Strategic conversation as a tool for change

Citation

Manning, T. (2002), "Strategic conversation as a tool for change", Strategy & Leadership, Vol. 30 No. 5. https://doi.org/10.1108/sl.2002.26130eab.001

Strategic conversation as a tool for change

Tony Manning

In an age of continuous change and surprises, the challenge to every executive is to hold a steady course, yet push performance to new limits through both improvement and innovation.

In my view, there are three reasons why most leaders do not meet this challenge. First, managers see the need for new initiatives, but the people around them do not buy in. Second, managers fall in love with the latest business tools – reengineering, core competence, Six Sigma quality, or whatever – but do not really understand them, and try to use them without getting some very basic things in place. And third, they assume that change takes time, so they give it too much time; and they miss their chance to be opportunistic.

Strategic management, change management, and leadership are intertwined. All three functions depend on people talking to each other about the issues that are vital to superior performance.

What about some common sense?

Some leaders seem to have a knack for change management. They quickly get their hands around whatever assignment they are given, mobilize their people, and deliver results. Often their success can be attributed to a talent for "strategic conversation."

When Nelson Mandela came out of a South African prison after 27 years behind bars, he could have talked about retribution, revolution, and race war. Instead, he talked reconciliation. Mandela patiently explained his agenda to captains of industry, and walked the streets to listen to ordinary people and to share his ideals with them. By word and deed he sold South Africans on working together to rebuild their country. A different "conversation" could have delivered chaos.

• •

  "Strategic conversation is far more than a just an occasional practice that can be adopted or abandoned at will: it is without doubt the central and most important executive tool."

A number of corporate CEOs are well known for their strategic conversations:

• •

  Peter Brabeck, CEO of Nestlé, shared his blueprint for the future with everyone in the company – and even with outsiders[1].

• •

  Sir Richard Branson, chairman of the entrepreneurial Virgin Group, never lets his people – or anyone else – forget the importance of innovation, daring, and passion.

• •

  Former GE chairman Jack Welch constantly talked "change," the need to be "No. 1 or No. 2," "boundarylessness," and "speed."

• •

  The fact that Wal-Mart has become one of the most valuable companies in America is due, in large part, to the endless evangelizing about customer service by its founder, the late Sam Walton.

Not an optional extra

Strategic conversation is far more than a just an occasional practice that can be adopted or abandoned at will: it is without doubt the central and most important executive tool, and the one on which all others depend. Day-to-day performance hinges on it. It underpins every special initiative – innovation, quality, customer service, cost control, brand building, and so on.

"Strategic conversation" is not a term in widespread use, and it mostly occurs implicitly rather than explicitly. Even in firms where communication is taken seriously, and where messages are carefully crafted and shared, executives make the mistake of seeing strategy making as one task and communicating the strategy as something else that happens later.

But emphasizing the need for continuous strategic conversation by senior management ensures that executives understand clearly their own roles and priorities, and helps them get the results they aim for.

Strategic conversation is both an ongoing event and a product. It is a deliberate process of:

• •

  sensing changes in the external and internal environments;

• •

  generating options;

• •

  provoking ideas and innovation;

• •

  shaping strategies;

• •

  inspiring action; and

• •

  learning from what happens, and sharing that experience.

It is also a condensed operating manual, a framework, and a set of "key themes" that aim an organization and keep it on course.

Take your company's pulse

When I start work with a company, I listen for answers to three questions:

1. 1.

   What are senior managers talking about?

2. 2.

   Who is involved?

3. 3.

   What is the quality of that conversation?

What senior managers talk about – clearly, passionately, and consistently – tells me what they pay attention to and how sure they are of what they must do. (Trouble sign: managers' conversation is muddled and all over the place.)

Knowing who takes part in those conversations tells me whether enough voices are being heard, and whether the top people are bearing their own messages or hoping that it happens through "the channels." (Trouble sign: The senior managers are talking to themselves!)

And knowing whether the conversation is "nourishing" or "toxic" gives me a sense of how turned on and positive people are likely to be. (Trouble sign: The lack of true dialog in many firms harms performance.)

• •

  "Strategic conversation is both an ongoing event and a product."

Keep it really simple

Running a business is a complex process. But strategies for even large and complicated companies can be surprisingly easy to explain and discuss. If they are not, alarm bells should ring.

In 1984, Jack Welch drew three now-famous circles on a dinner napkin to show how he saw General Electric's future. When the late Roberto Goizueta was chairman of Coca-Cola, he reduced the firm's strategy to three words: acceptability, affordability, availability. And when Lou Gerstner became chairman and CEO of IBM, he refused to provide a vision of the future, but instead issued six "strategic imperatives" which put "Big blue" back on course.

The strategy for an industrial conglomerate boiled down to four key themes:

1. 1.

   Infrastructure focus.

2. 2.

   Local/global marketing.

3. 3.

   Project skills development and deployment across all business units.

4. 4.

   Brawn to brain shift, to get more high value-added work.

A manufacturing firm saw its strategy as having these six key elements:

1. 1.

   Global sales.

2. 2.

   Product development.

3. 3.

   Customer obsession.

4. 4.

   Quality in everything we do.

5. 5.

   Magic people.

6. 6.

   Powerful partnerships.

In both cases, these "headline issues" led to specific actions. Management was able to quickly home in on what mattered, to keep conversations to the point, and have valuable exchanges with employees at all levels.

Begin with some key principles

Managers today must be guided by four principles that seem obvious and that "everybody knows," but that are violated every day. These should form the theme of their strategic conversations. They should become a mantra in every company.

1. 1.

   Offer unique value to customers. In an increasingly cluttered marketplace, it is more important than ever to offer customers a unique value proposition. (If you do not make a difference, you do not matter!)

2. 2.

   Drive value up, costs down. Operational excellence must drive value up, costs down. This is everyone's responsibility. If people at the furthest edges of a firm do not understand this, they will wait for instructions. If they do not understand the firm's overall strategy and philosophies, they cannot be their best when it comes to solving problems or finding better ways to do things.

3. 3.

   Create a context for performance. Since most changes and improvements will be triggered far from the CEO's office, the imagination and spirit of people are key resources. So leaders must create a context in which they flourish, and in which they are willing to volunteer their best.

4. 4.

   Connect thinking and action. Effective strategy involves both decisions and actions. It is partly about positioning, and largely about execution. Michael Porter warns against "running the same race" as competitors[2]. But this is easier said than done. For many firms the reality is that they sooner or later find themselves back in the pack, and the only way out is to run faster. More often than the purists would like to think, execution is worth 100 IQ points.

These principles apply to virtually every company in every industry. There is hardly a company around that can say, "Not us." Most importantly, they highlight the importance of people outside of the executive suite in producing superior performance.

Involve lots of people early

For all the talk of "empowerment" and for all the fascination with "learning organizations," "self-managing teams," and "human capital," a glimpse into most organizations shows a different reality. Those at the top hog strategy making while implementing strategy is handed down to others. But those others are critical to success.

When the general manager of a large South African steel plant started a new strategic planning exercise, he put together a core team of 12 senior people to drive it. But he immediately involved 600 others from across the operation in scanning the environment. The strategy team used the views of this big group as a basis for defining a vision and some actions. When the plans were fed back to the 600 in a series of meetings, one question was asked over and over: "Why have you aimed so low?"

Petrochemicals manufacturer Sasol, another major South African company, used a similar approach. Before launching his global strategy, chief executive Pieter Cox brought together two huge groups of people – some 1,400 in all – to talk about future possibilities. This not only produced a lot of insights and ideas, it also gave Cox and his fellow directors a chance to share their thinking. Result: a critical mass of people understood the strategy and signed up to make it happen. Today, it is unfolding faster and better than it might otherwise have done. There are many examples of similar processes – and successes – in other companies across the world.

Strategic conversation needs to be a democratic process. But it also needs to be "robust" and tough. People need to be tested, stretched, and held accountable. They should be able to set their own goals and decide how to do their work; but they also need to know that someone – a boss or their peers – will talk about strategy.

• •

  "What senior managers talk about – clearly, passionately, and consistently – tells me what they pay attention to and how sure they are of what they must do".

How to get started

There are many ways to start and manage a strategic conversation. Here are some guidelines:

• •

  Decide what you want to achieve and whom you will involve. As always, having clear objectives is essential. Usually, a small team is best for this task; but maybe you should include people from outside the top executive ranks.

• •

  Brief your team. Tell them why you are adopting this approach and how you see it unfolding. Do not get into too much detail: you might trap yourself in a process that turns out not to be best for your organization. While you want a reasonably clear "roadmap," you should also encourage people to review the process as it unfolds, and be willing to alter it accordingly.

• •

  Gather information. Assign people to get the facts you need about the macro environment, customers, competitors, etc. This is your chance to involve large numbers of people. Doing so greatly enhances their "change-readiness."

• •

  Create a framework for your "conversation." Start talking the specifics of how you will take your organization into the future. Try to boil your discussion down to a few "key themes."

• •

  Fill in the detail. Agree goals, priorities, and actions. Assign work. Set deadlines. Agree on dates for feedback and reviews.

• •

  Review and revise. Regularly (every 30 days) check your progress. Make these sessions "robust," and hold people strictly accountable. Do not let them get away with excuses. Begin with a fresh look at your assumptions about the environment, so you do not miss sudden changes. Agree what must happen next.

The mandatory management tool

In the new century, strategic conversation will become the No. 1 management tool for a simple reason: nothing happens without it. Whether a company's results are good or bad depends on what is said within its walls. So best you manage this conversation rather than leave it to chance.

Unlike many other management tools, strategic conversation is a concept that is easy to understand. It is also surprisingly easy to use.

References1. Wetlaufer, S., "The business case against revolution", Harvard Business Review, February 2001.2. Porter, M.E., Balanced Scorecard Report, March-April 2002.3. Hamel, G., Leading The Revolution, Harvard Business School Press, Boston, MA, 2000; Pascale, R., Surfing The Edge of Chaos, Crown Business, New York, NY, 2000.