I’ve always believed that innovation comes from people who care. When you care about your profession, your clients, your peers, and your company, you’re never entirely happy with the status quo. You ask questions like, Can this be done better? Quicker? Cheaper? Is there a different product that would help or delight people? The self-applied pressure to improve, combined with creativity, brains and experimentation, drives innovation.

Transparency is a cultural attribute of a company that, when exhibited by managers and leaders, engenders trust in employees. Trust is a critical element to nurture caring people. After all, caring makes you vulnerable, and if you don’t trust the company or the people you work with, your caring is likely to wither, or you’re likely to move on.

Transparent environments have some downsides. I’ve previously written about their ability to spread anxiety, sow confusion, and slow decisions down. These negative outcomes of transparency reflect my viewpoint as the leader of Atomic Object. Research reported in the Harvard Business Review this month helped me see some negative aspects of transparency from an employee’s perspective.

Useful Boundaries

In the Transparency Trap, Ethan Bernstein, an assistant professor at Harvard Business School, describes a simple, powerful model for understanding the downsides of a transparent environment. Bernstein observed four types of boundaries in companies that effectively balance transparency and privacy:

• Boundaries around teams
• Boundaries between feedback and evaluation
• Boundaries between decision rights and improvement rights
• Boundaries around time

Boundaries around teams allows for collaboration, experimentation, and refinement in the relatively smaller, safer, and trusting team context, away from observation and judgment of other teams, managers, and the company as a whole. Bernstein found that not providing a shield for the team was found to inhibit process improvement. When I hear stories of people experimenting at home with a new approach or tool, I think I’m hearing them want some opacity from their team.

Boundaries between feedback and evaluation are needed to keep people open to the feedback that transparency can provide. If real-time feedback on your performance goes immediately to your boss, or is used directly in your next performance review, you’re more likely to spend time managing the perception of this data then using it to improve. Informal peer review, in the team, during a project, is a way I see we’ve successfully preserved this boundary.

Boundaries between decision rights and improvement rights preserves the ability for everyone to improve a process or product, even when the decision rights are concentrated in relatively few people. Making space for people to experiment with and improve the work of the company, while clarifying who will make each kind of decision, seems to me a way to balance quality outcomes and efficiency.

Boundaries around time create the opportunity and mental space for people to innovate, away from the relentless pressure of their project or operational responsibilities. Our business manager is so busy keeping the plane flying that she doesn’t invest enough time improving the way she works.

An Example

We’re in the final weeks of a project to create a new website for Atomic Object. As a software design and development consultancy we have the skills in-house to do this work ourselves. But until we created the right boundaries, this was a painful and frustrating project. In fact, we started and failed twice before this third attempt succeeded. In hindsight, I can see how in our first two attempts we fell into some of the traps that Bernstein identifies.

What made the third time the charm?

Space

Creating a boundary around our design team resulted in a beautiful, distinctive, functional visual design. Every designer in the company worked offsite for a week to kick off the visual design effort and explore new ideas.

Time

Creating a boundary of time for the project team, protected from client and regular work, was critical to making reliable progress. While we’d done some of this in the past, we’d also fallen to the temptation of pulling team members to help clients.

Clarity

Clarifying decision rights and improvement rights eliminated friction we’d felt in our previous, failed attempts. Everyone on the team could suggest improvements, and many of those improvements to our logo, message, tagline, etc, were adopted. But until we clarified my ultimate decision making role, this was a muddied and frustrating process for everyone.

The causal chain of transparency -> trust -> caring -> innovation is very powerful. It’s fundamental to our success, I believe. Understanding the boundaries Bernstein observed helps mitigate some of the downsides of the transparency that underlie this virtuous chain.