Santa Monica, California
March 2008

Warren Bennis

CREATING A CULTURE OF CANDOR

Warren Bennis, Daniel Goleman, and Patricia Ward Biederman

In the spring of 2007 something unprecedented happened in the southern Chinese city of Xiamen. In a nation notorious for keeping citizens in the dark, word got out that a petrochemical plant was to be built near the center of the lovely port city. The factory would have produced toxic paraxylene, and residents who learned of the plans were understandably alarmed. A decade ago, concerned Chinese citizens could have done little to stop the plant’s construction. But this is a new age, not just in China but throughout the world. Via e-mail, blogs, and text messages, word of the plan spread and a protest was organized against it. As the Wall Street Journal reported, hundreds, perhaps thousands of protesters gathered at Xiamen’s city hall to oppose the plant.¹ Chinese officials refused to acknowledge the protest and shut down Web sites that opposed the plant. But using today’s ubiquitous communication technology protestors were able to circumvent the official silence. Participants took photos of the protest with their cell phones and posted them on the Web. Much to the chagrin of Chinese officials, some photos were transmitted straight to sympathetic media. The result was a victory of electronics-driven light over official darkness. City officials have postponed construction of the plant until a new study of its environmental impact is completed.

Today the word transparency pops up in stories about everything from corporate governance to the activities of the U.S. Justice Department. In the mouths of those in power, its meaning tends to be fuzzy, although, as New York Times essayist John Schwartz writes, when officials say they are being transparent, “what they really mean is ‘not lying’ and ‘not hiding what we’re really doing.’ But that doesn’t sound as nice or vague, does it?”² The vagueness is understandable, however. As we all know, claiming to be transparent is not the same as actually being transparent. Even as many heads of corporations and even of states boast about their commitment to transparency, the containment of truth continues to be a dearly held value of many organizations. Sadly, you can say you believe in transparency without practicing it or even aspiring to it.

While opacity is far less of a problem in the United States than in some other nations, it continues to characterize many, if not most, American organizations. And lack of transparency is usually no accident. It is often systematically built into the very structure of an organization. In the following pages, we look at the forces that conspire against an organizational culture of candor and transparency, and the often disastrous results when those qualities are lacking. We also show that the effort to withhold information from the public has become an all-but-impossible task because of profound changes in the global culture. Most important of these is the emergence of electronic technology that facilitates sunlight, and the rise, over the last decade, of the blogosphere—a development that has made transparency all but inevitable. In today’s gotcha culture, no men’s room tryst is sure to remain secret, no racial slur goes unrecorded, no corporate wrongdoing can be safely entombed forever in a company’s locked file cabinets. A decade ago, secrets often remained buried until a professional journalist could be persuaded to reveal them. Today anyone with a cell phone and access to a computer has the power to bring down a billion-dollar corporation or even a government.

WHAT IS A CULTURE OF CANDOR?

When we speak of transparency and creating a culture of candor, we are really talking about the free flow of information within an organization and between the organization and its many stakeholders, including the public. For any institution, the flow of information is akin to a central nervous system: the organization’s effectiveness depends on it. An organization’s capacity to compete, solve problems, innovate, meet challenges, and achieve goals—its intelligence, if you will—varies to the degree that information flow remains healthy. That is particularly true when the information in question consists of crucial but hard-to-take facts, the information that leaders may bristle at hearing—and that subordinates too often, and understandably, play down, disguise, or ignore. For information to flow freely within an institution, followers must feel free to speak openly, and leaders must welcome such openness.

No matter the official line, true transparency is rare. Many organizations pay lip service to values of openness and candor, even writing their commitment into mission statements. Too often these are hollow, if not Orwellian, documents that fail to describe the organization’s real mission and inspire frustration, even cynicism, in followers all too aware of a very different organizational reality.

When we talk about information flow, we are not talking about some mysterious process. It simply means that critical information gets to the right person at the right time and for the right reason. Although the successful flow of information is not automatic and often requires the leader’s commitment, if not intervention, it happens every day in organizational life, often in the most mundane ways. For instance, a few years ago, General Electric became alarmed about a precipitous drop in appliance sales. At meetings on the matter, the conversation soon narrowed to how the problem could be solved by improving marketing: should GE focus on pricing? On advertising? On some other change in marketing strategies?

Then someone from the company’s financial services arm, GE Capital, spoke up. He put up a PowerPoint presentation showing that consumer debt had reached near-saturation levels. The problem wasn’t that GE was failing to market its appliances successfully. The likelier problem was that customers were too strapped to buy the big-ticket items that GE sold. That single crucial bit of information swiftly shifted the conversation from marketing to financing, as the company began seeking ways to help customers pay for appliances. The right information had found its way to the right people at the right time.

Just as the free flow of information can maximize the likelihood of success, damming its flow can have tragic consequences. An instructive example is the decision of Guidant executives to continue selling their Contak Renewal defibrillators even after they learned that the implanted heart regulators were prone to electrical failures implicated in the deaths of at least seven patients.

Because company officials remain silent on the matter, we can only speculate on why the firm decided not to recall the devices until 2005, three years after insiders learned of the flaw. Perhaps the health-sciences firm was blinded by its then-anticipated acquisition by Johnson & Johnson (it has since been acquired by Boston Scientific). Perhaps its corporate judgment was clouded by its Yale-Harvard-like competition with Medtronic, the leading manufacturer of implantable defibrillators. Whatever Guidant’s reasoning, the result was not only needless deaths but a catastrophic trust problem with its primary customers—not heart patients but the physicians who prescribe the lucrative life-saving devices. According to the New York Times, Guidant’s share of the defibrillator market dropped from 35 percent to about 24 percent after the recall, apparently because of the disgust many physicians felt at the company’s decision to conceal an embarrassing truth on which patients’ lives literally depended. As one angry physician wrote to the firm: “I am not critical of Guidant’s device problems—these devices are so complex, issues are expected. I will not, however, work with a company that put profit and image in front of good patient care and honesty in device manufacturing.”³

CHOOSING TRANSPARENCY

It almost goes without saying that complete transparency is not possible—nor is it even desirable, in many instances. Just as national security concerns may justify limiting access to certain information to a small number of carefully vetted individuals, an organization may have a legitimate interest in holding close and guarding from competitors information about innovations, original processes, secret recipes, or corporate strategies. Such secrets are reasonable. However, secretiveness is often simply reflexive. And secretive organizations are vulnerable to exposure by both the mainstream media and their growing legions of amateur competitors. But even when lack of candor is likely to be harmful, many organizations continue to choose it over openness, as Guidant appears to have done.

Because the term transparency, like courage and patriotism, has the exalted ring of eternal truth, it is easy to forget that transparency is a choice. Writer Graeme Wood gives a vivid illustration of this in his analysis in the Atlantic of how differently recent U.S. administrations have treated sensitive information. ⁴ Arguing that the administration of President George W. Bush is unprecedented in its insistence on secrecy, Wood says the current trend began in 1982 with Ronald Reagan, whose philosophy was, in effect, “When in doubt, classify.” By 1985, 15 million documents had been classified, far more than had been shrouded under President Carter. President Bill Clinton, who favored declassification, ushered in a new era, saying, in effect, “When in doubt, let it out.” Classification surged again under George W. Bush. In 2006, 20.6 million documents were classified, more than six times the 3.6 million classified under Clinton. “Leaving aside the blinkering effect it has on congressional oversight, too much secrecy impedes the routine functioning of the executive branch, by making useful information difficult for many government employees to see,” Wood argues. Ironically, he points out, secrecy also has the unintended consequence of making leaks more likely.

Another dramatic example of transparency as choice was the 2007 decision by the Central Intelligence Agency director, General Michael V. Hayden, to declassify the agency’s so-called family jewels. Buried by Director William E. Colby in 1973, these are internal documents relating to some of the agency’s most controversial activities, including attempts to assassinate Cuban leader Fidel Castro. Hayden appears to have opted for sunlight because he believes revealing even ugly truths would ultimately help the agency. As the New York Times reported: “Hayden said it was essential for the C.I.A., an organization built on a bedrock of secrecy, to be as open as possible in order to build public trust and dispel myths surrounding its operations. The more that the agency can tell the public, he said, the less chance that misinformation among the public will ‘fill the vacuum.’”⁵

But few leaders in either the public or private sector have been willing, as Hayden was, to choose voluntary transparency. Following Enron’s meltdown and the other transparency-related scandals that did such damage to the American economy in recent years, long-needed reforms were enacted. Though flawed, and with unintended consequences of its own, the Sarbanes-Oxley Act has helped make corporate governance more transparent. But legislation alone cannot make organizations open and healthy. Only the character and will of those who run them and participate in them can do that. New regulations can help restore much-needed trust, but they can only go so far. If a culture of collusion exists instead of a culture of candor, participants will find ways around the rules, new or old, however stringent. Candor and transparency become widespread only when leaders make it clear that openness is valued and will be rewarded. Openness happens only when leaders insist on it.

The influence of a leader committed to transparency was evident in the 2007 decision by heads of the New York City Health and Hospitals Corporation to release information on mortality and infection rates at the eleven hospitals it operates.⁶ The largest public health system in the United States, the corporation decided to act in spite of opposition from a notoriously secretive hospital industry in hopes of reducing the rising number of preventable infections and subsequent deaths among the 1.3 million patients treated in its hospitals each year. The corporation was encouraged in its pioneering move by New York City Mayor Michael R. Bloomberg. A crusader for transparency, who believes it encourages collaboration and positive change, Mayor Bloomberg created a free 311 phone line so New Yorkers can directly report their concerns (more than 49 million so far). According to a 2007 profile in Business Week, the 311 line is an example of bottom-up transparency that allows Bloomberg to gauge New Yorkers’ attitudes as well as their problems .⁷ Bloomberg also eschews a private office to work among his aides in a “see-through city hall” with windows in the meeting rooms so the public can literally watch the city’s business being conducted.

WHISTLE BLOWERS, THEN AND NOW