If you have never heard the term “operational transparency” before, then I am a happy camper because it means I coined a new phrase. Operational transparency is just as it sounds—providing transparency in the way you operate, both internally and externally. Let us deal with them separately.
External Operational Transparency
One of the best examples of external operational transparency is FEDEX and UPS. For those of you who have ever sent a package with them, you know how easy it is to track the delivery of your package. However, it was not always that way. Remember the days when you had to call customer service to find out why your package had not arrived at its destination? I bet FEDEX and UPS do too. Those types of calls used to represent the majority of calls their customer service representatives received.
They knew where the packages were and they knew by when they would arrive. So why not offer that information to the customer? By offering a website and a tracking number, not only could the customer track his or her own package, it also dramatically reduced the number of phone calls customer service representatives received. This new way of doing business was brilliant for many reasons as follows:
• It reduced the administrative (and financial burden) on FEDEX and UPS.
• It gave the customer access to real-time delivery information about their package.
• It empowered the customer to take control of the order.
Everybody wins! The customer can see the status of the package in the matter of a few seconds, and FEDEX and UPS no longer field phone calls about the status of every package. They do not waste fielding calls from customers asking, “Where is my package?” They have put that onus on the customer and made it in the customer’s best interests because they provide real-time information about the location of the package.
Every inquiry a customer makes is failure work, and the more transparent you are, the less failure work you will do. Operational transparency reduces the time and effort spent on answering basic questions and inquiries. So how do you make yourself more transparent externally? Here are some questions to consider:
• What information is available to us that would be valuable to customers and/or suppliers (think package location for FEDEX customers)?
• Are we comfortable sharing that information (it needs to be accurate)?
• What types of questions do we receive most frequently from customers and business partners? Can we offer any tools that allow customers and business partners to access this information on their own?
We can boil it down to three key factors when determining whether or not to be externally transparent:
• Valuable information—delivery information, lead times, pricing (think car dealers), industry trends
• Accurate information
• Improved experience—reduces customer workload, timeline, and frustration and increases engagement and loyalty
Do you have information that would be useful for a customer or business partner to have?
Do you have accurate information to share?
Would this information improve the customer’s experience? Can it reduce failure work?
If yes to all three questions, why not do something about it?
How Transparent Do You Want to Be?
When considering your next steps before implementing operational transparency, you first have to decide how transparent you want to be. In some cases, like the FEDEX example earlier, there are advantages to being fully transparent. In other cases, you might benefit more from being translucent, or even opaque.
There are four factors to consider when determining how transparent you want to be. Figure 25.1 shows those fours factors and what the different levels of transparency might look like for your organization.
Figure 25.1 Levels of operational transparency
1. Information: What information will you provide customers so that you can drive why they contact you? FEDEX benefits from being transparent by providing customers with complete information—a package tracking number and a website. This way, customers will not call and ask, “Where is my package?”
2. Access: How much access do you want to give your customers? Should it be easy or difficult for them to contact you? The Yahoo Fantasy Sports websites benefit from being opaque. When customers try to contact them with a question, there is no phone number, and e-mails are not returned for 24 to 36 hours. By then, customers have usually figured out a solution or moved on.
3. Revenue Opportunities: What revenue can you generate from customers contacting you? Some businesses, like cell phone providers, can generate revenue by being opaque. They need customers to call them so that they can offer new services and wireless packages.
4. Customer Experience: Can you improve the customer experience through your level of transparency? Apple provides a better customer experience by being translucent about new products. They leak out enough information to get customers interested, but not enough that they know everything.
You have to be thoughtful about how you look at each of these factors. Is there more of a benefit to giving the customer more information than keeping it from them? Are there more revenue opportunities if you drive customers to contact you? If you provide more information or better access, will it improve the customer experience or make no difference at all?
These are the types of questions you need to be asking when determining the right level of transparency.
Internal Operational Transparency
Have you ever had to field questions from employees about how decisions are made? Decisions about hiring, performance, growth, or strategy? If so (and you know you all have answered these questions), then you are not transparent enough in your internal operations.
How do you respond to those questions—are you transparent?
Internally, the more transparent you are, the less your employees take up time wondering about how decisions are made, the less time they spend complaining about bureaucracy, and the less time they are frustrated about the approval process. If you set parameters about how decisions will be made, whether those be investment decisions, strategic decisions, or decisions about which ideas will be implemented, employees will not waste time asking why a decision was made a certain way. They will spend less time questioning and more time doing.
Employees know when their organization is not being transparent. It discourages trust. It causes doubt to creep in about how genuine the organization and its leaders are. Moreover, once doubt creeps in, retention becomes a lot more difficult. Why would anyone want to work for an organization he or she does not trust?
Be clear and transparent about how the organization will make decisions and prioritize initiatives. Share as much relevant information as you can with employees to improve performance. The more employees know, the less they do not know. The less they do not know, the less they conjure up worst-case scenarios. The less they conjure up worst-case scenarios, the more time they spend being productive.
When employees know how decisions will be made, they will begin to self-select based on the parameters that have been communicated.
If I know that the company will only invest in new initiatives expected to make at least a 30 percent profit margin, I would not suggest ideas that will make a 10 percent margin.
If I know the company wants to become the largest volume producer of widgets, I would not suggest initiatives that are going to cut back on production volume to save money.
As I have discussed many times in this book, everything stems from having a clearly communicated ideal future state. Internal operational transparency comes from being open and transparent about how that ideal future state will be achieved.
Have you set specific performance expectations on each employee?
Do employees know how their performance is going to be measured and what steps will be taken to help them develop?
I met with a $300 million organization with more than 3,000 employees and the CEO told me that they have identified high-potential employees in their organization, but those employees have not been told they were high potentials and there was no plan in place for their development. That is not transparency. The following are what I told them to do:
• Determine the characteristics exhibited by a high-potential employee.
• Identify who the high-potential employees are.
• Tell them that they have been identified as a high-potential employee.
• Communicate their options for development.
• Monitor them to ensure they are continuously being challenged.
They were transparent about what they expected from their employees and gave them the opportunity to thrive.
Remember the three key factors to operational transparency and then you can apply them either internally or externally:
• Useful information
• Accurate information
• Information that improves the customer/employee experience and/or reduces your organization’s failure work