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The Naked Corporation
The need for a transparency strategy, as described by Tapscott and Ticoll, is born out of the massive exposure and risk companies open themselves up to when they conceal activities from the public, or live by poor values. As they say:
Customers can evaluate the worth of products and services at levels not possible before. Employees share formerly secret information about corporate strategy, management, and challenges. To collaborate effectively, companies and their business partners have no choice but to share intimate knowledge with one another. Powerful institutional investors today own or manage most wealth, and they are developing x-ray vision. Finally, in a world of instant communications, whistleblowers, inquisitive media, and Googling, citizens and communities routinely put firms under the microscope.
Using basic tools available online, interested parties and activists can discover a companys darkest secrets and publish them to the world - instantly. Transparency theory states that because the corporation risks being stripped naked in ways it cannot control, it needs to be buff. Firms that live by good values (video) do not fear exposure.
Some firms and industries still opt for secrecy in our transparent world and they often end up paying a price for it. That is because when there is little to no visibility into how firms are operating (no transparency), there is very little trust built with customers. Low trust stifles innovation and can instill fear. This in turn creates conflict as companies try to stay closed and stakeholders try to break free.
Some stakeholders community activists, nongovernmental organizations (NGOs), and the like have little or no direct power over the firm. Their main tool is transparency: the ability to learn, inform others, and organize on the basis of what they know. When community stakeholders use information to gain support of others who do have economic power like the firms customers, shareholders, or employees their power multiplies.
One example, referenced repeatedly in the book, is the Linux community. There are so many transparent elements to Linux, from the inspiration behind its conception (an alternative to closed-source software), to the GPL that keeps it open, and the overall integrity of the software and the community that develops it.
Linux's transparent nature is quickly becoming a standard component of the technology industry. In fact, what could be a better endorsement of transparent business practices than IBM shifting its business strategy to embody open values? Big blue has donated millions of dollars of once proprietary code to the open-source community, and hosts massive developer forums that blur the borders between paid developers and the community. This is all done with the objective of making IBM more transparent to its stakeholders.
The Naked Corporation is a fascinating read filled with the ideals that businesses should aspire towards this century. What makes it most enjoyable to read is that Tapscott and Ticoll ground their concepts with real-world case examples, many of them technology related.
The book is divided up neatly into three sections.
The first, The Transparency Imperative, takes three chapters to thoroughly introduce the concept of transparency, and the structure of open enterprises. Most interesting is the first chapter (available free here), which identifies and explores independently the drivers behind transparency economics, technology, demographics (the power of the Net Generation), and sociopolitical changes (the rising global civil foundation). This is a rich and inspiring study, and the authors fuse their findings at the end of the chapter, stating that:
As emerging economy firms and citizens become integrated into the global economy, they will increasingly expect and gain the ability to demand visibility into Western firms business practices Both emerging economy and Western firms will be under increasing pressure to practice what they preach about open trade and level playing fields, as well as to behave responsibly toward people and the environment.
The second section, When Stakeholders Can See, illustrates just how much information employees, partners, customers and communities can discover about a firm. Given that we live in a knowledge economy, companies cannot block information from becoming free. The ultimate exposure of poor business practices is not a question of if anymore, but of when. The whistleblowers at Enron are proof.
Section three, Being Open, teaches companies about the rewards earned by being transparent. Up until this part of the book, transparency was viewed as a defensive strategy. Now transparency is re-introduced as a core source of new value a firm can tap into. Like IBM is doing now, companies can earn massive profits by adopting a more open stance.
In addition to being a great read for managers, I believe this book should be on the reading lists of members of NGOs, activist groups, and socially responsible corporate watchdogs. This is because in outlining the need for businesses to adopt a transparency strategy, Tapscott and Ticoll also create a blueprint for how to expose opaque organizations.
The drawback of this read, quickly obvious to the reader, is that transparency, ethical business practices, and corporate social responsibility are all such new theories that few know how to effectively apply them. Then again, when thinking about the Web in its infancy, talking about the new possibilities was the first step to the future we have now.
You can purchase The Naked Corporation from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.
It's not a security hole, it's a transperency. // Serious transperency, fix later.
Did they forget to mention this book was published on October 7, 2003? Hmm - I smell an advert!!! -6d
Only good things can come from corporate transparency. Just like 'open source is better since more eyes can look for errors', having companies share more information with their shareholders (and other people who have interest/financial stake in the company), there are more eyes to go over the decisions that the board makes. People on the board will be more accountable, but again, that's a good thing.
I store my recipes online (the way nature intended)
Hate to say it, but there are certainly benefits to being closed. Not to society as a whole, mind you and 'stakeholders', but certainly to your CEO's pocketbook and your shareholders.
Section three, Being Open, teaches companies about the rewards earned by being transparent. Up until this part of the book, transparency was viewed as a defensive strategy. Now transparency is re-introduced as a core source of new value a firm can tap into. Like IBM is doing now, companies can earn massive profits by adopting a more open stance.
IBM may be earning 'massive profits'. So is Microsoft. And Microsoft is not being that open. Therefore, I think we should be a little cautious about seeing this causal relationship between 'open' and 'profit.' Perhaps this will emerge into two dueling schools of thought - the open vs. closed, and time will tell which prevails, but certainly the success of 'The Naked Corporation' is by no means guaranteed. Interesting review, however.
"There's no success like failure, and failure's no success at all."
- Bob Dylan
See also: The Cluetrain Manifesto. It came first.
Power to the Peaceful
"I heard that there were rumors, uh, on the Internets."
This reminded me of the Cluetrain Manifesto; it certainly covers a lot of similar ground.
My business: Farstrider Studios.
"...when a corporation is naked, it is best to be buff."
When I first read this I thought it said "...when a corporation is naked, it is best to be in the buff." To which I thought, "Well, you don't have much of a choice, do you?"
In addition to being a great read for managers, I believe this book should be on the reading lists of members of NGOs, activist groups, and socially responsible corporate watchdogs.
Which makes it sound like activists, NGOs, and other entities (like local PTAs, homeowners associations, and the like) are somehow not impacted by the same issues. Entities like the Nature Conservancy sometimes get caught with their financial pants down in odd real estate dealings, and all sorts of non-profits (the United Way, among others) have seen huge problems because of their opaqueness.
The drawback of this read, quickly obvious to the reader, is that transparency, ethical business practices, and corporate social responsibility are all such new theories that few know how to effectively apply them
Actually, the thing that's quickly obvious, here, is that the authors/posters/editors involved in what I'm reading here think that there's never been such a thing as a decent company of more than 10 people, or that running an ethical business is somehow a new invention of the anti-corporate camp, which they've strong-armed onto an unwilling business sector.
Our economy is powered by thousands and thousands of businesses. Hard work, dilligence, and giving a damn about customers and investors is far and away the custom - no matter how much capitalism's philosophical opponents like to trot out the recurring handful of idiot CEOs and boards that smell otherwise.
Where's the rag-tag group of watchdogs watching the crazed HOAs and litigous NIMBYs that actually make more of a direct impact on most people's day to day lives? Those groups are more manipulative, and conduct their decision making in far more nefarious ways than most companies trying to keep their customers, employees, and investors loyal.
Don't disappoint your bird dog. Go to the range.
but I don't know if I could read a whole book about the concepts mentioned here.
*phew*
-- If I were a fish, I'd be wet
When companies must give employees full disclosure on wages of co-workers so they can appropriately value their own work, then transparency will be acheived.
The widest canyon capitalism has is the rules are all one way. Submit salary history with resume? How about submit salary history of potential team members so you can make an informed decision?
I find it interesting that most pro-capitalism libertarians, like the authors are all about access to imformation for the investor and other corporations, but not for the workers.
They appear to be out of print. They have three or four used copies, from $11 to $33.
Guess I'll go to my local used bookshops and see what I can find.
Mit der Dummheit kämpfen Götter selbst vergebens.
From the school principal to the president to the CIA to corporations.
THe Net is returning us to a type of tribal, village society, one where everyone knows everyone else's business. In that kind of society, the powerful have less leverage when it comes to propaganda and knowledge. In that kind of society, they can only rely on force.
As America has become atomized, it has isolated us from the urban, unionized neighborhoods of the Northeast and midwest, and the grange halls of the great plains. Our political information now comes from the mass media, i.e., CorpGovMedia, meaning it is as much disinformation and propaganda as anything else.
But the net does not suffer bullshit or propaganda gladly, and instead skewers it on innumerable web forums (you're soaking in it now!).
Once broadband becomes cheap, look for America to become more like Sweden or Denmark--more united against the rich and powerful....
eat shiat and bark at the moon
Using Enron or any other corporate scandal as an example in favor of transparency is silly. The "stakeholders" for those companies bear no relation to the people making the very non-transparent decisions.
And those decision makers didn't care about the future of the companies, they just wanted to extract enough money out of them to buy their judgement-proof giant houses in Texas or Florida.
So the issue isn't that well-run corporations should be voluntarily transparent, they already are well-run. The issue should be how to force evil corporations, run by thieving robber barons, into some level of transparency before they've emptied the cookie jar.
paul
Silly Rabbit, sigs are for kids.
this book should have been published in 1998 when people actually believed all that bullshit.
Guess I'll go to my local used bookshops and see what I can find.
Some friendly advice: Look for it at the bargain table. In fact, first search the carts of 3 for $1 books and the 'Free' bin that are usually right outside the front doors of most used book stores.
Don't forget that aside from companies choosing to go naked, bloggers are also pulling down their companies pants in public and feeling the repercussions.
-Colin
I said it before and I say it again. People really are starting to trust the free and open source software community more than commercial software companies. This is no surprise since private companies act as your enemy as soon as you buy something from them. They try to extort money from you by pushing upgrades that patch vulnerabilities and making sure your product only stays compatible for a short period. They make you subject to small prints, EULAs with mysterious and suspicious content, advertisement that is manipulative, misleading and dishonest. They give you poor quality support for their products and even worst support if the product is more than a year old. They push expensive insurance on everything you buy. Before the advent of opensource/free software consumers had no alternatives so they had to deal with unethical deceitful entities. But now open source has proven to be much more competitive on the ethical and honesty front. If private companies want to keep their market share they are going to have to earn the trust of the consumers. They will have to stop trying the fsck everyone in the behind all the time by pulling charlatan licensing tricks on everyone otherwize consumers will slowly move away from them. -- My posts are copyleft.
Let's start with:
- the UN
- SCO (and their parent, the Canopy Group)
- Microsoft
- Congress
Don't get me wrong, I'm as anti-big-brother as the next person, but in a society where privacy cannot be garunteed, the next best thing is to have as much as public as possible. Therefore the things that get entered into records would be done under the understanding that anyone could log in and check up on it instantly.
Examples:
You're trying to unionize your workplace and your boss finds out about it. They want to fire you by citing other reasons (attendance issues or something trivial). Any person in the world could check the data and see that you had an outstanding personnel record and that the firing is totally inconsistant with past relations to the company, making it obvious that they were firing you for union activities (firing for that reason is illegal) and they know that.
The company wants to make shoes in Indonesia for a total material and labor cost of $20/pair and sell them in the USA for $120/pair. The consideration of this would be documented and available online (the internal cost analysis report, for instance). Any fool could see that this a profiteering rip-off. Consequences: shoes get cheaper or anti-sweatshop activists lobby the company to keep production local (and union!).
Corporate execs like would have to document all decisions and so forth on the system so there is a big incentive for them to not make shady deals (or at least disguise them better).
I guess what I'm getting at is that transparency builds trust, but it has to be TOTAL and there needs to be some sort of expected standard of corporate transparency, not like the blackboxes they are today. It would be like a public ISO 9000 test. No more non-disclosure agreements!
I hope I live to see it happen, but I suspect that corporations themselves will go extinct before they adopt such structures.
[pink beam of light]
Deeper levels of transparency are even more important if Social Security private accounts are invested heavily in stocks. Enron-like corporate scandals would have dire consequences with no safety net.
an ill wind that blows no good
Just because a corporation is more "exposed" doesn't mean that it will do good things. Hilter was very overt about what he wanted to do, and the public agreed with him.
If people are willing ignore (or even applaud) the general atrocities and exploitation that underlie a given corporation, that company can afford to be "public" about everything it is doing and contiue unobstructed.
I have to stop reading slashdot during lunch. This article just brought to mind a picture of Carly What's-her-name of HP in the nude, and now I'm no longer hungry.
This sounds similar to a book written by NYtimes Editor Thomas Friedman entitled The Lexus and the Olive Tree. The book was written during the tech boom and has some bad examples of successful companies that ended up tanking after publication. He makes the same argument for Transparency and applies it not only to corporations but entire Countries and Governments.
The web is stripping away the layers of insulation between companies and the public by giving everyday people access to massive amounts of information. Increasingly companies are finding themselves like the emperor naked and exposed.
Sounds like Harvey Mackay having a wet dream. Cripes.
Slashdot: News for Managers, stuff that maximizes synergy.
Weaselmancer
rediculous.
> Some friendly advice: Look for it at the bargain
> table. In fact, first search the carts of 3 for $1
> books and the 'Free' bin that are usually right
> outside the front doors of most used book stores.
And if that doesn't work, check out the public washroom next to the used bookstore.
The world's burning. Moped Jesus spotted on I50. Details at 11.
Do not and I repeat DO NOT imagine Steve Ballmer naked and exposed.
...
Too late.
...when the Securities and Exchange Commission was created. By giving the public access to the financial statements and goings-on of publicly traded companies, the stock market became much more transparent and investors could make better decisions. However, given events like the Enron and Worldcom debacles, there is certainly much more room for disclosure.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
i see naked in the title, and i clicky clicky.
If you want to really know about a company's practices, read the management footnotes as well as the full income statements and balance sheets in the 10-Ks and 10-Qs. Don't just look at their pro forma earnings statement. Obviously you won't catch outright fraud, but there are plenty of clues that something shady is going on.
I think that people's demand for corporate transparency is inversely related to the money the corporation is making them. Accounting scandals usually happen just after a bust, rarely during a boom. While the returns are attractive, investors simply won't ask questions.
Please, for the love of God, no more car analogies.
Like, when the 800 lb gorilla is viewing your business.
A recent Frontline piece about Walmart included quotes from suppliers getting squeezed by the retailing giant to the effect of
I don't immediately see why a company can't provide a friendly exterior interface without giving away the family jewels. Maybe it just takes too much work, or else customers asking for super detailed technical specifications turn out to be competitors looking for instructions on how to eat your lunch?
"Provided by the management for your protection."
I've also wondered what would happen if a companies accounts were made public.
But dare not try it myself...
A blog I run for the wealth
...simply breed a new level of disinformation, not a new level of transparency.
The worst part of the whole deal is that people really believe that they have a new depth of vision via the web, so they put much more stock in what they read on the internet then they ever would have otherwise. Farewell, critical thought. If it's on the internet, it must be true.
...you may need to have a PhD in accounting to understand them. When Enron was coming down, I knew someone in the business school at OSU, taking classes in accounting. When discussing Enron's books, his professor said (approximately) "I have 2 PhD's in accounting, and I still can't understand them [Enron's books]." If the company is shady, they may use differing approximations of accepted accounting practices, and the products of those accountings may be hard to correlate to reality. Without significant accounting knowledge, you may not recognize deviations from normaity and/or how big the deviations are.
On /., transparency is good... except for apple which apparently is "special".
I guess this is a flame, but this kind of hypocracy is annoying, even when you expect it.
Open Secrets publishes a lot of interesting info on how various corporation's employees and officers use money to influence the political process. You can go there and tell who they are donating too. What needs to be done is correlate that data with stuff like the ratings of groups like Better Immigration. There are a lot of congressional ratings-what we need to figure out is what are the kinds of voting behavior that really elicit funds from various corporate interests.
When the kitchen gets too hot, major shareholders can just go private. All that's done, doesn't show up in the Fortune 500. A public corporation's dealings, especially one of any size, are so complex that there is a lot of nuance that you can never get .
As on who sat in on analyst calls in a public company, and tracked the stock price, I know there is huge gap between an understanding of the public, the market, company insiders and company employees. Due diligence is no joke, and communicating what's going on in a company is an extraordinarily difficult matter. Just publishing stuff on the web doesn't cut it. If so, nobody would have lost money in the Bubble. Raise your hand if you really know how to daytrade or read a 10Q.
Private equity firms are on the rise. Everything is not for public consumption. Given what happens to people roasted in the media, what would you rather do? Be public and open to false ridicule, or concentrate on your business?
fault-tolerant
You have a valid point, but... Corruption in large, especially large multinational corporations, is perhaps, a larger $ problem, and should be more of a priority. For reasons you touched upon, there are seperate issues for NGOs, and though some institutions hide behind rules, there are valid reasons to give extra protection to them. BTW you know there are "anti-corporate" right-leaners. Perhaps there is a better way to categorize people's economic thinking in these divisive times.
I think it would actually be a lot healthier for companies if wages were disclosed.
It would be an odd change. But it would prevent abuses in a company with some employees making far more than others just because they "know" the right people. It would probably lead to a much more equitible salary for everyone, and shift extra pay into higher bonues for highly performning people.
I've actually never understood what the big deal is with people within a company knowing what each other makes - companies guard this very jealously, and even tell you not to speak to anyone about it. But many people find out anyway, and then it just festers. I end up knowing what a few people make and it doesn't really affect me one way or the other, so why should it matter if I can see what everyone makes?
I would say how much I make to avoid seeming hypocritical, but again the company says I can't - so I don't (outside of a few close friends). I'd hate to lose a job over a theoretical point on Slashdot...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I'll bet they wish they were a little less naked after laying down the steamy pile known as "World of Warcraft".
A friend of a friend opened a restaurant with a novel pricing structure. It goes like this: Each day, there is one entree on the menu. She's a good and highly dedicated chef, so it's always good, depending upon individual taste. There is no price marked on the menu. You eat and then pay her what you think it's worth. Pretty weird, huh?
You know what' even weirder? She's making money.
"OH SHIT, THERE'S A HORSE IN THE HOSPITAL!"
Why is this book getting attention but "The Corporation: The pathalogical pursuit of profit and power" didn't get nearly as much attention when it should have. This is book is a piece of shit. It's my personal mission in life to detroy every mother fucken modern day unnaccountable tyranny known as the corporation. I mean, jeez, I can't put my finger over a flame for more than 20 seconds. How the hell you plan to tolerate being burned alive for the rest of your existance is beyond me.
I'm not anti-microsoft. I'm anti-bullshit. Which means I'm anti-microsoft.
I worked for 30 years for a major corporation.
What they did was screamed from the rooftops.
It made zero difference.
You get transparency into the corporationss? So what! Its all lies anyway.
This is a load of road apples. Enough so that I don't intend to even read TFA.
I can scratch my ass in my cubicle when my coworkers aren't looking, where the cameras aren't pointed, and nobody will ever know. I can jerk off to pr0n on my PDA in the bathroom. And I can still shuffle SeKrEt InFoZ!! around via handwritten notes - and since nobody reads anybody else's handwriting anymore (we read printouts now), it's unlikely anybody will know who wrote the note.
And nothing prevents me from taking my lunch at Starbucks or Borders or Barnes & Noble, buying 1 hour of 802.11b access (or "borrowing" access from some no-WEP dope in the neighborhood a block away), and sending internal, potentially company-damaging notes to coworkers, my executives, etc. through personal email accounts, available free via Yahoo, GMail, etc.. Of course, if those get leaked to the general public (i.e. sent to people other than my intended recipients), then my ass is grass, hence, a strong incentive not to do such things, further inhibiting transparency.
Transparency? Yeah, transparent like the brick walls you see from the guardhouse at the edge of corporate property. So you hear about a few major legal cases involving companies, or the occasional whistleblower from within, and the quarterly financial reports. Let's be serious -- those are drops in the bucket compared to the info that *isnt'* made public.
Yeah,every one should follow the open source model, that's why Linus Torvalds choose to work at Transmeta and why they did well for some time at least: Openess.
Only good things can happen from opening every thing about everybody to every one.
It would surely be a better world. Your wife will know about your affairs and you about hers; the government will know when you cheat on your taxes; you will not be able to amke a new product and launch it surprisingly because everybody will know what you are doing; your parents will know every time you get drunk and every time you decide not to answer the phone when they call you.
Sniff, sniff, I miss my Big Brother.
The only solution I see is requiring management keep a minimum percentage of family net worth in the company stock. Make that number bigger then the salary so they can actually lose money in a bad year.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
as long as this Gal is the CEO. ;)