One of my first jobs was working for a Dutchman who refused to put prices on any of his products. He would work out the price when someone entered the warehouse or sent him a fax. His principle was that people should pay according to their need – the greater the need, the greater the price. One of his senior managers called it the “rip off factor”. Unfortunately, customers did not warm to a business built on subterfuge and Michel had to learn to adjust his ways.
In the social media era, trust and transparency are becoming more and more important for businesses to perform better inside and outside the office. A bad tweet or Facebook post can kill sales faster than a clever way of extracting more cash out of the poor customer (except possibly in the Australian banking or supermarket sector).
The digital transformation of communication in the past ten years has created a new way of doing business based on the foundations of trust and transparency. Whilst trust has always been important in business, transparency is now critical given how easy it is for people to “find things out” and spread the word.
At Whole Foods Market, all employees know the details of the company’s financial performance, they know how their team is performing in relation to other teams, and they have control over what products to offer, what products to bin, and what the marketing message should be. For a new employee to continue beyond the four week trial period, they must get the vote of at least two-thirds of their peers.
John Mackay, the Whole Foods Market CEO is a proponent of something he calls conscious capitalism. A key tenet of this philosophy is that a focus on maximising shareholder value and profits is a cancer which ultimately puts the business at risk of being destroyed due to a singular focus on the shareholder as the most important stakeholder. For Mackay, a business is not a machine but part of a complex, interdependent, and evolving system with multiple constituencies.
Mackay claims, “The beauty, in my opinion, of capitalism is that it has a harmony of interests. All these stakeholders are important. It is important that the owners and workers cooperate to provide value for the customer. That’s what all business is about, and I’d say that’s a beautiful thing.”
Sometimes transparency is chaotic but delivers results anyway. Automattic, the company behind the fabulous WordPress have a completely transparent system of communication through a system of, you guessed it, modified WordPress theme called P2. Everything is communicated on the P2. In an organisation where most of the workforce works from home, the cafe, or the beach a transparent system for communication is the difference between success and failure. Matt Mullenweg, the founder of Automattic writes that the P2 “completely transformed how Automattic works internally”.
Scott Berkun spent a year working at Automattic and has written about his experience in “The Year Without Pants: Wordpress.com and the future of work“. Berkun discovers that Automattic’s strong values of transparency, meritocracy, and longevity have created a culture where the meaning has been out back into work. No more cubicles, no more side conversations near the water cooler. Work can be passionate, fun, and rich with meaning.
Whether you agree with radical transparency and managed chaos as a viable growth strategy, Automattic’s achievements are pretty impressive. A new blog is published on WordPress.com every 2 seconds and the network of blogs attracts 400 million visitors a month. Not bad for a business that breaks all the traditional rules of management.
Generally consumers need to trust this they do business with. They trust them with their credit information, their health, their financial security, and their personal information. The Internet makes trust even more critical. It’s not an accident that Symantec’s strap line includes the phrase “the last word in online trust”. When you’re selling security products to protect payment and contact information, trust is pretty important.
Businesses today not only need to be trustable, they need to be transparent. Without transparency, trust evaporates and along with it customers.
Customers want to know:
How long will that delivery take? Is it really in stock? What is the minimum contract period? Are there any cancellation fees? What aren’t you telling me? What is your corporate strategy? Do children make this product? Will it catch on fire?
With over 84% of consumers trusting the opinion of a friend or family member over any other form of advertising the impact of getting it wrong can be very bad. Vodafone lost almost one million customers in over a year because they lost the trust of their customers. Revenue declined 15.7% at the same time costing the owners of Vodafone Australia hundreds of millions of dollars.
The risks and rewards are huge.
Image credit: http://www.flickr.com/photos/chesh2000