02 Jun Transparency – Entrepreneurial Success Tip #6
When it comes to running my businesses, honesty isn’t just the best policy–it’s the only policy. And if you want to succeed as an entrepreneur, what they see had better be what they get.
In the same way everyone says they only hire “A” Players, companies also love to talk a lot about transparency. The problem is, most fail to actually achieve it. Sadly, the only thing really transparent in most companies and increasingly in our government today is the utter lack of transparency. I’ve even heard people say things like, “For the most part, our company is pretty transparent,” but “pretty transparent” is like being “a little pregnant.” You either are or you’re not. And regardless of what you say, your investors, employees and customers can sense when they’re not being told everything. Simple rule of thumb, unless it’s a birthday party or an engagement ring, most people don’t like surprises.
At Jigsaw Health, my premium supplement company, we hold an open-book, company-wide monthly ops meeting. Everyone in the company is in attendance and we go over all the numbers – profit, loss, balance sheet, cash flow, analysis of key metrics – everything. Why? Because informed people can make informed decisions. Entrepreneurship requires being agile, the ability to move quickly, but you can’t expect, much less require people to effectively do their jobs without everyone knowing what’s actually going on. Lack of transparency is like giving your people an incomplete roadmap and expecting them to successfully navigate unknown and treacherous terrain.
A good example of transparency comes from the later years at SalesLogix when we were trying to make a web product. It was a good idea, but frankly, very bad execution. Really bad. The kind of bad Charles Barkley calls “turrible.” Around $20 million worth of “turrible,” to be exact. Luckily we were more than big enough at that point to deal with that costly of a mistake. And we could have easily whitewashed everything by simply not talking about it and moving on.
But people would have wondered, whether they talked about it or not, because a lack of transparency, clarity or closure breeds a lack of confidence. So we owned it. We very publicly acknowledged the failure, and guess what? Everyone simply stopped talking about it and went back to work.
My meetings with my Board of Directors always start exactly the same. Two slides… Highlights and Lowlights. The good, the bad and the ugly. I never hide anything. And then I tell them what I am doing about the bad, or begin a discussion about what we ought to do. Entrepreneurs ask me about dealing with investors, especially about dealing with venture capitalists. I say, “if you try to hide ugly from them they will want to fire you.” They know there are always things that go wrong in startups. They expect it. All they really want to know is how you are going to fix the problems. They want you to acknowledge and own the problems. A few months ago I had dinner with one of my SalesLogix VC/BOD members who out of the blue told me he has taught a few dozen entrepreneurs my way of doing BOD meetings. He LOVED that he could expect exactly how my presentation was going to happen.
Transparency translates to trust and respect, and in the end, happier employees. The opposite is also true. When you hide things, paint a rosier picture than is accurate, or you set expectations that can’t be realized, your people will become insecure and you will only be setting them up for disappointment and failure. In time, everything you say will become little more than pie-in-the-sky prattle, and a Pavlovian bell cuing people to your lack of leadership. You can only cry wolf so many times before people are no longer willing to follow you.
Justice Louis Brandeis once said that sunlight is the best disinfectant. He was right. When it comes to transparency and your business, it’s always best to throw open the shutters and let the sunshine in.