Transparency Key to Shifts Win

    September 6, 2006

Shift Communications, home to social media advocate Todd Defren, was named agency of record for Novell, largely on the strength of Shift’s well-documented social media chops.

Social media like blogs can help make decision-making processes that were once conducted behind closed doors more visible to audiences like industry analysts. It was those analysts who questioned Novell’s direction, leading to CEO Jack Messman’s departure. Since then, according to a PRWeek story, Novell has worked to “highlight its position as a transparent public company.”

Several Novell blogs are at the forefront of the effort. Shift also helped craft one of its social media news releases addressing the company’s SUSE Linux Enterprise 10. Novell’s PR director, Bruce Lowry, sees the social media release as simpler for bloggers to use.

So let’s review: A closed approach caused analysts to wonder what the heck Novell was thinking, leading to a lowered valuation and the CEO’s departure. Now striving for transparency, the company sees opportunities for “engagement with the market-both media and the broader universe of Novell watchers,” according to Lowry.

The notion of business transparency has been attacked in some corners of the PR blogosphere, largely based on the absurd notion that transparency means something like “no secrets of any kind, ever, under any circumstances.” Anyone with half a brain knows that organizations need to be opaque in some matters. Products in development can’t leak to the competition. Internal earnings forecasts can’t be shared; these are forward-looking and violate regulatory rules. There are plenty of circumstances under which a company either should or has no choice but to play its cards close to the vest.

Transparency means that organizations should provide timely and useful data and information that people need to understand and fairly value a business. According to a Thomson Financial white paper on transparency, “The spirit of Regulation Fair Disclosure calls for companies to not only make information available to multiple investor types, but to also enable them to make use of the information.”

Sun Microsystems CEO Jonathan Schwartz has been a model of transparency through his blog. As a result, when Sun reported earnings, he was able to use his blog — and its audience of readers who have come to know and trust him-to look beyond these results to the future. Commentaries have suggested that any other CEO-without the base of support Schwartz has built through his transparent communications with the marketplace-would have been subject to ridicule for such a response to an earnings statement. Because Schwartz’s comments were part of a continuum, they were welcomed.

In the world of communications, we know that transparency applies not only to investors and the broader financial community, but to customers and consumers as well. For example, companies that advise customers about a problem and what they are doing to fix it will win loyalty over companies that leave customers to discover the problem for themselves and wonder what the hell the company is going to do to fix it.

It’s not like companies aren’t transparent anyway. As one CEO once told me, “We have a rule in our boardroom. We don’t make any closed-door decisions we’d be ashamed of if our mothers were to read about them on the front page of the New York Times, because she might.”

Don’t let anybody suggest to you that business transparency should not be a goal, or that it can only exist as an all-or-nothing-at-all value (which would mean it cannot exist at all). Real-world transparency is demanded by regulators and customers alike, it is the business watchword of the decade, and companies that win will be those that embrace it.

Companies like Shift Communications, which won the Novell account on the strength of its ability to help its clients communicate transparently. Congratulations, Todd and the rest of the gang at Shift.

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Shel Holtz is principal of Holtz Communication + Technology which focuses on helping organizations apply online communication capabilities to their strategic organizational communications.

As a professional communicator, Shel also writes the blog a shel of my former self.