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Transparency is the New Legitimacy — Public Utilities and Public Perception

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“Networked markets are beginning to self-organize faster than the companies that have traditionally served them. Thanks to the web, markets are becoming better informed, smarter, and more demanding of qualities missing from most business organizations.” -Levine, Locke, Searls & Weinberger. Cluetrain Manifesto. 1999.

The emergence of the Internet as the primary platform for the formation and operation of social networks has profoundly increased their capability. For the first time, self-organized social networks are operating at a faster pace and with a greater scope than official or company sanctioned communications. This shift will fundamentally change the way that utilities interact with their stakeholders to build mutual understanding and garner stakeholder support.

Self-organized social networks are ad-hoc groups of individuals and communication methods that are created in order to gather, process, and re-distribute information to other network participants. Social networks have existed since the dawn of civilization, the first social networks were the result of conversations between trusted friends. Even with the increased spatial and social distance between network participants enabled by the Internet, participants still see their network activities as “having a conversation.” The good news for organizations is that the increased inclusivity of the social network provides an opening for organizations to participate as well. However, simply being a public utility does not mean that the social network will place value in what your organization says. The most common mistake that organizations make is mistaking the communication medium for the conversation; simply posting a press release on the Internet is not participation.

Utilities must participate in the conversation because social networks have always had a profound effect on how individuals perceive the world around them. Individuals construct their narrative, the words and feelings they use to describe events, based on the most prominent narrative expressed in their network. This can create feedback loops where the importance of prominent events or topics is magnified while specific narratives are reinforced. They can make relatively minor issues spiral out of control resulting in the loss of an organization's credibility.

Organizations are finding that transparency is a requirement to become a legitimate participant in the conversation. For a utility, transparency is actively providing information about what decisions were made, the reasoning behind the decisions, and an honest discussion regarding the alternatives to the decision. Transparent organizations are able to leverage their openness to manage the narrative of events that the network creates. Successfully managing the narrative of a topic can make a significant difference in the public's perception. Small differences in public perception can have large impacts on a utility's ability to achieve its objectives. For example, the public may be receptive to a water reuse project that protects a fish species. However, they will reject the same project if the narrative is focused on sewage.

Social networks are only going to become more efficient at distributing information. Organizations that refuse to participate in the conversation or participate with malicious intent find that the networks work against them. However, if you participate transparently in the conversation, social networks can become your ally. While corporations need to exploit this alliance for competitive advantage, utilities need to utilize the alliance to insure that they have stakeholder understanding and support.

Keywords: Internet; Transparency; social networks; stakeholder understanding and support

Document Type: Research Article


Publication date: January 1, 2010

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