Turnaround Talk

Hewlett-Packard. Starbucks. Best Buy. Research in Motion (Blackberry). RadioShack. And, most recently, JC Penney. Hardly a week goes by without a report that one well-known company or another is in the throes of a turnaround.

Each period of business history has its own representative corporate type. The 1960s were the age of the conglomerate. In more recent decades, the startup has achieved iconic status. But the kind of organization that marks our own historical moment is, arguably, the turnaround company. In almost every sector, there are once-dominant enterprises that find themselves on the wrong side of a shift in customer demand or the emergence of a disruptive technology.

So what does it take for a leader to pull a company out of the doldrums, or indeed out of real or potential bankruptcy? It starts, no doubt, with a sense of urgency. In that respect, a turnaround effort differs from a standard organizational change initiative. Change happens slowly—whereas, in a turnaround situation, time is of the essence. A company that’s going in the wrong direction needs to change, and change fast, or soon it will be past the point of no return. Decide, act, decide, act: That must be the order of the day.

Or so it might seem, anyway. In fact, while the need for speed is undeniable, effective turnaround leaders also keenly appreciate the need to stop—to stop and talk with the people in their company who must do the day-to-day work of moving the organization in a new direction. Such leaders understand that a push to undertake a new strategy or to redirect operational performance depends pivotally on how well they communicate with employees. Equally important, it depends on how well they manage communication throughout their organization.

StarbucksLogo.jpgConsider the example of Starbucks. In 2008, the coffee chain was struggling to maintain its market position and to ward off a growing set of competitive threats. So Howard Schultz, the company’s founder, retook the reins as its CEO and launched a drive to revitalize its operations from the ground up. As reports on that effort demonstrate, Schultz placed communication at the center of his turnaround strategy.

“Schultz’[s] capacity for hands-on communication is impressive,” one writer observes. “He blitzed each core constituency—senior managers, store managers, customers, media, analysts, shareholders, and employees—with various communications concisely presenting the case for change or a particular decision.” Another commenter, drawing upon a published interview with Schultz (subscription required), highlights several principles and practices that Schultz has sought to pursue: “Share the Vision.” “Clearly Lay Out the Plan.” “Let Employees Know How They Can Help.” “Foster Two-Way Communication.”

Yet a focus on enhancing communication isn’t enough. It has to be communication of the right sort. In normal times, leaders can allow ideas and information to move across their organization in a deliberate, structured, layer-by-layer fashion. In a turnaround scenario, however, leaders must do whatever they can to make that process nimbler and smoother—more dynamic and more immediate. “Corporate communication,” as businesspeople have traditionally understood and practiced it, must give way to organizational conversation.

That’s our term for an approach to managing communication that draws upon the immediacy of personal conversation. Our model of organizational conversation features four distinct elements: intimacy, interactivity, inclusion, and intentionality. Here, in the spirit of that model, we present four steps toward powering a turnaround project through conversation. For each step, we’ll cite an example from the case history of notable turnaround efforts.

Talk straight. Conversational intimacy involves efforts by leaders to create and maintain a close connection with employees at every level of their company. And it requires leaders to be honest and authentic, especially when it comes to sharing bad news or addressing difficult topics.

XeroxLogo.jpgIn 2000, when Anne Mulcahy took charge of operations at Xerox, there were plenty of difficult topics to confront. Xerox was deeply in debt, its stock was plummeting, and its core business model showed every sign of being unsustainable. In that role and at that moment, Mulcahy focused on getting out into the field and talking with people. A study of her tenure during this period quotes a colleague of hers as follows: “Anne appealed to employees with missionary zeal, in person and through videos.” According to the study, Mulcahy herself said, “I’m never happier than when I’m milling around with a group of Xerox people, in a town hall meeting, or a Q&A. I don’t like giving speeches, but I love dialogue.”  

It wasn’t all happy talk—far from it. In talking to fellow top executives, in particular, Mulcahy was blunt about reckoning with points of potential conflict. “I knew there would be people who certainly wouldn’t be supportive of me,” she recalled. “So I confronted a couple of them and said, ‘Hey, no games. Let’s just talk.’” She also put forth a more general rule: “When there are tough messages to deliver, it’s important to communicate the good and the bad. Respect people by delivering the truth.”

Make talk happen. When a company enters a turnaround crisis, it’s often in part because people in the organization have lost the ability to interact with each other. So conversationally adept leaders find ways to promote interactivity. They deploy communication channels that allow for back-and-forth discussion, and they build a culture that fosters that kind of discussion.

NissanLogo.jpgThat’s what Carlos Ghosn did after he became president and CEO of Nissan in 1999. The Japanese automaker had seen its performance deteriorate over the preceding decade, and a shake-up was clearly in order. Among the first items that Ghosn changed was a protocol that had been in place for meetings of top executives. In a study of Ghosn’s turnaround leadership, a fellow executive offered this observation: “In old Nissan, there was hardly any discussion in most senior management meetings. … Today our meetings are different. We actually debate issues. We openly disagree with one another. It took some time for all of us to get used to it, but our meetings are much more productive.”

Ghosn also initiated practices that enabled greater interactivity throughout Nissan. Instead of relying on memos—or on middle managers—to convey his message, he used a companywide video hookup to present his transformation plan to employees. “This was the first time in the company’s history that the president spoke directly to everyone in the organization,” one Nissan executive explained.

Let everyone talk. Conversation inclusion exists where leaders adopt measures that enable employees to participate fully in the communication process. By including people at all levels of a company in the organizational conversation, leaders can achieve a more intense quality of engagement among those who must carry out a turnaround project.

HCLTechLogo.jpgHCL Technologies wasn’t at a point of crisis in 2005, when Vineet Nayar took on the role of president, but right away Nayar saw the need to initiate a major transformation effort. The company needed to move up the value chain in the technology services industry, and making that shift would require HCL employees to change how they related to each other—and to the company. Toward that end, Nayar and his team launched a internal communication initiative that featured the tagline “Employees First, Customers Second” (EFCS). Nayar, in a study of his early push to transform HCL, explained the EFCS theme: “The idea behind Employee First was that as a services business, the employee interface with the customer was critical. … I wanted value-focused employees who were willing and able to drive an innovative, sophisticated experience for customers.”

Elements of the EFCS project included the launch of a new, “employee-friendly” intranet portal and the creation of an intranet-based service called U&I, which empowered employees to engage directly with Nayar. “Communications at HCL used to be handed down from up high,” a senior manager at HCL noted. “Vineet replaced that with lots of direct contact through video conferencing, online tools, and face-to-face talks.”

Talk strategy—and talk strategically. Only when leaders approach communication with intentionality can they ensure that smart talk will result in sustained action. By carefully building communication efforts around a clear organizational vision, and by taking care to follow an overarching strategy for those efforts, a leader can pursue a turnaround conversation that will keep a company on message and on track.

SASLogo.pngConsider the turnaround push that Jan Carlzon undertook at Scandinavian Airlines Systems (SAS) in the early and mid-1980s. To improve the company’s ability to attract business customers, Carlzon aimed to improve the level of service that frontline employees could offer. The best way to do so, he concluded, was to empower those employees—to give them greater autonomy and flexibility in how they did their job. Yet they could exercise that autonomy fruitfully only if SAS leaders also gave them a big-picture sense of what the company was aiming to achieve. Carlzon, in a study of his early work as CEO, put it this way: “Anyone who is not given information cannot assume responsibility. But anyone who is given information cannot avoid assuming [responsibility].”

According to that study, Carlzon and his team went so far as to create a booklet for employees that used cartoon imagery—a smiling airplane, for example—and “simple, direct language” to tell “the story of the company to date.” Employees came to call it “the little red book,” and it exemplified Carlzon’s theory of turnaround communication: “Rather than merely issuing your message, you have to be certain that every employee has truly understood and absorbed it.”

[Cross-posted, in a slightly different form, at the Harvard Business Review Web site.]

People Are Talking (Year-End Edition)

’Tis the season of year-end round-ups—a time when people look back and collect their thoughts on the “best” works to appear over the preceding twelve months.And we’re happy to report that a couple of outlets have included Talk, Inc., on their lists of notable business books published in 2012.

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The Web site 800-CEO-READ, a retailer and information clearinghouse that has become a key player in the fast-changing business-book market, put our book on its shortlist of titles in the “Leadership” category.

Strategy + Business, a magazine published by the consulting firm Booz & Company, placed Talk, Inc., on its “Best Business Books 2012″ list. (Free registration required. Visitors can also download a PDF of the magazine’s entire package of articles on the best books of the year.)

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The editors of Strategy + Business cite our book under the rubric of “Organizational Culture.”In a piece that covers books in that category, writer Sally Helgesen offers this summary comment:

Talk, Inc. makes a powerful case that effective talk is the primary means of motivating and inspiring loyalty among today’s increasingly social and connected workforce. . . . Talk in all its manifestations—intimate, interactive, inclusive, and intentional—is the cultural instrument required to get people engaged.

Meanwhile, consultant Karina Butera recently posted a review of Talk, Inc., at her Web site. Here, in brief, is her verdict:

Overall, the authors give a compelling case for broadening the function of Corporate Communication from a one-way, top-down approach, to a two-way exchange. Talk, Inc. is well suited to executives wanting to gain better employee and stakeholder engagement and is a must-read for anyone specialising in Corporate Communications.

As strong business relationships are built from productive conversations, I see this book as an excellent guide to assist you in your business relationship building.

Talking Business

Business blogger extraordinaire Bob Morris, who wrote a warm review of Talk, Inc., soon after the book came out, has published an interview that he conducted with us via email.

BobMorrisHeader.tiffBob served up a host of great questions, and we did our best to provide thoughtful answers that didn’t merely repeat material that’s in the book. The result is a wide-ranging discussion that touches on our personal backgrounds, our speculations about the future of leadership, and our musings on how the likes of Lao-Tzu and Voltaire might provide insight into the meaning of organizational conversation.

[The full interview appears in the extended entry.]

(more…)

2 Candidates, 2 Communication Models

Did Barack Obama win re-election because he was a better communicator than Mitt Romney? The 2012 race for president was so tight that it’s easy to speculate that this factor or that one made the crucial difference—and just as easy to dismiss all such speculation. But the communication factor merits a keen look. Both candidates, after all, waged this close-fought battle largely with words: Through their communication efforts, they each sought to forge a connection with voters.

Several weeks ago, we surveyed HBR.org readers to gauge their sense of each candidate’s ability to conduct and manage communication with voters. Both candidates, according to respondents, displayed an ability to communicate well. Yet the survey results indicate that Obama and Romney showed their respective strengths as communicators in very distinct ways.

We based our survey in part on a model that we call organizational conversation. In that model, leaders strive to practice and promote a form of communication that resembles personal conversation. Building upon our research on how leaders communicate today, we have identified four elements that make up this model: intimacy, interactivity, inclusion, and intentionality.

In the survey, which was open to HBR.org readers from September 21 to October 14, we asked respondents to rate how well each candidate performed along each of those four dimensions. Then we asked them to rate how well each candidate performed “overall” with respect to “conducting and managing communication with key constituencies.” In addition, we asked respondents to indicate whether they planned to vote for President Obama or Governor Romney.

Not surprisingly, respondents tended to answer our questions about each candidate’s performance in a way that reflected their candidate preference: Pretty much across the board, those who intended to vote for Obama gave their candidate higher marks as a communicator than they gave to Romney, and vice versa.

Nonetheless, we also observed an intriguing pattern that cuts across the line of candidate preference. Both Romney supporters and Obama supporters gave Romney higher scores on his overall communication performance than they did on any of the four areas of performance that we associate with the practice of organizational conversation. What’s more, on that question about “overall” performance, Obama supporters gave Romney essentially the same score that Romney supporters gave to Obama.

Those results, in our view, suggest that both sets of respondents attributed to Romney a talent for communication that differs substantially from the talent that Obama displayed. Obama excelled at pursuing a conversational form of political communication. So we argued previously in this space, and the results of our survey tend to support that conclusion. Romney, meanwhile, excelled at communicating with voters in what we might call a more traditional manner.

To understand what we mean by “traditional” in this context, consider Romney’s performance in the first presidential debate, held in Denver on October 2. In that venue, Romney was clear, cogent, and forceful. He knew what he wanted to say, and he said it systematically, using a tone and a rhetorical approach that he knew would appeal to his target audience. For decades, communicating in this model—communicating in a top-down and tactically efficient way—has been a central part of organizational leadership.

Thus, when respondents awarded Romney a relatively high score as an “overall” communicator, they were effectively recognizing his ability to convey messages in that traditional manner.

In business, as in politics, both of these forms of communication have their place. Leaders today, we believe, do benefit from the pursuit of organizational conversation. Nonetheless, we also appreciate the virtues of the more traditional model. Our model of organizational conversation, in fact, includes the element of intentionality precisely because that element addresses the need for clear, direct messaging. And, notably, both Romney supporters and Obama supporters gave Romney higher scores for that element than for each of the other three elements in our model.

In that first debate, Romney demonstrated an impressive ability to communicate intentionally with voters, and that performance gave his campaign a major boost during the final weeks of the race. (After the debate, interestingly enough, we noted a sharp rise in the number of Romney voters who responded to our survey—and a sharp rise, too, in the scores that Romney received from respondents as a whole.)

Obama, by most accounts, performed quite poorly in the Denver debate. In that setting, he seemed to many observers to be neither intimate nor interactive nor inclusive nor intentional. Over the course of the campaign as a whole, though, he seemed to draw effectively upon all four elements of organizational conversation—much as he and his team did in 2008. The results of our survey bear out that conclusion. Respondents scored Obama particularly high on the questions that pertained to intimacy and inclusion; even Romney supporters gave Obama relatively high scores in those areas.

Again, Obama’s prowess in this area—in conducting and managing communication to, from, and among voters—does not fully account for his victory. Even so, the success of his campaign this year highlights the power of the conversation-based model. Leaders in any kind of organization, we’d argue, are apt to benefit from adopting that model to communicate with key constituencies.

[Cross-posted, in a different version, at the Harvard Business Review Web site.]

Faith Talk

FaithLead logo.jpgReligious leaders need to build a reliable, conversation-based rapport with their followers—just as business leaders do (if not more so). That’s why an editor at Faith & Leadership, an online newsletter published by Duke Divinity School, approached me (Mike) to talk about the ideas presented in Talk, Inc. The result was an interview that Faith & Leadership is featuring this week on its Web site.

For the piece—it’s titled “Part of an Ongoing Conversation”—I spoke with the interviewer about the value of trust, the importance of telling an inclusive story, and the elements of organizational conversation.

Organizational Failure? Look for Communication Failure

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.]

Conversation We Can Believe In

A presidential campaign is many things. It’s a race. It’s a fight. It’s a long-term venture and a high-risk investment. But for a presidential candidate—and for the voters, volunteers, and donors whose support he or she seeks—a campaign is also a conversation. It’s an effort to talk about issues in a way that engages people. It’s a bid to develop a rapport with current and would-be supporters. It’s a process that hinges on a two-way exchange of information: Voters tell the candidate what they care about, and the candidate tells voters what he or she stands for.

In our book, Talk, Inc., we describe how more and more leaders today manage communication within their organizations in a way that calls to mind ordinary, person-to-person talk. Indeed, a new model based on organizational conversation (as we call it) has come to the fore at many companies. Where organizational conversation has taken hold, leaders build engagement and drive strategic alignment by enabling ideas and information to move efficiently across their company. The task of a conversationally adept leader, according to this model, is to ensure that the right messages reach the right people at the right time.

It’s a task, in other words, that resembles the one that a successful presidential candidate must undertake.

In 2008, then-Senator Barack Obama developed and led a campaign for the presidency that not only achieved its main goal—sending Obama to the White House—but also set a new standard for innovation and execution. He did so, we believe, by mounting a campaign that fully leveraged the principles of conversation-based leadership.

Earlier candidates, of course, had excelled at communicating with voters in a conversational manner. (Think of Franklin Roosevelt, who became famous for his radio-based “fireside chats,” or Ronald Reagan, whose easy-going style earned him a reputation as “the Great Communicator.”) Yet the Obama campaign signaled the emergence of a novel framework for managing electoral communication at a national level. From the way that it deployed advanced digital media to the way that it incorporated rank-and-file supporters into its messaging apparatus, the Obama for America operation in 2008 demonstrated the power of conducting a campaign as though it were a conversation.

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Effective organization conversation, we argue in Talk, Inc., depends on how well leaders are able to promote four key qualities. Four years ago, each of those qualities was very much in evidence in the campaign that culminated in Obama’s victory on Election Night.

Intimacy: Effective leaders treat an opportunity to communicate as an opportunity to close the gap that might otherwise separate them from their followers—whether those followers happen to be employees or voters. From his fabled keynote address at the 2004 Democratic National Convention to his high-pressure speech on race in 2008, Obama proved able to talk about sensitive issues in a way that promised to bring people together.

Interactivity: Taking steps to promote dialogue—real, back-and-forth interaction among people from all parts of an organization—is another hallmark of conversation-based leadership. In 2008, Obama built an operation that used social-media tools (such as Facebook and its own “mybarackobama” platform) to enable two-way communication between campaign operatives and grassroots supporters.

Inclusion: A truly conversational leader engages people by empowering them to become full-fledged conversational participants. A highlight of the Obama campaign in 2008 was its ability, and its willingness, to leverage unsolicited pro-Obama messaging efforts. Notable examples of supporter-generated content included the “Hope” poster created by Shepard Fairey and the “Yes We Can” video produced by the music artist will.i.am.

Intentionality:HopePoster.jpg Enabling open conversation isn’t enough. Leaders also need to pursue a focused agenda that ties together the various strands of conversation—an agenda that clearly ties organizational conversation to organizational strategy. The 2008 Obama campaign, through its “Change We Can Believe Inmessaging strategy, aligned diverse constituencies around a vision that differentiated Obama from his opponents.

There’s more to a successful presidential campaign than building a great communication operation. Other factors, many of them external to the campaign itself—the state of the economy, the demographics of the electorate, the salience of certain policy issues—each play a critical role in rallying voters to one candidate rather than another.

Even so, Barack Obama’s extraordinary rise to the presidency illustrates the value of adopting a conversational approach to engaging with key constituencies. These days, whether you’re leading a private-sector company or a campaign for high political office, it pays to communicate with people in ways that are intimate, interactive, inclusive, and intentional.

[Cross-posted, in a slightly different form, at the Harvard Business Review site.]

People Are Talking (IV)

We spotted a couple of recent online references to our work—one from Canada, and one from Australia. Talk, it seems, does travel.

  • GlobeMail.jpgThe Globe and Mail, a leading Toronto-based daily newspaper, published a thorough (and thoroughly friendly) review of Talk, Inc., earlier this month.
  • At the Web site of the Australian Institute of Management (Victoria & Tasmania), blogger Leon Gettler cited our Harvard Business Review article in a round-up post titled “How to Be a Better Communicator.”

The Reviews Are In!

Well, a few reviews are in, at any rate. Over the past couple of months, several commentators from around the Web have reviewed Talk, Inc. And they’ve done so in very kindly terms, all in all.

This week, for example, a Canadian business writer named Wayne Hurlburt posted a notice about the book at his site, Blog Business World. Here’s a sample of his commentary:

For me, the power of the book is how Boris Groysberg and Michael Slind combine the theory and principles of organizational conversation, with the practical techniques for nurturing and developing the concept within any company. The authors present a very compelling argument in support of organizational conversation as essential for companies seeking more engaged and empowered employees.

And here two more notable items that we’ve spotted in our “review mirror.”

  • Bob Morris, at his Blogging About Business site, published a lengthy post about Talk, Inc.. A highlight of his review is a detailed list of “the passages, themes, and concepts that caught my eye throughout the narrative.”
  • Dan Erwin has put up a piece about the book at his blog, which focuses on “career development, career and neuroscience research, current affairs,” and much else. “Groysberg and Slind’s new work,” Erwin writes, “is a welcome addition to every manager’s bookshelf.”

People Are Talking (III)

Here are further notes on places on (and off) the Web where people are talking about Talk, Inc.

  • A writer for Investor’s Business Daily, Steve Watkins, quotes both of us (Boris and Mike) in a recent article titled “Walk the Talk to Get Others to Follow Your Lead.” That piece appeared in print as well as online.
  • At Forbes.com, marketing columnist Dorie Clark draws upon her interview with Boris in a piece titled “Why CMOs Should Get Used to Less Control.”
  • The magazine Canadian Business has published a brief review of the book. It’s available not only online, but also in the magazine’s print edition.
  • Here, addition, is a short notice about Talk, Inc., on the company blog of Continuum Design, a company that we featured in the book.
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