Transparency and Trust
April 16, 2009
My friend and fellow blogger Critt Jarvis recently posted a blog entitled “Transparency is key to building high trust relationships.” That post directed me to another interesting article on transparency that was cited by Critt. That article was written by Esther Dyson, a well-known businesswoman, journalist, entrepreneur, and philanthropist [“Can Transparency Be a Business Model?,” Advertising Age, 30 March 2009]. When I discuss transparency, it’s most often in connection with Development-in-a-Box™. Often I have to convince government and business leaders that sustainable economic growth relies on making their policies and processes more transparent. People want to deal with those they can trust — and transparency fosters trust. That basically is the message with which Dyson begins her article. She asserts that in this day and age attempts to keep secrets or to cover up challenges never work. There are too many sources of information available; too many eyes watching. “You now need to disclose not just what’s in your products,” she writes, “but how you make them and treat the people you employ or subcontract.”
Dyson points out that business people often face a dilemma between being open with the public about challenges and following legal advisors who tell them to say nothing. She believes, however, the days of saying nothing are over. “The conversation will happen,” she asserts, “with you or without you.” That message, Dyson writes, was going to be the focus of her article. When she was about to put pen to paper (or fingers to keyboard), she realized that the intended message had been delivered before. As a result, she asked another question: “Can transparency be a business model? Not, can it be good business, but can a business dedicated to transparency prosper?” I found the question intriguing because my company, Enterra Solutions, provides products that help organizations become more transparent, effective, and efficient. But as she wrote, Dyson had a different kind of business model in mind. In fact, she had a very specific business in mind.
“It’s derived from a promising not-for-profit social project fondly called ‘Barcode Wikipedia’ and was formulated at (where else?) Social Innovation Camp last April. The ringleader, Richard Pope, plans to build it out at Consumer Focus Labs, a website that’s part of a U.K. government consumer-support organization. The idea is pretty simple: Develop a website full of product content so that anyone can go into a store — or his neighbor’s house, for that matter — scan an item’s barcode, send the scan to Barcode Wikipedia, and get back a full account of the product. The data would not be just the manufacturer’s ingredients, warranty policy, corporate statements and the like (though that would be interesting in itself), but also third-party ratings for carbon content, labor policies, nutritional quality, social correctness or even stylishness. All points of view are welcome; the user can filter what she’s interested in. It would be much like Wikipedia, but (for now) focused on tangible products and with more structured data.”
In essence, what Barcode Wikipedia is trying to do is get companies to raise their standards and enhance public trust. Development-in-a-Box™ is based on a similar philosophy. Enterra Solutions tries to increase trust in the business environment and in the products of developing nations through the use of best practices and accepted international standards. Barcode Wikipedia is trying to encourage a similar voluntary raising of standards. It just might work. When the World Bank first published its Doing Business Index in 2003, it was purely informational. Nations had no obligation to do anything as result of the report — but they did. In the years since the Index was first published, nations have made thousands of reforms in efforts to improve their rating and move up the chart. Barcode Wikipedia, if successful, could achieve similar results for individual companies and products. Dyson says she “loves the idea.” However, she says she’s skeptical of government initiatives and wonders if Barcode Wikipedia has within it a business model. “Let’s call it, with a wink,” she writes, “Barcode Confidential: the service that tells you the secrets behind the barcode.”
Her interest in a business model is sincere, but so are her concerns. After all, she notes, Wikipedia “is free and unsullied by any commercial interests.” The difference she muses is that Wikipedia provides information about “broad topics and dead people” and Barcode Wikipedia (or Confidential) would provide information about companies and products. Affected companies have a real stake in ensuring that accurate information is available. “A product-focused service could charge the vendors for a place to give their side of the story and use that money to pay for the costs of the business, plus a return to investors.” The public, of course, would need some assurances that the information is factual and not simply promotional. The first time that published information was proven inaccurate trust in the site would take a nosedive. As a result, there would be some built-in tension between the need to generate income and the requirement to expose the truth. After all, the site would be selling transparency and trust. Would it work? Dyson writes:
“In the old days, this probably wouldn’t have worked. Why should a producer pay to get beaten up in public? The answer is simple. One, you’re going to get beaten up anyway; you’re paying for the privilege of replying. And two, isn’t there a company that really believes in healthy criticism to help it improve? I’m enough of an idealist to believe that there are a few — and that others can be provoked into pretending they believe.”
I started Enterra Solutions in the shadows of 9/11 and the Enron fiasco. Out of those crises came new regulations (such as, the USA Patriot Act and Sarbanes-Oxley) that required an inordinate amount of time and effort to ensure compliance. I wanted to help organizations find a way to deal with increased calls for transparency by developing automated processes that would provide transparency, efficiency, and auditability. Automation would help reduce the temptation to cook the books and increase the transparency and trust of both the regulators and the public. Ethical companies welcome greater transparency. That is the message that Dyson thinks the future founder of her made-up company (Barcode Confidential) should sell.
“Transparency is a mechanism for companies to get better and better. Otherwise, you have to think that marketing is really just a subtle form of deceit, designed to cover up the truth rather than to reveal what distinguishes one product from another in a world where there may be no single best, but a variety of consumer preferences and trade-offs between quality, however defined, and cost, size, performance and other parameters. In a perfect world, consumers will know what they are getting and want precisely that, given the possible choices. Whether they are true believers or just politically correct, smart companies are already discovering that they have to join existing conversations rather than convene them; they need to show up (and pay to show up) where they are being criticized rather than hide. Barcode Confidential is the place where they can do so — telling the world about how their products are made and responding to critics.”
One only has to recall some of the product safety scares of the past couple of years (toys and baby formula in China, food and medicine scares in the U.S., etc.) to realize that ethical companies have a real need for the kind of service that Dyson is recommending. Like the World Bank’s Doing Business Index, Dyson recommends that Barcode Confidential deal with the tension between truth and promotion in an open and fair-minded way.
“To handle that, Barcode Confidential should start with a set of products and a set of ratings from some respected third parties: consumer reports, various activist groups, manufacturers’ associations (yes, let’s hear from everyone!), carbon-counting services, etc. … Over time, with effective marketing and management, Barcode Confidential could become a valuable resource both to consumers and producers.”
When I discuss Development-in-a-Box™ with government and business leaders, I obviously try to sell them on the importance of using best practices and recognized standards. I do so because it is in their own best interests to do the right thing for the right reason. This is not idealism but pragmatism. The business world is built on trust. The current financial crisis was generated because that trust was broken by unscrupulous individuals and companies. The effects are apparent — when trust disappears commerce suffers. Transparency and trust aren’t about implementing some sort of “big brother is watching” framework; rather, transparency and trust are about fostering an environment in which businesses can grow and consumers can have greater (and safer) choices.