Slashdot Mirror
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.
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
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
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.
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]
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."
but non-profits are generally beholden to their ideological base and are judged by their effectiveness in advocating for their causes
Boy oh boy, if that were more than only occasionally true. I happen to consult (IT stuff, web stuff) in the DC area. Everyone assumes that the only thing in town are giant corporate defense contractors, but believe me: it's non-profits that litter the Beltway. Every conceivable trade association, think-tank, and activist organization on every part of the political spectrum.
After years of working with the management, boards, and communications people in these organizations, I've come to draw some conclusions about them and the people that staff them. First and foremost: it's an industry. Meaning, it's a professional arena, to which people aspire, or in which people find themselves thriving. I've actually gained new clients because of the gypsy-like behavior of that universe's people - they tend to wander from association to association, and often take with them their favorite web tech guy.
So that you know, I'm talking here about associations representing current and veteran military people, those representing environmental activists (both pro- and anti-industry, and pro- and anti-hunting), those representing parts of the oil industry, and those pushing bicycles in lieu of cars. I've seen them all... and the have one thing in common. The people that work for those groups (and here, we're talking mostly about professionals - the fundraising campaign managers, the communications specialists, the directors, the general managers, the CFOs, the attorneys, etc) tend to stick with groups that have a particular Red/Blue affiliation, but otherwise don't seem very picky at all. The exception to this might be the particularly loopy religious bunch, or the truly crazy Marxist types, but both are fairly rare.
These people - career association/PAC employees - are, more than most anything else, shopping for jobs that look that much better on their resumes, and of course, which have a fatter paycheck. They generally want to prop up the political party that they adhere to, but are astoundingly ambivilant about which specific cause or movement they find themselves working for. After enough years in this groove, these folks are far more interested in triumphs of process, fund raising, and performance bonuses than they are the rise and fall of a particular advocacy effort. In trying to put another notch on their 501(c)(3) scorecards, they routinely resort to exactly the sort of corner cutting, obfuscation, and oily maneuvering that you are attributing to large corporate entities. And, when you're dealing with associations that have 200,000 members (or ten times that many), there's a lot of cash moving around, and a lot of events, people, campaigns, and other things to spin and work in one way or another. I've been expressly tasked with building systems that don't leave much of a detailed trail after a particular event has wrapped up, or after donor perks have been dolled out, etc.
My earlier comments about these organizations needing to practice what they preach are based on my personal observations of unethical skullduggery, sham communications, bad bookeeping, outright graft, and more importantly: daily operational/career decisions that absolutely, positively would horrify the average contributer/member of these groups (or, at least require such people to publicly act apalled, anyway).
The association/advocacy/"movement" industry is every bit as competitive (for scarce donated dollars) as the for-profit corporate world, if not more so. At least a large company is completely honest about what they're their to do: reward investors by profitably satisfying customers. But these NGOs and other non-profits are, first and foremost, career paycheck engines for the people that work there, and producers of their marketed message, influence, and advocacy second. In that setting, transparency is rare, and would shock a lot of people.
Don't disappoint your bird dog. Go to the range.