Ridiculously Transparent

http://bhorowitz.com/2011/09/02/ridiculously-transparent/

by InfinityX0 • 15 years ago

111 19 15 years ago

I'm not familiar with this stuff. Would someone please explain what types of information public companies can't share with their employees, and the thinking behind these regulations?

Xlythe• 15 years ago

If information (cash flow, cash in the bank, bad debts) is released to the staff before the public, there's problems with insider trading of stocks, etc. And I'm sure it has to do with stock stability as well. If there's a bad day in the company and everyone knows about it, stocks will likely fall. You don't have time to fix the problem before the public hears of the news.

gabaix• 15 years ago

I might try to do a startup at some point where people email each other through tweets. I think it would open new possibilities for companies.

WiseWeasel• 15 years ago

Why do I picture Dilbert's boss when I read that statement?

threepointone• 15 years ago

maybe you remembered this strip? http://dilbert.com/dyn/str_strip/000000000/00000000/0000000/...

yuhong2• 15 years ago

Yea, SEC should allow tweets and forum posts etc. to be considered fair disclosure under Reg FD. And how about direct response instead of firing in response to criticism by employees?

yuhong2• 15 years ago

In particular, criticism of managers. I am particularly thinking of allowing non-anonymous Glassdoor reviews.

sgentle2• 15 years ago

It seems like in most communication decisions, being secretive loses you a lot more through misunderstandings and missed opportunities than you gain from control. At least, I've seen a lot of articles written asserting this, and my own experience backs it up.

I wonder if it's always true, or if not what the boundary conditions are. Apple, for example, seem to play on their secrecy quite well as a marketing technique, and it seems the Unity developers on that Reddit AMA had been cautioned against revealing planned features to avoid disappointing people.

The cynic in me thinks it makes you feel powerful and in control to have secrets, and that's the main reason why transparency is rare. I'd be interested to hear counter-examples, though - does anyone know cases where being secretive worked out to be a great business decision?

meric3• 15 years ago

You listed Apple as an example of secretive as a marketing technique being a "great business decision". I can list HP as an example of transparency as a marketing technique being a "not so great business decision".

Why is that? bhorowitz's transparency was certainly not a marketing technique. From this we infer that there must be at least two types of transparency.

Being transparent with people who are with you, and being secretive with people who are not. ...I guess its not a coincidence that people share more with their closest ones than with house guests.

On another note, this article reminded me of http://en.wikipedia.org/wiki/Ricardo_Semler

sgentle2• 15 years ago

I suppose so, and there are examples of massive fallout from the public finding out about internal decisions; Elop's Nokia memo springs to mind. Is it as simple as transparency to your friends, opacity elsewhere though?

My first thought is that some of those situations reflect genuinely bad business decisions, and maybe it's better to take the public hit immediately rather than struggle on in secret doing something whose dumbness is only visible to people outside your reality distortion field.

The other thing is, how do you distinguish between people who are with you and not? As the article noted, once you tell employees the information often ends up outside the company anyway. And not all employees are necessarily with you - they might agree with the broad mission of your company but disagree with how you're executing it, like the Nokia Plan B thing (although that turned out to be a hoax). Should you try to exclude people like that?

I should clarify that I'm not sure if Apple's secretiveness is a "great business decision", merely that it seems to work for them in terms of marketing. Would a company like Apple work better or worse if they operated more in the open? Unfortunately, there's only one Apple so it's hard to know.

That Semler article was interesting. Have you read Maverick? Would you recommend it?

mgkimsal2• 15 years ago

In what ways was/is HP transparent? Maybe I'm thinking you're just referring to the touchpad, where they seemed to be open about some stuff, but secretive (or more likely just incompetent/indecisive) about other important stuff (getting SDKs in to dev hands, for example).

jacques_chester• 15 years ago

This approach is sometimes referred to elsewhere as Open-Book Management[1].

One key addition in full OBM is that staff are given basic training in management accounting -- ie, in reading financial statements and inferring performance from them.

This should fit the current enthusiasm for metrics perfectly. The three core financial statements (Income, Balance, Cashflow) are internationally-recognised metrics dashboards for business financial performance.

You can even build derived metrics (accounting ratios) to better understand particular parts of your business. And nothing stops you marrying those derived money metrics to your other metrics.

Basic accounting is really quite simple and illuminates a lot of business logic. I'd recommend it to anyone.

[1] http://en.wikipedia.org/wiki/Open-book_management

shorbaji2• 15 years ago

The debate of more vs. less transparency is not trivial. Regulatory and competitive considerations make this difficult. Sometimes it is simply human nature to be secretive - particularly when it comes to bad news.

The article focuses on transparency between management and employees. Transparency with customers and with the public is at least equally interesting.

A company can benefit from transparency. Heroku, for example, are transparent with their downtime (e.g. status.heroku.com). Another example is the case of AirBnB and the EJ debacle. Once AirBnB openly acknowledged that safety/security is a concern for landlords it adapted by rolling out an improved product (guarantees, safety features, etc).

Both of these are great examples of transparency at the core impacting the product and how it is marketed. These products are more valuable and more competitive because of transparency. Certainly this adds to revenues and likely the bottom line as well.

AirBnB could have adopted this approach earlier. So, the lack of transparency can be missed opportunity.

ehsanu1• 15 years ago

A post was killed for no good reason. Reproduced here:

shorbaji 23 minutes ago | link | parent [dead] | on: Ridiculously Transparent

The article focuses on transparency between management and employees. Transparency with customers and with the public is at least equally interesting.

AirBnB could have adopted this approach earlier. So, the lack of transparency can be missed opportunity.

mgkimsal2• 15 years ago

AirBnB's entire business depends on non-transparency - you can't get the other person's phone number ahead of the transaction. And they've put in more workarounds to get around the problems that forced secrecy creates.

shorbaji2• 15 years ago

True. As a broker of sorts, it is essential that AirBnB withhold details of the two parties. But the company need not hide that they do so. The certainly would not be ashamed if news broke out that they do so.

The transparency I speak about is slightly different. AirBnB where (I think) caught out when news broke of a landlord's home was vandalized. The company was heavily criticized for an arguably insufficiently transparent initial response.

Eventually, AirBnB were transparent in the sense that they acknowledged mistakes and acknowledged inherent risks to landlords. They used that transparency to improve the offering and promote the product accordingly. Kudos to Chesky and team!

At the risk of repeating myself, I see a parallel with Heroku's status dashboard. In a sense they are saying: "We won't mislead you. Hosting with us carries risk of downtime. Here is a dashboard so you see how well (or bad) we are doing." That too is an example of transparency leading to an improved service offering.

Heroku seem to have done it proactively. AirBnB did so reactively. Better late, of course, than never.

mathattack• 15 years ago

It's actually to keep people from trading on info before it's public. Every investor legally is entitled to get material info at the same time.

Being this brutally honest as a firm isn't easy. Sometimes you withhold for what seems to be good reasons - not scaring people, not distracting people, etc. Not everyone reacts well to such transparency. All this said, it did build a remarkably strong culture for them.

Ridiculously Transparent

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