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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.
See also: The Cluetrain Manifesto. It came first.
Power to the Peaceful
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.
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.
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
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.
Well, while I'd agree that transparency is good overall, it does depend on what kind of information we're talking about.
The management is appointed by the board, which represent the shareholders. Thing is, stocks don't work the way they used to, when people would hold their stock and get rich off the dividends. Today people aren't investing for stock dividends. They buy in the hopes of selling them for more. So the business has to keep growing and keep that stock price up to keep everyone happy.
The problem is, if the shareholders have down-to-the-minute information on everything the board is doing, things get short-sighted. Every single decision the board does would be cause for speculation on the stock.
This, in turn, could make it difficult for the managment to do their job, namely run the company, because any decision which could means lower stock prices, even in the short run, is going to get them into some heavy criticism from the unhappy and increasingly short-sighted investors.
In the worst case, you'd risk ending up with management looking only at what's good for the next day and not what's good for the next decade.
(Of course, it's already a lot like this. I'm just saying it might get worse.)
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