David Ticoll spoke about his new book The Naked Corporation: How the Age of Transparency Will Revolutionize Business (with Don Tapscott) this morning at a BIGfrontier breakfast today.
This talk ties nicely to John Parkinson's discussion of The Real-Time Enterprise the other day at KMPro. Companies that are becoming transparent are inherently making data and information more available, engendering the ability to make informed decisions more quickly. Progressive Insurance, for example, states its financial data every month.
What is transparency? What version of transparency does this book discuss? To keep the suspense low, David Ticoll started his discussion with five varied examples that all touch on transparency:
- Highly hyped movies that didn't make it past the 2nd weekend. Kids are using instant communication to pan movies to their friends.
- Websites that let you talk about companies, such as InternalMemos and The Vault.
- Walmart strategy to go to RFID for inventory & supply chain control.
- Starbucks vs. HaidaBucks Cafe. Starbucks sued for using "*bucks" suffix. The case went to the internet and Starbucks backed down.
- As recently as last year, mutual funds did not want to talk about their corporate governance policies. For example, Fidelity and Vanguard didn't want to tell clients how they are voting on proxies. Pension funds and unions argued that this should be public knowledge. SEC has ordered that this should be the case, particularly since mutual funds own 25 percent of the available stock.
In keeping with the spirit of his book, Ticoll stated two laws for the new corporation: 1. You are going to be naked. 2. You had better be buff.
As with many corporate change, Ticoll said that the only way corporations are going to stay with transparency for the long haul is if it comes from the top. Interestingly, he said that people really want to do the right thing. If leadership gives them the right set of examples, people will follow. But if leadership falls short, it is easier for the people they lead to come up short as well.
An interesting question at the end of the session asked what becomes of companies that try to be transparent but "fail." Ticoll sited the example of Nike, which has been trying to come out from under the popular belief that it employs (or contracts work to) sweatshops. The issue there is that for some reason no one believe them -- their efforts have been too little too late, particularly when compared to another sports shoe company that has been trying to do the right thing all along.
Related to this were some questions on the longevity of the transparency "fad." Ticoll argued that transparency is here to stay -- but that it is here as a substitute for social capital and trust. These companies have gotten so big that many peole now operate under the assumption that all multinationals are "bad." Transparency by itself cannot solve these problems.
Finally, Ticoll talked about the lifting of the "Civil Foundation" for companies as part of the legislative and cultural changes that are driving transparency.
This was in response to my comment about reports that have suggested companies are valued higher in countries where there are higher financial reporting standards.
Sidebar
In a crazy bit of irony, I discovered this article in the Metro section of today's Chicago Tribune: Top O'Hare bidder walks ("free" registration required)
A politically connected business partnership considered to have the inside track on managing the O'Hare International Airport expansion pulled out at the last minute to avoid publicly identifying owners, but Chicago officials said Wednesday they might waive those disclosure requirements to lure the group back.
What could they possibly lose from disclosing the ownership of the partnership? Would it surprise anyone if the firm were buddies with da Mayor? Or even if they were foreign investors? The question should be whether they can really do the job -- are they really the only firm that could successfully run this project?