Transparency v. regulation.
Had an interesting conversation this morning on aligning business success with doing the right thing. The debate was between whether increased government regulation is required to prevent businesses from getting us in to the kind of mess we’re in now or whether there are ways business success can be better aligned with behaviour that supports, rather than weakens, the overall economy. I proposed a (possibly naive and Utopian) view that a number of simple things could allow this to happen: warning extremely simplistic analysis follows.
- First: increased transparency on every level. In a world where we can all see what everyone else is doing, it’s harder to pursue obviously selfish goals in plain sight.
- Second: increased measurement and increased linking of disparate data. I wrote about this a while ago, but I think that our ability to measure everything and see the non-obvious consequences of our actions will begin to shift our behaviour. If bankers had been staring a dashboard that showed the true impact and risk of their loans it’s possible that they may have paused for a bit before writing that next sub-prime loan.
- Third: improved data presentation and visualisation. To me this goes hand in hand with increased measurement.
I think it’s certain that if all were combined and anyone could look at the true consequences of continuing to write bad loans there would have been far more voices against continuing than there were.
Clearly, there are some interesting marketing applications to this kind of thinking. There are lots of situations where we want to align lots of people’s behaviour towards a common end. The illustration above suggests that this can be done by creating an open, democratic and transparent landscape where we are all able to see each other’s progress (or lack of) and where we can all quickly see the impact of our actions on everyone else. Better and more clearly articulated here on a daily basis.
However, I think that this also raises an interesting political dilemma. An approach like this wouldn’t appeal to liberals who favour government regulation because it looks like the worst of free-market capitalism. Neither would it appeal to conservatives who would see this as an invasion of privacy. It will be interesting to see where the new administration falls on this issue.