Business value increases with transparency.
‘In 2006, restauranteur Jay Porter banned tipping in his San Diego restaurant, the Linkery. Instead, he implemented a service charge, and split it—transparently—amongst staff. Porter also ran a second restaurant that still allowed tipping, and this made for a useful comparison.
“Once established, the tipless/service charge model made us more successful in every dimension,” he said. The staff worked as a team, instead of selfishly trying to maximize their own tips. Servers and chefs enjoyed equal status, and staffed turnover dropped. The policy was so successful, says Porter, that it “gave us a huge competitive advantage in the marketplace; this in turn allowed us to serve a much higher quality of food and take lower margins on it.”‘ —FastCoExist
Businesses that are open, transparent, and cooperative are more resilient because they rely on people, not processes. In the second example above, people worked together because the remuneration was transparent. There was no way to game the system as an individual. This type of business model focuses on long-term value, not short-term profit. It can also foster innovation, as diverse ideas come to the fore when people openly share their ideas. The workers became a social network, cooperating in order to make the whole restaurant better.
Knowledge networks are similar. They function well when they are 1) based on openness, which 2) enables transparency, and 3) in turn fosters diversity – all of which reinforce the basic principle of openness. In such a transparent workplace, the role of management is to give workers a job worth doing, the tools to do it, recognition of a job well done and then let them manage themselves.
A socially networked business that enables open conversations around work can make better and faster decisions. This is the business value of social networks. But it is all based on trust, for without trust, there is no sharing. Transparency sets the stage for trust to develop.