Truth & Transparency: The Case for Organizational Openness

Ivan Schneider, Writer, specializing in financial technology | 3/20/2012 | 15 comments

Ivan Schneider
What do these three news stories have in common?

1. The unmasking of Mike Daisey's fabrications about working conditions at Apple's suppliers in China.
2. Shin In Geun's frightening and terrible story of his escape from a North Korean prison camp.
3. Greg Smith's New York Times op-ed, "Why I Am Leaving Goldman Sachs," which describes a company culture that disparages clients as "Muppets" to be manipulated and "elephants" to be hunted.

The answer is that each story involves the inner workings of a highly secretive enterprise. We have a major technology company with a notorious policy of blacklisting uncooperative journalists; a ruthless kingdom ruled by coddled and cloistered elites accused of heinous crimes against humanity; and North Korea. By considering in parallel the three key players in these stories, we can discern a few lessons for promoting greater transparency in our world's institutions.

Last May in Seattle, I saw Mike Daisey's one-act play, The Agony and Ecstasy of Steve Jobs. It was a powerful and emotional experience, and it was built upon lies. How, then, shall we judge Mike Daisey? By the standards of journalism, he's a disgrace to a profession in which he allowed people to think that he was a participant. By the standards of activism, he caused harm to the cause that he purports to serve.

Daisey is not even a particularly skilled manipulator of the truth, and so we cannot even grant him the grudging respect that we might offer an artist who paints unimpeachable forgeries in the style of the Old Masters. Nevertheless, we have to grant that he's a good storyteller with an instinct for identifying a popular cause. The sad part is that without having to make anything up, Daisey could have spun a very compelling narrative based entirely on the facts and noble sentiments alone. Now, he's a member of the infamous pantheon populated by fakers such as James Frey and Jayson Blair.

In contrast to an outsider drawing attention to invented injustices within a closed institution, with Shin In Geun we have an insider from the most closed society on Earth trying to draw attention to the jaw-dropping details of the most brutal, horrific circumstances imaginable. There's no way to corroborate his account short of something as momentous as the fall of the North Korean regime. All we know is that the details are sadly plausible, as was the case with Daisey's report. Telling Shin In Geun's story in the media is the right thing to do, if only for the forlorn hope that it might fortify the will of the rest of the world to increase pressure on the Hermit Kingdom. The Guardian was correct in publishing the story, and it would be absurd to suggest that the newspaper demonstrated a lack of objectivity by not interviewing North Korean prison guards or officials for "balance."

Prominent figures are suggesting a different standard for another outsider who went public with inside grievances, the Goldman Sachs ping-pong champion Greg Smith. Blame the messenger, we hear from New York City Mayor Michael Bloomberg, who wonders aloud why The New York Times published his insider account, and from Morgan Stanley CEO James Gorman, who complains about lack of media fairness and balance. Similarly, Goldman Sachs executives decry "that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback [employees] have provided the firm and independent, public surveys of workplace environments."

Ranking high on some magazine's "Best Places to Work" list is no substitute for regular engagement with the media, and there's no public benefit or transparency involved with a company's internal satisfaction survey. The only reason that an individual opinion from an ex-employee carries so much weight in this case is because of its inflated scarcity value. If Goldman Sachs were a more open company, insider knowledge of the firm would be a widely-traded commodity, and a scathing farewell letter would be barely worth mentioning. As it stands, Smith's letter knocked a few billion dollars off Goldman's market capitalization, an entirely self-inflicted wound.

Goldman Sachs is known for not engaging with the media unless absolutely necessary. As William Cohan says in the FT: "For most of the bank's storied 143-year existence, the unwritten rule around Goldman was to stay as far away from the press as possible." When that's how you treat the press, you shouldn't be surprised when a newsroom takes advantage of an opportunity to make you look bad. That's what the Greg Smith episode teaches us.

The Mike Daisey episode carries a similar message, demonstrating the risk of relying upon charm offensives targeted only at favored courtiers. Apple, despite cultivating good press by doling out valuable access privileges, was unable to prevent theater audiences, reviewers, and news outlets from readily accepting the premise that the company's supply chain was rife with child labor, workplace injuries, and chemical poisoning.

Finally, the Shin In Geun story reminds us how incredibly fortunate we are to have the freedom we enjoy, with food on the table and family with whom to share it.

Whether in financial services, information technology, or other sectors, the activities of leading companies and their employees advance economies and help the material well-being of billions in the developing world. However, in a free society, we should expect more than just marketplace success for our most prestigious commercial enterprises. We should also expect and demand that corporate entities operate at a level of transparency that respects the role of a free press in conducting honest inquiry and exposing injustice. Technology makes it easy to think that you can hide your actions and behaviors from the world, but it's equally capable of exposing those same failings.

Some lessons for organizations:

  • Don't be a Hermit Kingdom. No matter how careful and ruthless you are, the truth will come out. Even if your organization isn't truly evil, you are at risk of being seen as such if you actively disengage with those who tell the truth.
  • Don't be a Kermit Kingdom. With all due respect to the essential humanity of the Muppets, there's no excuse for dehumanizing, belittling, or insulting your customers. It's not worth the easy laugh, and being an obnoxious blowhard turns you, not your target, into the caricature.
  • Turn insider opinions into a commodity, not a scarcity. You may suffer small nicks and bruises from wrestling with the press on a regular basis, but at least you'll avoid getting sucker-punched with a potentially lethal blow when you're not expecting it.
  • Don't treat critics as enemies. By doing so, you may turn a critic with a valid point into an aggrieved party with a personal interest in your failure.

In the comments, let's hear your takeaways, along with story ideas for a forthcoming feature film with our felted friends, The Muppets Take Goldman Sachs.

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Ivan Schneider   Truth & Transparency: The Case for Organizational Openness   3/21/2012 5:04:00 PM
Re: Truth, Justice and the American Way
@Curt: That's a really good point. It's hard to identify the biggest contributor without knowing what yardstick we're using, but the fact that people are now paying more attention to the markets is certainly a big factor in explaining the "perceived need."

But when it comes to the need for transparency, is there a difference between the perception and reality? In other words, are people clamoring for transparency that they don't really need?

I would suggest that the global financial crisis aptly demonstrated why the financial sector needs to be more transparent regardless of what the average working American thinks. 
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singlemud   Truth & Transparency: The Case for Organizational Openness   3/21/2012 4:24:52 PM
RE: Truth & Transparency: The Case for Organizational Openness
truth or lies? It is hard to find it out if the story is not happening in local. Thanks to the explosive growth of internet population, internet PR is in high demand. PR companies can hire thousands of guys post millions of tweets or post over the night and the search engine will take it granted.

My point is: You can only reply on common sense to tell the story truth or lie.
CurtisFranklin   Truth & Transparency: The Case for Organizational Openness   3/21/2012 4:04:57 PM
Re: Truth, Justice and the American Way
@syedzunair, it will be very interesting to see how the rise of citizen journalism affects the actions of companies. It does make me wish that more schools taught the basics of journalism and journalistic ethics to students: If we're all going to be journalists, we should all know what the word really means!
CurtisFranklin   Truth & Transparency: The Case for Organizational Openness   3/21/2012 4:03:09 PM
Re: Another tip
@kstaron, it can be a bit more complicated than that in an age when innuendo and rumor can spread so quickly, but essentially you're right. As proponents of open government like to say, "Sunshine is the most effective disinectant."
CurtisFranklin   Truth & Transparency: The Case for Organizational Openness   3/21/2012 3:52:03 PM
Re: Truth, Justice and the American Way
@Ivan, I think the biggest contributor to the perceived need for financial industry transparency is the replacement of defined-benefit pensions with 401(k) plans. 30 years ago, investment was largely a game for the wealthy -- people who could employ specialists to watch their funds or who had the knowledge to manage their own dealings with the banks. Now, though, nearly every working American is an investor through their retirement account. The importance of the financial institutions has changed, the nature of the "average investor" has changed, and so the rules must change to match. I'm a huge fan of openness -- I see all this as a very, very good thing.

I agree, too, that the financial institutions have, on the whole, seen huge benefits from the changes. They shouldn't whine about the consequences.
kstaron   Truth & Transparency: The Case for Organizational Openness   3/21/2012 2:20:01 PM
Another tip
All those stories were also based onthe fact that these people/businesses/countries, had something to hide. Be ethical, be fair. Act as if a reporter is always in the room and rooting through the trash.
syedzunair   Truth & Transparency: The Case for Organizational Openness   3/21/2012 1:05:21 PM
Re: Truth, Justice and the American Way

Truth and Transparency is a necessity for both business organizations and the press to maintain their long-term profitability. With the surge of citizen journalism, thanks to social networking and media-sharing websites where participation cost is almost negligible, the truth is bound to get out sooner and later. Thus, organizations will eventually lose their credibility and face a blow on their Brand Equity.


sohaibmasood   Truth & Transparency: The Case for Organizational Openness   3/21/2012 9:08:29 AM
Re: Truth, Justice and the American Way
@Taimoor: I second your thoughts on maintaining transparency and sharing the truth. But then even after doing that it took just a while for people to doubt Apple after the news pertaining to child labor was broken. 

What I feel is that organizations need to be transparent but the press needs to show some maturity. If the press keeps on airing news without putting due effort in tracing its authenticity problems will arise. Therefore, I believe that the responsibility lies with the press to educate the people with the truth and they should focus on the facts. 

Taimoor Zubair   Truth & Transparency: The Case for Organizational Openness   3/21/2012 5:28:32 AM
Re: Truth, Justice and the American Way
I agree that it's important to maintain transparency and let the world know the truth rather than conceal it inside. It would give out a bad name when it eventually comes out. However, what the media may present to the masses might not be the actual picture. In many cases it can be heavily tampered with to exaggerate the situation. Hence, it's also important to ensure that the media and journalists do not misrepresent the information and only give out the true picture.
Ivan Schneider   Truth & Transparency: The Case for Organizational Openness   3/21/2012 2:27:11 AM
Re: Truth, Justice and the American Way
I read the transcript from the This American Life retraction, and it made for compelling reading, and yes, it did help their credibility that they owned up to the mistake of not checking out his story with the translator. 

Before seeing the Daisey show, I had read Leslie Chang's Factory Girls, which paints a much more nuanced picture of why people take those jobs and what they're like. That was why Daisey's show was so disturbing -- from where I sat, it seemed plausible, I mean who knows, maybe the situation on the ground changed that fast. 

As for the kids, that sounds like a tough workload. I wonder if "Pink Floyd: The Wall" has been dubbed into Mandarin. 
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