The Transparent Corporation

The digital revolution is shredding, forever, the curtain that once hid all sorts of information about corporate behavior, operations and performance from public view. Yet few companies are ready to handle the new scrutiny—and this transparency is proving to be increasingly costly and upsetting for companies struggling with new levels of exposure.

In their just-released book The Naked Corporation: How the Age of Transparency Will Revolutionize Business, author Don Tapscott and coauthor David Ticoll assert that to thrive, companies must accept the fact that partners, customers, the government and the general public have unfettered access to more information about them than ever before, and must conduct themselves accordingly; conversely, companies that try to halt the rising flow of information or ignore these forces of transparency do so at their peril.

CIOs, the guardians and designers of information systems inside and outside the enterprise, will play a key role in how companies formulate strategies to deal with the new openness, for better or worse. "In an age when networks put unprecedented amounts of information out there for anyone to see, intended or not, corporations have no choice but to rethink how they build their data streams, and to rethink their values and behaviors," Tapscott told CIO Insight Executive Editor Marcia Stepanek in a recent interview. "If corporations are going to be naked, theyd better be buff!" An edited version of his remarks follows.

The corporation is becoming naked, and its getting uncomfortable for a lot of people. In a world of instant communications, whistle-blowers, inquisitive media and Googling, citizens and communities are routinely putting firms under the microscope as never before.

Theres no more sticking your head in the sand. An old force has been quietly gaining momentum during the last decade; it is now triggering profound changes across the corporate world, with far-reaching implications for almost everyone. This force is transparency.

Transparency means far more than the obligation to disclose basic financial information. Were at the start of a transparency revolution, and information technology may well be the most powerful single force for transparency in our time. Whereas yesterdays dominant broadcast media were about one-way, centrally and corporately controlled, single-message delivery, the multidirectional Internet is the opposite. No one controls its content—except for its users. The same viral marketing that made Napster an overnight success can now pummel an unsuspecting company with sarcasm, in the form of parody Web sites. Increasingly, consumers depend on growing transparency to protect themselves (against price-gouging) and prepare for marketplace combat, while they guard against excessive inroads into their privacy by companies seeking to market to them better.

Visibility and transparency mean that validation of a claim is rarely more than a click away; blind trust is disappearing. In other words, transparency is something that can be done to a corporation as various stakeholders have unprecedented access to do their own legwork, inform others, scrutinize and even self-organize. Companies that are passively transparent are its victims. But transparency is also a force that firms can actively embrace, using candor to build trust and prove their value and values.