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The silicon graveyard is littered with companies that kept their cards too close to their chest. Kodak invented the digital camera in 1975, then locked it in a vault to protect film sales. Nokia dominated mobile phones while secretly dismissing touchscreens as a fad. Blockbuster had the chance to buy Netflix for $50 million but couldn’t imagine a world beyond late fees.
These weren’t stupid companies. They were closed ones.
In nature, organisms that share genetic information through sexual reproduction evolve faster than those that clone themselves. The same principle governs corporate survival. Companies that expose themselves to outside ideas, that cross pollinate with customers and competitors and even critics, adapt at speeds that make their rivals look like they’re evolving in geological time.
This isn’t about being nice or democratic. It’s about survival.
The Transparency Paradox
Most executives think competitive advantage comes from hoarding secrets. They build walls around intellectual property, compartmentalize teams, and sign everyone to NDAs thick enough to stop bullets. The logic seems sound: if competitors can’t see what you’re doing, they can’t copy you.
But here’s what actually happens. Those walls don’t just keep competitors out. They keep reality from getting in.
When Apple was developing the iPhone, Steve Jobs did something that seemed insane to the old guard at companies like Nokia and Blackberry. He showed it to the world before it was finished. The January 2007 announcement came six months before the actual release. Critics pounced on missing features. Competitors scrambled. And Apple got an unexpected gift: six months of the smartest people in technology publicly dissecting their approach, identifying problems, and essentially doing free R&D through criticism.
The closed companies, meanwhile, were perfecting products in secret that the market had already moved beyond.
Openness creates a feedback loop that secrecy strangles. When you share work early and often, you get correction before you’ve bet the company on being wrong. When you hide until the big reveal, you get the market’s verdict only after you’ve spent everything.
Why Cognitive Diversity Beats Individual Genius
There’s a persistent myth that innovation springs from lone geniuses working in isolation. The myth is so appealing because sometimes it’s true. But it’s true about as often as a broken clock is right.
Scientific research on problem solving reveals something counterintuitive. A diverse group of decent thinkers consistently outperforms a homogeneous group of excellent thinkers. Not because diversity is morally good, though it might be. Because diverse perspectives make different kinds of mistakes.
When everyone in your organization went to the same schools, worked at the same companies, and reads the same books, they all get stuck in the same cognitive potholes. They make the same assumptions. They miss the same solutions. They share the same blind spots.
Open companies don’t just tolerate outside input. They actively hunt for people who will tell them they’re wrong. Amazon has a mechanism called “working backwards” where they write the press release before building the product. But the real innovation isn’t the press release. It’s that they share it with people who have zero stake in being polite about it.
Pixar goes further. They have something called the Braintrust, where directors must show incomplete work to colleagues who then say exactly what doesn’t work. There’s no authority structure in the room. A junior animator can tell a director their story is broken. This sounds like chaos, but Pixar hasn’t made a flop in 25 years.
The closed alternative is what happens at most studios. Notes come down from executives who haven’t made a film in 20 years, if ever. The feedback is political rather than honest. The film gets worse with each round of revisions designed to offend nobody and please everybody.
The API Philosophy of Business
Programmers understand something about openness that most businesses are still learning. When you build an API, an application programming interface, you’re essentially opening your system so others can build on top of it. You’re inviting the world to use your infrastructure for purposes you never imagined.
This seems dangerous. And it is. People will use your system in ways you didn’t intend. They’ll find bugs you missed. They’ll build competing services on your own platform.
But something remarkable happens. The ecosystem that grows around your open platform makes it more valuable than anything you could have built alone.
Amazon didn’t plan to be a cloud computing company. They built infrastructure for their own online store, then opened it up as AWS. Now AWS is more valuable than the retail business. Salesforce didn’t invent most of the features that make it dominant. Third party developers built them using Salesforce’s open platform.
The pattern repeats across industries. Tesla open sourced its patents in 2014. This wasn’t altruism. Elon Musk understood that electric vehicles would only succeed if the entire industry moved that direction. Tesla needed charging stations everywhere, battery innovation from multiple companies, and regulatory pressure that only comes from a movement, not a single manufacturer.
Closed companies think, “If we share this, competitors will catch up.” Open companies think, “If we don’t share this, the whole category will fail.”
The Vulnerability Requirement
Here’s the part that makes executives uncomfortable. Real openness requires admitting you don’t have all the answers. It means showing work before it’s polished. It means letting customers see the kitchen before you’ve cleaned it.
This feels dangerous because it is dangerous. When Microsoft open sourced .NET, they weren’t just sharing code. They were admitting their previous approach was limited. When Adobe moved to subscription pricing and cloud services, they had to acknowledge that their old model was dying.
The alternative is pretending everything is fine while the ship sinks. Sears never admitted that retail was changing until they were selling off assets to survive another quarter. Newspapers spent a decade insisting that the internet was just a fad that serious readers would grow out of.
The companies that survive aren’t the ones that avoid looking vulnerable. They’re the ones that get comfortable with vulnerability before they have no choice.
Speed as a Byproduct, Not a Goal
When people talk about innovation speed, they usually mean doing things faster. Ship products quicker. Make decisions in days instead of weeks. Move fast and break things.
But speed in open companies works differently. They don’t innovate faster because they’re rushing. They innovate faster because they’re learning in public.
Consider how pharmaceutical companies traditionally develop drugs. Years of secret research, then clinical trials, then FDA review, then launch. The whole process takes over a decade. But during COVID, companies like Moderna shared research in real time, collaborated with competitors, and published failures as quickly as successes. A vaccine that normally takes 10 years took 10 months.
The difference wasn’t working harder. It was working visibly.
When you develop in secret, you learn from your own mistakes. When you develop in public, you learn from everyone’s mistakes. The difference in learning speed is exponential, not linear.
The Network Effect of Ideas
Ideas, unlike physical resources, get more valuable when you share them. This defies basic economic intuition. Normally, if you have something valuable and you give it away, you have less. But ideas work differently.
When you share an idea, you still have it. But now someone else might improve it, combine it with their idea, or apply it in a context you never considered. The original idea becomes more valuable because it’s connected to more brains.
LinkedIn’s Reid Hoffman calls this “network intelligence.” Each person in a network doesn’t just add their individual intelligence. They multiply the intelligence of everyone they connect to. A network of 100 people isn’t 100 times smarter than one person. It’s exponentially smarter.
Closed companies cut themselves off from this multiplication effect. They might have brilliant people, but those people can only recombine ideas that exist inside the walls. Open companies plug into a global brain.
When Secrecy Actually Matters
This isn’t an argument that companies should share everything. Some secrets matter.
Coca Cola’s formula stays secret because it provides genuine competitive advantage with no benefit to sharing. Your customer list probably shouldn’t be public. Personal data must stay private.
But most corporate secrets aren’t like the Coca Cola formula. They’re average ideas that seem important only because nobody has examined them. Companies classify their org charts like they’re nuclear launch codes. They hide product roadmaps as if showing future plans will cause competitors to instantly copy them, despite the fact that execution matters far more than ideas.
The test is simple: Does keeping this secret make us faster or slower? Does it help us learn or prevent learning?
If secrecy slows you down, you’re probably protecting the wrong thing.
The Mutation Rate Problem
Evolution works through random mutation and natural selection. Organisms need mutations to evolve, but too many mutations cause cancer. The sweet spot is enough variation to adapt without so much chaos that the organism falls apart.
Companies face the same challenge. Too closed and you don’t get enough new ideas. Too open and you lose coherence.
The answer isn’t finding a perfect middle point. It’s being open about different things at different times. Share research early when feedback helps. Lock down details when execution is everything. Show the world your failures so others don’t repeat them. Keep your specific implementation secret until it’s ready.
Valve, the gaming company, publishes their employee handbook online. It details exactly how their flat organization works, including the problems they haven’t solved. Competitors can read it. They can even copy it. But most won’t, because implementing the system is harder than understanding it.
Valve isn’t worried about competition. They’re betting that the feedback and talent they attract from radical transparency will outweigh any tactical copying.
What Openness Actually Looks Like
This isn’t about posting everything on social media or turning your company into a commune. Practical openness has specific components.
Default to transparency. If there’s no specific reason something should be private, make it public. Internal documents, decision frameworks, even mistakes.
Build public learning into the workflow. GitLab, which runs entirely remotely, documents everything in a public handbook that anyone can read and suggest changes to. They’re not just open about what they do. They’re open about how they think.
Create forums for criticism. Red Hat has completely open development processes where anyone can contribute and anyone can see what’s being built. This invites criticism, which is the point.
Measure learning speed, not secrecy. Most companies track how well they keep secrets. Almost none track how fast they discover they’re wrong about something important.
The Organism You’re Becoming
Companies don’t just exist in an evolutionary environment. They are organisms in that environment. And the most important question isn’t whether you’re innovating. It’s whether you’re developing the capability to keep innovating.
Closed companies might innovate successfully once or twice. They might even dominate for decades if they get lucky with early timing. But they can’t keep doing it because they can’t develop new capabilities faster than the environment changes.
Open companies don’t necessarily innovate better on any single product. But they build the organizational immune system that lets them adapt to whatever comes next.
The companies that will exist in 20 years aren’t the ones with the best current products. They’re the ones who’ve figured out how to evolve.
