Among the many lessons learned from the collapse of Enron and the many other scandals that followed, was that transparency in management is a critical success factor for good governance, accountability, and performance in business. Indeed, at Enron and elsewhere, not only was misconduct rampant at the highest levels of management, but the necessary conditions for concealment were present there as well.

Thus, there is a difference between business conduct and organizational transparency. Illicit conduct, or misconduct, consists of illegal or inappropriate behaviors; transparency is an environmental condition in which behaviors of all kinds can occur, be they proper or improper ones. Consider, for example, the possibility that the same type of misconduct might be found in two or more organizations, whose transparency environments are, however, dramatically different.

A company can at once be both ethical and open, or ethical and closed; or it can be unethical and closed, or unethical and open -- although this latter case will probably not last for long, since transparency in business tends to discourage misconduct, or at least reveals it.

There are two forms of openness in business; transparency is only one of them. The other is inclusiveness. While transparency speaks to the extent to which a company's operations are open to scrutiny or to which it discloses its information, inclusiveness speaks to the degree to which stakeholders have access to, or can participate in, related business processes.

This is not to say that either transparency or inclusiveness should necessarily be maximized in all cases. Indeed, there are many instances where 'closedness' or opacity is the better stance to take, especially where privacy issues or trade secrets are involved. Still, 'Openness Plans' or strategies should be adopted in all organizations in order to assure that the proper degree of transparency and inclusiveness is being enforced where needed. This has become a necessary condition for survival and accountability in business!

Once a company has developed and implemented an Openness Plan, periodic Openness Audits (tm) should be performed in order to measure their impact against expectations, and to also demonstrate to stakeholders that management takes transparency and inclusiveness seriously as duties owed to constituents. In order to preserve objectivity, such audits should be carried out by external, independent parties such as Macroinnovation Associates. Our firm is a leader in providing related services.

Macroinnovation's Openness Audit (tm) is a measurement and reporting tool that makes it possible to objectively profile the current degree of transparency and inclusiveness in a firm. While it expresses its measures in terms of transparency and inclusiveness, the targets of its focus are: (1) Business Processes, and (2) Business Information, with a particular emphasis on whether or not, and to what degree, different stakeholder groups perceive their needs as being met.

Further, the Openness Audit (tm) can be used to help assess an organization's degree of compliance with statutory rules, such as Sarbanes-Oxley, but it doesn't stop there. The Openness Audit (tm) can also be used to assess levels of transparency and inclusiveness on non-financial fronts, as well. Thus, the functional and organizational scope of the Openness Audit (tm) is comprehensive!

Macroinnovation's Openness Audit (tm) and its Transparency Audit (tm) and Inclusiveness Audit components are commercial implementations of its patent-pending Policy Synchronization Method. More information about that method can be found elsewhere on this site. For a more detailed discussion of the Openness Audit (tm) and insight into the proper scope of an Openness Plan or strategy, click on the Frequently Asked Questions link below.

Frequently Asked Questions About the Openness Audit (tm)