Managing the threats and opportunities of the open corporation

Purpose This “Masterclass” paper aims to show senior leaders seeking innovation in various degrees of corporate openness how to defend their businesses against the threats and to take advantage of the opportunities posed by social media. Design/methodology/approach Openness is not an “anything goes” approach to management. This paper explains the rules for two‐way accountability, with clear delineation of what is expected from each side of the relationship. Findings Getting involved in social media can be disturbing to managers because it means dismantling some of the barriers and controls that embodied the 20th Century organization and that filtered communications within and to and from the organization. Practical implications One approach is to articulate “covenants” between the parties so that everyone knows explicitly what behavior is appropriate. For example, social media guidelines for employees and customer‐facing guidelines, such as community participation or comment guidelines. Originality/value For most organizations, being more open means building relationships that have not existed before. This paper offers leaders a detailed, practical, analytic guide for managing the process.