Wednesday, March 28, 2007


The Age Of The Transparent CEO

There have been more notorious corporate scandals than you can shake a rolled up annual report at in the last few years. CEOs everywhere are learning that if you screw up, you can't hide it - so why even try? "Transparency" is the new buzzword on the block among corporate publicists. Corporations are now freely admitting their mistakes, or at least pretending to. Some CEOs even have their own blogs, in which they confess their thoughts and even personal info to anyone who will listen. Some companies encourage their employees, lowly or otherwise, to run their own blogs off the company website, saying what they wish about their masters.

The trick is with "transparency" is that it must be done with a consistent and authentic openness. If corporations simply attempt to mimic openness by disclosing some things, but not others, the public will pillory them as hypocrites. Cunningly controlled publicity is hardly the same thing as openness either. One PR executive got into trouble by running "flogs" for Wal-Marts - fake blogs that pretended to be the real blogs of Wal-Mart supporters. Explaining why "transparency" runs counter to the traditional aims of PR, the author of the article at the link below says, "The reputation economy creates an incentive to be more open, not less. Since Internet commentary is inescapable, the only way to influence it is to be part of it. Being transparent, opening up, posting interesting material frequently and often is the only way to amass positive links to yourself and thus to directly influence your Googleable reputation. Putting out more evasion or PR puffery won't work, because people will either ignore it and not link to it - or worse, pick the spin apart and enshrine those criticisms..."

The article gives examples of many corporations and CEOs that have practiced full disclosure to their own benefit. There is a real estate executive who saved his business by ranting about the evils of his trade like Jim Cramer coming clean on the shortcomings of hedge funds, and a software mogul who actually increased the sales of his software by publishing the program code online. Southwest Airlines got some egregious initial publicity when they forced an obese man to buy two seats, and then it turned out that he was fat because of hepatitis C and was on his way to a "life-saving" operation. Southwest promptly confessed all in their blog, posting an apology and even links to articles that criticized them, winning a coup with a forgiving public.

Some hurdles to corporate transparency remain. Many CEOs don't really know how to write - not even half-literate emails - and this impedes their ability to blog. Even once they've started a successful blog, they can't stop it, which eats up valuable time that might otherwise be spent bossing their minions around. In a similar all-or-nothing fashion, once they start being honest, they have to remain honest about everything. The CEO of the job search service Jobster denied rumors of upcoming layoffs on his own blog, then was vilified when the layoffs actually came to pass. Finally, some corporate operations - such as the development of certain products - must be kept secret for obvious reasons, thus providing the exceptions that would invalidate any ethos of full disclosure.

"The See-Through CEO" from Wired

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