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The Open Enterprise and IT

Businesses can't be accountable if IT can't expose "the truth."

Smart companies are becoming open enterprises, cultivating stronger relationships with employees, customers, shareholders, partners, community members and other interest groups. These companies want to be seen as honest, accountable, considerate and transparent, but each of these characteristics requires a supportive IT strategy.

Honesty: Not just an ethical issue, honesty is a matter of fiscal responsibility. To establish trusting relationships, companies must openly disclose information. They must be truthful, accurate and complete in communications. They must not mislead or be perceived to mislead. In motivating employees, negotiating with partners, publishing product information, disclosing financial information or explaining the environmental impact of a new factory, companies are expected to tell the truth.

IT implications: Companies need clear insight into their own operations and a single version of the truth in order to be honest with stakeholders and the rest of the world. Shell lacked this insight and reported inaccurate information about its oil reserves, which led to a trust crisis and the CEO's resignation.

Accountability: Companies must make clear commitments to distinct stakeholders and abide by them. And they must demonstrate with clear communication, preferably with the verification of stakeholders or independent outside experts, that they've met their commitments. Accountability used to be considered undesirable, suggesting liabilities, testing and scrutiny. In the transparent world, where every stakeholder has radar, accountability becomes a requirement for trust and a powerful force for business success.

IT implications: Companies need systems and scorecarding techniques that monitor performance against goals and translate strategy into measurable actions. Execution requires powerful IT architectures and integrating systems across the entire network of business partners.

Consideration: A critical pillar of trust is the belief that a company shows regard for the interests or feelings of others. Good will is relevant to all stakeholders. Companies foster loyalty when employees believe that their company will be loyal to them—that employees won't be discarded once the going gets a bit rough, or at least that the company will consider their interests and downsize only as a last resort, and then only with a fair and equitable severance. Similarly, companies need to truly care about customers and their interests.

IT implications: Companies can't be considerate of stakeholders' interests unless they have information on what those interests are. Good systems are necessary to track employee satisfaction, engage employees in designing knowledge work and enable them to collaborate effectively. Forecasting models, data mining, integrating cross-channel data for better customer segmentation and enterprise planning systems will forge a better understanding of customer needs.

Transparency: Trust and transparency reinforce each other. The question "What are they hiding?" encapsulates the relationship between transparency and trust; it implies that if company executives hold secrets, they do so for nefarious reasons and, therefore, aren't trustworthy. Companies can't be transparent unless they're trustworthy, as openness will harm them. Trustworthy companies must be transparent because openness helps stakeholders validate the organization's integrity. In an increasingly transparent world, openness is becoming central to building trust between stakeholders and companies. To coin a phrase, companies should undress for success.

IT implications: Open the IT architecture to reach out to various stakeholder organizations. Companies need better, more accurate and timely financial reporting, moving toward the type of monthly operational reporting practiced by Progressive Insurance (see Peter Fingar's May 2005 feature "Prime Time for Real Time," ID# may05f1). Sharing financial information is assured by public accounting standards, laws and regulations, but nonfinancial information is a new frontier. Companies must share valid and reliable information with various stakeholders in myriad new domains—from customer satisfaction and market share to product quality. New standards and corresponding systems will be required. End-to-end visibility across the supply chain is required to reduce transaction costs and speed the metabolism of partnerships.

Don Tapscott is the author of 10 books about technology and society, including (with David Ticoll) The Naked Corporation: How the Age of Transparency Will Revolutionize Business (Free Press, 2003). You can reach him through www.AgeofTransparency.com.