One reason is that it could threaten their business.
By that we mean that consumers can now easliy compare everything they do and offer to their competitors, so if their offer and behavior isn't the best of the best they will lose customers.
The other reason is that it is a big opportunity.
By being transparant as a company you gain consumer trust and likeability.
You can read the first part here:
Pretend for a second that you're a CEO. Would you reveal your deepest, darkest secrets online? Would you confess that you're an indecisive weakling, that your colleagues are inept, that you're not really sure if you can meet payroll? Sounds crazy, right? After all, Coke doesn't tell Pepsi what's in the formula. Nobody sane strips down naked in front of their peers. But that's exactly what Glenn Kelman did. And he thinks it saved his business.
Last year, Kelman was the newly hired CEO of Redfin, an online brokerage firm that was, as he puts it, "the ugly red-haired child" in the real estate world. Redfin was trying to turn the industry upside down by refunding people two-thirds of the commission that real estate agents normally charge. Customers loved the idea - why the heck did you need to hand over 6 percent of the price of your house, anyway? But agents hated it for destroying their fat margins, so they began blacklisting Redfin, refusing to sell houses to anyone who used the service. Kelman was struggling to close deals for his clients.
His first reaction was to keep the situation quiet and pretend everything was OK. "We were really ashamed that our customers were getting pushed around, so we tried to keep it this dirty little secret," he says. But when months went by without any improvement, he decided to take a different tack.
Kelman set up a Redfin blog and began posting witty screeds about the nasty underbelly of the real estate business. He denounced traditional brokers, accusing them of screwing customers with clubby, closed-door practices. ("If we don't reform ourselves, and take out all the sales baloney, too, people will come to hate real estate agents the way they hate tobacco companies or Big Oil," he wrote.) He publicized Redfin's internal debates, even arguments about the design of its Web site. He mocked himself: One post described how he had sat at a college job fair for hours, waiting in vain for a single student to approach him. ("This was particularly sobering because it meant we had outlosered our neighbor to the right, Ford Motor Company," he wrote.) Meanwhile, in the blog's comments, old-school agents were unleashing hissing attacks on Redfin. Kelman left the critiques ine and lashed right back, in full view of his customers.
His enemies got nervous. All this intestinal spew seemed maso chistic. Worse, it was probably bad for business. Everyone's business.
But customers loved it. More and more signed on to use Redfin, and by the beginning of this year, Kelman and his crew were closing several deals a day. "Instead of discouraging customers, being open about our problems radicalized them," Kelman says. "They rallied and started pulling for us."
Like some crazed convert, he trumpeted his epiphany: "I honestly believe that if Redfin were stripped absolutely bare for all the world to see, naked and humiliated in the sunlight, more people would do business with us." Follow me, he urged.
And many have. Radical forms of transparency are now the norm at startups - and even some Fortune 500 companies......
Read the rest of the article here: http://www.wired.com/wired/archive/15.04/wired40_ceo.html
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