/ business

Trapped by transparency or trapped by culture?

Transparency has become one of the most popular demands in the recent years and for good reasons. Not so far ago, we went through one of the biggest global financial crisis, caused by large investment groups and credit rating firms hiding the real risk of financial products to their clients. Another example closer in time, just a few months before this article being written the ICIJ has revealed the Panama Papers scandal, exposing hundreds of world leaders, celebrities and businessmen's dirty secrets.

Despite society's urge for transparency, I believe there isn't a clear understanding of what we mean and expect from it, specially when we discuss transparency outside of the public sphere: things turn more complex when we try to apply the same principles to the management of private corporations. Although some essays have been written on management theory regarding transparency on the organization, there is still a vague understanding of what exactly it implies and how it can be put into practice.
When neither transparency, nor the conditions required for applying it, are properly understood, the expected benefits of increased productivity and more commitment from employees are not met. An interesting example of this misunderstanding is an article published a couple of years ago on the Harvard Business Review called The Transparency Trap.

The first thing that caught my attention on this article was the strong connection established between transparency and the office space. I do agree that to a certain level, a company's culture and the importance it gives to transparency can be reflected on its physical layout[1]. However, I cannot think of any reason why a company whose employees work remotely on different locations might not be several times more transparent than another company whose employees work in the same open space. My impressions from the first example given on transparency boundaries around teams, are that the author believes transparency is reflected on the fact that employees' everyday activities are exposed to a direct scrutiny of others. The experiments around changing the office space mentioned in this article were done in very specific organizations (e.g. a large Chinese phone manufacturer) and their conclusions just reinforce our knowledge on the repressive power enforced by Bentham's Panopticon design[2].

What I found more disturbing from this article is that the problems brought by the increase of transparency on an organization are all examples of employees' work being affected by privacy lost against their peers or bosses. There isn't a single example of managers, leaders or company owners being affected the same way by transparency. Are all the companies under study run without bosses? Or perhaps, in these organizations, transparency just means increasing visibility in order to improve how information flows from bottom to top, so that management can achieve greater control in the reverse direction, top to bottom.

In my opinion the article is not studying the effects of transparency on organizations, it rather studies different monitor and control techniques put in place by companies with a traditional mindset. The confusion brought by the article led us to the wrong assumption that there is a conflict between transparency vs freedom and autonomy.

So what are we talking when we talk about transparency in an organization?

Principles and values

For a while, I struggled to grasp the difference between a principle and a value. Very often these two words are used in the place of each other and their difference was quite fuzzy to me. After doing a bit of research I decided to settle down on the following distinction:
A principle is a logical proposition to which we arrive after following a rational process. Therefore principles can be refuted. If someone else disputes me a principle using rational arguments that turn out to be better than mines, then I will be willing to change my principle for another.

On the other hand a value is a belief. There is no logical reasoning behind my values and even I can undertake a big effort to come up with a rational explanation for them[3], it would be very hard for someone else to convince me to change my values regardless of how many logical arguments are presented to me. Values can certainly change over time, however they usually change very slowly —except in the case of a great tragedy— and trying to change them involves a process of diving deep into our own identity as human beings or organizations.

We could say that principles are the foundations of a theory, school of thought or philosophical paradigm. While the values build an ethical system which is the tectonic plate of any culture.

Transparency principle

Since the Taylorism management school has proved its short limits, management theorists have been looking for ways of improving organizations productivity along with increasing innovation. Many of them reached to the conclusion that the traditional pyramidal organization, where decisions are solely being made at the top and the rest of the organization follows orders, left a huge potential for innovation out of the game. This led to the new concept of empowerment: distributing control and decision making from the top levels to the whole organization.

Information is crucial in order to make rational decisions instead of blindfolded ones. Then if decisions are going to be made all over the organization, information should flow transparently through it. The level of transparency achieved by an organization can be assessed by the visibility employees have on information that traditional organizations keep secret. The higher the level of transparency the bigger the capability the organization will have to be self-organized and foster innovation on every member.

For a truly self-organizing organization to exist there must be a full disclosure information system in place.

Values

The transparency principle sounds very good in theory, but taking it into practice could be one of the biggest challenges an organization might take. The reason is that there are some preconditions for it to work well. In my experience this principle cannot be applied without a culture based in the following three values: trust, honesty and respect.

Once the transparency principle is in place, it will generate a positive reinforcing loop that will result in a stronger culture. However, transparency does not create trust by itself. These values must be already present or transparency will feel like a trap and it will create a demand for boundaries and private spaces to protect employees from the overexposure and the bigger control exercised by their managers.

Creativity

The article elaborates an interesting controversy stating that creativity and innovation is hurt by transparency. It first presents a somehow twisted example of artists and athletes needing to rehearse in private in order to not be inhibited by others, assuming rehearsals require creativity while in public they perform repetitive tasks. Quite far from reality for anyone who has played an instrument or has practiced a sport, knowing that great artists and athletes do spend a big amount of time practicing repetitive tasks during rehearsals in order to improve a specific skill, and at the same time they are very good at improvising when performing live[4].

Creativity and innovation require a big amount of experimentation. When people trying to innovate run experiments and feel they are under the spotlight and cannot perform well, we should look deep into the organization to find out the root cause. Have they fallen into the transparency trap? Or are they trapped in a culture where failure is not accepted and where new discoveries cannot be shared for fear of being harshly criticized or ideas being stolen? In a culture where there is trust and respect, someone stepping in to ask a question to a team who is working on an innovation, is not viewed as a threat, rather like an opportunity to get feedback and engage more people on the new idea.

Final words

Our democratic systems are going through a rough moment. Corrupted politicians; wicked lobbyist; large corporations investing millions of dollars in candidates and expecting their payback when they are elected; governments which seem to work for the interests of the richest 1% rather than for the majority of the people. How do we think these problems should be fixed? Are we going to ask to put limits and boundaries to democracy and get some of that old good tyranny back? I hope not! Democracy needs to be fixed from the inside. We need more democracy, not less. The same way fake democracy needs to be replaced by real one, fake and shallow transparency can be fixed not with boundaries, rather by going through a deep cultural transformation of the organization's principles and values.


  1. For example you can tell a lot from a company's culture whose employees work in small cubicles and managers sit in big offices with nice views on the top floors. ↩︎

  2. Bentham's Panopticon design is studied in detail by french philosopher Michel Foucault on his book 'Discipline and Punish'. ↩︎

  3. Such as Descartes' Ontological Argument ↩︎

  4. Even not all artists improvise on stage, their ability to improvise is crucial to their art. Even more important in sports, where an individual or team has to play against an opponent. How boring sports would be if athletes wouldn't have the talent to be creative and to innovate on the field and games would just be a playback of their rehearsals. ↩︎