10 Rules for Entrepreneurs: Be Transparent

by Lynnette Nolan | Jan 04, 2012

In November I posted 10 Rules for Entrepreneurs, my list of the top 10 lessons I’ve learned in business. I’ve since began exploring each of my rules a bit further, sharing with you the experiences behind the rules. This week I’d like to share a story about Rule #7, “Be transparent. The more people know, the better.”

When I was in my 20s, I had a short stint working as an arms control researcher at the Pentagon. It was all top-secret stuff requiring many levels of security clearances. One aspect of top-secret security is the so-called “need to know” rule. Regardless of someone’s security clearance level, if they don’t need to know something, you don’t tell them; and the fewer people who know anything, the better.

In such an environment, the first thing you think of when you meet someone is, “what does he know that I don’t know and he’s not telling?” Information quickly becomes a currency that buys you favors, power, and prestige. The pervasive secrecy makes for an excruciating working experience. At least that’s the way I felt about it, being near the bottom of the totem pole. I resolved that if I were ever in a situation where I could set the rules for transparency, it would be the opposite of my experience in the government.

In business, the idea of “need to know,” exists only in the narrowest circumstances, such as compensation and personnel records. Otherwise, my recommendation is always to be completely open with people about what’s going on. That doesn’t mean cc’ing the entire company on emails or holding large meetings, though. If employees have enough on their plates, they won’t seek out unnecessary information because they simply won’t have the time. If I am on the cc list for something that I don’t have time for, I simply ask politely to be removed from future communication. That’s better than just deleting the mail, or blocking it, because it also sends a not-so-subtle message about too much email. On the other hand, if someone requests to be copied on email, I’m generally happy to oblige, but if I don’t see the relevance, I’ll wonder if the individual needs to have their deliverables tightened up.

The only exception to my “open book” policy is where information could leak out and be damaging to the company. For example, my company is now public and if our financial results leaked out before our quarterly earnings release, we could be in big trouble. Similarly, I’m sure that our competitors would love to see our strategic plan and product roadmap, so the fewer people who have their hands on such documents; the less likely they are to leak out. But as far as people inside the company knowing what is going on and what our plans are, we discuss those things openly all the time.

-Dave Friend, Carbonite CEO