Monthly Archives: February 2008

Transparency – too much of a good thing?

An interesting debate on transparency seems to have spontaneously broken out around the blogosphere. Frank Buytendijk wrote a thoughtful piece on the topic and although he sees significant upside for technology enabled transparency:

Transparency is a competitive weapon to differentiate from the competition in attracting capital, informing customers about the value proposition (not only price) and in cost efficiencies by driving down the transaction costs in the value chain. Empowering the knowledge workers leads to more organizational collaboration, everyone being on the same page (focus and alignment) and as a result more ambitious targets.

but he also worries that perfect information leading to perfect competition will destroy margins:

The conclusion is simple. Part of your profitability exist because of intransparency. Transparency can lead to margin erosion. Is that what you are looking for?

Nick Carr plied the same path and ended up concluding:

You have to wonder whether, as what was once opaque is made transparent, the bolder among us will lose the incentive to strike out for undiscovered territory. What’s the point when every secret becomes, in a real-time instant, common knowledge?

These ponderings I classify similarly to the famous quote in 1899 from the then Commissioner of the US Office of Patents who said:

Everything that can be invented has been invented. 

From the consumer perspective (and indeed for that matter from the pov of all stakeholders)such transparency can be only a good thing. With still 4 out of 6 billion on the planet excluded from meaningful participation in markets we have a long way to go and plenty of competitive space left before we reach this economic utopia of perfect competition, perfect information and no barriers to entry. But supposing we did reach it, I still think competition would thrive though the playing field of differentiation might focus more on dimensions of quality, trust, responsiveness and stakeholder assurance. Maybe then we will see the functioning of the perfect market place, a pure manifestation of economic theory.