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Radical Transparency: Revelation, Reputation and Reciprocity

Wired_cover15_04The current issue of Wired has a great feature on radical transparency, highlighting the benefits that accrue to CEOs who are open to revealing their shadows, and exposing the risks to the reputations of those who continue to embrace secrecy and/or duplicity in their self representations. As with many Wired features, it is provocative ... and rather biased ... and just happens to align well with my own biases. I want to explore some of the issues raised in the article, blend in some issues I and others have raised elsewhere, and ruminate a bit about the prospective breadth and depth of radical transparency.

In preparing the lead article, The See-Through CEO, author Clive Thompson walked his talk by posting an entry on his blog outlining his plans (focusing on three themes: "secrecy is dead", "tap the hivemind", "reputation is everything"), and inviting comments. He received over 50 responses, with very high signal-to-noise ratio; several of them are explicitly included in his article (others are presumably implicitly included).

Redfin_logo_208_46 Clive opens his article with a story about how Glenn Kelman, CEO of Redfin, was faced with mounting challenges to his company's attempt to disintermediate the real estate business by empowering home buyers and sellers through a rich (and enriching) Internet application. Redfin provides an easy-to-use window into the real estate market, offering a map-based interface for prospective buyers to see a wealth of information about homes for sale in a given market (I imagine a similarly powerful interface for home sellers, but have not yet explored that side of the house). Faced with resistance by realtors who understandably feel threatened by this introduction of disruptive technology that [somewhat ironically] renders transparent many aspects of a complex and lucrative market in which they once enjoyed a clear hegemony of information, Redfin was in danger of failing.

Glenn created a blog to reveal some of the challenges he was encountering internally and externally. While initially hesitant to being so open about the challenges, he found that "instead of discouraging customers, being open about our problems radicalized them ... they rallied and started pulling for us". Glenn's move, and the response, hardly surprises me, given his inspiring recommendations on 10 Steps for Building a Company at NWEN's Entrepreneur University 2005 (one of which was "be open and honest and respectful") and his more recent presentation on Fortune Favors the Bold (one of which is "radical openness: the truth will set you free"). I'm also reminded of Glenn's recommendations for hiring employees -- "find the maniacs and give them a reason to believe" ... and given how he has, in effect, invited his customers into the pool of maniacs and believers, I'm thinking that my earlier rumination on everyone's a customer might be due for an update, as it appears that, increasingly, everyone's a partner.

I was [further] reflecting on how openness and vulnerability tends to breed reciprocity, and that if businesses want to build strong relationships with customers, that has to be built on a platform of trust, and the best way to get others to trust you is to trust them (demonstrating trustworthiness by trusting). I've written before about the business value of integrity, openness, vulnerability and compassion, but at that point was thinking more about how those principles might be applied internally. As Web 2.0 progessively erodes the barriers between us and them, there may be more business value to practicing those principles in "external" relationships as well.

Clive notes that

Google is not a search engine. Google is a reputation management system ... here's the interesting paradox: The reputation economy creates and incentive to be more open, not less. Since Internet commentary is inescapable, the only way to influence it is to be part of it ... network algorithms do not favor the cagey or secretive. They favor the prolific, the outgoing, the shameless.

However, I started to wonder how widely this radical transparency really applies (or could apply). Redfin is clearly a company that is setting out to empower its customers, and it's little surprise to me that some of those customers would help Redfin help them. Microsoft is another company that was profiled in this feature, where Fred Vogelstein [who, surprisingly to me, does not appear to have a blog] explored Operation Channel 9, the internal project wherein a small group of radicals went around creating impromptu videotape interviews with Microsoft developers and posting them on an external web site, and observed that "no large company - with the possible exception of Sun Microsystems - is as far along in understanding how the Internet changes the way employees connect with suppliers, customers, shareholders and peers". By promoting openness and vulnerability -- sometimes at the risk of being fired (reminding me of the risk / reward tradeoffs between thriving and surviving discussed -- especially in the comments -- in my last post) -- the Channel 9 crew helped Microsoft establish a new [virtual] front porch, making itself more approachable by its network of third party developers ... and, I suspect, a significant number of its end-users. This channel is also augmented with over 4,500 other channels (external bloggers), giving Microsoft one of the highest [external] blogger-per-capita rates (6.3%) of any company I know of.

So why does Microsoft have so many external bloggers, and why does, say, Nokia have so few? The blogroll at Stephen Johnston's ThreeDimensionalPeople blog has the most complete listing I've seen anywhere, but at 15 of 55,000, we have a blogger-per-employee ratio of 0.02%. There are, of course, a number of blogs sponsored or at least promoted by Forum Nokia, but as the forum is invitation-only (and the invitation can presumably be revoked at any time), I'm not sure how high these blogs would score on the radical transparency scale. I realize that many of the Microsoft blogs are primarily "promotional", but many of them tend to play closer to the edges with respect to what they reveal about the company and its practices, policies and personnel.

I know Nokia is very proud -- and protective -- of its brand, and so I started wondering about whether there is a fundamental tension between branding and blogging? According to Business Week's listing of Top 100 Global Brands, Nokia's brand is #6 and Microsoft is #2, suggesting that blogging does not adversely affect the brand (or at least not necessarily so). IBM, which has an extensive array of internal blogs (3,600 as of a report 2 years ago) and wikis, is #3 among brands, and seems to have hundreds of external blogs (judging from a few lists). On the other end of the spectrum, Coca-Cola (the #1 brand) has one rather infamous flog (fake blog), but very few "real" blogs (that I can find).

Does the discrepancy between external blog adoption rates have anything to do with a company's dedication to the empowerment of its customers? Nokia's mantra ("connecting people") certainly implies a level of individual empowerment, though perhaps not in the same way as Microsoft's mantra ("your potenial, our passion"), and I would argue that neither large company empowers its customers as clearly as Redfin does. It would be interesting to do a more comprehensive assessment of the correlation between brands and blogs, and even more interesting to investigate the causal relationship(s) between these two factors (and other factors such as size, vision, mission, values, industry, customer bases and business models). Meanwhile, in the spirit of Clive's openness, I welcome any insights anyone has to share on any of this.

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