The age of transparency: the Internet, social networking and blogging are making the world a radically more transparent place for businesses.--Recognized authorities on digital strategy Don Tapscott and Anthony Williams urge companies to rethink what information should be made available and to develop a more systemic and integrated approach to corporate transparency.

• Author: Tapscott, Don
• Position: Cover Story

When the global financial crisis wiped out $30 trillion in financial assets, caused mass unemployment and nearly bankrupted Europe, it reinforced the need for more effective corporate governance, better transparency and greater integrity in corporate management. When WikiLeaks--the so-called "people's intelligence service" --embarrassed the Pentagon and the U.S. State Department, it became clear that not even the world's most powerful government could maintain a monopoly on information.

And when a connected generation of freedom-seeking youth topple despots and dictators across North Africa and the Middle East, it's safe to say that the transparency trend has gone truly global.

Taken together, these events point to one inescapable conclusion: a potent cocktail of technological, demographic and economic forces is making the world a radically more transparent place. In fact, the waves of damaging WikiLeaks revelations are merely a hint of the world to come. Site founder Julian Assange says private sector companies are also on his hit list, starting with the financial services industry.

Even if the United States government successfully prosecutes Assange, there are thousands of like-minded wiki revolutionaries who will gladly fill his shoes.

A New Era of Transparency

For companies, this transparency goes far beyond the simple obligation to disclose basic financial information. Thanks to the Internet, people and institutions are gaining unprecedented access to all kinds of information about corporate behavior, operations and performance--from real-time analysis of company financials on StockTwits to third-party monitoring of overseas supply chains.

Armed with new tools to find information about matters that affect their interests, stakeholders now scrutinize companies of interest like never before, informing others and organizing collective responses. Customers can evaluate the worth of products and services at levels not previously possible. Employees can share formerly secret information about corporate strategy, challenges and management.

Global networks of business partners and suppliers share intimate commercial data to help their business ecosystems perform more like a single enterprise. Powerful institutional investors--the ones who own most of the economy--are developing x-ray vision, while increasingly networked investors dig up the "real dirt" on company financials in micro-blogging sites and chat rooms.

Finally, in a world of instant communications, whistleblowers, inquisitive media and Googling, citizens and communities routinely put companies under the microscope.

When organizations are increasingly naked, "fitness" is no longer optional as survival will force them to get buff. With demands for transparency originating from all sides and for all imaginable issues, a new, more systemic and integrated approach to corporate transparency is required. Corporate leaders need to start thinking about transparency as a critical component of competitive strategy and an essential pre-condition for building collaborative relationships with customers, partners, shareholders and the broader public.

Naturally, in the face of relentless scrutiny, it's tempting to just hunker down. Indeed, many executives assume that ramping up secrecy is the best antidote to their growing sense of impotence in the battle to control information. It is not.

But, leaders should embrace transparency, not fear it. Companies with higher levels of transparency create trust-based relationships that can help manage risk, increase brand value, drive down business costs and unlock new sources of value creation. In the capital markets, trust and confidence in a company's management builds investor loyalty and reduces its cost of capital.

In the public sphere, trust can help create a social license to operate and lessen regulatory burdens. Trust and transparency in the company and business web can create enterprise-wide alignment on values, enhance collaboration and lower transaction costs in the supply chain.

But transparency can be somewhat of a double-edged sword. It can surface mortal threats for the companies that are caught unprepared. Conversely, openness also creates exciting new opportunities for value creation and high performance, as the numerous examples cited below can attest.

Bottom line, in this age of transparency all organizations need integrity as part of their DNA--not just to secure a healthy business environment, but for their own sustainability and competitive advantage. Society will be increasingly alert to individuals and organizations that cultivate an aura of responsibility, when their business practices don't measure up in reality.

In everything from motivating employees, negotiating with partners, disclosing financial information or explaining the environmental impacts of a new factory, companies and other organizations must tell...