A New Era of Corporate Conversation

Editor’s Note: This article is one of a special series of 14 commissioned essays MIT Sloan Management Review is publishing to celebrate the launch of our new Frontiers initiative. Each essay gives the author’s response to this question:

“Within the next five years, how will technology change the practice of management in a way we have not yet witnessed?”

If you want to see how management is changing, take a look inside today’s high-tech offices. In the past, corporate leaders sat behind closed doors in large private suites. Today, many sit side by side with employees in open workspaces. In the past, workers toiled alone in cubicles, waiting for formal meetings to speak with their managers and colleagues. Today, they turn and chat with the managers and colleagues sitting right next to them, while conversing with others on digital chat systems that connect the entire organization, and with yet others in lounge areas and cafés built to promote informal connection and dialogue.

These changes are surface manifestations of a deeper transformation under way: Long-held assumptions about corporate communication and hierarchy are breaking down. Social media tools allow more open communication up, down, and across the corporate hierarchy. In the coming years, the savviest leaders will tap into the spirit and tools of openness from social media to build what I call conversational firms.

Over the past decade, social media has transformed how people communicate in their personal lives. It is beginning to do the same in our work lives. Millennials who grew up on Twitter, Facebook, Instagram, Snapchat, and the like are now the fastest-growing portion of the labor force. They are accustomed to constant connection and information access and engage in more open sharing than generations past. And they are carrying these expectations and habits into the workplace.

Meanwhile, the last several years have seen an explosion of social media tools designed for use inside companies — everything from wikis and microblogs, to multichannel platforms such as Yammer, Slack, and HipChat, to employee feedback tools such as TinyPulse. With workers who increasingly expect to have their voices heard, and with tools to enable that, it is now possible — perhaps even paramount — to build more conversational firms.

Conversational firms differ from conventional bureaucratic ones by having a far more open communication environment. Executives use multiple platforms to share information with the entire workforce. They encourage employees to speak up, ask questions, and share ideas and opinions. They saturate the workplace with digital tools and physical spaces designed to encourage dialogue. The result is an ongoing conversation that transcends the formal hierarchical structure.

Forward-thinking leaders are already managing their organizations this way. I profile one such company in my new book, The Conversational Firm: Rethinking Bureaucracy in the Age of Social Media. When this company’s SaaS (software as a service) business model was jeopardized by a spike in customer churn, executives used an internal wiki to share 138 pages of detailed analysis with the full 600+ person workforce. The analysis included the sort of information other executives might pore over in closed meetings but hesitate to share with more than a few select employees — such as trends in bookings, customer acquisition costs, competitors’ churn rates, fine-grained profit and loss and cash flow statements, and the complete results of a recent customer survey.

Armed with this information, employees throughout the business responded on the wiki with questions, thoughts, and analyses. The company then extended the conversation offline, hosting an open “Hack Night” for interested individuals to present their ideas in person. Executives sat in the audience listening to employee suggestions and joined small breakout groups to discuss various proposals. In the following weeks, these breakout groups continued to hack away at the churn problem, coordinating their work over the company’s internal chat system and posting updates on the wiki for everyone to see. Within a few months, the churn problem was resolved and the organization had new and improved internal processes to avoid future spikes.

This was not an isolated event. During the 10 months I was embedded inside the company, executives shared information broadly and encouraged employees to offer their input on a range of topics. This fostered a well-informed and engaged staff, willing and able to share their knowledge and insights. In turn, the organization was able to respond rapidly and thoughtfully as problems and opportunities arose.

What organization wouldn’t want this? In today’s markets, customer preferences evolve quickly, and new technologies and competitors continually emerge to unsettle the status quo. Open dialogue is one of the few ways to surface a multidimensional understanding of complex new realities and possible responses. Conversation brings the entire organization’s collective wisdom to bear on issues, and in doing so it helps the organization adapt and learn.

Some managers will worry that giving employees broad freedom of speech will weaken their decision-making authority. But blasting open the communication hierarchy doesn’t have to mean destabilizing all of the corporate hierarchy. Leaders can give employees voice and engage them in dialogue while retaining the right to make the final call. For example, the company I studied maintained a conventional reporting and decision-making hierarchy while supporting the sort of radically open communication I described above. In fact, the decisions executives made had more legitimacy with the workforce because employees had been invited into the conversation and knew their voices had helped shape the decision-making context. In the customer churn case, executives retained final authority over which ideas the company pursued. However, the ideas themselves were better because they had been shaped by the group’s insights and opinions. When done right, open communication can complement formal control.

Doing it right is hard, though. There are challenges to creating conversational companies. For one thing, executives need to see that the point of conversation is to surface a range of opinions. This awareness must guide their approach to everything from the people they hire to how they lead. After all, for valuable dialogue to occur, an organization can’t hire a workforce of clones who think and act exactly alike; a diversity of perspectives is required. What’s more, employees need to know that their leaders won’t punish them for expressing dissenting opinions; absent that trust, people will say only what they think management wants to hear.

Through it all, executives and managers will need patience and a thick skin. Some comments will sting, not every thought shared will be an insightful one, and some conversations will get derailed; these are unavoidable costs. However, leaders willing to invest in truly open dialogue with their workforce will be well positioned to face — and shape — the ever-evolving future.