The Secret is Out: Transparency is In

Last fall, Kellogg’s acquired a protein bar startup called RXBAR for $600M dollars. The significance of that deal is twofold. First is the story behind the company: two childhood friends built the business out of their kitchen with $5,000 each and no outside funding. Second, their brand was built on transparency and candor: each bar neatly lists a handful of ingredients on the front packaging followed by their signature motto: “No B.S.”

The market took notice.

In an era where food labels list hard-to-pronounce ingredients like “tartrazine” and “disodium inosinate” and include vague statements like “may contain” (which we wrote a separate blog post about), consumers are unsurprisingly gravitating towards products like RXBAR.

But the trend isn’t limited to food. Increasingly, shoppers are looking to company values—including a company’s commitment to transparency—when making purchase decisions. More consumers are looking beyond price tag and factoring in product origin, reputation, and quality and ethical standards. The rise of fair trade, organic, and Certified B Corporations (“B Corps”) is a testament to shifting consumer preferences. Consumers are also looking at where companies donate politically: with a new app from startup Goods Unite Us, consumers can run political background checks on products to see what political party their purchase indirectly supports.

Corporate candor is a hot commodity right now. That much is clear.

A Label Insight study looking at consumer behavior around food and personal care products found that nearly 40% of consumers would switch from their preferred brand to one that offered more product transparency. A quarter of respondents indicated that transparency was the leading reason they remained loyal to brands.

We live in a digital age where consumers have access to unprecedented levels of information. In turn, they are using that information to scrutinize company decision-making and hold companies accountable for those decisions. The businesses that are quickest to adapt will likely outperform and outlive their peers.

Investors see the appeal.

Investors routinely evaluate the risk of any potential deal or transaction. Transparency helps mitigate these risks by identifying blind spots, which can in turn reduce reputational, compliance, and financial risk. Transparency also fosters trust: the foundation of any business relationship.

The metrics of business success do not always account for intangibles like transparency and trust—but they should. Facebook is learning that the hard way this month, as user numbers drop and #DeleteFacebook becomes a trending hashtag.

Trust is hard to earn, difficult to quantify, and easily lost. For these reasons, trust is arguably the most valuable commodity a company holds. The precursor to trust is transparency.

- Abi and the Allergy Amulet Team