Transparency in Praxis
This post is the second in a series of eight that unpacks the increasing expectation of transparency in business: Why and how to develop authentic, accurate, and thorough communication and reporting on your business purpose, goals, and impact.
Today, every company, large or small, sits squarely amid an expectation of transparency — perhaps even radical transparency — on issues ranging from materiality to data integrity, from diversity to community investment.
Intensifying pressure from employees, consumers, investors, and the media are compounding into the necessity for higher and higher standards of accountability and disclosure among all companies.
Transparency Technologies, LLC, which certifies companies as transparent based on multiple metrics studied for more than a decade, released data this year indicating that 86 percent of US consumers favor corporate transparency. I can only assume that the remaining 14 percent misunderstood the question as clarity is so critical to everyone’s future!
When executed optimally, transparency can be a profit-driver. Those companies that effectively communicate their efforts and impact on meaningful public challenges can expect significant market expansion, according to Harvard Business Review, Ernst and Young, and nearly innumerable other sources.
The most sustainable, ethical, and transparent companies can charge a significant price premium for their purpose-based assets, tangible and intangible, according to NYU Stern Center for Sustainable Business and IRI research, as well as many other sources. In fact, 73 percent of customers are willing to pay more when they know a company cares about their concerns — and is doing something about it.
These companies therefore experience a lot less consumer churn as long as they continue their transparency, given that the vast majority of consumers regularly report they’re likely to switch brands to one associated with a good cause.
In addition, transparently communicating impact magnetizes a business’s reputation and trust. Younger workers — 90+ percent of them — will even take a pay cut to work for one!
In fact, according to McKinsey, “The overwhelming weight of accumulated research finds that companies that pay attention to environmental, social, and governance concerns do not experience a drag on value creation — in fact, quite the opposite.”
Turns out that publicly demonstrating an emphasis on ESG concerns — in other words, ensuring that consumers and investors, especially, understand our ESG goals and impacts — directly relates to higher equity returns — up to more than twice the S&P 500 — as well as “a reduction in downside risk, as evidenced, among other ways, by lower loan and credit default swap spreads and higher credit ratings.”
OK, we’re all sold. But how will anyone know of our performance, profitability, purpose, and impact in these areas, especially those specific to our business? How will our stakeholders be able to judge our relative success, as well as where and how (and why) we still have room to improve?
We’ll tell them — that’s how. Transparently. But how, when, and where?
Transparency reaches into three interconnected realms, all of which we’re going to explore throughout this series:
- Our internal communications, where building a positive, transparent culture requires us to maximize across-the-board creation of, awareness of, and support for, any and all of our purpose-grounded initiatives and progress — and be clear, warts and all, about our relative progress.
Note that here we must endeavor to create a culture where transparency is a two-way street: We must regularly gather and encouragingly interrogate — with total immunity — all our stakeholders to discern their level of understanding, the depth of their concerns, and the extent of their progress and the obstacles they perceive in achieving the collectivized impact we all desire.
If in the process we discover our business culture is one where we for any reason fear disclosing key information to our crew, we’re probably doing something wrong, and could use a Lead With We reboot.
Similarly, if we suspect or discover that members of our team are disinclined to share their honest assessment, their own perspective from the trenches, something is likely amiss with our internal culture, which we’ll have to — together — resolve through dialog and other kinds of collaboration.
2. Our external (consumer- or B2B facing) marketing and advertising. Here, to grossly simplify, no one from our organization should lie, prevaricate, or dissemble (We need to “take the BS out of business”). We tell the truth, the whole truth, and nothing but the truth (within reason, of course) whenever we discuss our business practices, our products or services, our governance, etc., whether internally or externally. We should think of our brand as more in the movement-making business than the Old School marketing business. And we move the masses with authenticity and integrity, not hype and hucksterism.
Therefore we clearly, concisely, and regularly communicate with our consumers about our business’s purpose, goals, and impact, always celebrating them — the members of our brand community — rather than the company itself — and allowing them to co-create and co-own all initiatives. This will work only if everyone fully grasps and embraces the why behind our collectivized purpose and its activations, which they will if they’re included in their origination.
So, if, for example, a big part of our business purpose is to promote animal welfare and pet health, then we might report quarterly or annual donations the business was able to make this year to like minded organizations — including the impact of those dollars as specifically as possible without getting into the weeds. We can communicate the details of employee volunteer efforts or new initiatives; about “heroes” within our community who are putting our products or services to work in impactful, meaningful, or even creative, ways; and so on.
3. Our (official) reporting & accountability, where we publicly report on various Lead With We metrics and outcomes, financial and nonfinancial, that matter to the world. We do this whether we’re required to or not by law or regulation. Again, the vast majority of us are demanding more official accountability, and favoring the federal government mandating more regulations.
We understand by this point that beyond the urgent, emotional argument for a Lead With We revolution — the world’s on fire and business is best equipped to douse the flames — there’s a rational, unassailable bottom-line argument for working on and reporting on these aspects of our progress: profit and purpose are totally inseparable, as Larry Fink called for in 2018.