he word transparency pops up in news 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. 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?" 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.

As we note in our book, Transparency: Creating 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 the activity of 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 the flow of information 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 unimpeded 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.

While we believe leaders must set the example for their organizations by demanding candor and transparency, current leaders have less and less choice in the matter. In today's world, where information travels globally with the click of a mouse, transparency is no longer simply desirable, it is becoming unavoidable.

There was a time when the worst thing that could happen to an organization with nasty secrets was the emergence of a determined and credible insider with the ear of a respected journalist. But with the rise of blogs, the once vulnerable and isolated whistleblower has ready access to an electronic ally with a new set of superpowers. Whistleblowers no longer have to persuade reporters or put their careers at risk by going public. They can now make their charges anonymously, and when they do, blogs allow the information to be disseminated throughout cyberspace at the speed of light.

No leader can afford to ignore such a force. Even when damaging information is first revealed by the traditional media, the public's emotional response seems to be heightened somehow in the blogosphere. Economically lethal boycotts can be launched in seconds through blogs. The primary reason for not releasing a dangerous product, such as Vioxx with its increased risk of heart attack or Guidant's defibrillators with their tendency toward electrical failure, should, of course, be a moral one. But every leader needs to keep in mind that the blogosphere is always there, waiting, watching, opining, and persuading.

Blogs are uniquely powerful tools for promoting products, brands, and ideas, but they can also be ruthless and all but unstoppable in punishing what they disapprove of. And as their numbers soar, blogs will only get more powerful.

Leaders who will thrive and whose organizations will flourish in this era of ubiquitous electronic tattletales are the ones who strive to make their organizations as transparent as possible. Despite legitimate moral and legal limits on disclosure, leaders should at least aspire to a policy of "no secrets." The first beneficiaries of such a policy are the members of the organization itself, who are in a position to act on maximum rather than restricted information.

First, leaders often routinely mishandle information, setting a bad example for the entire group. A common malady among organizational insiders is hoarding information. This is one of many ways information gets stuck in organizations and is kept from flowing to those who need it to make solid decisions.

Many leaders continue to act as if they can hold awkward or damaging truths so close that the outside world will not learn of them. Those days are over. The rise of the blog has transformed the very idea of transparency.

A dangerous tendency toward silence may be an accepted but unspoken value of an entire discipline, not just a particular organization. For example, in a paper on factors that silence conflict, Harvard Business School professors Leslie Perlow and Nelson Repenning cite research among automotive industry engineers that found "a basic cultural commandment in engineering—don't tell someone you have a problem unless you have a solution." Such unspoken professional rules may have a profound impact on how an organization functions. We can't help but wonder, for instance, if the lack of a ready solution was what prompted NASA to okay both the tragic Challenger and Columbia shuttle flights in spite of staff misgivings about the former's O-rings and the latter's foam insulation. Implicit values may be so entrenched that they are never fully uncovered, even in the course of an extensive inquiry following a tragic accident.

As we have found again and again, one of the dangerous ironies of leadership is that those at the top often think they know more than they do. There seems to be an inexorable filtering out of bad news that often leaves those in the highest positions with potentially disastrous information gaps. Our research, for instance, shows that the higher leaders rise, the less honest feedback they get from followers about their leadership. Direct reports understandably hesitate to enumerate the boss's leadership failings. And so top leaders easily lose touch with the ways others see them and may remain poor listeners, abrasive, tuned out, or otherwise clueless about their own limitations.

The wisest leaders seek broad counsel, not because they are so enlightened but because they need it. Power does not confer infallibility. There's a compelling reason to become more open to information from people at every level: those close to the action usually know more about what's actually going on with clients, with production or customer service, than do those on the top floors. (There's truth to the maxim, "None of us is as smart as all of us.") Effective leaders find their own ways to elicit many points of view. The CEO of a Pacific Rim bank, for instance, schedules twenty days each year to meet with groups of his top eight hundred people, forty at a time. Aware that isolation in a corner office may weaken his ability to make good decisions, he seeks frank feedback from many sources on a regular basis.

But leaders have to do more than ask for the counsel of others. They have to hear it. All of us would do well to reflect on how receptive we are to the suggestions and opinions of others and alternate points of view. One motive for turning a deaf ear to what others have to say seems to be sheer hubris: leaders often believe they are wiser than all those around them. The literature on executive narcissism tells us that the self-confidence top executives need can easily blur into a blind spot, an unwillingness to turn to others for advice. Kevin Sharer, CEO of Amgen, keeps a cautionary portrait of General George Custer in his office to remind himself of the dangers of overestimating his leadership ability. And Sharer commissioned a portrait of Horatio Nelson to add to his office gallery, after reading a biography of the English naval hero and learning of his genius for collaborative decision making and consensus building.

A universal problem is that when staff speak to their leader, the very nature of the message tends to change. The message is likely to be spun, softened, and colored in ways calculated to make it more acceptable to the person in power. To continue to receive reliable information, those in power must be aware that whatever they hear from their direct reports has probably been heavily edited, if only to make the message more palatable and to make the messenger appear more valuable.

In most organizations, hidden ground rules govern what can be said and what cannot. Such cultural rules run deep, and they typically resist change. At NASA, for example, the cultural ground rules that contributed to the Challenger explosion sixteen years before were still operating in 2003, leading to the Columbia shuttle disaster. The panel that investigated the Columbia tragedy went beyond the technical cause—a chunk of flyaway foam that damaged a wing—to blame an organizational culture where engineers were afraid to raise safety concerns with managers more worried about meeting flight schedules than about averting risks. Head of NASA Sean O'Keefe said in the aftermath of the Columbia tragedy that no employee who speaks up about safety concerns, even to outsiders, would be reprimanded in any way. But since 2003, NASA has become even less transparent as a result of pressure put on political appointees to the agency to keep employees, including a NASA scientist concerned about global warming, from publicly expressing views not in keeping with current administration policies.

Everyone quickly realizes that it is folly to speak unwanted truth to power, no matter how crucial the information may be. Leaders must show that speaking up is not just safe but mandatory, and that no information of substance is out of bounds. It is not always easy for even the most confident leaders to embrace hard truths, especially when they are presented awkwardly by someone who is neither a friend nor a trusted colleague. But failing to hear critical information, whoever delivers it, may put the entire enterprise at risk.

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NOTE

Adapted by permission of the publisher, John Wiley & Sons, Inc., from Transparency: Creating a Culture of Candor by Warren Bennis, Daniel Goleman, and James O'Toole. Copyright © 2008 by John Wiley & Sons, Inc. All rights reserved.