How to Have an Honest Conversation About Your Business Strategy

Every organization faces challenges in executing its strategy. Great companies know how to work through them.

by

Russell Eisenstat

and

Michael Beer

by

Russell Eisenstat

and

Michael Beer

From the Magazine (February 2004)

Summary.

Reprint: R0402F

Too many organizations descend into underperformance because they can’t confront the painful gap between their strategy and the reality of their capabilities, their behaviors, and their markets. That’s because senior managers don’t know how to engage in truthful conversations about the problems that threaten the business—and because lower-level managers are afraid to speak up. These factors lie behind many failures to implement strategy. Indeed, the dynamics in almost any organization are such that it’s extremely difficult for senior people to hear the unfiltered truth from managers lower down.

Beer and Eisenstat present the methodology they’ve developed for getting the truth about an organization’s problems (and the truth is always embedded within the organization) onto the table in a way that allows senior management to do something useful with it. By assembling a task force of the most effective managers to collect data about strategic and organizational problems, the senior team sends a clear message that it is serious about uncovering the truth. Task force members present their findings to the senior team in the form of a discussion. This conversation needs to move back and forth between advocacy and inquiry; it has to be about the issues that matter most; it has to be collective and public; it has to allow employees to be honest without risking their jobs; and it has to be structured. This direct feedback from a handful of their best people moves senior teams to make changes they otherwise might not have.

Senior teams that have engaged in this process have made dramatic changes in how their businesses are organized and managed—and in their bottom-line results. Success that begins with honest conversations begets future conversations that further improve performance.

The Idea in Brief

Your strategy is sound but you can’t get it off the ground. The likely cause? People in your organization are afraid to talk frankly and publicly about obstacles to change. But to execute your strategy, you need the unvarnished truth: Does your organization have the right culture, structure, and leadership to support your strategy? Who might be threatened by proposed changes? Seeking straightforward answers to questions like these will set the stage for successful strategy implementation.

You can orchestrate strategic conversations about organizational weaknesses through a structured, highly visible assessment process. First, convince employees that you really want the unvarnished truth. Next, deploy a task force of your most respected managers to gather the brutal facts from key players throughout the company. Your goal? To find out what managers and employees really think of the strategy—and what could block its implementation. Then, carefully distill feedback to identify critical issues affecting your strategy. And most important, translate strategic insights into decisive action. When you act on critical feedback, you underscore its importance to the success of your organization.

Organizations that systematically encourage truth-telling reap dramatic rewards. For example, after one Hewlett-Packard division began conducting yearly strategic conversations, it saw a ninefold increase in profitability over a seven-year period.

The Idea in Practice

Structure Your Strategic Conversation

Articulate a Coherent Strategy

Your organization performs best when strategy is unambiguous. Ask your senior management team to prepare individual answers to essential questions about strategy—including “What are our company’s objectives and aspirations? What are the market threats and opportunities? What unique value do we offer our customers?” Gather team managers to discuss their answers and draft a statement about strategy.

Solicit Honest Feedback

Use a task force of highly regarded managers to ask a simple question of key employees: “What are the strengths we should build on and the barriers we should remove in implementing this strategy?” To counter “shoot the messenger” fears, promise employees that their feedback will be confidential.

Listen

Ask your task force to present feedback themes in a round table discussion—then listen carefully without interruption or debate. Hearing live feedback in a disciplined format has far greater impact than viewing PowerPoint slides or reading a standard report. When you listen intently to perceptions that may differ from your own, you open the door to fresh strategic insights.

Incorporate Input

Once your task force has presented its feedback, meet as a management team to distill core strengths and weaknesses in organizational structure, culture, and capabilities. Decide how to leverage strengths and correct organizational weaknesses. Then develop a proposal for action.

Reality Test

Ask your task force to review your implementation plan. This step ensures the quality of your change plan and underscores your commitment to the value of their honest feedback. One company’s task force told its senior management team that they had ignored the need to streamline a top-heavy division, a move that would reduce the power of one of the senior managers. The CEO and his top team validated the credibility of the feedback process when they revised their plan accordingly.

Act

Honest dialogue pays off when you act on what you’ve heard. And when you engage in annual strategic conversations—using a structured process that employees trust—you create a self-reinforcing culture of honesty that will increase the likelihood of future strategic success.

Despite widespread rhetoric about the need for organizational agility, an astonishing number of businesses stay stuck in neutral when they need to implement a new strategy.

A version of this article appeared in the February 2004 issue of Harvard Business Review.

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Russell Eisenstat is Executive Director of the Center for Higher Ambition Leadership and a former member of the Harvard Business School faculty. Russ has written extensively for Harvard Business Review and other publications and is co-author with Michael Beer, Nathaniel Foote, Tobias Fredberg, and Flemming Norrgren of Higher Ambition: How Great Leaders Create Economic and Social Value. For more information, visit www.higherambition.org.
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Michael Beer is the Cahners-Rabb Professor of Business Administration, Emeritus, at Harvard Business School, a cofounder of TruePoint Partners, and author or coauthor of 12 books. His most recent book is Fit to Compete: Why Honest Conversations About Your Company’s Capabilities Are the Key to a Winning Strategy (Harvard Business Review Press, 2020).