A leading mobile-phone maker falls out of step with its market—and struggles to catch up.
An energy-trading company rises high—and then suddenly implodes.
A luxury cruise ship takes a wrong turn—and the parent cruise-line company finds itself on troubled waters.
A mighty oil company presides over an environmental disaster—one that spills over to become a PR disaster as well.
The board of an airline hires a CEO—and then cancels his contract after just three years.
Five big companies. Five big problems. One of these companies is a high-tech manufacturer, two of them are in the energy sector, and two of them are in the consumer transport business. Otherwise, they have almost nothing in common. The problems that each company has faced vary widely, too.
Or so it might seem. In fact, each of these cases of organizational failure involves—right at the crux of the matter—a grievous lapse in communication. Let’s look further at these five companies and their problems.
- Nokia: For more than a decade, Nokia was the world’s largest mobile-phone manufacturer. But when the smartphone became the next big thing within the mobility market, the company lost its competitive edge. According to an in-depth account of why Nokia has “struggle[d] to turn its good ideas into products,” much of the problem stems from habits of communication that favor unfocused discussions about strategy over clear plans to bring new phone models to market.
- Enron: A scholarly investigation into the problems that led to Enron’s collapse pinpointed several “communication-based leader responsibilities” that senior managers failed to meet—responsibilities such as “communicating appropriate values” and “maintaining openness to signs of problems.”
- Star Princess Cruise Lines: In April 2012, passengers on the cruise ship Star Princess told members of the ship’s crew that they had spotted a fishing boat that showed signs of being in distress. Yet the ship didn’t stop to provide aid, and two people on the fishing boat later died of dehydration. Later, the cruise-line company issued a statement that cited a “breakdown in communication in relaying the passengers’ concern.”
- British Petroleum: The blowout of the Deepwater Horizon offshore oil rig, in April 2010, resulted in a massive crisis for BP and its partners. Among the key factors that contributed to the disaster were “poor communications” and a failure “to share important information,” according to a report on the White House commission that studied the incident.
- Thai Airways: When Piyasvasti Amranand lost his job as CEO of Thai Air, in May 2012, the reason for his dismissal was somewhat elusive. After all, he had held the post for a mere three years, and the company’s board had recently given him a positive annual review. According to one media account, however, the chairman of the airline said that “communication problems between Piyasvasti and the board were hampering the company’s effort to meet [its] profit target.”
We didn’t select these examples entirely at random. But neither did we work very hard to find them. Even a cursory survey of high-profile organizational failures will turn up numerous stories that fit the same pattern. Thumb through the business pages of your daily newspaper. Or browse the virtual pages of a business news Web site. Very often, if you didn’t know better, it would be easy to conclude that you were reading case notes from the field of communication studies.
Every leader keenly understands the consequences of taking a lax approach to financial management. And most leaders today recognize how dangerous it can be to take a lax approach to people management. But how many leaders appreciate the risks that come with taking a lax approach to communication management—with failing to manage the way that ideas and information flows within their organization?
Those leaders who do effectively manage the flow of information within their company tend to share a certain outlook—and a certain set of practices. They adopt communication methods that enable them to get closer to employees. They put in place communication systems that promote dialogue, as opposed to monologue. They engage employees by allowing them to become active participants in the communication process. They rigorously pursue an agenda that aligns their communication efforts with organizational strategy.
In sum, they put a premium on ensuring that people in their organization talk with each other, and not just to each other.
[Cross-posted, in a slightly different form, at the Harvard Business Review site.]