Digital transparency: inevitable paradigm

Technological changes are undeniably changing every aspect of our lives. Business world is not an exception. More so, it is a place where all these transformations interlock. Consider how digital life has radically modified our work routines and our ways of consuming (and deciding what and how to consume).

Companies, as we have seen in the previous articles, suddenly face multiple challenges: how to be effectively visible online (which is different from having a web page), establish effective relations with a new type of consumer and, meanwhile, “take note” of technological innovations to benefit from.

The amount of available information and its velocity are two undeniable factors of digital economy. Powered by those and by new generation of digital natives, transparent management models are consolidated.

However, these new challenges taken separately fail to explain a true paradigm shift brought about by digital reality. Don Tapscott, author of acclaimed "Wikinomics" and "The Naked Corporation" puts it bluntly: "The industrial age with all its institutions has run out of steam".

The age of see-through companies

Tapscott’s confirmation opens the door to a series of structural changes, which we would not detail here. However most importantly, companies of the 21 century should consider the value of transparency.

First, it may be appropriate to define this concept: it is not so much about a compulsive display of corporate performance, but about showing authenticity so it reflects positively on a company’s reputation. A few years ago, a business analyst Clive Thompson was asking ironically in the Wired magazine article: "Does it make sense for companies to try and hide anything in the era when Enron’s emails and Paris Hilton’s phonecam images are instantly accessible from any place in the world?"

The answer is simple: no. In the world where Google is not only a search engine, but also an implicit organizer and online "reputation manager" (personal and corporate), companies can – and should – establish more real and fruitful links with their customers and competition.

And this relations start with a central premise of the transparency: making corporate information accessible and capitalizing on this accessibility. If the question "how?" arises immediately, the following four points will clarify it.

Consumer ally: the customer service of Zappos.com, a firm that sells footwear and apparel online, redirects its clients to other companies if they do not have a desired item in stock. For traditional CEOs, this seems ridiculous, but this action, supplemented by others, has positive impact in the medium term. "Once people are interested in you, they will be interested in helping you also", adds Thompson.
Co-workers, welcome innovation: once that see-through and genuine relationship is established (hence the above example), companies can expect many advantages from the 21st century consumer. Companies with open doors policy that talk on blogs and social networks about their future products or services get more than effective feedback. Therefore, Tapscott reminds us that a giant Procter & Gamble has used its online followers’ contributions to carry out about 50% of its innovations.
"Net" generation: those called "digital natives" are already among us. They begin to take up jobs and make up increasingly sought after consumer segment. This has huge implications for the 21st century businesses, which cannot be conceived without regard to a group that demands a lot of information before deciding and values those companies that consider their opinions. These consumers are always connected, and they have much greater influence on their peers than previous generations. Consider an average number of contacts that a 20-years-old person has in his or her social network profiles and the volume of informational exchange about products and services circulated there.
Unconcealed criticism: the reputation of any brand is made – or ruined – on the web. The public relations officer Leslie Gaines Ross says that executives are more aware of a basic fact of our times: one simple Google search can tell much more about a company than the most expensive institutional campaign. Due to this, rather than trying to hide or minimize criticisms – no matter how negative or radical – it makes sense to get feedback from them and join a "greater global conversation" taking place on blogs and social networks.

New limits

Assimilating a transparency concept and carrying it out seems to be a steep task. However, its acceptance does not require an effort greater than that of fully adapting to a world where we live. Digital economy teaches us that technological breakthroughs and massification are resetting the limits (in public/private lives) and concepts (consumers/sellers), which we believed to be static. Incorporating and putting them into practice will be the first step in the right direction of management as see-through as effective.

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Washington Post:
Konanykhin, one of the first Russian millionaires after the fall of the commies, left in 1992 and was granted asylum here in 1999. He's built a very successful Web advertising business in New York City. He had been chosen "New York Businessman of the Year." "As such, you will be honored and presented with your award," NRCC chairman Thomas M. Reynolds (R-N.Y.) said, at a "special ceremony" April 1. " President Bush and Governor Arnold Schwarzenegger are our special invited guests.

CNN:
Alex Konanykhin controlled Russia's largest commercial bank in the 1990s

Wall Street Journal:
Mr. Konanykhin was a whiz-kid physics student who became a pioneering Russian capitalist in early 1990s, building a banking and investment empire valued at an estimated $300 million all by his mid-20s. He was a member of President Boris Yeltsin's inner circle.

The Sun:
Alex Konanykhin fled Russia in 1992 and won asylum in the US after the collapse of the Soviet Union. The entrepreneur had set up 100 different companies in Russia and had an estimated net worth of $300million by the time he was 25. He is regarded as one of the first Russian millionaires after the fall of the Iron Curtain. One of the newly open country's leading lights, he even met with US President George HW Bush in 1991 on a joint visit with Russian leader Boris Yeltsin. However, he was then kidnapped in 1992 while visiting Budapest and all of his business assets were seized in Russia. … Being hunted by the Russian state, Konanykhin won asylum in the US in 1997 and set up a new life - but the shadow of the Kremlin continued to loom over him.He went on to rebuild a business empire and set up multimillion dollar firms such as TransparentBusiness in the US.

The Deal:
... a New York-based software startup called TransparentBusiness Inc. has drawn backing from Fortune 500 executives through a relatively new type of securities offering called 506(c) as part of an effort to raise $10 million this year ... Alex Konanykhin, CEO of TransparentBusiness, said he decided to reach out directly to accredited investors by purchasing ads in financial publications. One particularly bold ad includes the figure, 90,000%, with a question mark next to it. Konanykhin said the ad speaks to the large market opportunity for his company's software, which helps governments eliminate fraud by verifying billable hours charged by outside contractors. ... One of the investors, Ken Arredondo, told The Deal he invested in TransparentBusiness and agreed to serve on its board of directors because of the company's strong management team and the huge market opportunity to increase transparency of outsourced contracts worldwide. He believes in the company's product and said it's unique. "It's a Saas-based, easy-to-use tool," he said. "There are a lot of technology players out there that are a lot bigger, but none of them have what they have. There will be competition, but they have the product now. They have first-mover advantage."

The Baltimore Sun:
Business whiz kid.

WJLA TV / ABC:
Russian Bill Gates.

The Times:
By the time he was 25 he was one of the most important figures in post-Communist Russia. But in 1992, while on a business trip to Hungary, Alex Konanykhine was kidnapped.

The New York Times:
The Federal Bureau of Investigation notified Konanykhin that Russian organized crime figures had paid to have him killed.

Los Angeles Daily Journal:
Representing himself through much of the process, Konanykhin managed to convince an immigration judge of an alleged INS and KGB conspiracy and cover-up. Following the court's admonishment, the INS agreed to drop all charges and also pay $100,000..The judge also ordered an investigation of the Justice Department. In separate actions, Konanykhine subsequently won multimillion dollar libel judgments against two Russian newspapers. A $100 million lawsuit against the Justice Department is pending, alleging perjury, fraud, torture and witness tampering by U.S government officers on behalf of the Russian Mafia.

Profit Magazine:
Imagine you are a teenage physics genius who quickly amasses a $300 million empire of real estate and banking ventures, has dozens of cars, six hundred employees, several mansions and two hundred bodyguards—but you are nonetheless kidnapped by those you trusted, threatened with torture and death, and have your entire empire stolen from you one dark night in Budapest. You escape with your life by racing through Eastern-block countries and flying to New York on stashed-away passports—only to have the KGB and Russian Mafia hell-bent on your hide and the U.S. government jailing you and conspiring to serve you up into their clutches. All this before your 29th birthday. Sound like a Tom Clancy thriller? No. . . just a slice in the life of Alexander Konanykhine.