The April issue of Wired magazine had a couple of interesting articles on business blogging, or what they call “radical transparency.” As their fluffy intro says, “business is always personal.” Perhaps the first (mostly) serious book written on the business benefits of blogs was The Cluetrain Manifesto: The End of Business As Usual. While the Cluetrain laid out the principles and intentions of business blogging, these articles The See-Through CEO and Case Study: Microsoft. provide two case studies.

No company is perfect, and it's common wisdom to not air your dirty laundry in public. But between word of mouth gossip, the Internet, and listservs, most all that dirty laundry is already public – and pretending that it's not just lets it fester without explanation. Even, “we screwed up, but we learned from it and will try not to let it happen again,” is an explanation. And presented in a personal way, without the legally tortured corporate-speak, such explanations can go a long way with customers. The transparent CEO in question, Glenn Kelman, runs an online real estate brokerage had some seriously dirty laundry – they were losing money, lots of it.

His first reaction was to keep the situation quiet and pretend
everything was OK. “We were really ashamed that our customers were
getting pushed around, so we tried to keep it this dirty little
secret,” he says. But when months went by without any improvement, he
decided to take a different tack.

Kelman set up a Redfin blog and began posting witty screeds about
the nasty underbelly of the real estate business. He denounced
traditional brokers, accusing them of screwing customers with clubby,
closed-door practices. (“If we don't reform ourselves, and take out all
the sales baloney, too, people will come to hate real estate agents the
way they hate tobacco companies or Big Oil,” he wrote.) He publicized
Redfin's internal debates, even arguments about the design of its Web
site. He mocked himself: One post described how he had sat at a college
job fair for hours, waiting in vain for a single student to approach
him. (“This was particularly sobering because it meant we had
outlosered our neighbor to the right, Ford Motor Company,” he wrote.)
Meanwhile, in the blog's comments, old-school agents were unleashing
hissing attacks on Redfin. Kelman left the critiques ine and lashed
right back, in full view of his customers.

His enemies got nervous. All this intestinal spew seemed masochistic. Worse, it was probably bad for business. Everyone's business.

It turns out customer (those buying or selling houses) loved it. Their “man behind the curtain” view into the industry was fascinating. According to Kelman, “They rallied and started pulling for us.” Kelman's gamble paid off and has been adopted widely:

Radical forms of transparency are now the norm at startups – and even
some Fortune 500 companies. It is a strange and abrupt reversal of
corporate values. Not long ago, the only public statements a company
ever made were professionally written press releases and the rare,
stage-managed speech by the CEO. Now firms spill information in
torrents, posting internal memos and strategy goals, letting everyone
from the top dog to shop-floor workers blog publicly about what their
firm is doing right – and wrong. Jonathan Schwartz, the CEO of Sun
Microsystems, dishes company dirt and apologizes to startups he's
accidentally screwed. Venture capitalists now demand that CEOs be
fluent in blogspeak. In February, after JetBlue trapped passengers for
hours in its storm-grounded planes and canceled 1,100 flights, CEO
David Neeleman tried to deflect the blast of bad publicity by using
YouTube to air his own blunt mea culpa. Microsoft, once a paragon of
buttoned-down control, now posts uncensored internal videos – and
encourages its engineers to blog freely about their projects (see page
140). The very process of developing ideas, products, and messages is
changing – from musing about it in a room with your top people to
throwing it out on the Web and asking the global smartmob for a little
help. That's how this article was written: I've been
blogging about it since I started, and some of the reader input I
received is reproduced on these pages.1

This is not just an effective new marketing tool, its an acknowledgment of an open society fueled by technology.

“You can't hide anything anymore,” Don Tapscott says. Coauthor of The Naked Corporation, a book about corporate transparency, and Wikinomics,
Tapscott is explaining a core truth of the see-through age: If you
engage in corporate flimflam, people will find out. He ticks off
example after example of corporations that have recently been
humiliated after being caught trying to conceal stupid blunders.
There's Sony, which put a rootkit – a piece of spyware – on music CDs
as a secret copy-protection technique, only to wind up in court when
bloggers revealed that the code left their computers vulnerable to
hacker intrusions. There's Microsoft, this time on the wrong side of
the transparent shower curtain, offering to pay people to buff up the
company's Wikipedia entry. And Diebold, which insisted its voting
machines were unhackable – until a professor posted a video of himself
rigging a mock election on them. The video went viral and racked up
some 300,000 YouTube views.

There's many more great examples in the story, so check it out – especially if you're the David giving battle to industry Goliaths. The next article is a case study of how one Goliath used radical transparency to improve their business – in many ways. Microsoft has long been cast as a secretive sometimes malevolent corporate giant. Through their use of blogs and video blogging (providing video clips of meetings and presentations), Microsoft has improved their relationship with software developers and customers, all while changing the public perception of Microsoft. Such transitions are not without their, ahem, challenges – especially from conventional information gatekeepers like marketing and legal. But the results speak for themselves:

What [director of platform evangelism Lenn] Pryor had done to set off this uproar was outfit a team of five
people, himself included, with camcorders and turn them loose on the
company to interview engineers about their jobs and their products.
Then he posted the clips – unvetted and largely unedited – to a Web
site that anyone, inside or outside the company, could see and comment
on. He and his team expected the initiative to be controversial, so,
except for the executives backing it, they told almost no one in the
company. “The key,” Pryor says, “was to not draw too much attention to
ourselves.” By lying low, Pryor headed off preemptive opposition. But
when Channel 9 launched, executives in PR, marketing, and legal reacted
with alarm. “They didn't take it well at first,” Pryor tells me.

Today, Channel 9 is one of the few things at Microsoft that company
image mavens love to talk about. Google is kicking Microsoft's butt in
search; Vista, its new operating system, is getting tepid reviews.
Zune, its iPod killer, can't kill a flea. And Nintendo's Wii, not the
Xbox 360, is the hottest game console in town. Channel 9, on the other
hand, makes Microsoft look downright visionary. No large company – with
the possible exception of Sun Microsystems – is as far along in
understanding how the Internet changes the way employees connect with
suppliers, customers, shareholders, and peers. The goal is clear:
Reestablish Microsoft as a cool, progressive enterprise that appeals to
customers, investors, and top job prospects. While the rest of
corporate America is scrambling to figure out whether it wants to allow
blogging at all, famously guarded, control-freak Microsoft has embraced
the idea of transparency with messianic fervor.

I linked to Channel 9 above, check it out. And the case study has a lot of other great examples.

The desire for secrecy among health care vendors is legion, bordering on neurotic. Sure, FDA regulated vendors have to deal with “labeling” issues. But that's really just an excuse, and here's why. Everything “said” by a regulated vendor is considered labeling and must be consistent with the intended use of the product in question. Product packaging, labels, and user manuals are obviously labeling, as is conventional marketing – brochures, print ads, booth graphics, etc. Here's the gottcha: everything a sales rep, installer, field engineer, trainer or customer support person tells a customer, including spoken conversations, emails, instant messaging, everything, is labeling – none of which goes through corporate regulatory affairs and legal review. And with the exception of spoken conversations, everything is discoverable by the FDA or any plaintiff. This yawning disparity is rarely acknowledged. Certainly you don't want just any sales rep or field engineer officially blogging about your business, but an individual or a few select individuals can be trained to safely communicate through a blog. The advantages of blogging – done right – can be tremendous.

A blog is not like a static corporate web site or printed brochure. Blog content is frequently updated and correct. While I try to limit my writing to things I'm knowledgeable about, I make mistakes, and when I do (and I become aware of them) I post corrections. Every blog should have a policy on this – I typically post the correction as an update in order to preserve original text and show there's been a correction (rather than changing the text as if there was no mistake to begin with). A corrections policy is one of the many little details about effective blogging. As blogs proliferate, even vendors who don't publish a blog will have to make changes to “manage” this new type of media. Ignoring an incorrect blog post, or one that lacks balance is a mistake. When it comes to blogs, silence is complicity. I have always encouraged any reader to come forth with a correction or different point of view, and revised this blog in response.

This post was really inspired by a story I saw earlier this week, a tale of what not to do. Published in the Boston Globe, this story describes the unmasking of an anonymous blogger with an ax to grind.

It was a Perry Mason moment updated for the Internet age.

As Ivy League-educated pediatrician Robert P. Lindeman sat on the
stand in Suffolk Superior Court this month, defending himself in a
malpractice suit involving the death of a 12-year-old patient, the
opposing counsel startled him with a question.

Was Lindeman Flea?

Flea, jurors in the case didn't know, was the screen name for a
blogger who had written often and at length about a trial remarkably
similar to the one that was going on in the courtroom that day.

In
his blog, Flea had ridiculed the plaintiff's case and the plaintiff's
lawyer. He had revealed the defense strategy. He had accused members of
the jury of dozing.

With the jury looking on in puzzlement, Lindeman admitted that he was, in fact, Flea.

The
next morning, on May 15, he agreed to pay what members of Boston's
tight-knit legal community describe as a substantial settlement — case
closed.

Wow, how stupid was that? Pictured right is the cover from Wired's issue on radical transparency. For those that saw it, the animated gif didn't work, so it's been removed.