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Wednesday, April 1, 2009

The Age of Transparency – Rebuilding trust

7:12:00 AM Posted by Oscar Berg 3 comments
"If a tree falls in a forest and no one is around to hear it, does it make a sound?"

These days, many of us are amazed by how a few people have been able – or rather allowed – to make decisions that have put well-respected companies at the brink of collapse, not to say how they have been able to create bonus systems with no upper limit generating huge bonuses independently of how the company performs. What the h--- went on in those board rooms? What went on in their heads, how were they thinking?

I think that a major clue to answer to these questions can be found in the scientific answer to the classic philosophical riddle above; if no one is there to hear the tree falling, then there is no sound. The falling tree does make a sound wave, but if there are no ears around it does not convert to a sound.

Even though their appearance matters to most people, it is less important how they appear when there are no eyes around to watch them. If no one sees you on a bad hair day, do you really care? Probably not so much (if you avoid mirrors). Many people are even ok with performing criminal acts if the risk of getting caught is minimal or non-existing. This seems to be a primal human behavior, one that can have disastrous consequences. To avoid it, we need to acknowledge that this behavior exists and take measures to protect ourselves from it.

This is where transparency comes into the picture. Transparency makes decisions and actions visible. By seeing what goes on in a business, we get a chance to discover and act on issues or problems before they get catastrophic proportions (we also get a chance to discover and act on opportunities!)

Another dimension of transparency has to do with trust. A lot of businesses, especially financial institutions, have recently lost a lot of trust from customers, employees, shareholders, customers, government, media and the public in general. As a consequence, they run the risk of losing customers, employees leaving, shareholders selling their stocks, government intervening in their business or resisting giving them financial aid, and media and social dragging their brand in their own dirt. Much of this can be attributed to a lack of transparency.

The thing with transparency is that it helps to builds trust. This is probably the major reason why we are seeing more and more efforts to increase transparency these days. But, increasing transparency does not come easy. Again, it has to do with human behavior. Most people simply find transparency, at least initially, scary and do what they can to keep the door locked and the curtains down. Transparency means that other people will be able to see what you are doing - or even worse, they might be able to see what you are not doing. Suddenly, you will have to care more about how your work you do appears in the eyes of others. Having a bad day at work? People will notice.

Transparency is one of the characteristics of social media and it is hence one of the key benefits that comes with implementing social software and applying the principles of social media in a business context. Transparency builds trust and trust is essential for people to help each other, to join forces and to decide to collaborate towards a shared purpose or common goal. Transparency makes work visible, which is essential if you are to coordinate people and their actions and to make the right decisions and actions in time. By making work visible, you have much greater possibilities avoid sub-optimization, duplication of work, unnecessary waste of time and resources, over-administration, bad decisions due to lack of the right information, lost ideas and blocked creativity, failure to make use of internal skills and resources in an optimal way…the list can go on and on forever.

We are now seeing the dawn of The Age of Transparency. We are slowly leaving the dark ages of industrialism behind us; the times when people could grant each other huge bonuses independently of how their business performs and where people could hide in a large organization without contributing to the business. From now on, what you do will be more important than where you are. You will be judged based on your contributions rather than hours spent at the office. Face time is over and action time is here. But it inevitably requires a new level of transparency in business, like it or not.


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