When Motives Become Clear

Disclosure Is Not Transparency

Transparency, most of us would agree, is a positive thing.  And disclosure is an obvious way to get there.

But transparency and disclosure are not the same thing. And confusing them can actually harm transparency.

So – what’s the difference between disclosure and transparency?

Transparency and Trust

Besides “able to transmit light,” the dictionary defines transparent as:

  • easily seen through, recognized, or detected: transparent excuses.
  • manifest; obvious: a story with a transparent plot.

In the simplest business terms, “transparent” means you can tell what’s going on.

If the link between transparency and trust isn’t self-evident, here are a few citations to help clarify it:

If I can see what’s going on, I know that I am not being misled. Motives become clear. Credibility is affirmed. Transparency is indeed a trust virtue.

Disclosure

Disclosure is a time-honored tool of regulators to achieve transparency. Food and pharmaceutical manufacturers are required to disclose ingredients, medical authors are required to reveal payment sources, the SEC frequently proposes disclosure as a tool, and so on.

Certainly you can’t find out what’s going on if information is actually hidden.  So disclosure is a necessary condition for transparency. But it’s hardly a sufficient one.

I don’t have much to say about the cost/benefit trade-off of greater disclosure in pursuit of transparency. Sometimes the benefit is obvious, other times not so much, sometimes not at all.

What’s more interesting to me is how the blind pursuit of disclosure can actually reduce transparency – even reduce people’s awareness of the distinction.

Over-Disclosure

Is it possible to have too much disclosure? So much disclosure that information gets lost in the blizzard of data?

On the face of it, disclosure is the handmaiden of transparency. But if disclosure becomes the end rather than the means, if regulators and consumer advocates become fixated on indicators rather than on what they indicate, then disclosure can actually become self-defeating.

Lawyers know that massive responses to discovery requests can overwhelm opposing counsel. Cheating spouses know that the best lies are those that disclose the most truth. Consumer lenders know to fast-talk the disclaimers at the end of radio ads, much like the small print on the ads and loan statements.

If disclosure isn’t accompanied by an ethos of transparency, it can be positively harmful. It is like crossing your fingers behind your back, taking movie reviews out of context, or word parsing a la “it depends on what the meaning of the word ‘is’ is.”

A trustworthy person, team or company will not settle for disclosure, but seek to offer transparency. A competent regulator will always remember that disclosure is just evidence, and partial evidence at that. And a wise buyer will always look for the spirit of transparency that may, or may not, underlie the act of disclosure.

Trust relies on both data and intent.

 

5 replies
  1. David Heath
    David Heath says:

    To my mind, it feels like you’ve only partly addressed the issue here.

    I was expecting you to take up a line something like, “disclosure is the process whereby we reveal only as much as is necessary to give the impression of transparency.”

    (and that ‘quote’ brings to mind the old line that we only hire lawyers when people stop believing our lies!)

    …and thanks for the ‘disinfectant’ link – I know the line well, but never knew where it came from.

    Reply
  2. Bob Whipple "The Trust Ambassador"
    Bob Whipple "The Trust Ambassador" says:

    Thanks for a good description of the difference between disclosure and transparency, Charlie.
    The topic of transparency has fascinated me for quite a while. While in most cases, being more transparent helps build trust, it is not always the case. There are times when being transparent is illegal (like I cannot tell you that my company is planning to merge with another one). There are times when being transparent is stupid (like why would I want to tell you that I am willing to pay more than you are asking for that vehicle). There are times that being transparent is unkind (like should I really tell you that your new hairdo makes you look like a muskrat died on your head.)
    Transparency is not the end all, it needs to be applied with good judgment, but then we have to figure out where to draw the line, and we are right back to how transparent we should be.

    Reply
  3. Barbara Kimmel
    Barbara Kimmel says:

    Hi Charlie- interesting article. I’m with David Heath on this one. Disclosure vs. transparency “feel” similar to compliance vs. trust. The first are regulated while the latter are voluntary. Our FACTS Framework confirms that the most trustworthy companies disclose more AND their leaders are more transparent in their communications with their stakeholders.

    Reply
  4. Charlie Green
    Charlie Green says:

    Interesting comments…Barbara and David, I’m with you on David’s arch line “disclosure is the process whereby we reveal only as much as is necessary to give the impression of transparency.” I will transparently credit you when I steal that line.

    Bob, I agree with you that transparency is not an unalloyed good – like most things in life, it depends. That said – and I expect you’d agree – the greater need in the world is for more transparency, not less; and the greater error I find people making in seeking trust is being not transparent enough, rather than being too transparent.

    In this regard transparency is linked to risk. Humans over-rate the near term vs. the long term, and overrate the negative vs. the positive. Which means we double-overrate the impact of near-term negatives, and double-underrate the impact of long term good. Since you risk near-term negative results by being transparent, we disproportionately censor ourselves or hold things back, out of fear. Which means we don’t take risks, which means we guarantee long-term trust failure, because there is no trust without risk.

    Transparency is not without limits; but it the day-to-day world, it generally represents a challenge and an opportunity for creating trust.

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *