How open and transparent can a public company really be?


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Here on opensource.com, we often talk about the benefits of an open, collaborative approach, and I see new stories every day that help showcase the benefits of an open organizational model.

But for public companies, the benefits of an open approach are often overshadowed by the risks. During my time at Red Hat (a publicly-traded company for much of my tenure), our approach was traditionally to "default to open," sharing as much information as we could, both inside the company and with the outside world.

Yet, as a public company, there were many financial and legal obstacles that stood in the way of openness. It was challenging to find the right balance between being open with our thinking and information, yet respectful of the legal and financial responsibilities that come with being a public company.

So it was with great interest that I read Scott Weiss's recent post about corporate transparency on Ben Horowitz's blog (also posted at AllThingsD). Scott is now a general partner of Andreessen Horowitz, but was previously the CEO of IronPort, an Internet security company that was acquired by Cisco in 2007.

In his post, Scott talks about making the decision to build an open culture at IronPort, despite the risks:

"...the more that I thought about it, the more I believed that sharing absolutely everything would create massive advantages and that we should live with whatever consequences resulted."

So he went ahead and did it. Yet, as soon as IronPort began to prepare for its IPO, the company was forced dial back the transparency. I'd encourage you to go check out the post for the full details of how they handled this transition. But the key takeaway at the end of Scott's piece is one that I could not echo more strongly.

"I believe it was much healthier to set the default to full disclosure while we were private. When you prepare for an IPO, it’s definitely a high-class problem to have to work backwards with concrete reasons to withhold information from the employees. And when that time comes, they totally understand."

Scott's right. People totally understand. When you level with them and share as much information as you can by default, then apologize and explain why when you can't share a piece of information, in my experience, almost everyone will be cool with it.

So if you are working for a company that is thinking about going public one day, and the more conservative folks in your organization are using this as an excuse for not having a more open, collaborative culture, show them Scott's post.

While complete openness might never be possible in your organization, a respectful, thoughtful default-to-open approach may give you the benefits of an open culture while minimizing the risks.

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