Based on a book review by Eli Singer, of The Naked Corporation. Free chapter download here

"In a world of instant communications, whistleblowers, inquisitive media, and Googling, citizens and communities routinely put firms under the microscope.

Photo credit: Marcin Tusinski

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.

The need for a transparency strategy is born out of the massive exposure and risk companies open themselves up to when they conceal activities from the public, or live by poor values."

"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."

Using basic tools available online, interested parties and activists can discover a companys darkest secrets and publish them to the world - instantly. Transparency theory states that because the corporation risks being stripped naked in ways it cannot control, it needs to be buff. Firms that live by good values (video) do not fear exposure.

Unfortunately transparency, ethical business practices, and corporate social responsibility are all such new theories that few know how to effectively apply them."

Eli Singer writes "The web is stripping away the layers of insulation between companies and the public by giving everyday people access to massive amounts of information.

Increasingly companies are finding themselves like the emperor naked and exposed. Don Tapscott, long time tech author (Digital Capital, Growing Up Digital and Paradigm Shift), and co-author David Ticoll (Digital Capital) say in their latest book, The Naked Corporation: How The Age of Transparency will Revolutionize Business, that when a corporation is naked, it is best to be buff."

Some firms and industries still opt for secrecy in our transparent world and they often end up paying a price for it. That is because when there is little to no visibility into how firms are operating (no transparency), there is very little trust built with customers. Low trust stifles innovation and can instill fear. This in turn creates conflict as companies try to stay closed and stakeholders try to break free.

Some stakeholders community activists, nongovernmental organizations (NGOs), and the like have little or no direct power over the firm.

Their main tool is transparency: the ability to learn, inform others, and organize on the basis of what they know. When community stakeholders use information to gain support of others who do have economic power like the firms customers, shareholders, or employees their power multiplies.

One example, referenced repeatedly in the book, is the Linux community. There are so many transparent elements to Linux, from the inspiration behind its conception (an alternative to closed-source software), to the GPL that keeps it open, and the overall integrity of the software and the community that develops it.

Linux's transparent nature is quickly becoming a standard component of the technology industry. In fact, what could be a better endorsement of transparent business practices than IBM shifting its business strategy to embody open values? Big blue has donated millions of dollars of once proprietary code to the open-source community, and hosts massive developer forums that blur the borders between paid developers and the community. This is all done with the objective of making IBM more transparent to its stakeholders.

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The Naked Corporation is a fascinating read filled with the ideals that businesses should aspire towards this century. What makes it most enjoyable to read is that Tapscott and Ticoll ground their concepts with real-world case examples, many of them technology related.

The book is divided up neatly into three sections.

The first, The Transparency Imperative, takes three chapters to thoroughly introduce the concept of transparency, and the structure of open enterprises.

Most interesting is the first chapter (available free here), which identifies and explores independently the drivers behind transparency economics, technology, demographics (the power of the Net Generation), and sociopolitical changes (the rising global civil foundation). This is a rich and inspiring study, and the authors fuse their findings at the end of the chapter, stating that:

As emerging economy firms and citizens become integrated into the global economy, they will increasingly expect and gain the ability to demand visibility into Western firms business practices. Both emerging economy and Western firms will be under increasing pressure to practice what they preach about open trade and level playing fields, as well as to behave responsibly toward people and the environment.

The second section, When Stakeholders Can See, illustrates just how much information employees, partners, customers and communities can discover about a firm. Given that we live in a knowledge economy, companies cannot block information from becoming free. The ultimate exposure of poor business practices is not a question of if anymore, but of when. The whistleblowers at Enron are proof.

Section three, Being Open, teaches companies about the rewards earned by being transparent. Up until this part of the book, transparency was viewed as a defensive strategy. Now transparency is re-introduced as a core source of new value a firm can tap into. Like IBM is doing now, companies can earn massive profits by adopting a more open stance.

In addition to being a great read for managers, I believe this book should be on the reading lists of members of NGOs, activist groups, and socially responsible corporate watchdogs. This is because in outlining the need for businesses to adopt a transparency strategy, Tapscott and Ticoll also create a blueprint for how to expose opaque organizations.

Based on a book review by Eli Singer, of The Naked Corporation. Free chapter download here