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How Transparent Should a Startup CEO be?

29 May

Transparency is one of the best qualities that startups can embed in their culture. I will go as far as saying that transparency is almost an exclusive privilege of small companies before attorneys, investors and the board becomes part of the everyday operations of an organization. When you are open and honest about all aspect of the company, employees love it and it improves the ability for everybody to contribute towards well known goals.

Every other entrepreneur I’ve met wants to establish an extremely open culture. However, there are only a handful who regularly exercise transparency as part of the day to day operations of their startup.

Why?

Very simple, being really transparent is REALLY HARD!

As human beings, we are genetically wired to feel more confident when we have the opportunity and access to the relevant information to make our own decisions. However, we are also genetically structured to feel fear and uncertainty when we need to exercise that control. As a result, you find that most people really strive really hard to have access to information and control over certain situation but only a small group of those people know how to exercise that control.

Hasn’t this happened to you before? The employee that wants to be promoted as manager, control a specific project, be the owners of specific strategic initiative but when you offer then full control over the situation he/she paralyzes and doesn’t know what to do. Something similar happens in terms of being completely transparent about all aspects of your startup. Only a small group of people have the ability to receive bad news and stay focused on the task at hand or the long term goals. As a CEO, being transparent entails sharing both good and bad news about the operations of your company. When bad news are disclosed, inevitably some people are going to panic, some others are going to be very judgmental and you are obviously going to feel really bad about the whole situation.

What to do then?

Nobody but you can honestly answer this. The answer to this question is really specific to the culture of each company. In my experience, being transparent and open about your startup is totally worth it regardless of the difficult times. Make no mistake; you are always going to face difficult times. At Tellago Studios and Tellago, we try to be open about the current state of our projects, customers, prospects, financials and all other relevant aspects of the company. In my opinion, openness and remaining loyal to your core values builds trust and trust is one of the biggest assets you can have when facing a storm. If you have done your homework, when difficult times arises, you will surprisingly find that the majority of the company will trust the management team to address the situation. Also, although unpleasant, a facing crisis from time to time is not necessarily a bad thing. It helps to test the foundations of the company, it quickly highlights the quality of the people in your organization and it helps you make necessary adjustments. More about that on a future post….

So….What do you think? How transparent should a startup CEO be?

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Posted by on May 29, 2012 in Uncategorized

 

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