A company's success depends on flawless execution of business strategy. In today's business world, strategy is executed through cross-functional initiatives such as major product releases, strategic IT projects, organizational restructurings, fast-paced downsizings, and aggressive quality initiatives. It's not uncommon for senior leaders to bet the company on the success of these major initiatives.
These bets rarely pay off as anticipated. Failure rates of major projects range from 66 to 91 percent ("CHAOS Chronicles," Standish Group, 2004 and Kaplan and Norton in "The Strategy Focused on Organization"), costing hundreds of billions of dollars a year. In addition to costing money, these project failures cost careers. In 2005, CEO turnover doubled from the year before (Challenger Grey & Christmas, cited in USA Today, April 10, 2006, p. 2B). In fact, nearly two-thirds of all major companies replaced their CEOs within the last five years.
Studies suggest the inability to deliver on critical projects is a primary reason for this alarming rate of dismissals. The CEOs' shortcomings were less about strategy and decision-making than their ability to execute these plans (study by LeadershipIQ.com).
The Silence Fails study shows a major reason these major initiatives fail is a breakdown in one of five crucial conversations. When even one of these conversations fails, the initiative fails between 75 and 85 percent of the time. When these conversations succeed, the failure rate is reduced by 50 to 70 percent.
These crucial conversations address the five following concerns:
1. Fact-Free Planning: Initiative is set up to fail by setting deadlines or resource limits with no consideration for reality.
2. AWOL Sponsors: Sponsor doesn't provide leadership, political clout, time, or energy.
3. Skirting: Powerful people skirt or manipulate the priority-setting process.
4. Project Chicken: Team leaders and members don't admit when there are problems with the project.
5. Team Failures: Team members are unwilling to, or incapable of, supporting the project.
These concerns are much more common than most managers realize. Ninety percent of project managers routinely encounter one or more of these five concerns. But the problem isn't that these concerns are common. In fact, they may be an inevitable part of any large strategic implementation.
The problem is that these concerns rarely are discussed and even more rarely resolved. Only 11 to 14 percent of the managers leading these high-stakes initiatives say they can discuss and resolve these concerns. And when these concerns aren't discussed and resolved, they lead to failure 85 percent of the time.
For example, 85 percent of project leaders are given deliverables, budgets, and timelines that are unrealistic from the beginning. When they face these problems, only 19 percent are able to have the conversation in a way that works. When this conversation fails, the initiatives also fail. In fact, more than 80 percent achieve the "hat trick" of failure. They miss their deadlines, go over budget, and fail to achieve their deliverables.
Mastering these five crucial conversations turned failure into success. Managers who spoke up and resolved these five crucial situations were as much as 60 percent more likely to meet their budgets, hit their schedules, achieve specs, and maintain their teams' morale.
The Top-Down Solution
We've created a free tool managers can use to track the frequency and severity of these five crucial conversations—to determine whether their own initiatives are at risk. Most are shocked by what they learn. The prevalence of these problems acts as a wake-up call. The good news is that it gives a tightly focused target. After all, these are just five conversations that need to be mastered.
Managers can achieve rapid and dramatic improvements in execution by breaking this culture of silence. A few of the key actions they can take:
- Track the frequency and severity of the five crucial conversations, and make these numbers public.
- Expect these five problems, and probe for them in meetings with sponsors, key stakeholders, and other project leaders, as well as with senior leaders.
- Take steps to make it safe for project leaders to deliver bad news. Act on the bad news, and document the positive impact speaking up has.
- Reward project leaders and sponsors who address these five crucial conversations in ways that allow them to analyze and adjust their projects as they move forward.
The Bottom-Up Solution
This research focused on the 10 to 15 percent of project leaders who already were speaking up in effective ways, turning potential failures into successes. Organizations need to learn from this small minority of leaders, and take steps to make sure everyone can share their successes.
This minority is skilled at crucial conversations. They consistently speak up in professional and respectful ways that cause their sponsors, customers, and other stakeholders to listen and respond. Here are a few of the key skills we observed:
- They have the right conversation—one of these five. Others tend to talk around or avoid the real issue. The most common mistake is to talk about the project itself, instead of the behaviors impeding the project.
- They maintain respectful dialog. Others find themselves moving to silence or violence as the conversation turns crucial. The most common mistake is to allow a debate in which neither side listens or budges.
- They share facts, ideas, feelings, and theories candidly and honestly. Others often sugarcoat or minimize the extent of the problem. The most common mistake is to hint about the problem, but never come out and describe it.
- When they see defensiveness, they take steps to rebuild safety. Others may recognize the defensiveness, but then retreat or become defensive in return.
These skills can be learned and put into practice within a short period of time. Creating a corporate competence in these five crucial conversations creates dramatic improvements in a company's ability to execute strategy.
David Maxfield is coauthor of The New York Times bestseller, "Influencer: The Power to Change Anything." He is also vice president of research at VitalSmarts, an innovator in corporate training and organizational performance. For more information, visit www.vitalsmarts.com.