Published on: March 8, 2010
Last week’s MNB Radio piece was about something that I referred to as the “transparent corporation.” Not everybody is buying, however, as one MNB user wrote:
I generally love your commentary, but I really must say that you are a wide-eyed idealist when it comes to the transparency issue! I do agree with many of your points and generally agree that things need to be more transparent in certain areas such as environmentalism, HR related issues, etc. However, certain other areas are problematic for various reason. I will list a few below:
1. Cost transparency to retailers-- The Walmart's of the world would love to know their suppliers' every cost component down to the 1000th of a penny. (And if you think I'm exaggerating, you obviously haven't seen their bid forms) Do you think it's wise for a manufacturer/supplier to provide this information to Walmart? Perhaps some of it is truly wise to share, but as a business person, I feel strongly that at a certain point you have competitive advantages that are best kept quiet -- unless you intend on forking over your hard earned profits. Call me a heartless capitalist, but if I devise a proprietary way of making a widget better, cheaper, and faster, I believe that I should be rewarded for that effort with sales and profits-- rather than share it with my customer who then intends to share it with my competitor.
Health Claims-- While I agree that health claims should be transparent, to some extent, this information has become so complex, contradictory, and confusing, that consumers have no idea what to make of it. Honest to God, I have no idea if drinking a cup of coffee a day will prevent Alzheimer's, increase my brain function, or cause bladder cancer and brain tumors... I swear there's a study out there that will prove and disprove each of these claims-- and for far more products than just coffee. There are some notable exceptions where the evidence is pretty convincing (say... cigarettes???), but to me, as a consumer, it's almost all just noise at this point. One week's studies say we should be consuming more chocolate, wine, juice, and coffee so we can live a long, healthy, disease-free life, and the next week's studies tell you that all of these things will make you obese or give you cancer. Who can tease out the truth? I don't even bother keeping up with most of it anymore. The the only conclusions I can draw are that too many calories make you gain weight and that moderation is probably the best policy on almost every food.
In this case, sometimes too much information serves to confuse, not inform. In the "Transparency Utopia" you dream of, do consumers have the time and the mental energy to digest the reams of data that will be thrust at them?
3. Implementation Cost-- Transparency is great... but at what cost? Even your beloved country of origin rules, which seem perfectly reasonable, will COST money to implement, especially in certain industries with large, commingled, global food supply chains. As a businessperson living in the real world, my experience is that even a small increase in costs has a large impact on quantity purchased (in the food industry in particular). What's wrong with letting the free market determine COO? If you believe that nothing good comes out of China, refuse to buy anything that isn't labeled otherwise. Shop exclusively at places like Trader Joe's and Whole Foods that won't stock anything from China. If enough people shop at those places, and demand COO information, they will grow and the market will sort itself out. Funny thing though, this is all available today and things haven't really changed much. The truth is... there are some high end consumers willing to pay high end prices.... but the vast majority of people are more focused on low prices and though they might like COO, they probably aren't willing to pay 5% more for their weekly grocery bill get it.
I guess my point is that some transparency is good and we don't have enough of it in our society today, but there is sometimes a tendency to go overboard. Transparency is a nice concept when applied to certain issues, but it is not a panacea.You may be right. I’ve been accused of far worse things than being a “wide eyed idealist.”
I think that some of the objections you raise might not be issues if a level of transparency is achieved through natural evolution, as opposed to having it imposed upon companies. I understand that cost transparency may not be an advantage if you are dealing with Walmart, but it may be a requirement on the part of investors in a company...and I’m guessing that some sort of balance will have to be achieved. As for transparency of information, I actually think that when companies are transparent, people may actually trust them more and not need to access all the available information.
I guess what I’m saying is that in the long run, transparency may be a differential advantage. And I would suggest that a lot of the problems that companies have today is because of a lack of transparency.
We’ll see.
Another MNB user had an interesting take on this:
I believe all the buzzwords swirling throughout newsletters, seminars, NGOs, social media, research articles, etc. are tied to a general movement towards natural capitalism and away from predatory capitalism.
Predatory capitalism values only two things capital and capital investments (money in their pocket and things they own) with little regard for people and natural resources consumed. Natural capitalism regards capital, capital investments, people and natural resources with equal standing.
All of this is explained much better in the book, “Natural Capitalism: Creating the Next Industrial Revolution.” (Available on Kindle…)I’ll look it up.
On another subject, one MNB user wrote:
Regarding Friday's responder who wanted government service to be performed by business people, I was struck by which business people were to be selected. The responder later argued how these full time public servants ignored the will of the people to pass the bank, brokerage, and auto bailouts.
Did the responder envision Bob Rubin, who was a senior executive with Goldman Sachs before serving in the Clinton administration as Treasury Secretary? Rubin left the Clinton administration to take a senior position at Citibank, which only exists because of bank bailouts. Is it possible that Citibank avoided bankruptcy because of the bailouts? Is it possible that Rubin used his position as an advisor to the current president to help Goldman Sachs and Citibank?
Or did the responder envision Dick Cheney, who served as secretary of defense for Bush the Elder? Cheney served as a president with Halliburton before returning to public service as Bush the Younger's vice president. Halliburton reported a string of record profits because of its war contracts in Iraq and Afghanistan. Is it possible that Halliburton benefited financially from a policy driven by Cheney?
The notion that our founding fathers did not intend for a permanent public service is pure hokum; a straw man argument at best and an ignorance of history at worse. Jefferson preached limited government and the role of Congress until France presented the Louisiana purchase. Washington spent the vast majority of his adult life in the role of public service including the British army, the Continental army, various political bodies in Virginia, and later as a two-term president.
The founding fathers could not imagine a business on the scale or scope of Ford, Monsanto, or Hyundai.
Finally, how many school boards and/or town councils has the responder served on? Where is his or her time dedicated to public service?
I am so tired of the well worn troupe that government must be run like a business. Government is not a business. Businesses are not in the business of regulation. They are not in the business of keeping people safe. Unfortunately, our government does not seem to be in the business of keeping people safe. As the signs mount that our food is not safe, that our cars are not safe, and that our financial system is not particularly safe, perhaps we need government to behave more like a government and less like a business.I actually started this with my comment about Jim Sinegal, CEO of Costco, being perhaps an ideal person to run the economy.
All I was suggesting is that Sinegal seems to understand the value of people, the importance of efficiency, and the primary role of effectiveness. I would never suggest that government should be run like a business. They are, in fact, very different types of institutions. And I fundamentally believe what I think Robert F. Kennedy said about government - that it is there to protect the oldest, the youngest, the weakest, the poorest and the sickest in our society. Which isn’t always the case with business.
Responding to one section of Friday’s “OffBeat,” MNB user Steve Sullivan wrote:
Thank you for passing along the eulogy for Robert Parker by his son. Having the Irish in me, I’m sitting here with tears in my eyes. Partly, because they are lovely words and sentiments. Partly because it made me hope that MY son has taken something like that from MY life. I will be printing it and hanging it in my cubicle.
Again, this is another instance where you have not just provided the boring and too real look at business life but shared a very human and valuable moment.And MNB user Steven Ritchey wrote:
It’s funny how all the main recurring characters in Parkers novels exhibited and lived by those same qualities.
In High School I had an English teacher my Senior year who made the classics come alive like no teacher I’d had before or since. Her influence is what made me begin to appreciate good literature, and while I don’t read as much as I would like to, I think of her often. I found out after she’d died that she was a huge fan of Parker, particularly his Spenser novels. When I learned that I felt cheated, we could have spent many hours dissecting his books and enjoying every minute of it.
The year after I graduated, she was moved from the classroom to the administration office over the districts English program. In true Bettye style, when one of her teachers called in sick, if she was able to, she would go out to the classroom and teach that class for the day. Many teachers look for ways to get out of the classroom and in administration, she looked for ways to get back into the classroom.
She and I went to the same church, and one year the church put together a Lenten devotional book and asked for contributions, my former teacher was the editor. I wrote a brief devotional and sent it to her. She included it in the book, she also sent me back my contribution, marked up and graded in red ink.Sounds like a wonderful teacher.
I had pretty much the same conversation the other day with Tom Gillpatrick of Portland State University, who was saying that he was always amazed when students come back after many years and remember with great specificity the stories told in the classroom. That’s the great thing about stories...and why Robert B. Parker’s death created the vacuum it did.
In our book, “The Big Picture: Essential Business Lessons from the Movies,” I mention in the acknowledgments a teacher, Mike Callahan, from whom I took numerous courses at Loyola Marymount University back in the mid-seventies. I hadn’t talked to Mike in more than 30 years, but I felt compelled to mention him because of the impact he had on me.
A couple of weeks ago, I actually tracked him down, and we spent well over an hour on the phone - and I think he was surprised at how much I remembered from three decades ago. Mike didn’t just have great stories that he integrated into his lessons...he was a great storyteller.
And if we haven;t made it clear by now, I’ll say it again. The power of a great story - a great narrative - is that it makes a vision clear and actionable. That’s what our book is all about...and I hope it is a message that is conveyed often here on MNB.
