The value of radical transparency in leadership

When we think about all the profound challenges the world - and our companies - is facing and about all the changes we will have to make to survive and thrive in the new Era, we always get back to people. It is impossible to achieve any of that without new good LEADERS.

I have been thinking and discussing a lot about the characteristics, competencies, and character of the LEADERSHIP we need for the future. A few weeks ago, I wrote a piece on COURAGE and how much of it is required from leaders to navigate these vulnerable times. Today I would like to talk about another characteristic that is becoming more and more expected from all stakeholders: TRANSPARENCY. However, it is not what we used to call transparency in the old days but rather a more radical form.

It might sound scary to think about RADICAL TRANSPARENCY since our generations come from a place where controlling information is the actual power of leaders. To access specific data to manage crises, to have leverage innovation and technology for competitiveness advantage. The idea of a more radical culture of disclosure and radical honesty is very frightening.

I invite you to give this idea a more profound thought, though. This transparency style is a new movement that is gaining momentum. Companies that have used this concept swear by it, stating that it has increased everything from profitability to staff performance and satisfaction.

Bridgewater Associates, the world's most prominent hedge fund management firm, pioneered the concept of extreme openness in 1993. Ray Dalio, the company's creator, came up with the notion while looking for methods to enhance the company's performance. He built an open atmosphere, and the company has never looked back.

Radical openness for leaders entails exposing oneself to relentless scrutiny and criticism and is becoming demanded from employees and investors. They must be willing and able to accept and react to this input in a constructive, non-defensive manner. They must also be able to provide brutally honest feedback to others in a way that strengthens rather than destroys relationships. This means that radical transparent leaders don't avoid complex subjects but candidly address them with honesty, using all their excellent skills.

The Benefits of Radical Transparency

The ability to walk this tightrope is a combination of personality and knowledge. When done well, extreme openness offers definite advantages. Everyone's work and responsibilities are out in the open with radical openness. People are very aware of what their coworkers are doing in their cubicles all day. And, from the neighbor’s viewpoint, knowing they have an audience may motivate them to work harder—yet another advantage from the company's standpoint.

The issues are well known. Every company has problems. Everyone understands the problems and what is being done to fix them in a radically transparent organization, encouraging individuals to contribute to the effort.

The objectives are made public. The roadmap of a firm is a set of instructions for where the organization wants to go and how it intends to get there. Employees are empowered to execute their best job and assist the organization to realize its objectives when they grasp the company's business, sales targets, and deadlines.

The company's finances are open to the public. Everyone knows what the actual sales figures are or are expected to be. They know how much the firm has earned, what profits are generated, and the most costs incurred. This information offers workers a feeling of involvement and ownership, motivating them to succeed.

Threats from competitors are well-known. Every business confronts competition. This information, including strategies and chances to outperform the competition, is shared with workers by the radically transparent company. This method may elicit a competitive drive and boost performance.

When we think about digital or ESG transformation within a company, transparency will surge as one of the most valuable requirements to fulfill the desire to improve. Also, when we think about reputation management in times like this, there is not much room for non-transparent behaviors in leadership. Trust and consistency are the names of the game.

Customers and talents highly desire transparency and Openness, but some stakeholders might not.

When a company decides to adopt a radical transparency culture, it must also be prepared to deal with crucial subjects such as diversity, equity, inclusion, and justice. Salary disparities, for example. If your company is unable or unwilling to address such injustices, radical transparency may not be for you. Are you prepared to discuss honestly and openly all the sensitive matters for your different stakeholders? If yes, radical transparency will help you immensely.

So, how can you know whether radical openness is suitable for your business? Do you have the right people to lead that transformation in behavior?

As time passes and more and more of your company's operations become transparent, you should expect your organization to adopt a whole new attitude. People will begin to demand transparency, be more honest, and probably more efficient, and be more willing to embrace new transformation projects. Finally, the objective is to create an atmosphere where individuals have unique ideas and aren't scared to share them.

Extreme openness could transform both your everyday operations and your long-term performance. That might be a novel concept in leadership for the future. And I am a big fan of the idea.