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Managing By Mea Culpa

With straight talk and lessons in sacrifice, a new generation of leaders is changing the way that companies are managed.
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Last month, Nokia's new CEO Stephen Elop sent an e-mail to his staff, the contents of which would change the course of the company. In a candid, pointed missive, the Canadian executive said, "our platform is burning." Nokia's Symbian operating system had fallen far behind in the age of smartphones, which threatened Nokia's 200 million worldwide customers. Apple's iOS, RIM and Google's were now the dominant platforms, creating three viable ecosystems of operators, developers, and consumers. 

So Elop announced at The World Mobile Congress that Nokia would partner with Microsoft on a next generation of Windows 7 smartphones. Some Symbian engineers walked off the job, but Elop's message to Nokia's culture was blunt: Change, or die. Rather than hide his strategy or put a spin on Nokia's business challenges, Elop's frankness is emblematic of a new way of thinking to jump-start a business.

Today a growing number of managers are aligning their organizations around honest self-reappraisal, while earning the trust of customers as their company evolves. 

In his company's effective "Pizza Turnaround" YouTube video, Domino's Pizza CEO Patrick Doyle admitted their pizza tasted like "cardboard" with "processed cheese." This audacious marketing piece followed an expertly-handled crisis-management video a year earlier, in which Domino's was widely praised for swiftly handling the actions of a couple of rogue employees who were caught on camera doing some unsightly things during food prep.

Doyle told the AP, "The old days of trying to spin things simply doesn't work anymore. Great brands going forward are going to have a level of honesty and transparency that hasn't been seen before." Domino's reputational score has risen by an impressive 21 percent in differentiation, by 24 percent in leadership, and by 28 percent in perceived quality in our BAV data. 

This 'out with it, on with it' strategy is a characteristic of the modern post-crisis leader. In the wake of The Great Recession, trust in companies has declined by more than 58 percent according to our BrandAsset Valuator data. Still, conventional leaders deny their naked emperor in fear of losing face. (One of Stephen Elop's predecessors had written off Apple as "that fruit company" as recently as 2009!) This lack of an honest conversation between business leaders, their employees, and customers actually slows down our economic recovery. After the collapse of one iconic company after the next, we are now accustomed to sniffing out hubris. And we get worried when the news sounds too good.  

Perhaps this is a reason the Consumer Confidence Index looks like the pattern on Charlie Brown's shirt. We crave honesty and accountability, but we see little of it around us. The remarkable insight in Elop's admission is that a candid assessment of a situation actually makes us feel more secure, instead of less. Nokia's burning platform is actually a burning bush; the public will follow leaders who respect us enough to know we can handle the truth. 

And once the shoe drops, these executives earn political capital to call on us to accept sacrifice. Consider the surprising power and popularity of New Jersey Governor Chris Christie. Though he offers few mea culpas, his appeal stems in part, I think, from his ability to tap into this phenomenon of public consciousness. We know we can't recklessly spend today and feel secure about our future. Christie argues we must at least do the obvious when faced with possible catastrophe—live within our means—and we know he is right. When the stakes are high, it can come as a profound relief to stop hiding from the truth and to take action.

Whether the confessional will become commercial remains to be seen. But the lessons are instructional to innovators and small business owners, who too will face crisis, valleys, and periods of denial. Too often, organizations allow an elephant to wander around the room. Candor can be a catalyst. Honesty can galvanize an organization and free up people to take risks. And by admitting to a company's struggles, a leader becomes authentic and expedient at once. The truth always gets out eventually, so why waste more time on obfuscation?

And this is where values come into play. In our data, 72 percent of American consumers are searching for companies whose values match their own, so embracing the values of transparency and accountability constitute a smart strategy for really any brand. Stephen Elop and the team at Nokia will surely need to create the right product to win in the long run. But for now, Elop's humility on some level make us want to root for him to succeed. 

John Gerzema is the president of BrandAsset Consulting and oversees strategy across the Young & Rubicam Brands Companies. Gerzema's articles appear regularly on Inc.com. 

Last updated: Mar 14, 2011




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