Secrets in a Networked World

I’ve been thinking about secrets lately and trying to come up with a definition that works in a business situation. According to “The American Heritage Dictionary,” a secret is “something kept hidden from others or known only to oneself or to a few.”

That works, but I think you can put an economic spin on it to make it a little more useful: a piece of information whose value is inversely tied to the number of people who know it.

The more people who know a piece of information, the less valuable it becomes. When only one person knows something about someone or something, its value is at its highest. As more people learn that piece of information, the less valuable it becomes (though interestingly, the more useful it is; more on that later).

This definition of “secret” is useful because we’re now in an age when the challenge of keeping information from others is extraordinarily difficult. In fact, a sure-fire way of generating traffic for your blog is to leak a secret. The reasons are simple:

• Having a piece of little-known information has a ton of value; it’s like holding a 100-dollar bill. Of course, a 100-dollar bill is only a piece of paper until you actually spend it, exchange it for something of value. Posting little-known information on your blog or in a forum is akin to spending that money. You swap potential value for real value: for traffic, reputation, even revenue, if some of that traffic will click on an ad you may be running.
• Keeping the information secret has no clear use for the external blogger. Consider a company secret known just by senior executives. They won’t reveal that secret, not because they’re contractually bound not to, but because there’s a secondary value (i.e., keeping their jobs and reputations) that outweighs the primary value of revealing the secret. But if you’re on the outside, with no ties to the company, you might as well reveal. Otherwise, the value’s lost.

Today, companies with secrets to keep are in an interesting situation. Secrets are still as valuable as they ever were. But the difference between someone on the inside and someone on the outside is blurring, making the second point less of a safety net than it had been.

Secrets in the Networked Company

A few companies, Apple in particular, have been particularly upset about leaked secrets. The community has generally sided with bloggers. They seemed to have picked up the classic Internet meme: “Information wants to be free,” a general feeling that any bit of information naturally wants to be widespread. It’s a version of entropy: keeping secrets is a structured system, and systems naturally tend toward disorder.

But secrets are still valuable. That’s a business truth. There’s value in big announcements of new products, and competitors should never know specifically what you’re working on or what resources you have. These things should be kept on the inside.

But what is the inside? We’re moving toward a transparent business culture with a goal of information flowing freely between the company and its constituents. Businesses actively seeking people on the outside to help them achieve their goals. We’re talking about advocates, evangelists, and affiliates. How should a company deal with these stakeholders when it comes to secrets?

An evangelist may have some kind of casual relationship with the company. Consider someone who blogs every day about cell phones. A cell phone manufacturer may reach out to that person and treat her as it would a journalist. Should it feel some responsibility to share upcoming news with her? What about an affiliate, who may actually be selling products for the company? An early tip off may help him set up his store to capture some early excitement and convert it into sales.

Expanding the Secret Circle

Clearly, that secondary value is the key to keeping secrets safe. People are unwilling to blow a secret if they feel it will harm to either themselves or someone close to them. You gossip about everyone except yourself and your spouse. Secrets are items of value and should be treated as such.

As companies expand their influence beyond the corporate campus, they must be prepared to deal with secrets getting out. Trying to stop the information at the security gate may not be the most practical approach. It doesn’t mesh with either communication technology or with business culture.

Secrets stress the need to have a genuine relationship with the people a company seeks to connect with more deeply. The handling of a secret is a good way to test the degree to which your company is ready to have a real relationship with those who can generate value for you.

Meet Gary at Online Video Advertising Forum in New York City, June 16, 2006.