This post is a bit of a rant, and definitely not me revealing something clever or novel. We all know this to be true, but someone apparently needs to say it.
Everyone has a private life. Things they keep from their friends, their family, even their spouse. I won’t go into details here, but use your imagination 
The thing is, secrets aren’t always bad. Sometimes we need to keep a part of ourselves hidden. It might be because we’re not ready to talk about it, or perhaps because others aren’t ready to hear it. Or maybe we just want something that’s ours, without dealing with everything that comes from sharing it with others.
I’ve been reading a lot of blogs on the subject of social media lately, and I’m getting incredibly tired of hearing about how businesses need to be “transparent”. I’m not sure who started this meme, but it needs to die. In business, as in life, true transparency is bad.
I know, it sounds terrible, like a machiavellian scheme to hoard secrets for the purpose of power, to cover wrongs and sins for the purpose of pride, but bear with me.
Some things should be open to your customers. When you screw up, you should admit it openly and honestly, and what you’re doing to fix it. And it’s a great idea to have conversations with your markets about what their needs are and how you might be able to fulfill them. Most importantly, you should reveal things to your customers that they have a right to know, such as your return policies or how you handle their private data, or whether your product has certain shortcomings. But revealing too much about your business carries enormous risks:
1. It opens you up to liability – The sad truth is that we live in an increasingly litigious society, and even if you’re wrongfully sued and you end up winning, you’ll still spend an enormous amount of time, money, and attention defending yourself. And there are always lowlifes out there looking for reasons to sue, hoping for a quick settlement. Don’t give them more ammunition.
2. It’s highly likely to be misunderstood and damage your brand – This one will probably be controversial, but it’s my belief that customers don’t need (or often want) to know everything. Your strategic plans, financials, and other sensitive data are at best distractions, and at worst can turn customer sentiment against you. What if your product has 70% profit margins? That’s great for you, but a previously satisfied customers may now feel that you’re gouging them.
3. You risk divulging trade secrets to watching competitors – The barriers to entry for many industries keep dropping, making it easier for competitors to enter your market. Why help them out even more by telling them why it’s a great market and how to win in it?
Tell me this, how transparent are Apple, Google, and Microsoft? Do you know all about the inner workings? Do they let anyone in the company speak about anything they want at any time? Do you know what their plans are for the next year? Of course not, and ultimately, most people don’t care. They don’t care because those companies deliver. And that’s the real catch with transparency. The risks are enormous, but the advantages are few. If you deliver a great product or service and good customer experience, your customers won’t care if you’re secretive. But if you deliver crap, no amount of transparency will save you.
A great example of this principle occurred last year where a blogger wrote a post about how the website for American Airlines sucks, and an AA employee was allegedly fired for talking to the blogger about the internals of the company and how they had tried to improve the website, but bureaucracy prevailed. The social media folks generally came down pretty hard on AA for this, which is understandable given the slant of the story, but the reality is that AA has a brand to protect and transparency in this case would do nothing but harm the brand. Yes, their website sucks. But there are three classes of users of that website out there:
a) the ones who like it
b) the ones who hate it
c) the ones who don’t care
By revealing that there are factions inside AA that dislike the site and are trying unsuccessfully to improve the site, what is the effect on those groups? Group A, the satisfied customers, are likely to now be less satisfied. Group B, the ones who hate it, are now probably even more upset at AA because they can’t get their act together. And Group C either still doesn’t care, or now dislikes the site and the company as well because of this fiasco. So AA did the rational thing and fired the guy for breaching his NDA in promotion of transparency.
It may sound like I’m advocating companies firing folks to stay opaque, but that’s not my point. My point is that AA has not delivered a great product, so transparency in this case actually makes the situation *worse*. And if they had delivered a great product, we would never be having this conversation in the first place and no one would care whether they’re transparent or not.
There’s a limit to transparency, and going beyond that limit is incredibly foolish. I think our goal should instead be translucency.
Translucency says that I have enough respect for myself and my customers to know that they (and my competitors) don’t need to know some things.
Translucency values longevity and competitive advantage. Customers aren’t served by my company going under.
Translucency is ultimately about having a two-way relationship of trust, where your customers believe that they have the relevant information and that you’re not trying to mislead them. The subtle assumption behind too much transparency is that your brand or company can’t be trusted, so you should reveal everything.
Translucency is about honesty, and having the confidence that your brand represents enough goodwill that your customers will trust that what you’re telling them is what they need to know. That trust is difficult to build and maintain, but worth its weight in gold. Translucency is hard, but sustainable.
Transparency is just bullshit.
Photo by NataliaEnvy
…except when it comes to your government.
Some of your points are good, but they belie the title of your article. “We don’t want to see everything.” — That’s not true. In each of your examples, the customer is benefited by knowing the inner workings of a company. What may not be benefited is the company.
You are right, there are some things that should not be transparent, but for the vast majority of things lack of transparency creates an environment rife with corruption and opportunity to screw people over.
Your points:
1) “It opens you up to liability” — Yes, we have a serious problem with our legal system and a culture that litigates for everything. That said, keeping things a secret to avoid a potential lawsuit indicates one of two things. Either you’ve done something wrong, so you have reason to be afraid, or you’re irrationally afraid that someone irrational will take your statement and use it against you in some way. If someone irrational is going to attack you, they will do so regardless of your public verbiage. If you’ve hurt someone, you deserve to be sued. Either way, transparency benefits the consumer.
2) “It’s highly likely … to damage your brand.” If you say or do something transparently that damages your brand, you should have better people managing your brand. If you make 70% profit on a product, you should be prepared to justify that profit margin. “This products profits allow us to do research that benefits the consumer.” “10% of all profit on this product line goes to charity.” Responsible, transparent behavior can only help your brand. If you’re behaving in a congruent upstanding way you don’t need to be afraid.
3)”You risk divulging trade secrets” — This is your strongest reason, and the only one that actually makes sense to the consumer. If Coca-Cola divulged their formula, their business would be hurt with no benefit to the consumer. There are already plenty of cheap coke-like products available. The result would be companies changing their business to try and produce coke-replicas, or try to sabotage coca-cola by preventing access to key ingredients of the formula through pricing-schemes or simply buying up all the supplies. The end result is going to make the consumer unhappy.
AA made the right choice by firing someone who breached his NDA. You’re right. But this is not an issue of transparency, it’s an issue of contract. AA made the choice not to be transparent and one of their employees violated their contract by disobeying that policy.
You make an interesting distinction about translucency and trust. You’re right, trust is the important factor here. If a company is trustworthy then there is no need to be transparent. That said, if a company is trustworthy, transparency is not going to hurt them. If AA was trustworthy, delivering a good product worth the money their customers were paying for it, the entire thing would have been a non-issue. Turn it around a little. If said employee revealed that AA knew their site sucked and was in the process of fixing it, what would the ramifications have been in your three customer cases?
Customer 1 who likes the site will be happy they’re trying to make it better.
Customer 2 who doesn’t will be happy they’re trying to make it better, and glad their complaints have been heard.
And Customer 3 who doesn’t care, probably doesn’t care, but might have some goodwill towards AA for their efforts.
Further, in this scenario, the employee would not have needed to have been fired, because his action would have been a net gain for the company.
The problem is not transparency, it’s that the company can’t be trusted. A trustworthy company has no need to avoid transparency in most cases. Everyone is sometimes going to have something they want to sweep under the rug. The best thing to do is sweep it under the rug until it’s been resolved, quickly and directly, and then stop trying to hide it.
One might argue, in American Airlines’ case, that if they’d had a culture of transparency, they might not have had such a crippling bureaucracy in the first place.
"I’ve been reading a lot of blogs on the subject of social media lately…"
Talk about your first mistakes
…no comment.
Yes, government is a different beast, though I was a Navy intelligence analyst, so I'm not really in favor of full transparency there either
Perhaps, though I'm not sure one has a lot to do with the other. Regardless, American Airlines has to deal with the situation they have today, and while moving towards *more* transparency and *less* bureaucracy are worthy goals, going too fast is likely to only result in more dissatisfaction.
I think this is a misuse of the term ‘transparency’ not an overuse of it.
When I use the term in discussions with our clients it is in the context improving their view into the project lifecycle.
Transparency is ensuring they always know the project status and have tangible artifacts of where we are in the creation of their product.
There isn’t any added value knowing what color shirt or underwear I have on today, the focus is to increase the level of trust and comfort on the project.
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Thanks for the comment! I've emailed you.
This article and its comments were extremely beneficial to both consumers and businesses. It is helping me to write a great paper in my Business Advanced Studies class.
Keep up the arguments because we are bound to go one way or the other.
Ryan Waggoner, I would really like to discuss some things with you. Hopefully, I can get in touch with you and we can work on a project or two, if you can make time for it. email me at : kenyatta_handy@yahoo.com.
Don’t completely agree. I think the world is living in a time warp of sorts since the late 50’s “because” of lack of transparency, especially in the sciences, engineering, etc. Things are run by money instead of creativity. It has ruined our world. I think progress has been severely dampened by trade secrets, copyright, and patents. Credit does not go where credit is due. The past accomplishments of many thinkers have been pillaged by corporations who care nothing except about their bottom line. Now that they are rich (by overcharging and thus stealing from the population), they can afford their high priced lawyers and political payoffs to keep the whole stagnant thing going. They can afford to hire the best minds and keep all their hard work as their property.
Think about it. Should their really be trade secrets? For example why should Kentucky Fried Chicken or Coke be allowed to put their products into millions of kids, and no one except some clueless execurtives and paid scientist have any right to know what it is composed of. If we had truly transparent laws, we would make our society much safer, and lawyers could go after copycats, but we should not restrict the ability to copy or use or modify and develop. The later is just dangerous for our health and progress.
I want to know the best biochemists and scientist have full and complete knowledge of everything that we put into our mouths. I want to know or want the best minds to know that any software designed by Gates and company does not have any malware or spyware to hurt or cripple my computer. I want to know that any young bright mind has complete access how to make a medicines, so he/she has access how to improve upon making new medicines…not have these hidden away in some pharmaceutical companies files…those companies borrowed from all the chemists of bygone eras, and did pay for the R&D, but overcharged also and the executives did not do the work either, the biochemist did. The buck does not just stop with them. A world without transparency is rife for corruption and stagnant for innovation. People should be reimbursed for their efforts, but never through secrecy or lack of transparency…that will just ruin human progress. Maybe we are now all surviving by that corruption, but it will be our end if we continue on that path.