Many startups these days are started by young, technical or product founders who are in the idealistic phase of their lives and careers.
Thus I hear many talk about “radical transparency” when virtually every experienced operator in my inner circle talks knowingly about that naiveté. It’s not that I don’t love idealism – I was young once, too! – it’s just that the more experience you get in your career the more you come to realize certain truths.
With all due respect to Mr Suster, however, I must disagree, quite strenuously – and not because I’m young and idealistic. I’m young(ish… 33), but deeply pragmatic. I’m building my company in a “radically transparent” company for very practical reasons:
1) I don’t want to work in a traditional company based on the “command and control” model.
2) I am aware that businesses today operate under market conditions that change ever faster, so adaptability is a premium quality for any business.
3) I can see for myself the obvious benefits of radical transparency in terms of the sort of people it attracts and how it motivates them.
This is not just my experience. I had a long chat with Joel, as well as with others in the industry, and they are seeing the same things. People like Ricardo Semler (whose revenue was $212m in 2003) have been preaching and applying ideas like these since the 80’s. Companies like Valve ($4b) and Github are running with open allocation. Zappos (acquired by Amazon for $1b) recently adopted Holacracy.
Those are all models that require radical transparency. Are Tony Hsieh, Gabe Newell and Tom Preston-Werner all starry-eyed “young and idealistic” product founders?
I don’t think so. And you shouldn’t either.
Here’s the reality: both models work. One way to refer to them is to call them Theory X and Theory Y style companies, after the ground-breaking research by renowned psychologist Douglas MacGregor in the 50s. But the key finding that most people usually miss is the discovery that: whatever your starting assumptions (X or Y), when you set out to gather data to prove them, you will find data that supports them.
In other words, if you believe that Theory X (Command and Control) is the one that works, when you set out to find out whether Theory Y makes any sense, the answer will be “no”. But the reverse is true too.
This calls for a bit more maturity than declaring that the other side is “young and idealistic”.
Both models work, they have different strengths and weaknesses. Use the model that makes sense for your context (which includes your beliefs) and don’t waste time belittling the other side.