How Transparent is Too Transparent?

Posted on January 21st 2010

Domino's Pizza's new Pizza Turnaround campaign set off a wave of discussions in the social media world. The Pizza Turnaround video, which was produced by Domino's, features Domino's employees, including its head chefs, and some of the company's marketing executives, admitting outright that the pizza sucks. Some of the quotes in the video include “Domino's pizza crust is to me like cardboard,” a sentiment expressed in a focus group but echoed by Domino's executives. “Doesn't feel like there's much love in Domino's Pizza,” says another focus group participant.

This is, to be sure, a bold move, and many are applauding Domino's for publicly owning up to making bad pizza. Everyone's talking about transparency, but not many companies are really doing anything about it.

There's a reason for that, of course. Only an idiot is 100% transparent.

Setting aside literal definitions, what does “transparent” mean? For publicly held companies, “transparent” has come to mean conducting business and doing accounting according to GAAP (Generally Accepted Accounting Principles). Every company is supposed to report its financial situation using the same measures as every other company, and using the same measures every quarter, to ensure that shareholders and regulators can read them and make valid judgments and comparisons.

In the social media world, transparency extends beyond finance, meaning something like “using social media to expose to the public the inner workings of the company and the candid thoughts of its executives and employees.”

So where does the publicly held company draw the line? The CEO can't be 100% transparent on his or her blog. Comments about the company's finances are regulated by FASB and the SEC. Comparisons to competitors are regulated by the FTC. When, what information, and in what format an officer of a publicly held company can disclose information is all strictly regulated.

One could argue in fact that Domino's admission that its pizza isn't up to par is contrary to its obligations to shareholders to maximize value. In fact, Domino's stock traded around $11.39 today, not far from its 52-week high, and nearly triple its 52-week low of $4.76. So how bad can the pizza be?

Maybe we expect too much transparency from the companies we do business with. How transparent are you? Do you tell everybody everything you are doing and thinking, or are there some things you might omit? If you want to be 100% transparent, you would have to walk down the street saying out loud, “That's an ugly shirt.” “You look so cool with your Bluetooth.” “Your girlfriend is way too hot for you.” We wouldn't call that transparency, actually, we'd call it Tourette Syndrome.

Why then do we expect the companies we do business with to overexpose themselves? I think the social media “movement” has pressured companies to act irresponsibly. OK, the Domino's thing is clever and is attracting a lot of attention. And maybe Domino's feels it's “working.” But I think these guys are subjecting themselves to an unnecessary beating. The following (with one letter masked) was displayed by Domino's on its Pizza Turnaround site:

When counseling clients on blog commenting policies, and the use of RSS feeds and Twitter feeds on their corporate sites, I remind them that they still own that real estate, and while they can't control what people are saying about them out in the blogosphere, they can control their own Web sites. For example, no public company should permit racism, gratuitous obscenity, out-of-control bashing of the company or its competitors, etc.

I used to argue that companies should not surrender their brand to consumers, but should share it. Some things require careful branding and messaging, some things should be more open and participatory and a lot of things are simply beyond the company's control. Domino's has raised the stakes by inviting consumers to trash talk the company and its pizza. I wonder what's next?

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Joel Postman

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Posted on January 21st 2010 at 9:11PM
I believe transparency applies more to disclosure regarding potential conflicts of interest and bias, not necessarily divulging everything about you and your business. 


What Domino's did was good for their reputation (people appreciate honesty and humility) and their business..... as long as they start making a better product.  It will backfire if the new product is no good, or worse yet, if the public feels like they were lied to.

Erik Stockglausner