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may 2006 115

f you want to know why so many organizations sink

into chaos, look no further than their leaders’ mouths.

Leadership, at any level, certainly isn’t easy – but unclear,

vague, roller-coaster pronouncements make many top

managers’ jobs infinitely more difficult than they need to be.

Leaders frequently espouse dozens of cliché-infused decla-

rations such as “Let’s focus on the key priorities this quarter,”

I

LEADERS MUST MANAGE

THE FIVE MESSAGES

by John Hamm

All too often, leaders fail to explain what they mean

when they talk about organizational structure,

financial results, their own jobs, time management,

and corporate culture. Left unclear, these concepts

can throw a firm into turmoil–but when given proper

focus, they confer extraordinary leverage.

The Five Messages Leaders Must Manage

“Customers come first,” or “We need a full-court press in

engineering this month.” Over and over again, they pre-

sent grand, overarching – yet fuzzy – notions of where

they think the company is going. Too often, they assume

everyone shares the same definitions of broad terms like

vision, loyalty, accountability, customer relationships,

teamwork, focus, priority, culture, frugality, decision

making, results, and so on, virtually ad infinitum.

Even the most senior managers nod in polite agree-

ment when the CEO uses inflated terms like these, but

the executives may feel somewhat discomfited, wonder-

ing whether they’ve truly understood. Rather than asking

for clarification – a request they fear would make them

look stupid–they pass on vague marching orders to their

own troops, all of whom develop their own interpreta-

tions of what their bosses mean. In the absence of clear

communication that satisfies the urgent desire to know

what the boss is really thinking, people imagine all kinds

of motives. The result is often sloppy behavior and mis-

alignment that can cost a company dearly. Precious time

is wasted, rumors abound, talented people lose their

focus, big projects fail.

By contrast, think of the way a high-reliability team –

say, an emergency room staff or a SWAT team – works.

Every member has a precise understanding of what

things mean. Surgeons and nurses speak the same med-

ical language. SWAT teams know exactly what weapons

to use, and when and how and under what conditions to

use them. In these professions, there is absolutely no

room for sloppy communication. If team members don’t

speak to each other with precision, people die. People

don’t die in corporations, but without clear definitions

and directions from the top, they work ineffectively and

at cross-purposes.

For the past five years, I’ve worked with hundreds of

CEOs as a leadership coach, a board member, a venture

capital investor, and a strategy consultant. I’ve also been

a president and CEO myself (my company, Whistle Com-

munications, was acquired by IBM in 1999). The compa-

nies whose CEOs I’ve worked with – typically technology

firms – range in size from about 100 to several thousand

people. In observing CEOs, I’ve come to the conclusion

that the real job of leadership is to inspire the organiza-

tion to take responsibility for creating a better future.

I believe effective communication is a leader’s single most

critical management tool for making this happen. When

leaders take the time to explain what they mean, both

explicitly (by carefully defining their visions, intentions,

and directions) and implicitly (through their behavior),

they assert much-needed influence over the vague but

powerful notions that otherwise run away with employ-

ees’ imaginations. By clarifying amorphous terms and

commanding and managing the corporate vocabulary,

leaders effectively align precious employee energy and

commitment within their organizations.

In researching this topic, I have discovered that many

leaders don’t take the time to define specifically what

they mean when they use generalized terms or clichés.

They don’t want to feel that they are talking down to peo-

ple by providing what seems like unnecessary detail or

context. Leaders simply assume that the exact meaning

of their words is obvious; they’re surprised to learn not

only that their message has been unclear but that their

teams crave definitions so they aren’t forced to guess what

the boss has in mind.

If we accept that the leader’s job, at its core, is to inspire

and support the organization’s collective responsibility

to create a better future for the company, then what are

the keys to effectiveness? What tools do leaders need at

hand for this mission? What mental models must they

have? I like to think of good leaders as comparable to

skilled locomotive drivers. The train is controlled by a set

of switches and levers. When the driver pulls one lever,

the train goes forward; when he pulls another, it stops,

and so on. When an organization is well aligned, all the

managerial levers are easily and neatly moved. They func-

tion smoothly so that driver, passengers, and train grace-

fully move forward as one.

In my experience, five such topics control the train: or-

ganizational structure and hierarchy, financial results,

the leader’s sense of his or her job, time management,

and corporate culture. Messages on these subjects wield

extraordinary influence within the firm. When leaders

take it for granted that everyone in the organization

shares their assumptions or knows their mental models

regarding the five subject areas, they lose their grip on

the managerial levers and soon have the proverbial run-

away train on their hands. But properly defined, dissem-

inated, and controlled, the five topics afford the leader

opportunities for organizational alignment, increased

accountability, and substantially better performance.

Before examining each one, I’d like to address a few

possible objections head-on. First, why do these five par-

ticular topics matter so much – why would defining cor-

porate culture be a higher priority than, say, defining

customer relationships? Certainly, other terms carry a

premium in some organizations, but I’ve found that

these five are excellent places to start and are highly rep-

resentative of the kind of difficulties that exist for leaders

as they speak to their teams day to day. The topics not

only present the sharpest examples of the dangers of

imprecise communication, but, when mastered, they also

produce the greatest leadership leverage.

I am hardly suggesting that in defining the five concepts

precisely, leaders should become dictators or blowhards.

116 harvard business review

John Hamm ([email protected]) is a general partner at

VSP Capital in San Francisco and the author of “Why Entre-

preneurs Don’t Scale” (HBR December 2002). He led a CEO

“boot camp” in the Bay Area for four years.

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On the contrary, I am suggesting that when a leader de-

fines what he or she really means and sets a clear direc-

tion according to that definition, relationships and feed-

back improve, action is more efficient and on-strategy,

and improved performance follows.

Organizational Structure and Hierarchy

The organizational chart, because it represents

individual power or influence, is an emotion-

ally charged framework even during a com-

pany’s most stable times. But when the corpo-

rate structure is changing, the org chart can

truly become fearsome, particularly in companies where,

because of the political culture, employees worry about

risk to their personal status.

If a CEO fails to take definitional control of a reorgani-

zation, with its prospect of job losses, boss changes, and

new modes of working, the whole com-

pany can grind to a halt. Consider what

happened when one well-known former

CEO allowed the default assumptions sur-

rounding the term “reorganization” to

take hold. A few years ago, Carly Fiorina

decided that Hewlett-Packard needed a

top-to-bottom reshuffling. She had a fixed

idea that reorganizations must be man-

aged with extreme care, and she implicitly

communicated her belief by the cautious

way she floated her ideas with senior man-

agers. She worried that a reshuffling plan

would open a Pandora’s box of political

sensitivities, especially among middle man-

agers. For this reason, everyone assumed

that “reorganization” was cause for fear

and trembling.

For two months prior to Fiorina’s official

announcement, work slowed or stopped as

employees, not knowing precisely what

to expect or fear, shifted their focus to the

upcoming changes. Managers, jostling for

power and position, got lost in political

battles. Motivation plummeted. Contrac-

tors were put off, since no one knew who

would be managing which divisions after

the reorganization. When the new organi-

zational structure was finally communi-

cated, still more time passed unproduc-

tively as employees settled into their new

positions. A total of 12 weeks – a full quar-

ter – were effectively lost. If you multiply

that time by employee salaries, and factor

in the inevitable lapses in customer service

and product innovation during the pe-

riod, you can conservatively estimate the damage to the

company.

It may be unreasonable to blame Fiorina for failing to

realize that she was communicating her trepidation, or

to fault her for not divining the consequences of talking

about her reorganization ideas months ahead of time.

After all, leaders cannot be held to perfection in execu-

tion. But they can be held to a standard when communi-

cating a vision and its rationale. If Fiorina had laid out

the master plan behind the reorganization more clearly,

made her decisions more quickly, and communicated

more explicitly, the troops at HP would have gained a bet-

ter understanding of the process, the reasons for the ex-

tended time frame, and their future places within the

company.

A leader who quickly takes charge of the communication

around a reorganization can prevent the discourse from

engendering fear. The most productive way for a leader to

think about organizational structure is as a flexible map

may 2006 117

1MESSAGE

The Five Messages Leaders Must Manage

of accountability for action and, thus, results–a guideline

whose purpose is to define goals and optimize resources,

not to oust or devalue employees. When a reorganiza-

tion is presented as such, it loses its reputation as a

proxy for personal power shifts, whether real or

imagined.

The CEO of a 150-employee software com-

pany shows how a leader can prevent polit-

ical fears from taking hold by keeping

communications brief and to the point.

Rather than viewing the org chart as a

source of anxiety, and communicating

that attitude to the company, the CEO

chose to see it as simply a temporary

structure for optimizing resources. When

a new strategy or direction was called

for, he enlisted people as active agents

of change, so they wouldn’t be left to

wonder whether they were to become

victims. For example, the CEO realized at

one point that he needed to realign inter-

nal resources because a close competitor

was gaining an advantage. He called an all-

hands meeting for a Monday morning.“Team,”

he said, “we’re in a war for market share. I get

paid to win it, and so do you. But right now I don’t

think we’re properly configured to win the particular

battle we’re fighting, so I’m changing the structure of

resources so that we can execute more effectively. Most

of you will continue to do the jobs you’re doing now,

but you may have a different supervisor.” After showing

everyone the new organization chart, he looked at his

watch. “It’s 10:45 now,” he said. “You have until noon to

be annoyed, should that be your reaction. At noon, pizza

will be served. At one o’clock, we go to work in our new

positions.”

The CEO later explained what he did: “We had a com-

petitor who was showing us a better way to win the busi-

ness. We were both like captains of firefighting teams. We

each had seven people and a full set of buckets and hoses.

My team had five guys armed with buckets and two with

hoses. His team had three guys with buckets and four

with hoses. We just weren’t organized to compete and

win. I wasn’t trying to shift power; I was just trying to op-

timize our resources. I wasn’t willing to let this change be

viewed as a political event. I wanted it to be seen as a busi-

ness necessity to remain competitive.”

Obviously, it’s one thing to shift personnel in a 150-

person company and quite another to do so in a giant cor-

poration like HP. But I would argue that the value of

clear, honest, explicit communication rises exponentially

with the size of the organization. In fact, a large company

can be reshuffled much more quickly when the CEO de-

liberately decides not to inflate the political balloon and

won’t tolerate others doing so.

84 GREAT THINGS To get an idea of what can happen when a CEO manages

time constraints by setting reasonable expectations,

imagine that you have seven direct reports, each of whom

commits to completing no more than three important,

very doable initiatives each quarter. If these reports and

their teams meet their goals, four quarters will yield 84

significant accomplishments. If your company were able

to do anywhere near 84 significant things in a single year,

the results would no doubt be astonishing. The real

enemy to accomplishing 84 great things is the temptation

to work on the 85th objective and beyond before, or at the

expense of, the higher-priority goals. To keep people on

track, a leader must communicate objectives very clearly

and demand that action flow to the real priorities first.

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Having gathered the data and made her decision, Fio-

rina was under no obligation to provide previews of com-

ing attractions. Within 48 hours of the announcement,

she might have held a companywide meeting, complete

with a Webcast, to explain why the change was necessary.

To keep people’s minds off who was headed down and

who was headed up, she could have asked everyone in-

volved in the changes to identify and submit, in short

order, explicit goals for the next 60 days. She thus would

have communicated that the organization chart has noth-

ing to do with politics and everything to do with organi-

zational effectiveness.

Financial Results “Results” is another powerful concept that,

left unmanaged, poses a risk to a company’s

long-term health. When a top executive tells

employees they need to “focus on our prom-

ised results,” senior managers often interpret

that as meaning “Do whatever it takes to meet investors’

expectations.” By losing sight of the connection between

employee behavior and results, and failing to take advan-

tage of learning opportunities, leaders miss out on build-

ing long-term value for their firms.

One CEO I knew truly believed that the only purpose

of his job was to make aggressive predictions and prom-

ises about quarterly results and then achieve the numbers

by any means possible. By the ninth week of every quar-

ter, when projections fell short, he put enormous pres-

sure on his sales professionals and finance people. His im-

plicit message was: “These are the results I need; I don’t

care how you get it done.”He fully expected the company

to thrive.

Quite the opposite occurred. Because the CEO defined

“results” so narrowly and failed to properly motivate or

compensate his selling team, the sales force had no com-

punction about stuffing the sales channel. Though the

company never met with any punitive action, its poor

practices forced recalculations of results and exposed it to

huge write-downs. Revenues stalled at $10 million a quar-

ter, and the company was eventually acquired at a dis-

count to its annual revenues.

In the long term, consistently positive results spring

from intelligent strategy and an incessant focus on qual-

ity of execution. Think of a golf pro like Tiger Woods,

whose best bet for winning major championships is to

master his aim, setup, and swing. Once the ball is in the

air, there is no way to control it; it will land where it will.

Similarly, effective leaders understand that there is

more leverage in using quarterly results as a metric for

long-term improvement than in worrying only about

short-term market wins. By using results as a diagnostic

tool in the service of improving future execution, and by

asking employees to participate in the analysis, effective

leaders encourage honesty and engage their troops in

open dialogue. Employees are more likely to generate

good ideas, and the firm is more likely to surpass financial

expectations quarter after quarter.

I had the pleasure of working for six years under John

Adler, former CEO of the technology firm Adaptec. Dur-

ing his 12 years at the helm, Adler drove the company’s

valuation from $100 million to over $5 billion because

he had a very healthy attitude about business goals and

financial results. For him, results were not a punitive

weapon but a useful diagnostic and learning tool. When

the firm, at one point, missed a quarterly goal, he and his

management team analyzed all the factors contributing

to the shortfall. They discovered that, as a result of an un-

usual quality-control issue, the company had been unable

to make some end-of-quarter shipments. Instead of react-

ing emotionally and assigning blame, Adler asked rigor-

ous questions of the senior management team, which

was able to uncover the root cause of the problem. He

communicated this information broadly to ensure orga-

nizational learning. By focusing on and taking responsi-

bility for the truth, Adler made others in the company

feel safe to discuss the issue without fear of an emotional

response that might lead to arbitrary punishment.

Through his actions, Adler sent an implicit message

that the past was over and tomorrow was another day.

Rather than being immobilized by uncertainty and won-

dering who would be forced to take the heat, software

engineers and quality assurance technicians worked to-

gether to improve their processes to minimize the proba-

bility of missing sales projections because of last-minute

quality or manufacturing glitches. From that point for-

ward, the company’s track record for quality was the envy

of the industry. By adjusting his “swing,” Adler was able

to achieve accurate, consistently excellent results for the

duration of his tenure.

The Leader’s Sense of His or Her Job

CEOs wear many hats and play many roles in

the service of leadership, but, surrounded by

people who seek their feedback and approval,

some fall into the trap of thinking that their

responsibility is to be the person who has all

the answers. (This is especially true of entrepreneurial

CEOs who are also founders, because their identities are

closely tied with their companies.) The “answer man”

falsely believes himself to be the final arbiter of conflicts,

decisions, and dilemmas. This puts him in a very lonely,

isolated position where information becomes unreliable

and useful input is stifled.

A CEO I’ll call Jim, who ran a once blazingly successful

and now defunct desktop-publishing software firm, had

been told his whole life that he was brilliant–and he was.

may 2006 119

3MESSAGE 2MESSAGE

The Five Messages Leaders Must Manage

The recipient of an MBA from Stanford and a PhD from

MIT and the holder of ten software patents, Jim was also

a Midas: Everything he touched seemed to turn to gold.

It wasn’t much of a leap for him to assume that because

he was so smart, he necessarily knew what was best for

the company. Jim took great comfort in this assumption;

indeed, since he was deeply insecure in other leadership

areas, his identity rested on it.

Though Jim made a point of hiring the best and the

brightest from top engineering and business schools, he

didn’t listen to his new team. Strategy, for example, was

not Jim’s strongest suit, but he believed he knew best how

to combat competitive threats. When his managers made

suggestions for staving off the competition, Jim ignored

them, using his positional power to drown out discus-

sion. He’d say of a rival company: “There’s no way those

guys could be close to our technology. I’ve met the CEO

there and I know we can beat them. I will explain what we

have to do.” While forceful and somewhat persuasive, he

was out of touch with market reality, and his team knew

it. Frustrated, his managers soon grasped the implicit mes-

sage that they were neither heard nor valued, and they

began to flee the company, taking much intellectual

capital with them. Jim, oblivious to perceptions of his own

behavior, was baffled by the exodus, telling himself that

the people who left didn’t “get it.”

Effective leaders, by contrast, understand that their role

is to bring out the answers in others. They do this by very

clearly and explicitly seeking contributions, challenges,

and collaboration from the people who report to them,

using their positional power not to dominate but rather

to drive the decision-making process. The more collabo-

rative and apolitical that process is, the less isolated the

leader, and the greater the likelihood that the business

strategy will be grounded in reality.

Contrast Jim’s understanding and communication of

his role to that of a CEO I’ll call Chris, who ran a technol-

ogy research firm. Chris, too, was brilliant and confident–

top of his class at Harvard and a military hero in the Gulf

War–but instead of expressing his intelligence arrogantly,

he conveyed curiosity. In functional meetings, he commu-

nicated that for the duration of the session, he wouldn’t

wield his positional power as CEO but instead would be

just another contributor of ideas. He listened to every-

one’s point of view before expressing his own. He posed

questions and challenged opinions. In one meeting with

his marketing team, he listened to presentations from

public relations, marketing, and advertising managers.

When he finally spoke, he noted that the company had

outspent competitors in a bid to raise visibility for its flag-

ship product but had yet to make a dent in competitors’

market share. He asked that a smaller group convene

within a week to find out why. Aware that the “boss’s an-

swer”would stifle the group’s creativity and thus do more

harm than good, he resisted the temptation to state his

own theory.

In asking his team to be accountable for diagnosing

the problem, Chris didn’t accuse anyone or cast blame.

He thereby conveyed that his role was to help the team

process information. He made it clear to the people who

worked for him that it was not his job to provide the an-

swers, but rather to help find the best solutions. His au-

thentically collaborative approach encouraged the smart

people around him to contribute their ideas. The task

force generated a half dozen thoughtful and feasible the-

ories and several comprehensive recovery plans, the most

compelling of which was put into action. It produced the

hoped-for changes in market share in the next three quar-

ters. In the process, several ideas for other successful mar-

keting campaigns were born. As a result of his leadership,

Chris’s firm established itself as a powerhouse of intellec-

tual capital in the technology arena. His company is now

regarded as a unique source of market information and is

paid handsome fees to publish its findings.

Like the Level 5 leaders Jim Collins describes, Chris led

by separating his ego from his job. Leaders like Chris un-

derstand that their role is to ask great questions, and

they know that answers can be found as long as employ-

ees feel safe offering them. Accordingly, the entire team

moves the company forward.

Time Management Every executive feels that time is in short sup-

ply. Organizers, time management classes,

and administrative assistants remind us of the

time we don’t have. Obsessed with deadlines,

managers struggle against constraints by try-

ing to squeeze, manipulate, and control the limited hours

in the day. When the CEO gives employees the message

120 harvard business review

4MESSAGE

When a reorganization is presented as simply a guideline for

defining goals and optimizing resources, it LOSES ITS REPUTATION AS A PROXY for shifts in personal power.

that time is the boss, the “to-do list” mentality can easily

subsume important goals.

Allow me to illustrate with an extreme-sounding but

true example of a CEO with whom I worked. Alan, as I’ll

call him, was the busy head of a midsize technology firm

in Silicon Valley. A former engineer who was ruled by his

Day-Timer, to-do list, and BlackBerry, he started every day

feeling that he was “behind,” long before the opening

bell on Wall Street. The time management system was

his scripture, efficiency his credo, and prioritizing his

Job 1. Alan’s fixed idea was that time was the

enemy; he communicated this message to his

team, telling the members that by managing

time better than their counterparts at rival firms,

they could drive the company to success. His ob-

session with time created a palpable anxiety.

When economic conditions in the valley wors-

ened, Alan was forced to impose a moratorium on

head-count growth. Then the company received

a request for proposal from BellSouth. Alan

jumped at the opportunity to make a big soft-

ware sale and focused his already stretched work-

force on the project. Implicitly, time management

became the operational currency of the organi-

zation. Alan became even more conscious of em-

ployees’ use of time, so he separated elements of

the project into streams, telling his direct reports

where and how to use their hours and minutes to

produce the RFP. When he was giving feedback

to his direct reports, his first question was about

how they used the time they devoted to their

work. Despite everyone’s efforts, however, there

weren’t enough hours in the day to keep up.

The company submitted the RFP on time, all

its i’s dotted and t’s crossed, then waited with

bated breath for what Alan was certain would be

a positive response from BellSouth. But the com-

pany lost to a firm with inferior technology. The

problem had less to do with the content of the

proposal than with the way it was delivered. Alan

and his team had created a perfect RFP but failed

to invest in any relationship building with anyone

at BellSouth. The competitor, by contrast, had

developed close relationships with the telecom-

munications firm. Simply put, Alan’s people were

so obsessed with meeting tasks on deadline that

they had lost sight of the project as a whole, and

the customer in particular. It was as if the cooks

at Alan’s firm had made an exquisite, five-course

dinner but had forgotten the wine, the tablecloth,

and the flowers and had served the food cold.

They delivered what Alan said he expected.

A CEO can be more effective if she communi-

cates to the company that the resource of time

must not be squeezed for all it is worth but in- Y E

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may 2006 121

When executives assume that managerial topics

are understood the same way by everyone, they sur-

render the opportunity to lead effectively. Leaders

who explicitly say what they mean are better able

to leverage the energy and commitment of their

followers.

1MESSAGE

Organizational structure and hierarchy

Make the org chart a proxy for politics.

CONVENTIONAL MENTAL MODEL

Optimize human resources.

TRY THIS

2MESSAGE

Financial results

Penalize misses. Blame someone.

CONVENTIONAL MENTAL MODEL

Perform a diagnostic to determine the root cause of any shortfalls.

TRY THIS

3MESSAGE

The leader’s sense of his or her job

The boss has the answers.

CONVENTIONAL MENTAL MODEL

Everyone has answers – ask questions.

TRY THIS

4MESSAGE

Time management

Time is scarce, so scramble against constraints.

CONVENTIONAL MENTAL MODEL

Time is fixed, so choose wisely within constraints.

TRY THIS

5MESSAGE

Corporate culture

Hand the responsibility to HR.

CONVENTIONAL MENTAL MODEL

Create an environ- ment in which everyone can help the team win.

TRY THIS

CHANGE YOUR MIND-SET

stead must be strategically utilized. It’s a subtle but impor-

tant distinction. A leader who harps on time constraints

and breathes down managers’ necks, trying to get them

to do too much in the allotted period, can make the orga-

nization frantic and, ultimately, ineffective. A leader who

communicates that when time is tight, it’s better to do

fewer things – but do them very well – gives managers

the confidence to make the best use of this precious re-

source. That way, everyone involved works within the

time parameters to do what needs to be done.

The Five Messages Leaders Must Manage

One leader who understands the importance of com-

municating properly about time is Mark King, the CEO

of TaylorMade-adidas Golf. King desperately wanted to

launch an industry-changing product to mark the com-

pany’s 25th anniversary in the spring of 2004. The golf

equipment business, like music, cars, and fashion, is trend

driven; King knew that if his company could develop a

breakthrough product and launch it at a very powerful

point in the industry’s history, the company would ce-

ment its status as golf’s leading performance brand.

At first, King envisioned an entire new line of clubs

based on the bold idea of movable weight, and he set all

his best engineers working on development. They put in

long hours, but as the six-month mark neared, he real-

ized that his objective would be impossible to meet by

the anniversary date. He could not ask for more time

from the team, nor could he change the deadline. So he

changed the goal. TaylorMade would develop a single

golf club that would showcase the technology of mov-

able weight, and the product would debut at the anniver-

sary event in front of hundreds of reporters and industry

influencers.

Instead of struggling against time, King shifted his

choices within the time constraint. How, he asked himself,

could his teams best use their hours? Instead of playing

beat the clock by trying to do everything he wished,

where could they best focus their energy? How could

time be optimized? By understanding that he had a

choice about how the limited time could best be used,

he was able to free up needed technical and marketing

resources and focus on quality and branding.

The new TaylorMade r7 quad driver, unveiled on the

anniversary, garnered rave reviews. PGA and European

Tour golfers snapped it up. By the time the 2004 PGA and

European tours came to an end, half the professionals

worldwide owned the new driver, guaranteeing its popu-

larity among the golfing public. A dozen additional prod-

ucts followed, completing the team’s vision for the line

of clubs. The meal was well planned, cooked, and served.

Today, TaylorMade is the fastest growing golf-equipment

firm in the world, and its r7 driver is the flagship product

in a multihundred-million-dollar product line.

Alan, the technology company CEO, sent the message

that time was to be fought against, and he set unreason-

able expectations. Mark King’s message was that time was

not the enemy, just a fact of the situation, and there were

other, more controllable levers that could be used to meet

the challenges at hand. Alan saw time as a fearsome, in-

flexible monster, best overcome by brute force; King saw

it as a neutral phenomenon, best handled with flexibility.

Both men had a strong vision of what success would look

like, but King was willing to make trade-offs in the service

of quality. (See the sidebar “84 Great Things.”)

Corporate Culture What is corporate culture, and why is commu-

nicating clearly and precisely about it impor-

tant? Culture is not created by declaration; it

derives from expectations focused on win-

ning. You can only have a culture that encour-

ages performance if you hire the right people, require

them to behave in a way that is consistent with the values

the company espouses, and implement processes that will

allow the company to win in the marketplace.

CEOs who fail to define success and communicate

their vision of it, and fail to make their expectations clear

to employees, produce meaningless cultures. The silly cul-

tural activity arising from the high-tech bubble of the

late 1990s is a wonderful example. I remember one Sili-

con Valley CEO who opened the “culture cupboard” and

fed employees with all kinds of treats–Friday beer bashes,

foosball tables, and the like. He even hired a “chief culture

officer,” an HR executive whose job was making employ-

ees feel fleetingly happy, even when the company lost a

client or had a bad quarter. The idea was that if people felt

good, if they were “empowered” and were working to-

gether, then good results would follow naturally. It was

all about employee morale and attitude and teamwork.

But managers lost sight of core business metrics. In the

end, people wanted to work for a firm that did more than

cheerlead them–they wanted a share in a successful IPO.

Eventually, the company was acquired for mere asset

value because instead of developing a winning strategy,

the CEO engaged in indulgent avoidance.

A healthy culture is created and maintained by focus-

ing on the right goals and creating the experience of win-

ning in the marketplace. A telephony-software company

CEO I’ll call Jeff runs his firm like a high-performing

sports team. A big, football-style scoreboard on a confer-

122 harvard business review

If a top executive says employees need to“focus on our promised results,”

SENIOR MANAGERS OFTEN INTERPRET that to mean “Do whatever it takes to meet investors’ expectations.”

5MESSAGE

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L M

A G

C YA

N B

L A

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The Five Messages Leaders Must Manage

ence room wall displays the company metrics – sales, ex-

penses, revenues–for all to see. All personnel in the com-

pany, screened for their collaborative as well as their

analytical skills, work on six-person teams (according to

the U.S. Navy SEALs, six is the ideal number of partici-

pants on any high-intensity project). Individuals are only

as effective as their teams; everyone in the firm adheres

to a strict set of values and basic standards of conduct. Fi-

nally, everyone in the company knows what winning

looks like: a P/E ratio of 15, a market share of 20%, and 30%

year-over-year revenue growth. If the company’s goal is to

make $20 million by the third quarter, the goal is broken

down into strategic parts marked on the scoreboard. The

spirit of the company is a function of its collective com-

mitment to success, not the most recent company outing.

Successful companies are places where people want to

come to work–not to be coddled but to make a difference.

In companies with healthy cultures, employees aren’t

kept in the dark; rather, they are supported in the belief

that they are part of an exciting future. They come to

work with a fire inside them, a result of clearly stated

leadership and business practices that everyone explicitly

understands. Every person in the company knows how

to individually contribute to its future.

• • •

By recognizing the impact of clear and direct communi-

cation and seeking feedback from their teams, leaders

leverage, rather than abuse, their positional power. The

most effective leaders I know, CEOs who understand that

the risks of miscommunication are very high, ask them-

selves the following questions on their way to work: What

needs to happen today so that we can get where we want

to go? Where is there confusion in my company? What

vague belief or notion can I clarify or debunk today?

What have I not communicated completely or clearly?

What kinds of things are people taking for granted?

In the end, the power of clear communication is really

a game of leverage. A CEO who communicates precisely

to ten direct reports, each of whom communicates with

equal precision to 40 other talented employees, effec-

tively aligns the organization’s commitment and energy

around a clear, well-understood, shared vision of the com-

pany’s real goals, priorities, and opportunities. He or she

saves the company time, money, and resources and allows

extraordinary things to happen.

Reprint R0605G; HBR OnPoint 432X

To order, see page 159.

may 2006 123

“This ensures that we don’t overanalyze.”D A

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