Benefits and risks of business transparency

In 1967, the British Barclays Bank successfully installed the world’s first ATM machine, which was highly concerned. ATM is less expensive and more efficient than manual tellers. And customers can go to the ATM to withdraw money at any time, and the bank’s business hours are not affected. This is like a situation where both sides are profitable, and ATM is rapidly spreading around the world. Now people are three times more likely to withdraw money from ATM than to seek manual services.

However, ATM has a small problem: customers use ATM more, and the contact with the tellers is reduced, and the overall satisfaction with the bank will decrease. As it turns out, consumers can’t see the service’s own work done in front of them. They feel that it doesn’t take much effort to provide services, so there is not much gratitude and attention. The work that ATMs must complete is complex: identifying the identity of the customer, finding account information, completing the transaction accurately, and protecting the customer’s private information throughout the process. But all this is concealed in the cold metal interface and a “transaction completed”, the customer feels right; if faced with a live teller who provides services to them, it will not be like this.

In recent years, automation has greatly improved the efficiency of many aspects, but it also isolates customers from specific operations. Order picking robots and automatic conveyors allow employees to pick, pack and ship an ordinary Amazon package in less than a minute – a perfect match between the person and the machine, which the customer simply can’t see. With more than 1 million servers, Google has to deal with trillions of searches every year – less than a second can give you the information, and you won’t be aware of the huge work behind it.

Even if the technology has not separated the customer from the work done for them, there are leaders who have put up a barrier. Up to 70% of clinical diagnosis in hospitals comes from pathology laboratories, but people who perform pathological tests are generally hidden in the basement or elsewhere outside the hospital. A commercial flight successfully took off and landed, concentrating the efforts of hundreds of people, but passengers only saw the crew at best. In the office, kitchen, warehouse, and factory, how many people work hard and create immeasurable value that customers never know.

This is a crucial management dilemma that I have studied for ten years. For a long time, people thought that the more an operation and user contact, the lower the efficiency. In the 1960s, a researcher boldly declared that customers were “environmental interference”. As the discussion continues, researchers believe that using physical distance, time, or introduced technology to separate customers from internal processes can help companies increase efficiency and create more value for consumers. But my research shows that this approach may have side effects. When customers are isolated from the company’s operations, they cannot fully understand the value that the company creates for them, and they are less grateful. As a result, satisfaction and reliability are reduced, and they are unwilling to spend money. Over time, loyalty to the company will also decrease. And employees who are far away from the company’s front line will lose the motivation and fun they get from the recognition that “their work changes people’s lives”, and there is no opportunity to learn and improve by communicating with customers.

One solution we found was to introduce operational transparency and carefully design a “window” for the operating area to help customers and employees understand the value created by the work. To determine when and how to design this window, managers must understand when and how customers and employees want to publicly display their operations, receive attention, and when they want to work behind the scenes.

Behind the scenes

I started to pay attention to the benefits of operational transparency in 2008, when I worked with Harvard Business School colleague Michael Norton on a simulation site called Travel Finder, which is one of our projects. Part of the research. We have found that travel agencies, like bank tellers, are becoming obsolete under technological development (network travel agents). We also noticed that many ticketing sites hid the work that the staff did for the client in a progress bar, event list, or marketing message (“Do you know? You can also book a hotel at us”). The online travel agent Kayak is an exception. The company allows customers to see the process of searching for different routes on the website during the waiting period, displaying the found trips one by one on the results page, rather than displaying them all after completion. We are not sure whether this transparency of operations will change the way customers think about web services.

For our travel research, participants are asked to search for flights from Boston to Los Angeles on the Discovery Travel website. The waiting time after entering the information is random. During this period, some people will see the progress bar, and the other part will see the search details in addition to the progress bar: “Now search for American Airlines and JetBlue has found 133 results. “We then asked participants how they feel about the value of the site.” Regardless of the length of the waiting period, participants who saw the details of the search considered the site more valuable and more willing to pay. They feel that the results given by the website are of higher quality and they hope to continue using the website next time. In addition, when participants see the search details, the sensitivity to waiting time is greatly reduced. Those who get the search results immediately, the feeling of the value of the website is equivalent to the person who waited 25 seconds for the progress bar, and also the person who waited 55 seconds for the search details. In this era when we all hope that web services can give results in an instant, such results are very noteworthy.

In other experiments, another site returned the same results faster, but did not display the search details, and as a result, participants were more willing to use the site that displayed the transparency details. We also found that people like to display the details of the operation of the website, rather than displaying other content to help users spend time waiting for the website, such as destination Mito, promotion information of other services on the website, or small games that pass the time – these None of the methods made the participants feel that the service provided by the website was of higher value.

Why can operational transparency produce this unique effect? We conducted a survey to see (and did not see) human-made research details on the behind-the-scenes work of multiple service industries, such as restaurants, retail, and online dating, trying to understand how operational transparency affects their perceptions. We have found that if people can see behind-the-scenes work, they will think that the services they receive will condense more efforts, and they will believe that service providers have more professional capabilities and are more comprehensive and meticulous. They are aware of the quality of service and the efforts they make, and they feel that the service is more valuable.

Obviously, operational transparency can fundamentally promote customer understanding and recognition of the services provided by the organization and increase participation. But what about the employees here?

Positive loop of employee improvement

A pioneering study of the service industry in the early 21st century found that one of the main drivers of employee satisfaction is knowing that the company is working hard to satisfy customers. A 2007 study by Wharton professor and organizational psychologist Adam Grant found that call center staff who donated money for university scholarships, if they saw some students who were funded by the corresponding scholarships, worked in reality. There will be a huge increase in efficiency and perseverance. But what if the interaction between the customer and the employee is done in real time?

In 2012, Tami Kim of the Darton School of Business, Chia-Jung Tsay of the University College of London and I conducted an experiment at the Annenberg Hall canteen where Harvard served more than 3,000 meals a day. The Annenberg canteen was built around 1810, when it was thought that diners should not see kitchen work. In the past, if Annenberg’s diners wanted eggs, fish sandwiches, burgers or other baked goods, they had to write the requirements on paper to the cafeteria staff, who handed them from the small window to the kitchen, and the chef cooked the food and then cooked the food. Delivered from the window, from the employee to the customer. The chef and the customer can’t see each other.

We set up an iPad with video conferencing software at the à la carte and kitchen to allow customers and chefs to see each other, then record the time needed to cook and assess the satisfaction of both the chef and the diners. Adjusting the iPad only allows the chef to see the customer, the customer’s satisfaction with the food increased by 14%; the two-way visibility, customer satisfaction increased by 22%, the chef speed increased by 19%. A chef told us, “Customers can see that we are making food for them, and I feel grateful. I feel grateful. This makes me want to do better.”

Through questionnaires and supplementary experiments, we found that when customers saw the chef cooking, they felt that they had gained more efforts in the services they received, and they felt grateful, so they believed that the service value was higher. The chef sees the customer—the person who benefits from his work—and feels that his work is more recognized and more influential, so he is more satisfied with his work and more willing to work hard. This is a benign cycle.

Another example: I have worked with Ethan Bernstein on the Japanese Shinkansen cleaning company Tessei, a Harvard Business School case study. The company has a daunting task: to do the cleaning work in a short time when the Shinkansen train stops at Tokyo station – clean up 1,000 seats in 7 minutes, which is equivalent to cleaning half the time normally required to clean a Boeing 737 aircraft. Finished seven aircraft. At the beginning of the 21st century, it was difficult for Tessei employees to complete the work. Part of the difficulty is that the work did not receive the recognition it deserved: it is well known that the cleaning of the Shinkansen is heavy and dirty, so the Tessei cleaners have a low status in Japan. Therefore, the cleaning staff does their best to avoid being noticed by the customer. In 2005, the new leader, Yabe Fufu, took office and reversed this situation. His actions include transparent operation between customers and employees. The company changed the unobtrusive gray-blue (consistent with the Shinkansen body) into a bright red for the passengers to see and thank the people for their work. After the employees and passengers had more interaction, the employees also felt that they had obtained Recognition, work has a strong sense of mission. Employees began to provide advice to optimize the cleaning process, and passengers began to take the initiative to help clear their seats. There has been a noticeable improvement in the cleaning process: it is now only 4 minutes for a Tessei team to clean a train.

If the face-to-face design of employees and customers is not possible, technology can be used to achieve transparency. In 2013, Domino’s installed a camera in a store kitchen in Salt Lake City to launch Dominos Live in the Pizza Tracker app. Customers who order at Salt Lake City can log in to watch the live pizza production process they ordered. As a result, tens of thousands of people across the country logged in and watched the kitchen to make pizza live to others. Domino’s awareness of the potential of this service is to promote Dominos Live on Facebook. When someone likes it, the kitchen will light up “Like the lights” and let the chef know that someone has approved their work. Now that Dominos Live has stopped, the company has added a feature on Pizza Tracker that allows customers to send incentives to employees who prepare pizzas – like “What if I don’t have you?” “You are my pizza hero. “This pre-written template. Uber also updated its mobile app not long ago, encouraging passengers to send a thank-you message after the trip, attach a tip, and form a feedback loop with the driver. One driver said, “I have made the day of others better, and this fact has made my day a better place.”

Risk of counter-effect

Although there are many benefits, operational transparency can also have a negative effect. In some cases, transparency can make customers and employees unhappy. But even in this case, managers should be careful to choose a closed operation that is completely opaque. There are several situations in which transparency must be carefully considered:

Show things that people don’t want to see. Few people are willing to watch the video of the conflict between the behind-the-scenes work of collecting garbage and police enforcement. However, “I would rather not see” and “I should not have such a thing” is not the same. For services that people are not interested in or bored with, companies should try to use transparency, change people’s ideas, and encourage everyone to participate. For example, Halifax, Nova Scotia, Canada, switched to a transparent garbage bag in 2015 so that everyone can see what was thrown away. As a result, the total amount of roadside waste decreased by more than 30%, and the recycling rate increased by nearly 20%. If the details of the operation create a sense of resistance, the company should sum up the experience and choose other ways to improve the operation. Video of police violence enforcement has caused public outrage, but it has also led to improvements in supervision and accountability, leading dialogue, facilitating change, and improving frontline staff training. “I don’t see your eyes, your heart doesn’t bother” may make everyone feel comfortable in the moment, but it will not help long-term interests.

Cause anxiety. Showing each step of the loan credit assessment to the client, or gazing from behind while the employee is working, will amplify anxiety. Ethan Bernstein of Harvard Business School found that in a Chinese mobile phone manufacturing company, the curtains around the production line will increase efficiency by 10% to 15%. When it’s free from prying eyes, employees are more focused and can try to improve the standard process. In addition, employees will feel safe and willing to exchange ideas with others to make the team more united and improve performance. If transparency makes us feel peeped, it will be counterproductive; but if we help us to be more engaged, we can push us forward. For example, Harvard Business School Michelle Shell and I found that if customers can see their loan evaluation process and have easy access to staff for consultation in the process, then continue after passing the assessment. The possibility of a loan will increase.

Live up to trust. If transparency reveals the company’s injustice, or violates the public order, then of course it will make customers feel uncomfortable. Another example is ubiquitous customized advertising. Tami King, Leslie John, and Kate Barasz of Harvard Business School found that if the company transparently and publicly provides customized online advertising based on the personal information disclosed by the customer, the customer would recognize it; Customers are dissatisfied with the provision of customized advertisements based on customer information they infer. If the company clearly provides the customer’s personal information to a third party without permission, the customer will be greatly angry.

It is disillusioned. Sometimes we want to let go of suspicion, and excessive transparency will destroy this. Retailers who sell high-end jewellery, musical instruments or home accessories will not display large inventories, which makes us feel that we have bought a unique treasure. Our rings, guitars or vases are unique, and this illusion gives us a better experience.

Exposure to inefficient processes. If transparency reveals employees who are unable to communicate the company’s value proposition, customers will feel angry. Think about what you have experienced. The two staff members are waiting for you to talk about it. The customer service staff apologizes for a problem but there is no way and no superior supervisor to solve the problem. Are you angry at this time? In turn, getting employees to contact customers who are completely negative and impossible to satisfy may also cause burnout. For example, many call centers have an average turnover rate of more than 150% a year. This often happens when transparent design fails to make a positive impact on employees and customers. Positive improvements can be achieved if mechanisms are in place to ensure that employees learn from customer feedback.

The fact that the company’s best efforts were exposed in exchange for bad results. If people see that the company’s many efforts behind the scenes are not satisfactory, they will feel that the company can’t do what it is supposed to do. An experiment I conducted with Michael Norton allowed participants to use one of two online dating sites. Both sites give results that are not satisfactory to them, one of which shows the details of the process and the other does not. As a result, the former gave the participants a worse impression than the latter. Participants will feel “this is the limit you can do? It must be that you have not done this well.” Despite this, errors and timely transparency and transparency are still the best treatments under normal circumstances. The company can’t transparently disclose mistakes, it will make customers dissatisfied, and question the company’s motives for hiding information. For example, customers may suspect that “Equifax data breaches may affect 143 million people, why wait until 40 days later?” “Cambridge Analytica improperly accesses information on Facebook’s 50 million users, why did Facebook not publish it three years later?”

Exposing company products or services is not as good as competitors. A basic business principle still applies here: If a customer finds that your product is of poor quality, is too expensive, or is otherwise less attractive than a competitor’s product, then the customer will switch elsewhere. Stanford’s Shwetha Mariadassou, MIT’s Zheng Yanchong and I found that the company’s performance level is considered to be worse than competitors or below industry benchmarks, the negative effect of transparency is the strongest. On the other hand, transparency, if exposed to poor customer performance (such as the power company notifying you, you consume more electricity than your neighbors), may be a powerful driving force for change. This is especially true when the company finds that your performance has changed badly (the average power consumption of neighbors has dropped by 3% and your power consumption has increased by 5%).

Let customers see no progress. We are unsure of what state we are in, so the progress bar is widely used on the web. American Airlines, Delta Air Lines and United Airlines are now also upgrading passengers’ checked baggage status during their journey, providing mobile phone push reminders at every step of baggage scanning, loading, unloading and delivery to the pick-up office. We want to get a sense of moving forward, and if transparency shows us the opposite result, it will make us unhappy. In a recent experiment, I found that if someone waiting for a service can see that no one is behind the queue, the chances of giving up waiting are much higher than not knowing if anyone is coming back. Seeing lack of progress from the queue status will make them wonder if it is worth waiting for. On the other hand, if the person waiting for the service can see that they are no longer at the end of the team after waiting for the time, the possibility of continuing to wait in line will be greatly improved.

Exposing the fact that the company’s work has a negative impact on employees or the environment. The collapse of Rana Plaza in 2013 killed thousands of Bangladeshi garment workers; an accident at the Gulf of Mexico rig in 2010 caused millions of barrels of oil to leak into the sea. Reporting on these accidents, focusing on the inhumane working environment and unqualified environmental standards, has enabled companies to rectify supply chain sustainability. Allowing customers to see such problems can have a huge negative impact. So transparency becomes a test: if you don’t want to see how you treat employees or the environment, you may need to change. On the other hand, if transparency allows everyone to see the company’s operating practices and focus on sustainability, it will have a strong positive effect.

Basak Kalkanci of Georgia Tech and I conducted field trials with clothing manufacturer Alta Gracia and coffee bakery company Counter Culture Coffee. Located in Dominica, Alta Gracia provides employees with a salary that is sufficient to sustain their lives. Counter Culture Coffee is located in North Carolina and values ​​environmentally sustainable work. We worked with Looma Project to film the Alta Gracia factory work environment, produce short videos, and interview employees to discuss the company’s salary. For Counter Culture Coffee, we also produced a similar video that focused on environmental sustainability, such as dealing with residues from the baking process and reducing the amount of landfilled waste. Compared with simply playing a branded promotional film, playing this video in a store has increased the chances of customers purchasing products by nearly 20%.

Deceive customers. Transparency reveals the details of the work and, in turn, produces good influence. But if you pretend to be transparent and fabricated facts to deceive customers, it will be counterproductive. The customer calls AT&T or Apple to request customer support. The customer service phone automatically plays the typing sound during the communication, indicating that the work is in progress. Customers know this trick and don’t feel that someone is doing something right. However, companies are easily lost and turned into deception.

Recently, Google announced that it will launch a more complex mobile phone robot, Google Duplex, which is fully automatic and can be used to make appointments for restaurants and beauty salons instead of users. The technology is exciting and the potential for value creation is infinite, but unless Duplex is fully publicly announced to be a robot, the person it deceives probably won’t forgive it.

Make your organization transparent

Transparency can have all of the above advantages and disadvantages, and managers should carefully consider how to apply them. When designing a transparency campaign, the following factors should be considered:

What is open? It’s a good starting point to think about which parts of the process don’t have to work hard. For example, a restaurant that emphasizes desserts introduces transparency, and a mirror is placed above the pastry chef to allow the diners to see the dessert making and setting. The diners’ eyes were blocked by counters and coffee machines, and now they are attracted by this new “window.”

You can also consider what information is already in the organization database to be recognized by the customer for transparency. For example, a few years ago, the US Department of Veterans Affairs set out to improve access to medical services, one of which was to internally track the waiting time for veterans to book a doctor. Not long ago, the department disclosed this information to patients on the website. Similarly, the nationwide car repair company Quick Lane Tire and Auto Center tried to provide digital information displays in the waiting area to update the car status and queue status to customers in real time.

When is it open? Publicizing an ongoing or just-completed job can make customers feel more valuable than showing work that hasn’t started yet. I found in my research that a travel website like Kayak, when searching, shows that it is searching for dozens of airlines, which is better than prompting to search dozens of airlines before customers click the search button. In addition, companies should not force consumers to accept transparency, but rather let consumers decide when they want to know more. For example, UPS usually receives 143 million requests for inquiries for a package on a business day, which is equivalent to an average of 7 packages being queried. These query requests come from customers who want to know the status of a particular package, and they can choose their own time to query. Imagine if you send a parcel to you, UPS will call you 7 times to inform the delivery situation. What does it feel like?

How to make it public? Visualization is the best for transparency. It’s best to set up a real window so that customers can see the real-time process, and the customer won’t question whether the things they see with their own eyes are trustworthy or not. If you can’t do this, then using a video or animated chart to render the work process will work better than a still image, and the image will be better than the text description. The company proactively provides transparency and gives customers the best feeling. Transparency given under regulatory requirements, investor pressure or other coercive factors cannot build trust.

Don’t forget the positive loop. Transparency is the most important thing to achieve a two-way flow from customer to operation and from employee to customer. Forcing employees to work behind the scenes in obscurity, they can’t see how their work helps customers, and their sense of identity is reduced, which affects their motivation. In addition, employees who see customers can also obtain the necessary information, provide personalized services based on the customer’s specific situation, and improve the operation method.

To some extent, today’s companies have become victims of a surge in global economic efficiency over the past two centuries. Today’s consumers rely on a variety of products that are manufactured and distributed around the world, as well as a variety of services that are frequently intensive. However, the seemingly effortless affluence and convenience also make it easy for consumers to take what they have taken for granted, so that employees can’t connect with consumers and lose learning opportunities and motivation. Knowing this, companies should stop hiding operational details for efficiency, carefully consider when and how to achieve operational transparency, and create more value for customers and employees.