Transparency & Trust are Blood Brothers

Photo Provided By Max Harlynking

This post is the third 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.

Starbucks’ former environmental impact director, Jim Hanna (now at Microsoft) coined the ingenious term “pre-competitive trust” (PCT). Totally necessary when Starbucks had to shut down all 8,000 of its stores for racial sensitivity training in 2018.

Or consider the case of Toyota. At the time of its faulty Prius accelerator crisis and several simultaneous brake recalls — life-and-death problems — Toyota had long demonstrated strong PCT, its standing commitment to safety. It had built up enough social capital reserves that some Prius drivers actually came to the brand’s defense.

Toyota used the opportunity — especially being forced into the kind of “hyper-transparency” Starbucks would later experience — to reassess and redouble its commitments and investments, ask its consumers for more help, find new partners, and launch new initiatives so that it eventually wound up stronger because of confronting the problems head-on with relative humility, honesty, and proactivity.

Did it ever have a choice? We can’t hide. We shouldn’t. There’s no need to anymore. Transparency and trust are navel-tied.

Transparent Lead With We brands, even when they humbly report on their own demerits, build up social capital for a rainy day, or for when the market is tough — even during recessions. Such capital is not unlimited, however.

Everlane, the direct-to-consumer retail darling that actually trademarked the term “radical transparency” came under fire in 2020, accused of hiding behind the Covid-19 pandemic to engage in aggressive union-busting.

Though Everlane had built a firm reputation on transparency and ethics — it gets most things right — an attack tweet from Bernie Sanders called into question the company’s treatment of its employees. Critics thereafter accused Everlane of being a “serial offender when it comes to greenwashing in the fashion industry.” Everlane has redoubled its efforts in the face of scrutiny now leveled at the business world at large.

In my prior series on trust, I advised that business success is entirely dependent on trust, which perforce, always arises out of transparency. This is truer every day as the public and the media gain unprecedented access to data and doings.

Consistent, thorough, and above all, honest communication (internally and externally) creates a legacy of trust. We build, as the maxim goes, a reputation that will withstand scrutiny when we’re not in earshot of what people are saying.

Though “the truth” in business is changeable, its range is still subject to commonsense ethics. There’s nothing wrong with wanting to — needing to — make money. The simplest question in terms of transparency is: But at what cost?

What’s the reason we’re communicating — or not communicating — this aspect of our business to this audience through this lens? To what end are we telling this particular story — and are we glossing over the bad bits? Is it a strict PR exercise — because there’s nothing necessarily wrong with that; it has its place — or an exercise in authenticity?

Can our stakeholders tell the difference between these two approaches? Why or why not?

Is our story coming from on-high, or have we nurtured a culture in which we can co-create it with our employees, partners, and other members of our brand community?

In this story we’re telling, to what extent are we pretending? Defending? Obscuring? Or are we genuinely sharing? Interacting? Seeking understanding and collaboration?

Anyone who thinks “fake it till you make it” is still the best route to a company’s meteoric rise has clearly missed out on the Theranos and uBiome sagas. Scamming is never the secret to success.

We should instead think of all the brands vying for consumer attention in the same way we’d consider all the prospective matches on a dating app … how do we get “customers” to swipe right on us and stay committed? The short answer: transparency, integrity, and authenticity in the way we present ourselves.

So, along with meaningful apologies and reforms after inevitable missteps, longstanding transparency is how VW and Toyota survive scandals — and WorldCom and Enron do not. WeWork might well represent a curious middle ground.

If, like many in business, we find ourselves cynical about this premium on “truth” — it’s naïve at best — maybe a good enough place to begin our evolution toward transparency is simply considering the cost of exposure in terms of employee trust, brand reputation, investor confidence, consumer goodwill, and more, should we get caught in some wholly unnecessary deceit.

We could lose a lot more than all that.

Consider the case of BP, whose Deepwater Horizon oil rig triggered the worst environmental disaster in US history more than 10 years ago. BP paid through the corporate nose for its careless culture of cost-cutting, risk-taking, and malign neglect of safety protocols that led to the Gulf Oil Spill: It bled $60+ billion in criminal and civil penalties and natural resource cleanup costs.

The argument is that had BP been compelled toward more transparency as companies are — at least more so — today, perhaps it might have righted its reckless ways before the mega-disaster its ongoing concealment caused, affecting innumerable lives of multiple species including humans, likely for decades.

Ultimately, BP has to continually step up in significant ways to convince a skeptical and disgusted public that it has reformed and will look behind its profit margins: It admits it’s not perfect yet, preferring to call itself a “greening” (i.e., not yet green) company.

Or let’s look at the account fraud scandal at Wells Fargo, for which the community bank agreed to pay US prosecutors $3 billion to settle criminal charges and a civil action for mistreatment of customers. The once-trusted brand suffered incalculable damages to its credibility. It seems to be working hard now from the inside, out — with some notable backslides — to rebuild trust.

Can we afford to hope that such perfectly-predictable-from-the-inside disasters are less likely to occur in today’s culture of increased transparency?

Can we go further in pressuring company leaders to do the right thing? Is it still prudent to tie remuneration to traditional metrics such as closing deals and opening new accounts? Isn’t it win-win-win when we consider reforming compensation — starting with executive compensation — by tying it instead to the attainment of clear, transparent, and publicized impact goals and results hat matter not only to the balance sheet, but also to balancing the needs of people and our planet?

Such needs would be less sales-driven and more purpose-driven; less shareholder-centric and more stakeholder-centric; less “Me” and more We.

Before suspending its annual CEO 100 Rankings in 2020, Harvard had certainly begun to reflect such a shift. In compiling its prestigious annual list of top world chief execs, it had over the prior seven years or so included both company Sustainalytics and CSR metrics. A subtle evolution? Hardly. It means the industry will absolutely judge our “success” by those measures as well as the traditional ones.

Even it’s discontinuation of the list — rather than perpetuate the cycle of celebrating mainly White male leaders, says Harvard — is an act of radical transparency.

Because diversity and those other measures are at play at the other end of the transparency spectrum, where brands such as VF, Tesla, HP, Crowdstrike, Natura & Co, Lemonade, Starbucks, Beyond Meat, and many others are far exceeding today’s expectations — and leading their industries through a major transformation in organizational transparency.

These companies, with an average market cap of $135 billion, enjoy 94 percent brand loyalty, according to Transparency Technologies, LLC (TT). The organization ranks every publicly traded company in the world on six key metrics studied over a decade. It notes that the most transparent companies are publicly communicating their commingling of profit and purpose — and reaping rewards by elevating their brands far above competitors in the eyes of employees, customers, consumers, investors, the media, and Wall Street.

We can all, no matter how small our business is in contrast to the industry giants ranked by TT, learn from their methods of transparency. Publicly declare short- and long-term commitments. Share our plans, priorities, and resources for addressing internal issues and external impact.

Communicate how? Brands need to learn how to talk in straight lines instead of angles. Keep the evolution of the current state and the aspirations real, raw, and forward-thinking by candidly appreciating the nuances, challenges, and useful tension points implicit in the process.

Transparency is a function of where we start and stop our impact storytelling.

Take, for example, our diversity, equity, and inclusion. If the current state of our DE&I isn’t ideal — and it’s almost certainly not judging by prevailing practices — let’s call that out, holding our own company’s feet to the fire as Harvard has done — and by extension keeping both our industry and the business world at large accountable.

We can and should include these “warts and all” in our public storytelling. Be like Citi: “They are not shying away from difficult and uncomfortable conversations, and when they do fall short, they strive not to sweep their failings under the carpet.”

To legitimately Lead here means do something — and tell everyone what you’re doing. Let’s not bury our heads in the sand. The sand is burning, and we’re apt to lose that head. Lets undertake an internal audit as to our complicity — overt or covert, conscious or unconscious, explicit or implicit — on the issue. Honestly examine to what degree our current mindset and practices could be part of structural racism that otherwise appears to be not our problem.

In this way we expand outward from the “Me” to the first level of We. This kind of leadership audit might include questions like, “What is the level of diversity, inclusion, and equity among our board, employees, supply chain partners, and customers? What are our hiring criteria? How accountable (and transparent) are our promotion, incentive, and bonus systems?” Do the analysis. Look hard and look deep.

Face the real facts on the ground with courage and a willingness to think outside our assumptions and expectations — even, preferably, outside our limited perspective. Maybe we’re variously privileged or otherwise advantaged? Unconscious biases? All the while, let’s use our values — our purpose, including public acknowledgement of our short-fallings — as a touchstone for the debriefing.

If our purpose doesn’t include the health, safety, equality — in this case the very lives — of a significant cohort of society, maybe let’s re-evaluate those values. As leaders, we must take a stand here. Remember — neutrality and silence belie a perilous point of view. It’s up to us to set the tone and set the specific agenda for our response, especially as we’re going to communicate it to the public.

If we’re questioning our standards of conventional “sustainability,” we might ask: Given limited resources in the world, are our processes making things worse — or better? How effectively are sustainability strategies integrated across our entire business? If one or more aspects of our company are doing well, can we ladder up the others?

In general, is public reporting being done within and beyond our industry? How transparent are we? Could we get our company to the next level of sustainability — that of actively regenerating?

Remember, responsibility to all our stakeholders requires such transparent reporting on all our progress in key areas — even if it’s imperfect. In fact, we ought to aim high — but expect it to be imperfect. As we’ve seen, even the big dogs sometimes trip when going after this ball.

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