One of the biggest struggles for a CEO, especially of a small company, is feeling alone in your decisions. Running a business, and running it well, is hard and often lonely work. Sometimes you can see a good way forward but you get pushback from your team because they can’t see the big picture; or you’ll have a hard, complicated decision to make and you’d really just like to get a second or third opinion. Well, I can tell you that instead of holding all of these decisions and the “big picture view” by yourself, you’ll serve yourself and your company well to share as much as you can. Being open and transparent about how your business works and how decisions are made will create buy-in from your team and provide an entire team’s worth of support and feedback. I was recently on a panel for DrupalCon North America, Leadership at the intersection of business and open source, and we covered a wide range of topics. I want to use this post to expand a bit on our discussion about transparency.
I know that opening up your finances or allowing other people into your decision processes can be scary; it isn’t the way most people are taught to run a business or “be the boss”. But it is a powerful business tool that is often undervalued. Let’s break down the pros and cons, and I’ll share how we’ve implemented both open books and active business participation with my entire team. I should note that we are a team of 5 people right now, though I have also been a part of this process at a company of 60 people. I truly believe that open business practices should be the basis of any company at any size, and I really feel like the benefits especially affect small companies by huge degrees.
Examples of transparency and engagement
Here are some examples of this from the last few years at Osio Labs:
Coming from a positive financial position, 2018 was a very profitable year for us. We were in a position to invest our money in diversifying and growing our business for future stability. As I started to outline different paths we could take, I realized that I was going to need help with this scale of decision. I did a bunch of initial research, shared it with the team and through their feedback we ended up deciding together which new market to invest in (Node.js). When we got to our final decision, the whole team threw themselves into the work and believed in what we were doing and why. Even more importantly for me personally, I didn’t feel like I was carrying the weight of this entire massive decision only on my shoulders. We ended up changing course a few times through the process. Getting feedback from my team helped bring things to light that I either couldn’t know or was blinded to by being overwhelmed with all of my research. This was a major course change for our company. It was a better decision with the whole company on board because we were all involved in the process.
To look at this from another perspective, 2020 was a very hard year for most businesses, between the pandemic and the recession it caused. We, like so many other companies, had a significant drop in revenue. Since we share our company’s financial status every month, the entire team understood the financial effect as it unfolded. On the one hand, of course this made everyone aware of the fact that we might eventually need to do lay-offs if the financial situation didn’t improve. On the other hand, everyone was aware of the situation before it became dire and they could be an active part of helping fix the problem. We all pulled together to brainstorm revenue ideas and started implementing experiments to see how we could move the needle on revenue. We weathered our financial losses and are actually in a stronger financial position now than we were going into 2020. Often, leaders want to shield their teams from financial insecurity, but by doing that you end up blind-siding people when it becomes too much to hide anymore. Not only do you surprise people with bad news, you also miss out on giving them a chance to actively participate in helping themselves and the company. Giving people the information they need to prepare themselves for a potentially bad outcome and empowering them to act on that is not only the right thing to do, it makes for good business. My team weathered the pandemic and made our company stronger. I would not have been nearly so effective acting alone.
Important things to consider
The benefits of open business practices are clear. But you need to be aware of the impact of how you share your information and processes. We’ve certainly hit some bumps in the road over the years to get to where we are today. Here are some things to consider when you begin opening up:
Beware the firehose
Just because you always think about the business and understand the ins and outs of the various pieces, your team probably does not and aren’t super interested in it. My team members are all very good at their jobs and their heads are in that space most of the time. Early on in this process I would sometimes drop a ton of information and research on them that I had been thinking about for weeks. Then I’d ask for their feedback. They would just kind of get glassy-eyed. It was a ton to think about and it was completely outside of the normal work they were doing. Where and when could they create space to even think about all of this, much less formulate an opinion about something they didn’t feel comfortable with? We’ve addressed this a few different ways. For things like our new market decision we agreed that one person on the team would be the main person to work with me on the business ideas and decisions and we would summarize and share with the whole team. On other new projects or strategies I’m working on, I’ll lay out initial thoughts and let them absorb that. Then we can decide if this is something I should run with and come back to them with or if the whole (or part of the) team needs to be a part of the process itself. Business decisions and strategy are important, but so is the day-to-day running of the company and the tactical work that the team does. By and large I still do the lion’s share of strategy work and the team is happy to have me run with it. But knowing that they won’t be caught by surprise and that they can involve themselves when it makes sense means that we’ve found a pretty good balance of team involvement without derailing them or me.
Sharing financial data
Open books does not mean you have to share every financial line item with your team. Actually, I wouldn’t recommend it unless you share salary information already and your team has the financial knowledge to not become overwhelmed. We do not share salary information (this was a decision made by the team). To obfuscate that and simplify things I consolidate our monthly financial statements into a more digestible format to share. When we first started sharing our monthly statements, I also walked through it all line by line to explain the fundamentals of what they are looking at (things like EBITA, profit, etc.). We also now have some financial learning resources listed in our Operations Manual for those that would like to understand business financials better. They need to understand how to track the health of the company and be able to see the ups and downs in terms of revenue and expenses. Every month we meet on a team call to go over the financials along with our company KPIs and discuss what we see. Having access to the financial data doesn’t mean much if people don’t look at it and/or don’t understand it.
Some decisions can’t be shared
While we are a very open company with a relatively flat hierarchy, all decisions do end with me as the CEO, and there are definitely certain areas where the team isn’t involved in company decisions or given full transparency into a situation. The majority of that lies in the realms of personnel and legal issues. Both the company and the individuals within it have privacy rights that shouldn’t be breached. Given that we do share so much, it can be frustrating when people are “locked out” of information or discussions. Making it clear what those lines are and why as you get started will help avoid feelings of betrayal down the line.
This is a brief overview of why transparency is a good business decision, including examples from my own company. I’d love to know more about examples from other companies and any other lessons learned. If you are looking into exploring this route I’d love to know what kinds of questions and concerns you have. I’m more than willing to answer questions and share our experiences to help you determine if and how to implement more transparency in your own organizations.