Why we implemented 'radical transparency' in our organisation?

Running a business is not an easy feat. In fact, most businesses, some argue up to 80%, go bankrupt after just 3 years. Most fail to find market-product-fit and run out of cash in the process. The ones that do survive are faced with difficult decisions about strategy and company culture. How do you grow a business? The one thing that keeps on coming back to my mind is Peter Drucker who famously stated:

"Culture eats strategy for breakfast."

As such, how do we develop company culture in a way that engages, motivates and helps the organisation's most important stakeholder, its staff, to thrive and to develop themselves personally and professionally?

In 2018, we ran a series of experiments that came about with Hatch employing its first-ever operations manager. He brought with him not only a huge amount of insights into how to help Hatch operationalise and get more of the organisation's business processes streamlined, but he also came with unique insights into how an organisation can be run based on transparency. Before he joined Hatch, Andrew was part of a commercial business which went from 10 staff to 30 in a few years. The insights and experiences gained during this journey were immense and we would stand to benefit too if we chose to experiment.

The advantages of running an organisation that implements principles of 'radical transparency' are very obvious and I've come across them many times before, mostly in books and talks. From Ari Weinzweig running Zingerman's (a 21st-century eatery, training and community business that's been cited as a Top 100 progressive businesses by our friends at Corporate Rebels) all the way to the hedge fund manager Ray Dalio, writing about "Principles". An organisation that shares key information with its staff can make better decisions because more and better information is available and there is no secrecy. Secrecy can lead to issues between staff and between staff and managers/ leaders. Secrecy is also stressful as you have to remember what you can say and what you cant and to keep remembering what certain people know and what others dont. Does that sound appealing?

The experiment

Transparent Pay: In 2018 we ran the first experiment about making all pay data transparent. We did this over a walk through the park, between Andrew and myself. I didn't need much convincing. We made the decision and informed everyone at the next staff meeting. It took us another month or so to figure out how to do this, but as we're using Google Drive for information storage it seemed an obvious choice to do it there. But it also pointed to a much bigger piece of work. Making all our financial and programme data transparently.

Open Book Management: This was a much bigger piece of work. How do you make all your finances open? It wasn't obvious then, but this work would eventually lead to "the mother of all spreadsheets" at Hatch: The Flexible Financial Model (FFM). This Google Doc holds pretty much all our financial data on past, current and prospective projects, including resourcing, a calendar view, budgets and cash-flow forecasts. All in one place and all available to anyone at Hatch. Programme managers feed live data into it as does the book-keeping. We quickly realised in this process that our previous external accountants were no longer up to the task of supporting a growing organisation and we moved to a new company in the process. Whilst the FFM was a huge piece of work, I cannot imagine life without it now.

Management Accounts: Our next area of work was to make our Management Accounts accessible, readable and useful. These monthly documents, often produced by internal/ external accountants for use of the board/ senior management team can be as useless as the daily advertising that arrives through the door or it can be crucial in allowing people to understand what happened in the last month financially, the trajectory of where things are going and allowing a comparison between this year and last year. We worked on a style of management accounts that was visual, allowing for key information to be immediately visible in graph form, before having to look at any numbers. After we had figured out how we wanted the Management Accounts to look and hand-crafting them over a couple of months, we're now in the process of handing them back to our external accountants so they can produce them (it's quicker and cheaper now that we know what we want and how to get it). The Management Accounts are also available to anyone on the team, allowing them to understand where we are and where we stand in terms of runway etc.

Where are we going?

In early 2020 we've got our next Organisational Strategy Meeting (2/3) where we re-look at what we want to accomplish in 2020 and setting Organisational Key Results (OKRs) for the organisation and for the 5 core areas. I personally found Ray Dalio's "Principles" to be such an inspiration, we ended up buying it for everyone in the team. In his book, he talks about 'radical transparency', 'radical truthfulness' and combining this with 'believability-weighted decision making'. Sounds complicated? It isn't really but to shift the organisation to make better decisions on pretty much everything means we need to further align organisational design with key roles and making sure we have the right people do the right things to achieve our goals.

We're using this opportunity to look at where we want to be in 2025, supporting 10,000 diverse founders, running an impact investment fund and having a team of 25+ staff members. We are constantly reminded that our mission is larger than life and that there are so many amazing entrepreneurs out there who've got brilliant business and social business ideas but are lacking the resources, support and finance to turn them into reality. In order for us to help, we cannot be the same organisation we are today but we have to constantly evolve and adapt to an emerging reality as it presents itself.

Upwards and onwards!