Nokia’s new CEO Stephen Elop has written a remarkable memo to his Nokia employees–who, a few years ago, were comfortably working for the most successful cell-phone maker in the world (full memo here).In the memo, Elop likens today’s stumbling Nokia to a “burning oil platform,” in which everyone who remains on deck will quickly be burned alive. The only chance Nokia has to save itself, Elop says, is to behave wildly differently than it has in the past–namely, to jump off the edge of the platform into the frigid waters of the North Sea.
We’ve been in business for nearly two decades now, and we don’t recall another CEO ever being this honest and vivid about the desperate straits his company is in. (We recall MANY companies being in these straits, however).
The normal CEO approach in a situation like this is either delusional denial–(“this concern about BlackBerry’s future is ridiculous–iPhones are just fluffy consumer devices”)–or a more nuanced evaluation of the company’s strengths and weaknesses combined with confident assurances that the company will overcome its obstacles (“failure is not an option!”)
The latter approach is easier and feels safer, but it has a huge hidden risk, which is that the CEO will dash hopes and lose credibility. In recent years, new CEOs like AOL’s Tim Armstrong and Yahoo’s Carol Bartz have taken this approach. Although it may have temporarily raised hopes and confidence, it inevitably led to a big let-down.
RIM’s Jim Balsillie, meanwhile, continues to take the other common approach–outright denial of the obvious–and in the process has shattered his credibility. As a result, the chatter about RIM these days is mostly about how delusional its leadership is.
(Of course, one reason Balsillie has taken this tack, presumably, is that he himself is responsible for the situation RIM is in. It’s easier to be objective about a company’s situation when it was prior management who put it there.)
In any event, more CEOs should take Stephen Elop’s approach, and just tell it like it is.
Yes, Elop’s memo is risky: It will no doubt rattle and anger many employees, and the resulting shockwaves may temporarily hurt the company’s productivity. It may also scare suppliers and customers, who presumably also don’t want to be burned alive if Nokia goes down.
But as Elop himself suggests, this sort of shock treatment may be the only chance anyone has to save the company.
Elop’s memo also accomplishes three important things:
First, it buys him instant credibility with everyone, from employees to customers to suppliers to journalists. People may not like what they’re hearing from Elop, but they can certainly be confident that he’s giving it to them straight. And no one will follow a leader they don’t trust, especially in a crisis.
Second, it allows him to act with the urgency and scope that the situation demands. Nokia’s situation IS desperate, and when your choices are certain-death by doing nothing and small-possibility-of-survival by doing something that seems crazy, people understand when you do the thing that seems crazy.
Third, it paves the way for him to slay sacred cows, fire popular but obstructionist managers, and give orders that might otherwise result in quiet mutiny. Everything that Elop does will now be viewed in the context of his trying to save the company, and it’s hard to fault him for trying to do that.
CEOs tend to be optimistic by nature (“We have not yet begun to fight!”), and they rightfully worry that if they give the impression that even they aren’t confident the company will succeed, everyone else will just give up.
But there’s a difference between confident leadership and empty-headed delusion or cheerleading. And this is a difference that many CEOs miss.
At the World Economic Forum a couple of weeks ago, the pilot who landed US Air flight 1549 on the Hudson, Captain Chesley “Sully” Sullenberger, gave a presentation on “leadership in a crisis.” In the presentation, he played the tape of the communications he and his co-pilot had with each other and air-traffic control in the 100 seconds or so after the engines quit and the plane hit the water.On this tape, there was no panic. There was also no delusion about the seriousness of the situation or cheerleading about success. There was just swift, calm decision-making.
In these 100 seconds, in which Captain Sullenberger turned an almost certain disaster into a miraculous escape, he said only three words to the plane’s passengers.
These words were carefully chosen: Sully wanted to alert the passengers to the situation, but did not want to trigger panic. He also did not want the passengers fumbling under their seats for flotation devices when the plane hit the water.
The three words Captain Sullenberger chose?
“Brace for impact.”
Then Captain Sullenberger ditched the plane in the Hudson, ordered the evacuation, and made certain everyone had gotten out safely before he himself left the plane.
THAT is leadership in a crisis. THAT is understanding what many CEOs don’t, which is that their people can handle the truth (and, what’s more, want the truth). THAT is what gives CEOs and airline captains some chance of overcoming huge odds and pulling their people through.
Every CEO should read Elop’s memo. And more CEOs should follow his example.
Business Insider Emails & Alerts
Site highlights each day to your inbox.