TRANSPARENCY

Working on a co-creation platform fundamentally changes the way we interact, communicate, share and retrieve knowledge and has a basic impact on corporate culture. The 'metalayer' changes the way we work together, synchronize instantly and gives a never-before-known transparency. The cultural changes that go with the layer are very challenging and usually need much more implementation than the technical implementation and coordination.

TRANSPARENCY ENHANCES EFFICIENCY

Every student of Economics today is learning one basic fact: "Transparent markets are more efficient markets". Transactional costs decline, efficiency rises and though prices of goods in transparent markets fall, quality improves. The history of economy could be written as a history of new markets emerging, and existing markets getting more and more transparent.

Transparency makes markets more efficient, and is a natural process of markets getting more mature - In "new emerging markets", the amount of transparency is high, the cost of getting the right information is very high and the successful players in these new markets get high profits due to additional information they have or produce, which other market participants don't have. The cost of information is high, and so is the profit out of this information. If markets get more transparent, the cost of information is sinking and so are the profits of the players.

THE KNOWLEDGE ECONOMY

One of the key assumptions of the knowledge economy is, that the importance of information and knowledge increases, because mechanical as well as repetitive processes are automated, and the production process is less expensive (see 21stcompany) - In the knowledge economy, we are not paying primarily for human labor, but for information and knowledge within the products and markets. In a typical pharmaceutical company, only 30% of the cost today is R&D, and 60% is marketing. For special pharmaceutical products, as described in the Lilly case, 'Marketing' tends not to concentrate on branding, but on knowledge management - the distribution and creation of new knowledge within the company as well as to specialized medical doctors in hospitals.

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MARKETS ARE CONVERSATIONS

Markets are conversations and not primarily transaction places. Even though the exchange of goods with money is the central part of most markets, it is still only a small part. The main drivers and value generators within the knowledge economy are "conversations" - the creation, exchange and distribution of knowledge related to the product and its use.

OBSTRUCTION STRATEGIES

Transparent markets are more efficient and more beneficial - this is true for the sum of all market participants. One single market player however may loose income and even its position in the market, if information flow increases. A knowledge and information broker for example bases his business on the fact, that information is not (yet) flowing efficiently. He generates knowledge and sells it. But what if this knowledge becomes commonly available within the market? In the short term, it may be an efficient strategy for some market players to "obstruct" the information - to prevent the publication of information, or even to manipulate information. This is against the interest of the market and the market authorities are creating different standards and rules to prevent obstruction - accounting standards for the stock market etc.

THE CASE FOR TRANSPARENCY

Obstruction is clearly against the interest of the market. The sum of market players loose efficiency and wealth, and if every player starts to optimize his own interest, the market may stop working as a whole. In order to guarantee efficiency, the market players commonly agree on "authorities" and this may be the government, a semi government authority, or just a non-profit organization. The main task of this authority is, to create standards and rules to prevent obstruction, to ensure a free information flow, and to define actions against defaulters. Examples for market rules and authorities may be accounting standards for the stock market, international trade bodies and rules.

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ENTERPRISE KNOWLEDGE

A similar behavior can be observed within a companies. To give away knowledge without an immediate gain is believed to be inefficient for a single employee (Even though this is not the case). So, the most efficient strategy for one employee is taken to be the protection of his knowledge and trade it against the maximum gain. In an overall company point of view, the situation looks very different. For the enterprize as a whole, internal knowledge sharing is of tremendous value. The more knowledge is shared, the more efficient the company gets, in the same way as markets get more efficient, if more information is shared.

THE GOVERNMENT AS A TRANSPARENCY ENFORCER

Transparency has a clear value - for markets, countries, and companies - but maybe not for individual market players or individual employees. It is in the interest of the government of any country therefore, to implement strategies that enforce or encourage transparency. This is because the government is concerned with the totality of the situation rather than individual gains. Transparency invariably proves to be the catalyst for national market growth and well-being, thus proving to be a strategy that finds it's proponent in the government.

ENRON, ANDERSEN AND TRANSPARENCY

Would Enron, Arthur Andersen, and WorldCom have happened, if the markets they were in and the companies themselves would have been more transparent? Well, nobody can say - but many things would have been different. If more people, or maybe all people would have known about the practices of Enron etc, they possibly would not have happened, as some people would have vetoed against them. And if that would have happened they would probably have not met the fate they now have to accept.

SELF PROTECTION OF THE MANAGEMENT

Management is currently under an immense public pressure to adopt a more transparent style, to communicate clearer, to involve more people in strategic decisions. How will business leaders respond to that pressure?

TRANSPARENCY in management and the company is becoming the way to protect the management. Would the scenario for Enron, WorldCom, and Arthur Andersen CEO's be the same today if Transparency had been implemented?

NO BUSINESS WITHOUT TRUST

Trust is a basic business enabler. Trust is the assurance and knowledge of the outcome of relationships. A business formation with trust as the formative layer can work wonders for the stability of an organization. Trust breeds Transparency and vice-versa. On a positive note we can trust that the new knowledge economy will actualize these values and the work culture of tomorrow will be built on the foundations of human co-operation and honesty.

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