Transparency and Organizational Success

The key to long-term organizational and managerial success is transparency. It will sound somewhat contradictory to some, but transparency around processes, products, and procedures can take the organization to higher levels of performance than those organizations and managers that shroud their activities in mystery.

One challenge I often discuss with senior management groups is the necessity to pick and choose which aspects of performance they will excel upon. As a planning activity when responding to survey results, the organization should not simply have a knee-jerk reaction to the lower or more average rated items, and likewise they should not have a knee-jerk reaction to those items that are simply highly correlated to some outcome. Survey results are a snapshot of what is, at this moment in time, and senior management’s role is not only to manage for what is, but to put into place what can be, what needs to be, to achieve long-term organizational success. Surveys are really good at predicting the future only if the future is a static state – not a likely situation. However, surveys can give you a very good grounding as to where you are now and that forms a stepping off point into the future.   

No organization has infinite resources, so no organization can simply say that “we will be the best in the world at everything we do”. Organizations need to choose, for their market niche, for their industry, for their state of organizational evolution, what aspects of performance will give them a competitive advantage and enable them to succeed. Will we become the most customer focused, the most innovative, the highest quality, the best value, the most trusted, the most transparent? If you take a look at the top performers across a standard set of employee survey items, you will find a somewhat different list of top performers across the items, an indication that there is variance in the list of top performers by area, and one key to success is to pick the area(s), the thread that you will pull that will lead to across-the-board organizational success.    

I would argue that for many if not all organizations transparency is one of those keys. Transparency not only conveys confidence, fairness and quality, organizational transparency forces quality and fairness to occur and hence creates confidence in the organization and its management; transparency is a linchpin. When the organization operates in a fashion that clearly demonstrates that they have nothing to hide, the only path to long-term success is in fact to have nothing to hide. When your customers and your employees have the ability to look within your organization and to see how the work is getting done, how day-to-day processes are being handled, how decisions get made, in an open and clear fashion the organization is forced to do many good things regarding how it runs the various components and processes that make up its business.

Humans though have a tendency to have secrets, to keep some information close to the vest, as it is often viewed as giving a competitive advantage, even if it is only for the short-term. For instance, we build many of our games around just such thought processes. Having a “poker face” means that you don’t telegraph the cards you are holding in your hand to your opponents. Football teams don’t shout out what they are going to do on the next play, they huddle to share that information in secret. The pitcher on the mound during a baseball game will give the barest of nods to the catcher, as signals between the two get secretly shared regarding what the next pitch to be thrown will be, or if the pitcher should throw over to first base instead of home plate. How good does a pitcher have to be though to be able to say, “here comes my fastball or slider, just try to hit it”. If you are a really good pitcher you might get away with that, the more average ones can not. Will your organization step up to the plate and be really good, saying to the competition “here is what we are doing, just try to do it as good as us”, or will it settle for average? The natural tendency of course is to be secretive.

Going beyond our games, other examples abound. Lawyers and prosecutors will stake out positions prior to a trial regarding what sort of plea deal would be acceptable to a defendant or to the state, treating the court room as a version of a high-stakes poker game, trying to get the best “deal” for their client or for the state. They stake out almost absurd positions at times in an attempt to get the most advantageous result. (A comedic interpretation of this can be found in “Liar, Liar” a film in which Jim Carrey plays a lawyer who can not function when he is forced to tell the truth, to be transparent, for 24 hours). Businesspeople behave in a similar fashion when negotiating with suppliers or customers, during an acquisition or when two organizations decide to merge together, behavior that does not lead to long-term trust and relationship building.  Purchasing agents from the company side and sales people from the supplier side have made lack-of-transparency into an art form. There is a tension that arises from keeping secrets, from hiding things a bit. From the world of fashion it is well known that a woman who desires to dress somewhat provocatively, realizes that is often more effective and provocative to cover some things up, to keep some things hidden.

It may be viewed, regardless of whether you are an organization, manager, lawyer, prosecutor, pitcher, quarterback, sales person, or purchasing agent, that you need to keep secrets, because the other side is keeping secrets and you will be at a disadvantage unless you compete in the same fashion. So now we regress to the lowest common denominator. Is that what being human is all about? Is that the noble end state to which we should strive? 

Magic black boxes that have secret processes and information contained within abound all around us, but I am not a black box kind of guy. For instance, when I present survey results back into an organization, I want to point out in the data what is intuitively obvious to any thinking person, what they themselves could easily see if they knew to look at the data in a certain fashion, in other words to be transparent. When I buy a product at a store, I want to know where it was made, what it is made of and what it will do, not simply relying on the marketing information splashed across the label in advertising-like fashion.

I find that a lack of transparency in organizations is often a cover up for lack of robust, high quality processes. The logic is something like “I can’t show you how something is actually done because then I might have to justify why it is done that way, that it is not arbitrary, and that is something I can not do”. I find I have to bite my tongue in meetings when someone says “we have a terrific way of doing this, or figuring out that, better than anyone else has”, but they are often very short on details – details that would point out that in reality they are simply flying by the seat of their pants.

Scam artists play on the natural human tendency of some to trust the word of others. Trust me, take it on faith, believe me, or believe in me…this week in the Wall Street Journal there was an article that described how some organizations are getting around the national “Do not call” list by sending out flyers to the elderly that have a scary warning about how they could lose their house and that they should send away for more information on how to avoid this potential tragedy, a card that is designed to look like it is coming from a federal agency is included. By sending in the card the elderly are opening themselves up to all sorts of sales gimmicks by those they should trust the least – something that is conveniently not mentioned in the flyers sent out. This lack of transparency will last only for a short while, as these organizations operating in this fashion will be ferreted out and stopped. They have nothing real, nothing of value, and nothing substantial to offer people and hence need to rely on a lack of transparency for their short-term survival. Others however will soon rise to repalce them for there is no shortage of dishonest or scheming people out there.   

Imagine a fawn bending its head downward at the edge of a pond in order to sip a cool drink of water. Suddenly the leaves on the edge of the pond, a short distance away from the fawn, rustle. The fawn bolts and runs away from what it perceives as a potential threat. The fawn did not know if that rustling was simply the wind or a coyote looking for its next meal. But by making the assumption that it was a coyote or similar threat, the fawn, while missing out on its drink, helps to assure that it lives to see another day. This assumption by the fawn of intelligent intent by something that may simply be the wind has evolved as a survival mechanism and exists in humans as well. I have a picture that shows a gorilla holding a book in its hands in a position that any human would use if we were reading that book. When I show that picture to an audience, they are drawn immediately to the conclusion, at least momentarily, of intelligent intent or purpose behind the gorilla holding that book in such a fashion. It is only upon further reflection (maybe only a second or two later) that one realizes that gorillas can’t read. By the way the title of the book that the gorilla seems to be reading is “The Origins of Man”. The point here is that when humans find themselves in situations where there is a black box, a lack of transparency regarding how things work or what is going on, there are plenty of mechanisms available to help us fill in the blanks and many times what we come up with on our own will not necessarily reflect reality.    

In The New York Times (October 28^th), there is a story about how everyday Russians are taking on the local traffic police because of seemingly arbitrary stops as they drive around. These stops are characterized as done by police who are actually looking for bribes rather than for any real infraction of the traffic laws. One citizen who has repeatedly pointed out the law to the police and refused to pay the bribe was hauled away and beaten to the point where for the next several months he will be in the hospital. While there are a multitude of causative problems, such as the low pay for the police force, the fundamental lack of transparency as to how they enforce the law and why they are enforcing the law in the fashion they are, is indicative of severe systemic underlying issues that will eventually come to a head. Meanwhile confidence and trust in the system is eroded, the sense that the system protects the average citizen, and citizens should work through the system is nonexistent. The lack of transparency of the system is creating conditions whereby unless rectified, the system itself can collapse.  

Sarbanes-Oxley was initiated in direct response to a lack of transparency on the part of organizational processes and procedures, a lack of transparency that was felt to be so severe as to require a legislative remedy. However, Sarbanes-Oxley is just scratching the surface of what an organization can be transparent about. Sarbanes-Oxley is viewed as very onerous and costly by many organizations, so what is the benefit of this increased transparency to the organization?  How about long-term success. The real benefit to the organization will occur when they can be transparent in such a way that it is not burdensome to the organization, but rather enhances organizational functioning. Image for instance, if a client for a professional services firm could see their work progress through its various stages, in real time, throughout the organization. How much more attractive would that be to other potential customers? Imagine if you could track the history of the items you buy from source to store, so that you knew exactly what it contained, how it was handled and whether it had any defects. The list could go on and on. 

In addition to the above there is another force that is making transparency so key to future organizational success. And in one word that is information; the amount of information that is available to us is growing at a phenomenal rate. In one study it is estimated that the amount of information we humans produce is growing at 50% per year! (I am making no judgments on the quality of that information). With the amount of information available and with people more and more used to using tools that allow them to access that information in a comprehensible fashion, it will become much more common for people to expect more information about the organizations they interact with, and about the products and services that they purchase.  Those products and services couched in mystery, those organizations with obtuse practices and procedures will become less and less attractive entities with which to interact either as an employee or as a customer. Those organizations that continue to operate in mysterious fashion will be less likely to survive and hence organizational evolution as to the normal standards for transparency will occur.

The question is do you want your organization to be ahead of the curve? So throw me your best pitch.

© 2010 by Jeffrey M. Saltzman. All rights reserved.