Transparency Is the Most Effective Control System
When it comes to control, transparency is the most effective system because when everyone knows everything, there are no secrets. Organizations that embrace freedom of information and freedom of action have more resources available to them to assure that they remain under control. As a result, problems don’t fester, innovation is not muted, and quality is continually improved. This explains why self-organized businesses, such as W.L. Gore and Associates, the innovative fluoropolymer manufacturer, or Morning Star, the world’s largest tomato processor, are so much better controlled than their command-and-control counterparts. The level of transparency needed to make self-managed enterprises work eliminates the hidden agendas, the deceitful behavior, and the institutional ignorance that plague traditional organizations .
Traditional organizations have lots of secrets. With work subdivided among departments and directed by managers who are often engaged in some form of “turf battle,” it is not surprising that information does not flow freely and that many workers are unaware of what people do outside their departments. Sometimes the secrets are intentional, such as when information is shared on a “need to know” basis or even deliberately withheld. More often than not, most organizational secrets are the unintentional consequences of the functional fragmentation of work. Whatever the reason, hierarchical organizations breed secrets. And that explains why they need elaborate control systems.
When secrets prevail, there is little or no shared understanding among either the managers or the workers to guide consistent delivery of customer value. Worse yet, without the transparency that naturally accompanies shared understanding, there could be plenty of opportunities for greedy or malicious employees to defraud the organization.
To protect themselves from the potential adverse consequences of bureaucratic secrets, hierarchical enterprises promulgate a continuous stream of rules and regulations and establish complex control structures based on checks and balances. These structures rely upon armies of supervisors and auditors to assure that everyone is following the rules and that people are not using their secrets to inappropriately enrich themselves. The theory is that, if everyone has someone to watch over them, the risks associated with the inevitable secrets in bureaucracies will be mitigated and the organization will be under control. The unfortunate irony, however, is that often the application of complex rules and regulations only slows things down, creates confusion, and actually weakens control.
The only way that organizations in a rapidly changing world can remain consistently under control is by moving away from centralized authority to decentralized transparency. That’s why at W. L. Gore and at Morning Star, there are no supervisors and people are accountable to their peers. In these self-organized enterprises, pertinent business knowledge is freely shared among the associates and all related data and metrics are continually available to everyone. Most importantly, anybody can talk to anybody else. Transparency isn’t just about everybody knowing everything. It also means that everybody is available to everyone. Without both of these dimensions, true transparency is not possible.
Transparency is the new currency of business, especially among business alliances. The sophisticated collaboration structures that are essential for horizontal organizational arrangements are impossible without a high order transparency based on trust and freedom of information. In addition to sharing previously proprietary intelligence such as financial data, business plans, and market analyses, anyone working in a collaborative business partnership must also have the ability to independently verify this information at all times.
When organizations have the benefit of high order transparency, they do not have to depend upon the representations of supervisors or auditors to assure the business is running smoothly. They can take comfort in the fact that when everyone has access to everything, if there’s something that they need to know, they will find out sooner rather than later because when everyone is available to everybody, there are no secrets.