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Social Business: Transparency is Good for Business

Customers want increased transparency when interacting with companies because then they can make sure they really get what they want or need from the company. They can provide and ask for the right information early on in the process, allowing them to discover if things are going in the wrong direction and take proactive action.

Companies, on the other hand, should also want increased transparency when interacting with customers. The information they exchange with the customer will help them understand the customer’s wants, needs and situation, as well adjust the expectations of the customer to a reasonable level. It will make them much better equipped to satisfy the needs and wants of the customers in an efficient way and create a happy customer.

Furthermore, and even more important, the information that is captured about the customer during this process can be fed into other parts of the enterprise, such as R&D and marketing, to help them learn how to make better products or services and how to interact with the market in more efficient and effective ways. In short, it’s a win-win situation for the customer and the company.

The Fear of Increased Transparency

Despite this, many companies — or rather individuals or group of individuals within those companies — don’t want increased transparency. One reason can be that they don’t want to expose their internal structures and culture so that the customer will perceive them differently from how they want to be perceived as a brand. Another and perhaps stronger reason why they resist transparency is that the costs of interacting with customers in a more open and transparent way might be allocated to the units facing the customer while the value created is allocated to other units.

When you look at this from a company perspective, such behavior is completely irrational since it creates more costs and generates less value for the company as a whole. When you look at this from a business unit perspective, the exact same behavior is perfectly rational; why invest resources in the customer if the returns of that investment will be created in other units?

Foster Value-Creation Across All Internal Structures

The only feasible strategy for a company that wants to avoid this scenario of sub-optimization, leading to lower performance and creating less happy customers, is to avoid letting the internal organizational structure become an obstacle to getting work done and working together with the intention to do what is best for the customer and the company as a whole. Any mechanism that contributes to overemphasizing the division of an enterprise into organizational units, such as unit-based and individual-based performance models, should be replaced by mechanisms that foster value-creation across all internal structures, whether those structures are organizational, geographic or cultural.

Internal politics and political struggles should be treated as what they really are — total waste of time and resources. Reorganizations that simply create new structures instead of dissolving existing structures or minimizing the friction between the work that needs to be done and how resources are organized should be avoided at all cost, especially since reorganizations focus the attention of people inwards instead of outwards to the customers.

Getting things done and making the customer happy should be praised above all other things. This requires sharing information and knowledge across all structures so that the right decisions can be made wherever they need to be made. It requires collaboration across all structures so that decisions can be immediately followed by coordinated actions that push things in the right direction.

Openness and Transparency are Good for Everybody

Many companies have been designed and are still being managed in ways that make it rational for individual business units to let their own objectives overrule what is best for the customer and for the company. But from a company perspective — and thus also from a shareholder perspective — it is perfectly rational to take measures to enable and encourage sharing and collaboration across all organizational units within an enterprise simply because it will make it easier to get (the right) things done (in the right way).

Socializing the business is good for business and increasing openness and transparency is fundamental. Despite that, many individuals instinctively react negatively to anything that helps increase openness and transparency; doing so will benefit everybody from customers to employees and shareholders.

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About the Author

Oscar is an experienced management consultant who is passionate about helping customers to become more successful by improving communication, sharing and collaboration.

 
 
 
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