What Are Secrets Worth in Corporate America?

Monday, December 13, 2010

The power of information and secrets lie in their relevance and timeliness. WikiLeaks, the controversial non-profit media organization, which gained notoriety for leaking classified U.S. military files, is believed to be in the process of leaking confidential documents relating to Bank of America and BP. If the leaked information pertains to secrets of strategic relevance to these companies, the corporate competitive landscape could be altered.

In his joint paper with Evan Offstein, Ph.D., “On the Virtues of Secrecy in Organizations,” Ronald Dufresne, Ph.D., an assistant professor of management at Saint Joseph' s University, argues that “secrets are necessary, if not essential, to organizational survival and competitiveness.” He believes: “secrecy that delays competitive retaliation provides competitive advantage.” Furthermore, secrecy provides leaders more freedom to be creative and open to unique ideas behind the scenes before needing to air those ideas publicly.

In the event that the WikiLeaks about those corporations are timely and relevant, they could negate Bank of America and BP's competitive advantages. Dufresne uses Apple as an example of an organization which leveraged the power of secrets as demonstrated by the marketing impact and the buzz that accompanied the secrecy of the iPhone.

While executives at Bank of America and BP have no control over the forthcoming leaks, Dufresne recommends managers, who are still in position to dictate how company secrets are communicated, ask themselves three questions before moving forward:

1. Should secrets be shared within the organization and/or to an external audience? 2. How much of a secret should be disclosed? 3. At what time and at what rate do I want to disclose secrets?

An essential process in managing secrets is to compartmentalize information so individual organizational members or departments are unable to “connect the dots” and transform that information into intelligence.

Dufresne argues that the key is to find the balance between compartmentalizing secrets so “no one individual can put the secrets together to comprehend the ‘bigger picture’” and “expansive transparent knowledge sharing,” because “tilting too much one way or the other jeopardizes the organization’s long-term competitiveness.”

Media Contact

Dufresne can be reached for comment at 610-660-3106 or rdufresn@sju.edu, or by calling University Communications at 610-660-1355.

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