Dave Balter, founder and CEO of a Boston-based company called BzzAgent, is one of my favorite young entrepreneurs. His fast-growing firm (pronounced “Buzz Agent”) is a pioneer in the field of word-of-mouth marketing. It recruits volunteers to sample products, share their opinions with friends and neighbors, and report back on the conversations. BzzAgent has been a phenomenon in the United States, with high-profile press coverage and blue-chip clients.

A while back, Dave decided that BzzAgent was ready to take its act to the UK. But its first step was a misstep. He hired a UK executive to run the operation, and it was a clash of cultures from the outset. After 60 days, BzzAgent and its British hire parted ways.

Why do I know about this setback? Because BzzAgent shared this episode on its company blog, called the BeeLog. Dave wrote a long entry that described his decision to hire this executive and why things didn’t work out.

Talk about changing the game. It’s one thing to read essays by pundits about how the Internet eliminates secrecy in business. It’s quite another to encounter a company like BzzAgent that has chosen to share its inner workings with outsiders.

Dave has shared some pretty edgy stuff. BzzAgent, like lots of companies, has an advisory board of gurus. Every quarter, the company prepares a confidential report for its board of directors, and then sends the report to its advisory board.

Dave always wondered whether these advisors paid much attention to the briefings. So in August he slipped a phony slide into the middle of the report. The slide suggested that members of the advisory board were each about to be sued for millions of dollars. Only three of the company’s 15 advisors responded—a sure sign they weren’t reading the report. Balter posted an entry about his experiment on the BeeLog and invited visitors to share their advice about what he should do about his disengaged advisors.

Why be so open about how his company works? For one thing, it’s a matter of authenticity. One way to demonstrate your commitment to openness is to lift the veil of secrecy around your operations. “Openness is in our life blood,” Dave says.

It’s also about getting smarter faster. I recently spoke with Dave over the phone. He was at lunch in London with the new head of his UK office. This executive had read his post about the hiring miscue, and was clear about why he was a better fit. “It may seem scary to share your problems with the outside world,” Dave says, “but it’s also the best way to solve them.”

How transparent are you prepared to be? Are you ready to share your challenges and setbacks with the outside world?

HARVARD BUSINESS ONLINE RECOMMENDS:
The Buzz on Buzz (HBR Article)
The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts, and Cultures (Hardcover)
Authenticity: What Consumers Really Want (Hardcover)