From politician salaries to calorie counts on restaurant items, “transparency” is a key buzzword in government and business circles. However, high interest in cloud computing, data warehousing “to go,” and other analogous concepts beg the question of whether customers really want to peer inside the black box or whether an opaque approach works best.
Increases in the call for transparency are legion. Health inspectors post food safety grades for eating establishments. Websites track lists of political campaign donors. And restaurants redesign bars, kitchens, and more to show patrons how drinks and meals are prepared. All this, in order to give customers a window into processes for product and service creation.
And to be sure, there’s definitely even more opportunity for transparency in product creation, especially in financial services. As an example, Michael Lewis’ Big Short cites how via the securitization process, hundreds of subprime mortgages were packaged up and divvied into “tranches” of investment quality. Through securitization, it was tough to estimate the contents of a particular asset-backed security. One hedge fund manager exclaimed; “I didn’t know what the (expletive) was in the things. You couldn’t do the analysis. You couldn’t say, ‘Give me all the ones with all California in them.’ No one knew what was in them.”
Creating a product with so much complexity that teams of MBAs are necessary to decipher its contents surely is a recipe for confusion. And on the ugly side of things, perhaps that was the intention. Regardless, in an age of social media where a company’s reputation can be destroyed in five minutes or less, this avenue will not ensure long term success.
However, a key question is whether customers really want to peer inside the black box. After all, investment banks had very little difficulty offloading these impenetrable structured products. Plenty of hedge, pension and even sovereign wealth funds lined up to buy these complicated products—and most with no questions asked.
In the analytics market, there’s an adage that business users really don’t care how a particular solution works, just so long as it meets their needs. And while this may be true in some instances, there’s also ample opportunity to enlighten consumers (or in this case application users) as to the “value” received through peeling back the curtain on how a product or service is designed and delivered.
What say you? Do your customers really want transparency? Do they really need to know what’s in the black box?
Tags: analytics, Black Box, complexity, product marketing, transparency
Kinda…
We want transparency when we expect a brand or agency to follow certain standards. Banks are a good example.
Ivan
Ivan, do you want to see more transparency from only certain brands or industries? Thanks for commenting
Good post, Paul. Companies need to use common sense on this one. Transparency is important. Think about the concerns consumers have these days. Are products safe? Efficacious? Are services honest and fair? Our trust has been violated on numerous occasions even by once-venerable businesses. I personally feel better if I know information is readily available. Does it always have to be plastered in plain sight? No. But it’s good to let consumers know they can access it if they want or need to. Even for complicated financial services. And I’m with you: tired of all the talk of transparency. I want to be shown. Without fanfare. As a matter of conducting day-in, day-out business.
Claire, appreciate your insight and comments. With the internet of the past 20 years and social media of the past 5-7, I’m of the belief that a company either provides transparency or employees (past and present), anonymous insiders, whistleblowers etc, provide it for you. Probably best to be open and upfront as corporate secrets seem to have a short shelf life! A better question, however is whether customers actually care about transparency. I’m not convinced.
Funny, Paul, I just returned from a luncheon where the speaker – Hildy Gottlieb – discussed transparency and community collaboration in the nonprofit sector. The premise focuses on how we can collectively aspire to reach higher, and with that, achieve more. Right now, she is blogging about developing a conflict of interest policy for her new nonprofit called Creating the Future (http://www.creatingthefuture.org/). Can you imagine the corporate sector doing that?
True, nonprofit orgs don’t necessarily market tangible products as businesses do, but I found Hildy’s concepts enlightening and uplifting. For those stakeholders who want to engage in the process, being open and transparent may produce some interesting results for organizations.
Thanks for the comment Elaine. The concept of transparency is probably even more important in the not for profit arena as there is heightened interest in how monies are spent. That said, there is ample opportunity for-profit enterprises to peel the curtain back and showcase how they too are driving and delivering value. The key question still outstanding is whether customers actually care…