Transparency - a powerful force feared by organizations

Photo by Cristian Palmer on Unsplash

A short story about the atomic bomb

In Richard Feynman’s book, Surely You’re Joking, Mr. Feynman, he shares a story from his time at the Los Alamos Laboratory. The lab was a part of the Manhattan Project during World War II, and the lab’s goal was to build an atomic bomb.

The bomb was going to be made at Los Alamos, but another team at a different plant in Oak Ridge was working on separating the uranium isotopes that were necessary. They used uranium 238 and uranium 235, which was explosive, and it was all very experimental. The plan was to purify uranium in several stages and determine how much uranium 235 remained. ¹ Despite receiving instructions from the lab at Los Alamos, the team at Oak Ridge couldn’t seem to get it quite right.

Because the plant was not making enough progress, one of the scientists from the lab visited the facility at Oak Ridge. Among the first things that he noticed was a tank with uranium nitrate solution being wheeled around the facility. This highly explosive material was being handled in a very cavalier manner. When the scientist pointed out the danger, the staff was shocked since they were completely unaware of the potential risk for explosion.

The army had a strict policy of keeping information as secret as possible, and they only provided it on a need-to-know basis. The employees at the plant were unaware of the potential risks involved in working with uranium. They were given a procedure to follow without any context about why they were doing what they were doing. They weren’t even aware of the possibility of an explosion being caused by a purified material.

When the team at Los Alamos realized that the material was being handled improperly, they quickly developed a safety protocol. The army didn’t want to reveal anything to the Oak Ridge staff and ordered the scientists to only share the safety procedures without revealing that the uranium was going to be used to build an atomic bomb. Physicists from Los Alamos understood that this wouldn’t be sufficient to convince the staff at Oak Ridge to strictly follow the rules. People typically will not follow rules if they don’t understand the purpose behind them. The staff at Oak Ridge needed to have the reasons behind the rules and a much broader context if they were going to stay safe.

Finally, the colonel responsible for the facility agreed to brief the staff on the necessary details. The result was a self-organization of the team. They wanted to understand how to make their own calculations and learn how to minimize the risk. This led to a complete redesign of the plant. They not only avoided a fatal explosion but optimized the entire process and also mastered the uranium purification process.

What an organization should be transparent about

Feynman’s story is an example of the importance of context and a deeper understanding of the problem at hand. The circumstances presented in the story were extreme: building nuclear bombs during wartime, protecting information from spies, and peoples’ lives being at risk. A broader perspective was necessary for the employees to appreciate the danger and to make better decisions. Having information about the bigger picture ultimately helped them to do their jobs better. They developed the bomb, and eventually the U.S. won the war. Decision-makers purposefully hid information from those beneath them until they realized how imperative it was for the staff to understand the context behind what they were being asked to do.

When we take a deeper look at this example, there are some practical clues that help elucidate when transparency can be most important. The performance and safety of the plant improved when its team and their commanders understood:

• the deeper reason for their work (winning the war)
• the goal they were supposed to reach (building an atomic bomb)
• details about the problem at hand (purification of uranium and its associated risks)
• the potential risks and consequences (potential explosion, possibility of losing the war)

In day-to-day life within our organizations, we face similar kinds of issues. People make decisions and do their work based on the knowledge, information, and assumptions that they possess at that moment. The results vary depending on the quality of their judgment and actions as well as the accuracy of the information that they possess. An organization’s purpose and values, goals, business model, know-how, mistakes, and troubles need to be fully understood by all of its members. Transparency of this nature is key to avoiding bad outcomes.

Common concerns

In everyday life, where we face relatively less dire circumstances, I often hear valid concerns whenever I speak about transparency. Sometimes, people are afraid of its possible consequences; other times, they perceive that transparency only holds marginal importance. Let’s examine the validity of these reactions in more detail.

Things are not always perfect

The most common concern that I hear about transparency is related to a fear of the consequences. Organizations are complex systems, and a change in one place may cause unexpected results elsewhere, which is referred to as The Butterfly Effect. The most heated discussions around transparency are typically related to finances. Here is a short list of questions that I usually hear:

• What will our employees think about their colleagues’ salaries?
• What will they think about the salaries of the management?
• When they hear how much the client pays in relation to their own rate, won’t they feel bad?
• What will they think about the organization’s expenses and priorities?

Such questions always bring to my mind something that I like to call “the management debt” (which is a reference to the concept of technical debt). Here are some examples of what I mean when I say “management debt.”

• Employees have different salaries even though they possess similar skills and demonstrate similar levels of productivity and contribution.
• A leader’s salary is out of sync with the market and the rest of the team.
• The staff has a limited understanding of the organization’s business model and current financial condition.
• The organization’s expenses are reckless, focused on building status, or simply higher than the company’s revenue source. (The definition of reckless spending, naturally, varies depending on the type of the organization and its situation.)

The list of reasons behind the existence of these circumstances within an organization would most likely be long and diverse. Before you decide to be more open about your current financial status, I advise organizations to address important issues ahead of time, such as the ones above listed. People want to be treated fairly, and if this is not the case, it may trigger unwelcomed psychological tendencies among your employees, like envy.

My people don’t want more information anyway

I often hear from my peers that their subordinates just want to stay in their comfort zones. A challenge which would usually fall under their typical set of responsibilities is all they wish for. This narrative emphasizes that more transparency at the organizational level doesn’t add much value to employees unless it provides them with answers/solutions related to their professional or role-specific challenges. For instance, some managers argue that software developers just want to code. They don’t care about organization’s sales pipeline or financial condition. It’s just nice-to-have information that doesn’t contribute to their day-to-day problem solving. Put bluntly, even if the information was available, they wouldn’t use it.

I’m sure there is no easy answer to this problem. Some people will fit into this description, and some will not. However, there are two questions related to this argument that you may want to ask yourself, which I find especially important:

1. How would you know for sure which information is crucial to share and which isn’t?
2. If you don’t encourage your staff to broaden their perspectives, what kind of results can you expect from them in the long run?

To better illustrate my point, let me use the example of a software developer, whom I will call John. Let’s say John is focused on developing his technical skills and eagerly solves sophisticated problems related to the organization’s server infrastructure. His manager, Andy, takes care of the IT budget and doesn’t see a need to communicate with the team details about the budget .

Over time, John becomes an experienced developer. It’s easier for him to solve complex technical problems. Simultaneously, the server infrastructure becomes too small for the needs of the growing organization, and it’s time for an overhaul of its architecture. John is the perfect guy to design the new server infrastructure because he has enough experience with the current one and the skills necessary to make an informed decision on a purchase that could potentially have long-lasting consequences. Because John was never informed about the budget, he plans a new solution based mostly on performance and future scalability.

Later on, John’s plan is confronted with Andy’s budget. If their expectations align well, everyone is happy. The reality is often less satisfactory since the desired solution and the reality of the budget constraints often differ by a mile. If John had possessed a better understanding of the organization’s (or his smaller unit’s) financial conditions, he could have made a much more acceptable plan initially rather than wasting his time developing a plan that the organization could never afford. Cost is only one factor out of many that needs to be considered when planning like this needs to occur. The more perspectives that John has in his toolbox, the better the quality of his actions and decisions will be.

John is typically just one person out of many within a team or an organization that are being asked to make decisions or to carry out tasks where varied perspectives would be helpful. Your staff’s decision-making abilities undoubtedly contribute to your organization’s long-term well-being. If you don’t teach your people to look at problems broadly, you will sooner or later surround yourself with mediocre talent, and you will become their bottleneck.

Transparency doesn’t work on a larger scale

Another common misconception about transparency is its lack of scalability or at least a strong prejudice that it doesn’t work on a larger scale. This usually boils down to an argument about how bigger organizations are much more complex, their structure is more hierarchical, and it’s easier to align people by telling them only what they need to know and nothing more. Otherwise, chaos would emerge breaking down the structure making everyone less productive.

I’m sure there might be numerous reasons why bigger organizations might make it difficult to quickly see the benefits from a more transparent approach. Oftentimes, it would probably require numerous changes at several different levels of a large organization. As a result, these changes could bring about unpredictable negative outcomes. Whenever I face this kind of uncertainty, I turn to first-principles thinking as I try to better understand the status quo and its mechanics. Here is an explanation of a first-principles thinking approach, offered by Elon Musk:

I think people’s thinking process is too bound by convention or analogy to prior experiences. It’s rare that people try to think of something on a first principles basis. They’ll say, “We’ll do that because it’s always been done that way.” Or they’ll not do it because “Well, nobody’s ever done that, so it must not be good. But that’s just a ridiculous way to think. You have to build up the reasoning from the ground up—“from the first principles” is the phrase that’s used in physics. You look at the fundamentals and construct your reasoning from that, and then you see if you have a conclusion that works or doesn’t work, and it may or may not be different from what people have done in the past. ²

Frankly speaking, I haven’t practiced transparency at a large scale myself, so I cannot personally say that it works beyond a shadow of a doubt. However, there are organizations that have done it. In Frederic Laloux’s book, Reinventing Organizations, he researched 12 organizations of different sizes and industries. All of the companies that he examined relies on self-management. There were no managers, and the employees ran the companies on their own. They were supported by an advisory body that did not have any ultimate control over their decisions. This approach requires lots of transparency. Otherwise, the staff wouldn’t be able to operate effectively and would not be productive. The biggest of the companies that Laloux examined were AES, BSO/Origin, and Buurtzorg, which employ 40,000, 10,000, and 7,000 people, respectively.

My subordinates wouldn’t understand

We build organizations based on thousands of small decisions, tradeoffs, limits of our resources and capabilities. For an outsider, the result might seem like a mess. The decisions and sacrifices are an integral part of an organization’s structure, processes, and culture. Nonetheless, it’s often hard for someone on the outside to grasp the reasoning behind the design. Moreover, organizations include people. It’s not surprising that apart from all of the good aspects that they bring to the table, people are also a part of a company’s shortcomings by the incompetence, hidden agendas, politics, or fraud that they potentially introduce. To make it even more complicated, organizations are constantly evolving.

From my experience, the complex nature of organizations is largely what makes leaders and managers struggle with being more open. They fear that if the employees, partners or customers really knew how the business worked, they wouldn’t collaborate with them or buy their products and services anymore. They prefer to protect their subordinates and customers by hiding the unpleasant realities. Steven B. Sample, in his book The Contrarian’s Guide to Leadership, made an excellent point about the world and its people:

Niccolo Machiavelli was above all a student of human nature. His repeated advice to leaders was to believe in the reality of human nature, as opposed to what they wished it were.

I am reminded here of a book on child rearing by Dr. Hiam Ginott which my wife and I read many years ago. Dr. Ginott advised parents to teach their children the supreme importance of discerning and accepting reality, in order either to make peace with it or to attempt to change it. In other words, don’t let children delude themselves about how the world and its people really work. That’s exactly what Machiavelli was trying to do for adults. We must accept the fact that human beings and their institutions hardly ever measure up to our noblest ideals, and that to pretend otherwise is to invite ruin.

Protecting different stakeholders from seeing the true nature of an organization is likely to yield poor results in the long run. I would also say that they probably already know, to a varying degree, what happens behind the curtain. Moreover, being more open about various shortcomings allows people to better grasp their environment. Once fully aware of it, they become a part of these setbacks and are more likely to understand and more willing to accept certain decisions rather than undermining them and/or holding a grudge.

I would lose my edge

Over the years, I’ve heard numerous stories of what developers like to call “security through obscurity.” A common example occurs when a manager is hiring new people. Let’s look at an example where a new hire’s responsibilities and skills should be similar to the existing talent pool. After some interviews, the perfect candidate emerges. The candidate’s presented expertise doesn’t diverge significantly from the rest of the team. Unfortunately, the new hire’s financial expectations are a little bit above what the other team members make, and the individual isn’t willing to negotiate. If the corporation really needs this person, and the organization keeps all employee salaries secret, it’s extremely tempting to use that leverage to hire this candidate. A short-term gain can be achieved, and the manager hopes to deal with the small unfairness in the long run. Asymmetry of knowledge allows managers to have fewer restrictions and to make decisions faster.

However, let’s examine this problem from a different angle. Manager’s achievements and deliverable value hinges on their team’s abilities. The employees are the ones doing the heavy lifting. The more each of them adds value, the bigger their total contribution to the company’s success will be.³ It’s in a manager’s best interest to influence the team in a positive way by fostering more creativity and productiveness. I would argue that one of the most effective ways to do so is by giving employees more context (information). Transparency leads to higher-quality actions and decisions, as we have seen in the previous scenarios.

Having an edge over your subordinates, based on an information gap, becomes a double-edged sword. On the one hand, it does allow the manager to use shortcuts, to go faster, and to hide certain inconvenient truths. On the other, the staff’s shortcomings and underdeveloped skillsets have a direct influence on the team’s ability to succeed, which reflects on the manager. To make it worse, some team members might feel cheated or frustrated when they don’t see and/or comprehend the bigger picture.

Conclusion

Transparency is not usually on the top of the list of an organization’s priorities. In the story at the beginning of this article, the uranium enrichment process was slowing down the development of the atomic bomb. The goal was well-defined, and transparency did not seem like an obvious solution. However, it was a powerful force that changed the outcomes dramatically. Transparency, often has indirect effects in unpredictable situations. Using transparency to solve a specific problem is probably less likely to be successful, and in my opinion, it misses the point.

Many organizations can be quite skeptical about transparency’s potential to offer positive contributions to productivity and effectiveness. I would argue that the question we should be asking ourselves is not “what are the costs and risks that transparency brings.” Instead, we should ask ourselves “what are the costs of not being more transparent.” Moreover, transparency is not a silver bullet and requires careful consideration regarding how it might affect a particular environment. In the next few articles, I will present more practical examples of the application and the positive influence that transparency can have on teams. I’m curious to hear your thoughts on the topic. To what extent is your organization transparent? What has been successful, and what have the pitfalls been? Feel free to share any questions and comments on Twitter.

Notes