Recipe for a successful business: One part openness, two parts trust

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There's one major advantage to openness in business. Like the Billy Joel song says, it's just a matter of trust. 

Harvard Business Review's Peter Merholz recently highlighted several successful businesses modeled on trust—and, though he doesn't note it, openness.

When Amazon launched, it offered something no one else had — honest customer reviews about every product. Many thought this was foolish, as some products would be poorly reviewed, and thus not sell. But Amazon realized that in order for people to become comfortable with online retail, they needed honest information, and trusted its customers to provide it.

Can you imagine a retailer who would be happy to see disgruntled customers standing in their aisles, telling prospective buyers about every problem they've had with a particular product? Yet by fully opening up their product pages to customers' experiences and opinions, Amazon built a market for purchasing just about anything via the Internet.

While most of us don't make a regular habit of praising or criticizing our purchases to perfect strangers, the collaborative environment of the Internet and its potential for anonymity encourage just that. And it's this openness—combined with highly competitive prices and a smart shipping fee model—that pushed Amazon past the $7 billion sales mark last quarter.

(Merholz profiles two other businesses, Zappos and USAA, that likewise have built promising models around openness and trust.)

Speaking of trust, Facebook recently announced that information on users' profile pages—including past and present employers, alma matters, interests, even cities and towns of residence—will now be used publicly. Concerned about privacy? You can block your friends from seeing this information, but it will be available publicly to anyone visiting the "connection pages" for those places, businesses, etc. (Because clearly people are more concerned about their friends knowing where they live and work than random people from the Internet?)

Of course, Facebook software engineer Alex Li reminds us, "if you don't want to show up on those Pages," you can disconnect. Though as far as your Facebook friends are concerned, you'll no longer have an employer, city of residence, favorite movie, or bachelor's degree. It does make a person wonder about CEO Mark Zuckerberg's short term memory, considering he reassured Facebook users just a few months ago that Facebook's "philosophy is that people own their information and control who they share it with."

I'm reminded of an article Dana Blankenhorn wrote a few years back, where he noted that trust lies at “the heart of open source.” Trust is what motivates software coders to open up their projects to communities of strangers. It drives a CIO to choose an open source vendor, who won't lock them into a particular technology or brand. And it is broken when a social networking (and advertising) business repeatedly strongarms its users into pushing their private information out to the world.

Want to do business the open source way? Start by trusting your customers... and be the kind of business that others can trust.

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Rebecca Fernandez
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Rebecca Fernandez is a Principal Program Manager at Red Hat, leading projects to help the company scale its open culture. She's an Open Organization Ambassador, contributed to The Open Organization book, and maintains the Open Decision Framework. She is interested in the intersection of open source principles and practices, and how they can transform organizations for the better.
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4 Comments

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Jason Hibbets | May 7, 2010
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I'm tired of people complaining about FaceBook privacy. Let's make it really simple. If you're going to use a publicly available social network and don't want something to be seen, then don't post it. Whether it's a status update or part of my profile.

I trust that FaceBook is going to do whatever they want with my info, but I've got to give it to them first. So do you. But to tie it back to trust. I agree with you, I don't trust FB that much. Too many changes, too many surprises. But I still use their platform.

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Karsten 'quaid' Wade | May 8, 2010
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These new group of complainers about Facebook, who are first discovering the ugly side of their digital rights (and lack of after signing terms-of-service agreements), are the pool that gives rise to the next group of activists.

It's not the only way to come to see the value of free and open communities vs. walled gardens, but it is one way. This relates to Facebook because if they were an open source project, the real humans involved would have adjusted the bad privacy situation before it hit the wide world. When you develop in a closed fashion, your users suffer. Just look at the privacy mess-up around Google Buzz for another example.

You have a viewpoint on data and privacy that is informed by working at a relatively uncommon business. I recommend that you continue to teach the people who are feeling so heavily impacted and violated by Facebook. Use it as a chance to drive home these lessons instead of dismissing them as whiners who should know better.

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Rebecca Fernandez | May 9, 2010
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But probably a valuable one. Leaving behind a platform like Facebook, where your friends and coworkers remain, is very difficult. And the ongoing irritations of privacy invasion, information exploitation, and default-to-evil will drive home the point that choice is incredibly valuable.

That said, I am sympathetic to those who complain about Facebook. And not just because I'm one of them. But because typically when you create privacy settings within an application or website, the company does not repeatedly undermine and alter those settings to take advantage of your data for marketing purposes.

I expect when I visit a respectable website that lacks the fine print saying, "We will not share your information with others," but does include a reassuring, "We respect your privacy," that my email address isn't going to be posted on a billboard in Times Square.

Naive, perhaps.

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Rebecca Fernandez | May 13, 2010
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on the Facebook privacy settings:
http://www.nytimes.com/interactive/2010/05/12/business/facebook-privacy.html

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