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ETHICS

When It Comes to Transparency, Dropbox Is on to Something

Earlier this week Dropbox published its rules for disclosing any requests the government makes for user data. It's a timely reminder to explore what it takes to become a more transparent organization.

Here's one thing you know about the government: It requests customer data from private companies. Here's one thing you know about those companies: They're disclosing how many requests they receive. 

Earlier this week, for example, Dropbox announced that in 2013, it had received 118 search warrants and 159 subpoenas. But when it came to national security requests, Dropbox was not allowed to reveal the specific number. All it could reveal was that the number was between zero and 249. 

In a statement prefacing these disclosures, Dropbox made it clear that it wished it could be more specific about the zero-to-249 number:

In light of the US government's recent decision to permit online services to disclose national security requests under certain conditions, we are reporting that we received 0-249 national security requests from the US government in 2013. Although the ability to report in bands of 250 is a positive development, these restrictions interfere with both the public's right to obtain information about the US government's surveillance activities and our rights to publish such information. We continue to believe that online services should be allowed to report the exact number of national security requests received and remain committed to defending that principle.

This statement is fascinating on two fronts. First, it's Dropbox's way of stating that it's being as transparent and ethical as it can possibly (i.e. legally) be. Second, it's Dropbox's way of all-but-stating that its number of requests was way closer to zero than it was to 249. 

Dropbox's disclosures are a timely reminder that any company can take public steps (call them marketing steps, if you're skeptical) to become more transparent. Here are three core principles that your organization can start with:

1. Reveal how the "sausage" gets made. Regardless of what you sell, you have a process for making it. You have suppliers and you have a labor force. Chances are, the public only knows so much about either. You don't have to reveal everything, but you can probably reveal more than you currently do.

As an example, look at Nudie Jeans, which publishes a "Production Guide," showing the locations of all of its production facilities (both main suppliers and subcontractors), including information about material and transport.

2. Go above and beyond what's expected or required. What's fascinating about Nudie Jeans' "Production Guide" is that it leaves no detail uncovered. You're learning not just about the jeans themselves, but the buttons, zippers, waist tags, and care labels. 

Likewise, Dropbox made sure to stress that it would reveal more national security details to the public, if it only could. In its rules for disclosing government requests, Dropbox stated: "We've urged the courts and the government to allow services like Dropbox to disclose the precise number of national security requests they receive and the number of accounts affected. We'll continue this fight. In the meantime, we're providing as much information about national security requests received and accounts affected as allowed."

If you're not sure how to go beyond what's required, there's a simple step you can take: Ask.

You can ask your shareholders, your partners, and the public. Document your challenges, and invite feedback on them. Unilever, the consumer products giant, does this on its "Challenges and Wants" page. The challenges include sugar reduction, safe drinking water, and better packaging. Under each category, Unilever openly asks: "If you have a design or technical solution that could help us meet this challenge, we want to hear from you." 

3. Transparency applies to finances, too. The textbook example of a company that does this is Buffer. It is a private company on paper, but anyone can access its monthly financial reports. November's report revealed the following: 

New users: 66,000 (Total: 1,189,000, from 1,123,000: +5.9%)
Daily active users: 30,600 (down from 32,500: -5.8%)
Revenue: $196,000 (Annual: $2,347,000 down from $2,388,000: -1.5%)
Business revenue: $22,250 (down from $30,510; -27%)
Cash in bank: $318,651 (last month: $311,719)

One benefit of the openness is free feedback. For example, in response to the Novemer report, a site visitor posted the following remark: "You should be recognizing as revenue annual payments (if they are prepayments) in 12 equal amounts over the balance of the year, with a deferred revenue account on your balance sheet decreasing each month for the amount paid but not yet booked as revenue."

To which cofounder Leo Widrich replied: "Thanks for stopping by and great point! That's definitely been a shortcoming from us and we're thinking of making that switch very soon now!"

Beyond company financials, the company is also transparent about salaries and equity positions. It's more than most companies would be willing to reveal. But that's exactly why the high level of openness positions Buffer as both a cultural leader and a place whose values go beyond the narrow parameters of creating wealth for a select few.

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