As social media grows apace, directors are being urged to share more information about their business with consumers. But how do you embrace openness and transparency without hurting your brand?
Should business be transparent by default? Innovators and R&D teams might argue that secrecy is a valuable weapon: it gives them competitive advantage. But Jeff Jarvis, author of What Would Google Do? and an advocate of openness, would like governments and businesses to automatically make their information and actions available to the public.
"Holding secrets only breeds mistrust and robs [business] and us of the value that comes from sharing," Jarvis blogs. Transparency is a new and necessary way to operate in collaboration with one's customers and public. "Institutional companies will miss another boat as transparent companies take advantage of the age of openness to do business in a new way," he adds.
Directors clearly have to be willing to share much more information about their business than has ever been regarded as appropriate or necessary before. WikiLeaks has demonstrated how powerful disclosure can be. And consumers now have a huge amount of influence through social media. Research has shown that recommendations from personal acquaintances or opinions posted by consumers online are the most trusted forms of advertising these days. But are companies ready for this new mindset?
Tom Ellis, head of strategy and research at brand agency 1HQ, believes that withholding information is no longer an option. As he points out, it is increasingly the case that what you don't reveal may tell consumers just as much about your brand as what you do. "For so long it's been about everything other than transparency," he says. "It's been about creating an image, accentuating the positive and eliminating the negative. But now the roof is off so consumers can look inside the house—that's a big cultural shift. It's about being straight and honest."
Social media such as Twitter and Facebook is dramatising the fundamental weaknesses in modern corporations, adds Martin Thomas, author of Loose. Companies that come across as bureaucratic or unresponsive are dismissed as dinosaurs. What he would like to see is companies abandoning their tightly branded image and adopting the virtues of openness, collaboration and engagement instead.
Thomas maintains that social media needs only three actions to work well: be human, be responsive, and be open. But in his role as a marketing consultant, he says he's witnessed first-hand how many organisations struggle to deliver against those three things.
"Companies say they want a presence on Facebook but take five days to get a press release out the door. You've got 30 people round the table all claiming to have a stake in the discussion," he says. You won't see generations X and Y, which now have a presence in the boardroom and the workplace, dithering in such a painfully slow way. They're looking at openness and seeing it as an opportunity to transform business. "You've got to find a way to loosen up and challenge bureaucracy or you'll fail," claims Thomas.
Smaller companies, which are more agile and flexible, could claim an advantage here. Bryony Thomas, founder of Clear Thought Consulting, argues that SMEs increasingly seem like better companies to do business with, not least because they're less concerned with "command and control". She says transparency is creating a more level playing field because smaller firms are more able to show off their expertise. "People are quickly able to find out that some of the big brands don't live up to their promises. Glossy marketing and big-spend campaigns can't cover all cracks," she adds.
Thomas uses Bath-based internet telephony service provider Gradwell as an example of a small business doing it right. On the company website it suggests that some suppliers don't want to admit when they have a problem: "Not us. When there is a problem we tell you what is going on, what we are doing to fix it and when things should return to normal."
This isn't about a six-page social media policy but showing the world that you're real and that you care, adds Thomas: "There are always technical problems and any tech company that denies there's an issue is lying. Gradwell's Get Satisfaction service means that anyone can raise an issue online and in return it will be answered openly. It's a brave move, but it gives them the opportunity to show how good they are and that they're dealing with issues."
So will we see more stakeholders choosing to align with a company based on its openness? Do they feel a need to know everything about a brand? People are beginning to make decisions based on this information, confirms Ellis. Whether that's which brand of chocolate bar they buy, which business they decide to supply, or which company they choose to work for. Consumers are beginning to expect it, agrees Thomas, and if they can't get the information they want from a business then they'll get it from its customers anyway.
But there's another element at play here, adds Professor David Grayson, director of the Doughty Centre for Corporate Responsibility at Cranfield School of Management. While the ubiquity of social media and the internet has had implications for business, he says there are other factors influencing transparency and openness, not least corporate misbehaviour by the likes of Enron, WorldCom and Parmalat. This has led to "a pervasive decline of trust in institutions".
Grayson calls it the decline of deference: "Our default mode is much less one of trust than in our parents' generation. If you want to seriously restore trust you've got to engage people. A key part of that is to explain what you're doing, give evidence for what you're doing and the progress that you're making so that people can make informed decisions."
How to restore this lack of trust is vexing directors across the UK, says Grayson. He believes part of the solution is the provision of more relevant information by business. "What we've had in recent years, and this isn't a negative criticism, is a bombardment of information. But people don't have the time or inclination to wade through these huge reports. What they want is tailored information. Hence you're starting to see some of the best companies thinking about collecting relevant data and presenting it in the best way to all of the different stakeholders."
It's not so much about the quantity as the quality of information you're sharing, agrees Ellis. He believes that if you're trying to be positively transparent then you've got to turn all information you share into something honest and succinct. "It's not just about dumping it all on the Net. It's about saying, 'We're marking ourselves against these criteria and we're doing pretty well against these three but we need to do better here'."
Companies are no longer able to get away with being "reassuringly complex", says Thomas. She refers to a post by "Copyblogger", who asserts that at the point where you're feeling deeply uncomfortable that you're giving away the crown jewels, you're probably getting it right. Yes, there may be inconsistencies that you don't want to tell people about; or information that you don't want to shout about. But doesn't this make your business more accessible to the consumer? Isn't it an advantage?
This is a tricky learning curve for firms. There are many questions: Who decides what the appropriate level of transparency is? Who makes the rules? Where are the boundaries? Grayson insists that clever companies will be thinking about how they can add value to their business by being transparent. They'll use the fact that they're open to develop longer-term relationships with customers, suppliers and employees. "It's about how you get people pushing balls much more in your direction. To get them coming up with ideas that could help solve some of your business problems," he explains.
But how do you achieve a balance? Which parts of the business, if any, should directors keep tight-lipped about? Quite clearly, to do business you should be entitled to your intellectual property rights, to maintain confidentiality about your corporate strategy, or choose not to share your marketplace insights, states Grayson. Every company has to be open to some extent but it also has to define what its limits are. "It's not sharing everything, but sharing the things that are important to your consumers, your investors and your staff," agrees Ellis. "Nobody wants another Enron."
And an internal message that might resonate well with staff could hurt the business in different hands, cautions Martin Thomas. The message should be this: "While we aspire to certain levels of openness what we're not going to do is open ourselves up to be shot down. We're open about the fact that there is some information we just can't show—for competition's sake—but we've been open and honest about telling you that. It's about defining the freedom in a framework and pushing that as far as you can, because the more open and transparent you are, the more successful you'll be."
In an environment where WikiLeaks has become the norm, companies can no longer sit on, or bury bad news. They will be found out. So it's in a company's best interests to at least try to control how its information is disseminated. Marketing still has a huge role to play in this: no other department understands better how to communicate with an audience in an effective way. But it's become a cultural and leadership issue, too.
It's about employing good people that you trust to speak sensibly about your business, observes Bryony Thomas: "Everyone needs to loosen up and understand that people are people. Stop worrying about the risk and think about the benefits."
Martin Thomas agrees: "I spend a lot of time saying to senior managers, 'Stop looking at this [social media] as a technological trend'. Every chief executive needs to see it as an opportunity to transform their organisation. Building freedom, flexibility and agility into your system is the only way to survive as a business now."
