Transparency in business: risks and rewards
Hannah Genton recently appeared as a guest on the Startup Life! Live podcast with Ande Lyons. It was a great experience, and an opportunity to share some insights we have gleaned over the past four years since we founded CGL. In it, we touched upon the level of transparency we provide clients. We’re transparent about our fees, how we provide our services, and what we can and can’t offer to our clients. While this approach comes with significant rewards, like increased trust, better product fit, and reduced barriers to innovation, there are also risks that come with transparency. This week, we’ll outline those risks and what you can do about them:
Reducing the Risk of Transparency ‘Backfiring’
McKinsey published an article (a few years ago) about the dark side of transparency. In it, they outlined that transparency can, in some situations, lead to decreased creativity, reduced organizational efficiency, and lowered satisfaction with pay conditions. It concludes that business leaders must be smart about what they share, and what they hold back.
Our two cents on this is that businesses need to work out where transparency matters and to be transparent thoughtfully.
In our case, we recognized that transparency in pricing could be a competitive advantage. Lawyers are expensive and legal clients have historically shown dissatisfaction with pricing. And so we realized that transparency about our pricing and our billing structure could be to our benefit.
Other companies take advantage of this too. Pela Case, for example, occasionally runs sales where consumers get to choose what they pay. They’re given three payment options, alongside information about what the payment chosen will cover. Consumers are then able to choose whether they cover the costs of the product and product development, or pay more to cover operational costs too, or provide the company with a profit. The rationale here, we assume, is that most consumers will choose to pay a higher amount to support the company and the company’s very public mission.
In both cases, transparency in pricing aligns with the company mission and consumer demand. The decision to engage in pricing transparency has been made thoughtfully, and with consideration. In our case, we were sure to ‘test’ the impact of transparency, instead of assuming it was the best way forward.
Reducing the risk of giving away your ‘secret sauce’
Another risk that comes with increased transparency is the risk that you (or an employee) will accidentally give away your company’s trade secrets or confidential information. To reduce this risk, it needs to be clearly communicated to team members who are privy to company secrets and/or confidential information that the information is not to be freely shared. There should be agreements in place that clearly outline the obligations of all parties. These agreements must clearly define confidential information. Moreover, there should be practical measures taken to reduce access to trade secrets.
If you need assistance navigating the corporate compliance or intellectual property implications associated with transparency, get in touch. We’re here to help!
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