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Transparency creates an information blizzard not an excuse, nor an absolution

by Mark P. McDonald  |  July 23, 2010  |  3 Comments

Transparency is a hot issue in halls of legislators and executive offices and something that everyone has to do.  Increasing transparency is part of CEO strategies and investor commitments.  Transparency is the solution to regulatory challenges.  Transparency is something demanded by consumers ranging from support for free trade through to the ingredients in our food.

Transparency is driving technology investments in business intelligence, reporting and data warehouses making it a significant drive of IT spending.  Corporate performance management (CPM) follows closely as the ‘killer app’ for business intelligence and these investments.

The result is a blizzard of information blowing in the name of greater transparency.    Running the snowmaking machine requires investments in finance and communications.  However, the flurry of information coming out via transparency is evolving social views on corporate behavior and ethics.  Here is an observation:

“Corporate responsibility decreases as the level of corporate transparency increases”

I first came across this idea listening to a program broadcast by the Canadian Broadcast Corporation who posited this question on Voices one of their news and opinion programs.  The observation seems to negate the ideas behind transparency that was intended to raise corporate responsibility by increasing information flows as everyone knows more.

How is this possible?  Companies use transparency to disclose information and shift a portion of their responsibility to customers and the market.  This is based on the idea of Caveat Emptor or ‘buyer beware’.  Note: I am not a lawyer and this is not legal advice, just some observations

The more I disclose about my products, ingredients, their proper usage etc, the more I share liability and negligence responsibilities with customers and users.  The harder it becomes to sue an organization if it can prove that it notified of the risks.  You see this in the ‘small print’ in the product manual or the ‘fast talk’ at the end of a TV commercial for pharmaceuticals.

Transparency enables companies to hide in plain sight as the sheer volume of information overwhelms people’s ability to study and fully understand all of the implications of using a product or service.  You see this when you check the “Accept Terms and Conditions’ when downloading software.  You agree to limit the company’s liability among other conditions when you click yes.  The same is happening with the more legislation that runs more than 1,000 pages that neither legislators nor the citizens read before voting.

Transparency exists to help everyone make better decisions but that also assumes that people will take the time to incorporate that information into their decisions and will make rational decisions.  Studies and brain science tells us that people are not wholly rational actors (see Predictably Irrational) so people’s response to transparency is not necessarily fully rational.

So, while transparency is good, we all have to recognize that it’s not universally or even innately good.  Some considerations for living in a transparent world include:

  • Recognize the difference between transparency and disclosure.  Disclosure involves telling you things required by law in ways that may be technically accurate but contextually ambiguous.  Think of food labeling, automobile history, safety information etc.
  • Know the bias in the information.  All information is biased, because without bias it has no context and therefore means less.  Know the author, their intent, their goals, the financial aspects of the information and you can understand and use transparency better.
  • Question what you do not see as often the pieces missing tell you more than the blizzard of information people are providing.  When companies, individuals or the media hammer on a single point, or single issue – look even harder for what they do not want to talk about or what they want to keep away from your attention.  This is the other side of the ‘protest too much’ of transparency.
  • Ask, ‘what am I supposed to do with this information’ in order gain greater insight into its value, motivation and bias.  Simply dumping data without an intended or implied purpose is a garbage out strategy.

Everyone wants greater transparency, the want to see what is going on and for good reason.  Transparency provides companies, products and services with a degree of ‘trust’ but that trust comes at a price.  Transparency has not, nor was it ever intended to pre-empt people from making poor decisions.  People do that using information and not assuming transparency creates altruism.

Additional Resources

Category: leadership  personal-observation  strategic-planning  strategy  

Tags: business-management  information  management  personal-musing  

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program.

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