Transparency in a company: the problems no one talks about

In the video, in Italian, I say there is no deep strategy without deep dialogue, and that dialogue requires transparency; I quote Hans-Georg Gadamer. Here I bring in the scholar who showed how organizations hide precisely the problems that matter, even from themselves, and I explain why a strategist’s first job is to make them discussable.

Video transcript (translated from Italian)

Every genuine dialogue is an act of exposure.

Whoever really engages in dialogue agrees to show what is unresolved, what is unclear, what is a struggle.

In strategy work this is the starting point. There is no deep strategy without deep dialogue. And there is no deep dialogue without a willingness to remove the filters.

Hans-Georg Gadamer, the great German philosopher, devoted his whole work to a powerful idea: every genuine understanding comes from a fusion of horizons. Two different perspectives that meet, mix and produce something neither would have reached alone.

That is what happens when a company and its strategist really work together. Two forms of knowledge fuse: that of the person who knows the company from the inside and that of the person who reads it from the outside.

But for this fusion to happen there is a condition that cannot be faked: transparency.

Without it, dialogue stays on the surface. With it, it becomes the place where direction is born.

The left-hand column

Chris Argyris, one of the great scholars of learning in organizations, used a simple exercise. You divide a sheet of paper into two columns. On the right you write a difficult conversation as it went, with the sentences actually spoken; on the left you write what you thought and did not say, for whatever reason. The exercise shows whoever does it how much of the conversation stayed outside the room.

What a company does not show its strategist stays out of the strategy.

The left-hand column is where the gray areas I talk about in the video live. It does not contain lies. It contains the judgments no one voices in meetings, the doubts about the numbers, the decisions everyone knows are wrong and no one names. A strategy built on the right-hand column alone rests on a retouched version of the company.

Gray areas follow precise rules

In 1986, in a Harvard Business Review article called Skilled Incompetence, Argyris described how organizations handle embarrassing issues, and reduced it to four rules worth listing in full: craft a message that is clearly ambiguous; ignore any inconsistency in it; make the ambiguity and the inconsistency undiscussable; and make the undiscussability itself undiscussable.

Seen up close, the four rules describe a scene anyone who works in companies knows. Management announces more autonomy for departments, “in line with procedures,” without saying which procedures still apply. No one points out that the two things contradict each other. Anyone who tried to ask in a meeting would look combative, and no one says the question has become impossible: work goes on as before, and everyone knows the message is not to be taken literally. The example is typical, not a specific case, but everyone knows a version of it.

The article’s title contains the paradox: skilled incompetence. The people who follow these rules are not incompetent. Often it is the most capable executives, those who know how to avoid a conflict and protect a colleague, who build the most solid gray areas. Argyris called these habits defensive routines: they protect people from embarrassment and, in doing so, they protect the problems too.

Organizations tend to make undiscussable precisely the problems that matter, and to make undiscussable the fact that no one talks about them.

There is a detail I find instructive for my own work. In 1991, in another article, Teaching Smart People How to Learn, Argyris studied young management consultants at large consulting firms. They were excellent at solving their clients’ problems, and became defensive as soon as someone questioned their own work: their ability to learn, he writes, shut down precisely when they needed it most. So the transparency I ask of a company applies first of all to me.

And it applies to the owners. Those who run a company have their own left-hand column too: doubts about a partner, about a son or daughter who is supposed to take over, about an investment defended in public and regretted in private. These are often the things that weigh most on the strategy, and the hardest to say to anyone who works in the company. Sometimes that is exactly why someone from outside is needed.

Two horizons meeting

Gadamer, in the video, brings the other half of the argument. In Truth and Method, from 1960, he argues that all understanding is a fusion of horizons (Horizontverschmelzung): the meeting of the familiar and the foreign, from which neither comes out the same. The person who knows the company from the inside has one horizon, the person who reads it from the outside has another, and strategy is born where they meet.

Gadamer adds a point that is usually forgotten. No one comes to understand something without prejudices: everyone arrives with a horizon already formed, and prejudice is the starting point of understanding, provided it is put to the test. This applies to the strategist too. I arrive in a company with ideas born from other work, and dialogue serves to correct them as well; without the company’s transparency, my prejudices meet nothing that could prove them wrong.

Understanding a company comes from the meeting between those who know it from the inside and those who read it from the outside, and it requires that neither filters what they see.

The fusion, though, only happens with what is put on the table. If half the internal horizon sits in the left-hand column, the strategist meets a version of the company, and the strategy that comes out resembles it.

What full access means

In practice, when I work on organization and culture, full access means seeing the real numbers, not those prepared for the meeting, and hearing the open problems, including those that concern the owners. It also means talking to everyone, from executives to factory workers, because one department’s left-hand column is often another’s right-hand column, and the problems management does not see are seen by people working one floor down. The frozen middle, the intermediate layer that slows change without saying so, often lives right there.

Full access has a limit, and it is right to say so. The transparency I am talking about is toward the strategist, not toward everyone: what I see stays confidential, and is sometimes covered by nondisclosure agreements. I ask a company to keep its problems inside the room where direction is decided, which is very different from airing them in public.

That is why, from the first meeting, I ask to talk about what is not working before what is. It is not pessimism. It is the quickest way to find out whether the company is ready to work on the left-hand column, and whether I am the right person to do it.

What to do and what not to do

• Bring the real numbers and the open problems to the first meeting, including those that are uncomfortable for the owners.
• Let the strategist talk to every level, without filters and without chaperones.
• Try the two-column exercise before a difficult meeting.
• Do not prepare a presentable version of the company for the strategist.
• Do not confuse transparency with publicity: what is shown to the strategist stays confidential.

Sources

• Chris Argyris, “Skilled Incompetence,” Harvard Business Review, September–October 1986, pp. 74–79. https://hbr.org/1986/09/skilled-incompetence
• Chris Argyris, “Teaching Smart People How to Learn,” Harvard Business Review, May–June 1991.
• Chris Argyris, “Action science and organizational learning,” Journal of Managerial Psychology, 10 (6), 1995, pp. 20–26 (the two-column exercise); Overcoming Organizational Defenses, Allyn and Bacon, 1990.
• Hans-Georg Gadamer, Truth and Method (original edition Wahrheit und Methode, 1960). On the concept: Jeff Malpas, “Hans-Georg Gadamer,” Stanford Encyclopedia of Philosophy. https://plato.stanford.edu/entries/gadamer/