Companies moving toward transparency must shift through four phases, each of which is a step closer to true transparency. These phases are blind spots, awareness, compliance, and, finally, transparency.

Blind Spots

First, your company should recognize its blind spots, which I define as unanticipated risks or failures—such as the mistreatment of animals in a slaughterhouse. Of course, no company starts out by saying it wants to make products in factories with abusive conditions, but sometimes, a focus on price or a single aspect of quality obscures your vision and prevents you from seeing those abusive conditions.

Outsiders and employees can be useful in identifying these blind spots. Yes, even activists can help you do your job.

Even when you’re only beginning to recognize your blind spots, you’re beginning to build a culture that recognizes that you might not be as smart as you think you are. This humble view of the world outside your walls encourages you to constantly innovate. Pulling energy-intensive processes out of a supply chain or reducing the amount of resources required in a product will take innovation. If I had a dollar for every time a company has asked me to get an aspect of its supply chain fixed by putting out a request for a proposal (RFP), I’d be a very rich man. But rarely will material challenges be solved by an RFP; if the substitutes were all available immediately at the same price, then everyone would be using them. Instead of seeing the problem as unique, you can benefit from relying on the wisdom of crowds (the idea that the aggregation of a larger number of individual opinions has a better chance of being right than any singular opinion) or crowd sourcing (the idea that you can use the ideas in the crowd to drive your business forward). Companies like Procter & Gamble have long since abandoned the idea that innovation must come from within. These companies regularly go out and purchase new consumer innovations and use their distribution system to help themselves reach their potential.

Crowd sourcing works. Consider the television show Who Wants to Be a Millionaire? The ask-the-audience lifeline—when the contestant chooses to follow the advice of the studio audience —- is the only foolproof way to get the right answer. In The Professor and the Madman, Simon Winchester cunningly tells the story of one of the thousands of citizen volunteers (one in an asylum for the criminally insane) who collectively wrote the Oxford English Dictionary by sending in millions of slips of paper with definitions and the original sources of all the known words in the English language.

There are three main benefits of using the wisdom of the public to help your company build your strategy for sustainability.
1. You get a bigger team. You can reach beyond the talents of your own organization.
2. It’s cheap. You pay only for results, unlike your own R&D efforts.
3. You can examine multiple avenues simultaneously.

The first step is saying “what’s so.” It sounds obvious, but sharing your problems is the first step toward transparency. What happens when you start sharing the real state of affairs? Usually it’s a cathartic experience; it allows reinvention, reduces complacency, and socializes the problems, which allows people inside and outside of the company to act. It takes the monkey off your employees’ backs and allows it to run around the forest on its own for a while.

Instead of protecting information, your company makes the information useful; in the process, you give critics a chance to offer solutions instead of critiques.

Why is finding your own faults important? The psychologist Abraham Maslow said, “If you plan on being anything less than you are capable of being, you will probably be unhappy all the days of your life.” Although it’s hard to face sometimes, critiques present an opportunity to improve. A healthy company feasts on the contents of its errors as opportunities to improve.

Awareness

The second step toward transparency is awareness. In this step, you begin to catalog and assess blind spots to understand whether they are episodic or systemic. Is there an underlying cause? If so, how can it be removed or altered so that the risk of failure is mitigated?

Companies should also use this period to audit their own performance: by looking at the whole of what they’ve found, can they see any holes in their search? Are there patterns that could lead them to identify more potential problem spots? At this point, you need to discover and sort through all the bad news you possibly can.

Compliance

The third step is compliance. Most companies stop here (or, at the very least, only aim this high). In this step, they compare their former blind spots with relevant laws, regulations, and industry behaviors and work to meet those standards. The regulatory standards represent the legal minimum that they must reach.

But it is not enough. Companies need to exceed expectations; in sustainability, they must go above and beyond. Sustainability is not just a box to be checked off.

Transparency

The final step is true transparency itself, and it is the one that most companies miss and the one that makes all the difference.

Beyond bringing operations into compliance, share the information broadly inside and outside an organization. This will allow a company to open up opportunities for further improvements and innovations that it probably never even considered—some from the same individuals who pointed out its blind spots, and some from newer contributors. By widely sharing information about the failure, the company will ensure that employees learn from the situation, it will gain the trust of its employees, and it will be able to tap the innovation resources of everyone whom you’ve engaged.

Reprinted by permission of Harvard Business Press. Excerpted from Strategy for Sustainability: A Business Manifesto (July 2009). Copyright (c) 2009 Adam Werbach; All Rights Reserved.