Trend: Sharing inside information has become a viable strategy for many leaders.
Wired describes how companies and their leaders are using the Internet to communicate more openly with the public. Excerpts below.
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.
The Internet has inverted the social physics of information. Companies used to assume that details about their internal workings were valuable precisely because they were secret. If you were cagey about your plans, you had the upper hand; if you kept your next big idea to yourself, people couldn't steal it. Now, billion- dollar ideas come to CEOs who give them away; corporations that publicize their failings grow stronger. Power comes not from your Rolodex but from how many bloggers link to you - and everyone trembles before search engine rankings.
Indeed, network algorithms do not favor the cagey or secretive. They favor the prolific, the outgoing, the shameless. In the Reputation Economy, even a healthy, happy company needs to worry about its good name if only six or seven people are talking about (and linking to) it. When that's the case, "a casual reader has only a few opinions to determine what sort of company or person you are," says Peter Hirshberg, chair of the blog search engine Technorati. One bad blog post can kill you. But if you've got hundreds or thousands of sites linking to you and commenting on you, the law of averages takes over, and odds are the opinion will be accurate: The cranks will be outweighed by cooler heads. Again, the Net rewards the transparent.7
In January, bloggers began passing around a story that was disastrous for Southwest Airlines: The company had allegedly refused to let an overweight man with hepatitis C board a flight unless he bought two seats - even though he'd gained weight because of the disease and was traveling to a lifesaving operation. Southwest immediately posted an apology and explanation for the error. It even allowed a link to the negative story and then - in one of those judo moves - managed the torrent of hits and links into a net positive. "People don't want to hear about it in The Wall Street Journal - they want to hear about it on the blog," Southwest's Berg says. Most commenters accepted the apology, and some plunged into a sophisticated discussion of the economics of carrying overweight passengers.
There's no going back, yet many young CEOs worry that they're on a treadmill: Once they've started blogging, they can't stop, and that takes valuable time away from running their businesses. They also worry that all their witty little missives are simply giving critics fuel for later pyres. One new firm, Reputation Defender, last year began offering services to "clean up your tracks" online - by emailing sites and discussion forums that contain unflattering information and asking, nicely, to have it removed. "We do search and destroy," says Michael Fertik, the company's founder.