Three Communication Tips Every Leader Should Learn
At the end of the third quarter of 2007, Nokia announced huge gains in both profits and revenue, driving their stock price to an all-time high of $40/share. In a widely publicized interview after the release of the quarterly results, the CFO proudly emphasized that it was Nokia’s low-end cell phones, selling for $40 or so, that were driving the business.
He somewhat flippantly noted that it didn’t matter that Nokia’s average revenue per phone they sold was dropping, due to their success with low end phones compared to their struggling smartphones, since Nokia now makes almost 30% gross profit margins on their $40 phones, just like they do on their $375 smartphones.
The CEO was asked about the spectacular growth of the emerging smartphone segment, the dominance of the Blackberry in that business, and the recent introduction of the impressive Apple iPhone. He marginalized the question by curtly commenting that they were keeping their eye on them.
Verbal and Non-Verbal Communication
So…what do you think the take-away by employees was to their leader’s comments about the great quarter?
- Verbally, it is clear that Nokia’s low-end phones were the primary focus of these two guys. The company was selling more and more of them and the profit margins were great, even with their low unit price. Also, they made it clear that smartphones were not a priority and they were not overly worried about the very successful Blackberry or the new iPhone.
- The non-verbal message was also clear: Things have never been better for Nokia and we need to simply keep doing what we are currently doing. Blackberry and iPhone are really not a big deal for Nokia.
These Nokia leaders made two huge mistakes. The verbal message was all wrong. It should have been: we are doing fine at the low end, and we had great quarter, but we will also be putting a high priority on our smartphones, quickly matching and exceeding the capabilities of the Blackberry and iPhone.
Equally as important, the non-verbal message should have been that they have a real sense of urgency and opportunity to attack those two smartphone competitors, while continuing to strengthen their lead in low-end phone business. The leaders completely lacked any aggressiveness in their comments. The net for employees was: all is great and just protect the status quo.
The Rest is History
The CEO did nothing for 3 more years, and then was replaced, but it was too late. The new management found that the company was hopelessly behind in smartphones, now the dominant segment in the mobile phone business. With the stock price mired in the $5 range, recently Nokia announced the sale of their phone business to Microsoft.
Here are three points that all of us need to keep in mind as we lead our organizations:
- It is not only what you say, but how you say it- You must communicate clearly about the organization’s strategy, speed, direction and results, but you also need to be very careful to do it objectively, passionately, and confidently, conveying the emotion that you want to generate in the audience.
- What you say reverberates throughout the organization – The higher you get in an organization, the more what you say will be passed along by networks of people. That is an opportunity and a risk. Hence, the message must be simple and clear, with no room for misinterpretation, while also carrying the right emotion, such as the need for urgency and the need for change.
- For a leader, there should be no off-the-cuff remarks – A slip of the tongue can be disastrous. An off-color remark, an erroneous statement, a condescending tone or a flippant comment will not only be remembered, it will be magnified and obliterate the core message that you are trying to deliver.
Communication skills are critical for a leader and both the verbal and non-verbal elements deserve careful attention.
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