06/16/2010 11:27 am ET Updated May 25, 2011

What Corporations Can Gain From True Open Leadership

Companies are becoming more comfortable with using social media to open a dialogue with their customers, inviting feedback and product reviews. Some are even letting negative reviews remain live on their websites, and it's a bold move. But companies that embrace true open leadership -- the kind that takes both positive and negative feedback and incorporates it into product design, into marketing, into pricing--make the kind of leap that benefits the company, its customers, and its shareholders on a much higher level.

What is true open leadership? As Charlene Li explains in her recent book "Open Leadership," throwing open the doors to honest commentary is just the first step. Customer feedback can -- and should -- ripple through the entire organization.

To use an example from my industry, let's say you've designed a machine you think is great for music, and all your marketing materials are geared toward that use. That's what your advertising says, that's how your sales team is pitching the product. There's even a G clef on the box. But users love it even more for photography. A truly open company switches gears and not only re-markets the product but changes the packaging and instructs its design team to incorporate more features into the next model that will address the needs of the photographic community.

Keep in mind that even soliciting the feedback requires a lot more corporate courage than it sounds, particularly for companies who designed and manufactured the products they're selling. It's easier for companies like Amazon, who didn't write those books or record those songs. When users post reviews, they're just helping each other choose the right book or CD from Amazon. Negative reviews won't drive customers away from the company, only from a particular product.

That's the risk you take when you embrace true open leadership. Yes, there are customers who might buy a product from a competitor when they read negative comments on your site. But look further ahead, and you see sales rise and customer loyalty increase. When you use social media this way, customers have a stake in all that you do. You are literally listening to customers and taking their direction on how they can accomplish more with your products. The level of engagement that results from a genuine relationship between customers and a company is what creates community. And community is what social media -- and bold leadership -- is all about.