The Ugly Side of Transparency

Here are three ways Ray Dalio has used “radical transparency” to build a billion-dollar company.

“Radical transparency” is creating a culture that is direct and honest in communication and sharing of company strategies so that all people are trusting and loyal to the continuous evolution of the organization. For leaders, radical transparency is a way to build trust with their employees.

Transparency can create deeper relationships. However, it can also cause resentment within the culture. When you set out to have transparency, some people will not be able to handle that level of honesty. People begin to internalize the feedback, limiting their ability to be productive.

Doubt also can fester inside you as the leader with all the hard conversations. Knowing exactly what people think of you and your ideas sound great — but the reality is hard. This can be overwhelming when it comes from all directions within your company. I am often in private conversations with leaders who are growing at break-neck speed — the conversations are tough when I ask questions that challenge their identity or question their confidence — yet that is what they need.

I remember talking with a leader as he began to show signs of anxiety as we probed his leadership. He responded with shame that he was not the leader he wanted to be. He told me, “This would have been a really hard conversation to have in front of my team.”

“I want independent thinkers who are going to disagree,” he says “The most important things I want are meaningful work and meaningful relationships. And I believe that the way to get those is through radical truth and radical transparency. In order to be successful, we have to have independent thinkers — so independent that they’ll bet against the consensus. You have to put your honest thoughts on the table.” Then, the best ideas rise to the top.

Inside a recent TEDx talk, Dalio shares a story on how an employee called him out for the poor performance in a meeting.

When you decide that you want to embrace a culture based on transparency, you have to be willing to have thoughtful disagreements that others are not courageous enough to have.

To make a big culture shift that helps others develop their own identity within the organization, start by getting each person into a private conversation. Dalio said the two key questions to this are, “Should I tell you what I really think?” And, “Can you be free to tell me what you really think?” Once everyone is in agreement on this, you can begin to share honestly with each other.

Radical is by definition of going as far as possible. Decide on boundaries that are right for your culture. Most of the companies I work with on this draw a clear line at the point of legality. Take HubSpot, for example. When this company was faced with going public, its radical transparency was challenged through laws. HubSpot will share everything that is legally able to share — which means they don’t share salary data, as it is not owned by the company alone.

Practicing being honest and sharing with others how they can improve at every opportunity. As the culture sees the benefit of this, it is going to be easier. You must make a conscious effort to reduce the secrets and having closed-door conversations.

Continuous growth requires deeper conversations and when I see leaders embrace radical transparency it can unleash new energy into the culture.

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