Many top business thinkers -- including Michael Porter, C. K. Prahalad and Gary Hamel -- argue that good communications are crucial for implementing strategy. Yet, while most chief executive officers say that more than half of their daily work involves communications, little in their education prepares them for the task. Their formal training is often limited to basic writing and speaking courses in college and graduate school, sometimes supplemented by trendy workshops at corporate training sessions. For others in the organization, the level of training and skills can be dismal.
After twenty years of teaching at top business schools, we are still amazed at how much emphasis is placed on written and oral skills instead of on more strategic communication issues. We all can benefit from skills training, but what good are enhanced skills if managers do not have the ability to judge, in a given situation, whether they should be communicating at all and, if so, to what constituency? Many of the major business schools devote plenty of resources to quantitative analysis and traditional business disciplines, but fail to leave enough room for the study of communication theories and practices and how organizations formulate and implement strategy.
Senior executives who have invested time and effort in learning strategic communication approaches clearly have what we call a communication advantage. This is an organization's ability to use communications effectively to move from strategic planning to strategy implementation. The communications need to be aimed at the organization's key constituencies: employees, shareholders, customers, business partners and the media. The objective from the start is not just to share information but to influence opinions and actions. Executives who insist on the egocentric approach, focusing primarily on how they envision their own goals in their own terms, rapidly lose effectiveness.
LEARN TO PERSUADE
This is not to say that you need new ideas. The constituency-focused approach to communication can be traced to Aristotle's "The Art of Rhetoric." Aristotle used the concept to describe the activity of an individual speaker as the speaker tried to persuade others to think or act according to the speaker's agenda. According to Aristotle, the speaker can persuade others in several ways:
1) Appealing to the audience's intellect and sense of logic.
2) Playing on the audience's emotions.
3) Projecting a sense of self as an ethical and intelligent person the audience can trust.
We use a constituency-focused approach to look at the actions of organizations and their chief spokesmen as they attempt to implement strategy -- perhaps the most important persuasive effort that an organization undertakes.
One successful approach to communication in a dynamic, sometimes hostile, environment for business is the use of a communication framework based on ideas presented in "The Art of Rhetoric." An adaptation of these ideas provides the building blocks upon which organizations can develop a more coherent and successful approach to implementing strategy. (See Exhibit I.)
An organization must identify all the relevant constituencies -- and the interplay among constituencies --that will be influenced by its strategy. All too often, managers act more like politicians as they try to please all sides rather than trying to figure out which constituencies must be satisfied and how to respond to those who will have to be less satisfied with a particular strategic approach.
CHOOSE THE RIGHT TARGET
Sometimes the best approach is seemingly no approach. When the Walt Disney Company began construction of the Euro Disney theme park on the outskirts of Paris, for example, the company was well aware that Disney characters and stories and its strong corporate culture might be offensive to some segments of the Parisian intellectual community. In fact, the Parisian press consistently portrayed the theme park as an affront to European high culture, said its construction would destroy a pastoral French setting and lambasted the company's hiring practices as totalitarian. Disney chose not to respond to these critics. Instead it focused on another constituency: its prospective customer base. The French media attacks notwithstanding, attendance at the park was high from the outset.
When Nike, however, tried to shift focus among its key constituencies to blunt the effects of critical stories in the media, the result was not successful. For 15 years the company had been doing a terrific job of building its popular image among consumers with its "Just Do It" advertising campaign and the use of famous spokesmen such as Michael Jordan and Tiger Woods; it did a remarkably poor job of responding to allegations that its suppliers were running sweat shops in Vietnam. The widespread media perception of Nike was intensely negative; even Garry Trudeau's comic strip "Doonesbury" portrayed Nike in a bad light. Nike did not respond in a timely or effective manner.
According to research conducted by students at the Tuck School of Business at Dartmouth, Nike workers in Vietnam were paid above-average wages and treated very well relative to local economic conditions in Southeast Asia, but Nike had failed to use this information and lost an opportunity to defend its strategy of producing products in developing nations.
This damaging misstep stemmed from a surprising lack of understanding on Nike's part of how constituencies are likely to respond to negative external communications. It demonstrated how even the most communications-oriented companies can stumble in this strategic domain.
WHEN HISTORY HURTS
Credibility is crucial to the implementation of strategy through communications. Compare the perception of Johnson & Johnson after the Tylenol tampering incident in the 1980's with Texaco Inc. after its problems with racial discrimination a decade later.
Johnson & Johnson had spent a huge amount of time building its credibility with constituencies through its "Credo" (a vision statement outlining the company's value system) and its family-oriented image. As a result, customers were willing to give the company the benefit of the doubt in the Tylenol-tampering crisis and the brand was able to survive and even thrive.
When Texaco's chief executive responded swiftly to reports of racial discrimination, with both public apologies and an immediate settlement of a lawsuit, the public's response to the oil company was saturated with cynicism. Almost a quarter century of bad press for the oil industry -- fueled by the crisis of the 1970's when oil companies were suspected of holding back supplies to boost prices and the environmental disaster caused by the Exxon Valdez oil spill -- is hard to overcome.
PASSIVE OR ACTIVE?
The communication framework presented in Exhibit I shows the need for managers to think about whether communications should be direct or indirect. Most managers assume that problems with constituencies will magically go away, so they tend to employ a passive approach sometimes by default.
Look at the Hooker Chemical Company's response in the 1980's to the Love Canal incident as an example. Hooker used a state-of-the-art dump site in Niagara Falls, N.Y., to dispose of its chemical waste in the 1940's. After several winters with heavy snow in the late 1970's, the chemicals started leaching from the ground. Hooker did not respond actively to complaints from homeowners and ignored the media (passive approach) until the Federal government stepped in and forced the company to take a more active role in the communications process. Although Hooker was prepared for the possibility of such an environmental disaster, its passive approach to the media frenzy was a form of denial; it just hoped that the furor would die down. Instead, the story ran in hundreds of newspapers every day for more than a year.
The success or failure of communications strategies should be measured. A company can determine how employees react to a strategic shift in business, in what way consumers respond to a new product line or why stockholders push up share prices or drive them into the tank. The measurement is fairly easy and far more concrete and quantifiable than might be imagined.
Despite how easy it is to determine the success or failure of a communication approach, companies have difficulty conducting this research because they have weak corporate communication functions. Managers do not readily perceive the link between corporate communications and strategic planning. Often, the departments dedicated to communications or public relations are understaffed, and more crucially, distanced from the development and implementation of the organization's strategy. In addition, the communication function in most organizations is staffed by what we refer to as "outsiders" -- former journalists or public relations professionals rather than executives with graduate business degrees. As a result, this group can be of little help when the organization needs to communicate strategy to key constituencies.
Since little is taught about the corporate communication function in business schools, most managers do not understand how important the function can be to success. Only a handful of schools require courses on the subject and few provide electives. Imagine what would happen if business schools did not require finance, marketing or operations courses. Yet schools typically do not offer the kind of training in communication that is critical to the successful implementation of strategy.
FROM CONCEPT TO ACTION
We believe that all senior managers need to know how to get from concept to action, from strategic thinking to strategic performance. A stronger emphasis on communications in business schools and companies is crucial to meet this goal. We see two immediate benefits:
1) Better-trained professionals who can staff the function of corporate communications within organizations.
2) A tool kit of sorts for senior managers to help them think systematically about how their organization can best convey its strategic mission and plans to significant constituencies.
While we are still doing research with several companies on their approach to this topic, we see the communication advantage as the answer to many problems that face corporations today. Chief executive officers in the next century will have the ability to implement strategy more easily and more effectively if they take the time to learn about the power of communication. Some of the most generative ideas on the subject were developed thousands of years ago; now it is time for us to apply them to the challenges managers face in implementing strategic plans.