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Insights 4 Jul 2011

What’s the Big Secret?

By Heather Mak

In 2009, author Daniel Goleman wrote a book called Ecological Intelligence: How Knowing the Hidden Impacts of What We Buy Can Change Everything. In it, he argued that we were facing an age of radical transparency – the underlying concept being that decision making will soon be public, and has to be transparent from the beginning of the process.

Yet, we are in an era where there are many companies, private or otherwise, that pride themselves on being secretive. Private, family-run companies like Ferrero, ALDI, and Forever 21, and publicly traded companies like Apple, thrive on secrecy. Yet there other companies that, by virtue of their private ownership, could be more secretive but choose not to be – for example, SC Johnson and IKEA. Can secretive companies still survive in the shift to radical transparency?

Let’s take a look at the examples mentioned above.

Apple is a publicly traded company, known for its beautiful, functional devices, and not a day goes by without newspaper headlines speculating on details of the next Apple gadget or photos of line-ups snaking around city blocks for the latest iWidget. Profits have never been better. Yet, with success comes higher expectations and greater scrutiny. Apple came under fire from Greenpeace several years ago for lagging behind its competitors in reducing the use of toxic chemicals in its products, and it drew criticism last year for a number of suicides at one of its key suppliers, Foxconn, but neither instance has made much of a dent in Apple’s near angelic reputation. Apple still managed to be first on the list of most valuable/trusted brands in the world and 9th on Landor & Associates’ 2011 Green Brands List. So what’s going on? For one thing, Apple’s legendary design and dedication to product experience do keep consumers enamoured of the company, which surely contributes to trust. Also, pre-emptive moves at the product level – like the company quietly moving to secure EPEAT gold certification for some of its laptops – help reduce suspicion before issues begin to escalate.

Ferrero and ALDI, on the other hand, are both privately owned companies that have managed to keep expanding worldwide, without the help of any public relations departments. Ferrero SpA, a confectionery company, has topped lists of the most trusted companies in the world, yet is also known as being one of the most secretive. ALDI is owned by the low-key Albrecht family, and are known for grocery stores with low cost, high quality products and minimal assortments. What is common between the two companies beyond secrecy? Along with Apple, each has approached their products and customer experience with a laser-sharp focus on quality and consistency for many decades, which has helped them to engender trust.

Then, there are companies like Forever 21, a family-owned “fast fashion” company. The company has been growing exponentially, taking up real estate from former department stores and rapidly expanding its product lines. Stores are constantly bustling with shoppers. However, the company has been accused of, among other things, giving preference to suppliers who adhere to the Christian faith, using sweatshop labour, creating clothing that “sexualizes” children, preying on harmless bloggers with aggressive lawsuits, taking intellectual property from other designers, and encroaching on local community initiatives. Not surprisingly, in the absence of more information on social responsibility and community initiatives, many assume the worst. Herein lies the danger of secrecy: what we do hear about these companies, even if it is not true, quickly becomes real in the public’s mind.

Still, there are companies that are privately held and have committed to significant transparency, even if the absence of any requirements to do so. SC Johnson, for instance, claims that “sustainability is just the right thing to do” and have been publishing sustainability reports for 18 years. The company has fully embraced radical transparency with its recent disclosure of all the ingredients in its products at its website and Greenlist rating system.

IKEA offers another example of a privately held company that takes an interesting approach to transparency. On the sustainability front, IKEA has been forthcoming – it has published a comprehensive CSR report for years, collaborated with competitors and peers as part of the Global Social Compliance Programme, and pre-empted consumer concerns about its products by placing environmental labels at shelf-level. After a recent exposé on Swedish television, concerns were raised over the company’s governance and accusations of tax evasion and bribes, in response to which founder Ingvar Kamprad pledged, you guessed it, transparency.

So, what are companies to do in this age of radical transparency? We know that secrecy is often essential to maintaining competitive advantage. However, we also know that the more you don’t tell, the more people want to know and/or will fill in the blanks on your behalf. Ultimately, it comes down to building trust. Ensuring values are embedded throughout the organization, providing consistently high quality products and/or services, and pre-empting any public/consumer concerns before they become inflamed are all useful ways to do that. Lastly, just being transparent because your stakeholders want you to be is a radical idea for a secretive company – it may not always be right, but it’s an idea whose time has come.

The philosopher Sissela Bok summarizes the issue succinctly with this quote: “While all deception requires secrecy, all secrecy is not meant to deceive.” While deception is not usually the motive of most companies, sometimes they just need to let us in on a few of their secrets.



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