Recently Ellen Petry Leanse, head of enterprise marking communications with Google, sent me an article entitled “Leadership in the Age of Transparency,” published by Harvard Business Review (HBR). Ellen was on a panel I chaired at Enterprise Social 2.0 in Amsterdam and the article supported many of the remarks made in January by Ellen and others about corporate leadership, transparency and responsibility.
The core premise of the HBR article is that companies who want to establish themselves as leaders need to take responsibility for externalities or spillovers. Termed by economists, externalities is the concept that with most economic transactions there is an impact on a party (or parties) not directly involved in the transaction.
An example of an externality would be a company manufacturing a product that creates pollution that impacts the entire community. Whereas if I fireproof my home, my neighbors also see a spillover benefit as the safety of their home is improved because we live in a dense neighborhood and their house is very close to mine.
The article asserts that in today’s world where we are able to measure so much more (e.g. environmental impact, human behavior, disease outbreak, etc.), and people are more vocal and connected, companies must proactively address externalities if they are going to suceed. It is a fascinating and well crafted argument.
Another particularly useful part of the article is a sidebar that focuses on how to decide what externalities to focus on and respond to. This information provides the reader with thought provoking questions, which immediately make the material in the article actionable.
Finally, I want to point out that Google is called out as a company doing a good job in understanding the impact of its behavior on the world and is actively striving to create positive outcomes or spillovers. An example of how the company is doing this is included in the article.
Again, if you have a minute, I would encourage you to read this article and consider how your business is impacting society; how you might measure the impact of your company; and how stakeholder expectations may have changed. Clearly Facebook and Twitter provide fabulous mechanisms for understanding others’ perceptions of the impact your corporate entity may be having on the world.