A lax approach to communication can bring companies in trouble
Disruptive change is not the only element that can bring companies in trouble. It seems that lack of communication can play an equally important role. Let’s have a look at three companies:
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 “struggled 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.
More than seven years before Apple Inc. rolled out the iPhone, the Nokia team showed a phone with a color touch screen set above a single button. The device was shown locating a restaurant, playing a racing game and ordering lipstick. In the late 1990s, Nokia secretly developed another alluring product: a tablet computer with a wireless connection and touch screen—all features today of the hot-selling Apple iPad.
Consumers never saw either device. The gadgets were casualties of a corporate culture that lavished funds on research but squandered opportunities to bring the innovations it produced to market.
According to the latest numbers from research firm IDC, Nokia has dropped from the top five global smartphone makers, where it’s sat since IDC started keeping track of the rankings in 2004.
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.
Bad management and a communications breakdown by BP and its Macondo well partners caused the oil disaster in the Gulf of Mexico.
The commission went on to fault the three companies for poor communications. It said they failed to share important information – which meant they did not fully appreciate the risks they were taking in the final days of the Deepwater Horizon.
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:
- Communicating appropriate values to create a moral climate
- Maintaining adequate communication to be informed of organizational operations
- Maintaining openness to signs of problems
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?
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