The Naked Corporation; How the Age of Transparency Will Revolutionize Business

by Don Tapscott; David Ticoll

• ISBN13: 9780743246507
• ISBN10: 0743246500
• Format: Hardcover
• Copyright: 2003-09-30
• Publisher: Free Press

Summary

If you have to be naked, you had better be buff. We are entering an extraordinary age of transparency, where businesses must for the first time make themselves clearly visible to shareholders, customers, employees, partners, and society. Financial data, employee grievances, internal memos, environmental disasters, product weaknesses, international protests, scandals and policies, good news and bad; all can be seen by anyone who knows where to look. Welcome to the world of the naked corporation. Transparency is revolutionizing every aspect of our economy and its industries and forcing firms to rethink their fundamental values.Don Tapscott, bestselling author and one of the most sought after strategists and speakers in the business world, is famous for seeing into the future and pointing out both its forest and its trees. David Ticoll, visionary researcher, columnist, and consultant, has identified countless breakthrough trends at the intersection of technology and business strategy. These two longtime collaborators now offer a brilliant guide to the new age of openness. InThe Naked Corporation,they explain how the new transparency has caused a power shift toward customers, employees, shareholders, and other stakeholders; how and where information has exploded; and how corporations across many industries have seized on transparency not as a challenge but as an opportunity.Drawing on such examples as Chiquita's total turnaround on matters of ethics, to Shell Oil's reinvention of itself as an environmentally focused business, to Johnson & Johnson's longstanding and carefully nurtured reputation as a company worthy of trust -- as well as little-known examples from pharmaceuticals, insurance, high technology, and financial services -- Tapscott and Ticoll offer invaluable advice on how to lead the new age, rather than simply react to it.The Naked Corporationis a book for managers, employees, investors, customers, and anyone who cares about the future of the corporation and society. A new age is upon us, and you can either work with it and thrive, or fight it and die.

Author Biography

Don Tapscott is recognized as one of the leading business thinkers of our time. He authored several of the bestselling books of the last decade, including Paradigm Shift, The Digital Economy, and Growing Up Digital.

Table of Contents

Acknowledgments

Introduction

The Transparency Imperative

The Naked Corporation

Transparency Versus Opacity: The Battle

The Open Enterprise

When Stakeholders Can See

Whistleblowers and Other Employees

Transparency Among Business Partners

Customers in a Transparent World

Communities

The Owners of the Firm

Being Open

Harnessing the Power

Breaching the Crisis of Leadership

Notes

Index

Table of Contents provided by Publisher. All Rights Reserved.

Excerpts

Introduction

An old force with new power is rising in business, one that has far-reaching implications for most everyone. Nascent for half a century, this force has quietly gained momentum through the last decade; it is now triggering profound changes across the corporate world. Firms that embrace this force and harness its power will thrive. Those which ignore or oppose it will suffer.

The force istransparency.This is far more than the obligation to disclose basic financial information. People and institutions that interact with firms are gaining unprecedented access to all sorts of information about corporate behavior, operations, and performance. Armed with new tools to find information about matters that affect their interests, stakeholders now scrutinize the firm as never before, inform others, and organize collective responses. The corporation is becoming naked.

Customers can evaluate the worth of products and services at levels not possible before. Employees share formerly secret information about corporate strategy, management, and challenges. To collaborate effectively, companies and their business partners have no choice but to share intimate knowledge with one another. Powerful institutional investors today own or manage most wealth, and they are developing x-ray vision. Finally, in a world of instant communications, whistleblowers, inquisitive media, and googling, citizens and communities routinely put firms under the microscope.

Corporations have no choice but to rethink their values and behaviors -- for the better. If you're going to be naked, you'd better be buff!

This conclusion may seem at odds with current thinking about corporate values and behavior. At the end of 2003 the corporate world was still weathering a crisis of trust on a scale unseen since the Wall Street crash of 1929. Many say this latest crisis proves that companies are worse than ever, and irredeemably so. For these critics, the corporate corpus isn't buff, it's obese.

We believe the opposite is true. To build trusting relationships and succeed in a transparent economy, growing numbers of firms in all parts of the globe now behave more responsibly than ever. Disgraced firms represent the old model -- a dying breed. Business integrity is on the rise, not just for legal or purely ethical reasons but because it makes economic sense. Firms that exhibit ethical values, openness, and candor have discovered that they can better compete and profit. Some figured this out recently, while others have understood it for generations. Today's winners increasingly undress for success.

Opacity is still alive and kicking; in some situations it remains desirable and necessary. Trade secrets and personal data, for example, are properly kept confidential. Sometimes openness is expensive. But more often, opacity only masks deeper problems. Armies of corporate lawyers fight openness as part of a good day's work. Old cultures -- the insular model of yesterday's firm -- die hard. Nevertheless, the technological, economic, and sociopolitical drivers of an open business world will prevail.

Corporations that are open perform better. Transparency is a new form of power, which pays off when harnessed. Rather than to be feared, transparency is becoming central to business success. Rather than to be unwillingly stripped, smart firms are choosing to be open. Over time, what we call "open enterprises" -- firms that operate with candor, integrity, and engagement -- are most likely to survive and thrive.

This is good news for all of us -- customers, employees, partners, shareholders, and citizens -- no matter what stakeholder hats we wear, because corporations have become so central to our lives and communities.

Most of us are shareholders, whether directly or through pension and mutual funds. Our retirements hinge on corporate success.

Because they own shares in the companies they work for, workers now think twice about going on strike. Societies have willingly made way for corporations and capitalists to innovate and create wealth around the world; yet we worry when firms become untamed global powerhouses, and we wonder why economic divides have worsened. We love brands and new products, but we are uneasy about the companies behind them. Firms mine vast amounts of information about us to build one-to-one relationships, but we fear the loss of our privacy. We seek out low prices, but despair when our jobs move offshore to low-cost geographies. We prize our communities and Main Street, yet flock to Wal-Mart.

Business has become the most controversial institution in society. Business leaders, who just yesterday were revered, are today mocked and reviled. There is widespread outrage regarding the eight- and nine-figure incomes of executives who preside over the destruction of shareholder wealth. The integrity of the accounting industry -- the sector responsible for ensuring the financial honesty of corporations -- has been undermined. For all demographic groups, public trust in CEOs is now only slightly higher than that of used car dealers. Young people are particularly uneasy about corporate behavior.1

Stakeholders have historically unprecedented opportunities to focus these anxieties and scrutinize the corporate world. They have new power to influence performance or even cripple companies almost overnight. What will they do with this new influence? And how should firms operate in the face of it?

We have been investigating the impacts of information technologies and new media on business and society since the early 1980s. Transparency is one key piece of this puzzle, yet there are virtually no books or articles about it. The few authors who have addressed transparency tend to treat it merely as the disclosure of financial information to shareholders or the prevention of bribery.

With this book we have attempted to develop a theory, body of knowledge, and set of leadership practices for transparency. We explain how and why transparency has moved to center stage, including its bumpy rise through the history of industrial capitalism. You will meet new concepts like forced transparency, active transparency, reverse transparency, stakeholder webs, transparency fatigue, values dissonance, the transparency divide, and what we call "the new business integrity." You will read how opaque firms that lacked integrity were devastated and, in some cases, reborn. You will also learn how open enterprises thrive and succeed through candor and ethical core values. Among our conclusions are:

• Transparency and corporate values enhance market value: there is a competitive business case for strategies that focus on stakeholders and sustainability. "Good" firms that optimize the needs of all stakeholders are more likely to be good for investors.

• Transparency has an organizational form which we call the stakeholder web": a network of stakeholders who scrutinize a firm, whether it knows it or not. Oblivious to their stakeholder webs, some firms have been devastated or destroyed.

• Employees of an open enterprise have greater trust in one another and their employer -- resulting in lower costs, improved quality, better innovation, and loyalty.

• Transparency also brings a power shift to employees who share more information than ever before.

• Transparency is critical to business partnerships -- lowering transaction costs between firms and enabling collaborative commerce. The invisible hand of the market is changing the way firms orchestrate capabilities to create differentiated products and services.

• Another power shift -- from corporations to customers -- has emerged from price wars and "accountability" wars. Corporate values are now central to many brands.

• Corporations that align their values with those of the communities they touch, and behave accordingly, can develop sustainable business models.

The best firms have clear leadership practices that others can adopt. They understand that investments in good governance and transparency deliver significant payoffs: engaged relationships, better quality and cost management, more innovation, and improved overall business performance. They build transparency and integrity into their business strategy, products and services, brand and reputation, technology plans, and corporate character.

We hope this book will help managers who are striving to build effective firms in the new business environment. We also hope the book helps employees, customers, partners, neighbors, and shareholders understand the changing role of the firm in society, how to hold corporations accountable for the benefit of everyone, and how to work and live while wearing many hats. For additional cases, information, readings, and discussion, join us at www.nakedcorporation.com.

Copyright © 2003 by Don Tapscott and David Ticoll

---

Excerpted from The Naked Corporation: How the Age of Transparency Will Revolutionize Business by Don Tapscott, David Ticoll
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.