3 Ways to Clearly Communicate Your Company’s Strategy
For all the communication around strategy, we know that leaders at many companies don’t provide the necessary context for employees to understand what the words and sentences in a strategy statement actually mean. What can leaders do to help employees understand enough context to understand a strategy? In this article, the authors offer three recommendations: 1) Present the alternatives considered and explain why they were not adopted. 2) Explain how each choice is linked to the organization’s purpose. 3) Involve employees in strategy development.
A pilot once told us a story about an accident on an early morning flight in the 1950s. As the aircraft accelerated to take off, the captain noticed his flight engineer’s sullen expression and called out, “Cheer up, George.” But in his sleepy state, what the engineer heard was, “Gear up, George” — and he duly raised the landing gear — prematurely as they were not quite airborne. The aircraft sank onto its fuselage and slid to a halt, causing much damage. Luckily, nobody was hurt.
The story illustrates an important point: miscommunication and misunderstanding are both much more likely when context is unclear or not shared. Had George known that the topic of conversation was his mood rather than the flying of the plane, he would have been less likely to misunderstand what his captain was communicating to him, and he most certainly would not have acted the way he did.
What does this have to do with strategy? In survey after survey, employees of even successful companies claim that they do not know their organizations’ strategies. This is not for lack of communication by top management because the evidence shows that leaders spend a lot of time, effort, and resources trying to explain strategy to their people. George’s story suggests an explanation.
Our experience suggests that leaders at many companies communicate strategy without providing the necessary context for employees to understand what the words and sentences in a strategy statement mean or why a particular strategy was chosen, relative to others considered and rejected. For example, a statement that says: “a key element of our strategy is to leverage the benefits of our integrated model” may make perfect sense to the leader who has thought deeply about the company’s business model but may mean nothing to the average employee who does not even understand what an integrated model is or why this particular model was chosen in the first place.
Why don’t leaders provide this context? Quite simply, the answer is that it is impossible. When they make big and difficult choices that strategy requires, corporate leaders have considered a wealth of data and information about competitors, customers and market dynamics, utilizing in the process their own judgment — and that of other executives and advisers — developed over many years of experience. They cannot even begin to communicate all the implicit, often tacit knowledge that brought them to a particular decision, which means that they can never really explain their choices.
So what can leaders do to help employees understand context enough to understand a strategy?
Explaining why not can often help you explain why. In presenting a strategy, therefore, you can also present the alternatives considered and explain why they were not adopted. Consider, for example, the experience of the St Louis-based partnership of Edward Jones, a leading firm in the U.S. brokerage industry. In an interview with one of us, the late John Bachmann who served as the firm’s managing partner during 1980-2003, articulated their strategy as follows:
“Unlike most other competitors in the industry, we target and sell only to individual investors, not to institutional ones. Within this segment, we focus on individuals in rural America, not in urban areas. What we sell to them is “peace of mind” and, as a result, we do not sell exotic derivatives or risky products—instead we select transparent and safe products to promote. Unlike our competitors that sell their own in-house mutual funds, we do not manufacture the products that we sell. Instead of big offices in large cities, we have small offices that are placed in small communities to be convenient for the customer. In addition, each office is run by one, not two and not three Investment Representatives.”
Note how prominently the word “not” features. Pharma firm Roche similarly places its decision to focus on prescription medicines and diagnostics in context by highlighting their decision not to invest in alternative sectors such as generics, biosimilars, over-the-counter medicines, and medical devices.
Communicating a strategy in this manner allows people to not only understand what choices were made but also what alternatives were considered for each choice. More importantly, it invites people to either ask for clarification as to why the alternatives were rejected or challenge the choices made by top management. It is the discussion that follows such challenges or clarification requests that eventually lead to a better understanding of strategy, not whether the original communication was clear.
You should also link your strategic decisions to your company’s purpose or goal. Explaining to employees how each choice is linked to the organization’s purpose is a good way for people to quickly understand the logic behind the choice without needing to know all the deliberations that took place to make the choice.
Take DPG Media Group, the leading media company in Belgium and the Netherlands, which publishes largely in Dutch. In an interview with one of us, the Group Chairman, Christian Van Thillo, stated that the critical assumption the company had made at the outset of the digital era was that people would continue to rely on professional media rather than citizen journalism, blogs, and influencers. As a result, the company adopted the digital delivery of high-quality, professional journalism as its strategic goal.
The company always uses this goal as the starting point to explain its strategic decisions to employees. For example, in presenting DPG’s decision to engage in acquisitions for the first time in their history, Van Thillo pointed out that to be a leading provider of professional journalism in the digital context, DPG needed to compete with Google and Facebook for advertisers, which meant they had to be big enough in their markets so that local advertisers and consumers would have them top of mind. Similarly, in explaining the decision to focus on just two markets, Belgium and the Netherlands, Van Thillo pointed out that DPG could not afford to be big in many markets without undermining the quality of its journalism.
Employee participation and inclusion in the strategy process can take many forms, from simply soliciting ideas and feedback through to active participation in strategy workshops and testing of new strategic initiatives. At the upstream end, for example, we find the German drinks producer Premium-Kollektiv, which allows any interested employee to set a strategy dialogue in motion, through a process that is entirely transparent. Issues can be raised or responded to by anyone in the collective via posting to an emailing list. Lively debates can develop and decisions are largely reached through consensus emerging, sometimes gradually.
As strategic dialogues deepen, more employees will get involved, and with their involvement comes a greater shared familiarity of the context in which the strategy is developed. For example, at gaming company Valve, employees proposing strategic initiatives must persuade at least two colleagues to form a team to implement initiatives. As the development proceeds, more people join, which means that more people get a sense of what the initiative is trying to do.
Technology is a great enabler of employee participation. For example, as part of its strategy development process, global tire manufacturer Bridgestone is experimenting with AI-powered surveying of employees. The technology enables interactive dialogue with staff, efficiently and at scale, aiming to uncover information and insights to inform strategic planning. Jake Rønsholt, who leads strategy and transformation in the EMEA region explains, “We want to involve and engage a broad range of staff in the development process. AI-powered surveying ‘prods’ interviewees to consider what lies behind their answers, creating deeper and clearer insights on which we can build.”
For effective execution of strategy, employees need to know and understand the choices that their organization has made. Unfortunately, even clear communication of these choices is not enough because communication in the absence of context can lead to misunderstandings and lack of clarity. Since it is impossible for leaders to explain the full context in which they made their strategy choices, they have to find different ways to help their employees understand and appreciate their choices. Involving employees in the development of strategy, linking the choices made to the organization’s purpose, and communicating not only the choices made but the alternatives considered and rejected can be effective ways to bring employees on board quickly and make the strategy choices more memorable.
Corporate strategy, Internal communication, Strategy, Business communication, Corporate communications, Digital Article
Constantinos C. Markides
Constantinos C. Markides is a professor of strategic and international management at London Business School.
Andrew McLennan
Andrew McLennan is a guest lecturer at London Business School in London England
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