In June of 2000, the combative Durk Jager resigned as CEO of Procter & Gamble after a tenure that had lasted only seventeen months. When he left P&G, its stock had declined 50 percent, it had lost $320 million in the most recent quarter, half of its brands were losing market share, and the firm was struggling with morale problems.
Jager was replaced by a quiet and thoughtful P&G veteran named A.G. Lafley. Although Jager had questioned the competence of many P&G employees, Lafley immediately assured them that he knew they were capable of restoring the marketing powerhouse to its former greatness. Lafley’s long career in marketing had taught him how to glean insights by listening to P&G’s customers. Now he sought to do the same by listening to P&G’s employees. Lafley turned to Jim Stengel, heir apparent to the chief marketing officer, and asked him to conduct a survey to find out what employees thought should be done.
Although senior managers were considering several new business initiatives at the time, P&G’s employees felt something different was needed. They wanted a renewed commitment to marketing, more time to listen to customers, the results of programs to determine rewards rather than the quantity of programs launched and more disciplined market planning.
After P&G implemented employee suggestions, the number of employees who strongly agreed with the statement “We’re on the right rack to deliver business results” soared from 18 percent to 49 percent in just twelve months. And in a little more than two years after taking over from Jager, Lafley restored P&G to profitability.
Lafley turned P&G around in part because he increased the cultural element I describe as voice. The expanded term for this element is knowledge flow. Since leaders who increase knowledge flow within their organizations benefit from it and those who don’t risk failure, you might ask what you can do to ensure that knowledge flow is maximized in your company. The following are three steps I recommend.
Hold ongoing knowledge-flow sessions. Leaders stimulate knowledge flow by regularly holding sessions with employees in which they share information about important issues facing the organization and near-term action plans they are considering. The leader encourages employees to share what they believe is right, what’s wrong and what’s missing from his or her thinking. The frequency, length and size of these sessions can be tailored to particular segments of employees. Sessions are conducted at all levels of the organization.
Unlike the typical staged town hall meeting in many organizations, the knowledge-flow session is characterized by honest dialogue. Key to its success is an environment in which participants feel safe to share their ideas and opinions.
Results from knowledge flow sessions are shared with all participants, and valuable ideas arising from the sessions are executed. Employees feel more connected and become more fired up as they are informed and heard. Because few leaders do this well, it is wise for most to get outside assistance to design and implement the knowledge-flow session process as well as see it modeled.
Ask people to be inquisitive. Better-informed employees are more likely to identify critical pieces of information to solve business problems and spot opportunities. I like the term Peter Drucker once gave the contributions of educated employees who shared an opposing point of view. He called it “informed dissent.” Leaders should ask employees to seek to understand their business, client attitudes and competitors’ actions so that they can bring informed dissent to the organization’s decision-making process.
General Electric does this by thinking of and describing itself as a “learning company.” Among other things, GE encourages employees to recognize best practices outside the company and in other business units across GE, all for the purpose of continually strengthening their businesses.
Safeguard relational connections. It is important in all communications to be sensitive to the feelings of other people. Politely asking someone to do something is preferable to giving orders. Using a respectful tone is better than talking down to someone. Insensitive communication styles impede knowledge flow because people will naturally react in a defensive manner.
Individuals who regularly show insensitivity should be made aware of it and coached to change their behavior. People who are insensitive in communicating with others may be unaware of it. Although they may not like hearing it, once they see proof of the reactions on the part of their colleagues, they will begin to appreciate the need to change.
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