The Strategic
Communication
Imperative
SPRING 2005 VOL.46 NO.3
REPRINT NUMBER 46315
Paul A. Argenti, Robert A. Howell and Karen A. Beck
Please note that gray areas reflect artwork that has
been intentionally removed. The substantive content
of the article appears as originally published.
he link between strategy and its implementation has always been tenu-
ous. Top consulting companies have employed countless MBAs to
develop strategy for their clients. Academics at top business schools have
spent their careers developing frameworks explaining how to develop better
strategies for top companies. However, only a handful of academics and a
cadre of tactical consultants, primarily at public relations companies, have
struggled with strategy implementation in the area where it matters most: its
communication to a set of varied constituents.
Many companies take a tactical, short-term approach to communicating
investment bank and, more recently, Merck & Co. Inc.’s decision to wait until
pressured to pull Vioxx, its arthritis and acute pain medication, from the mar-
ket are all examples of communications being used tactically as part of a
short-term legal or financial orientation. However, the dearth of both aca-
demic and practitioner emphasis on the strategic nature of communications,
coupled with recent legal and regulatory responses to corporate scandals
(such as enactment of Regulation Fair Disclosure and the Sarbanes-Oxley Act
of 2002), has created a strategic communication imperative — an increasingly
urgent need for executives to ensure that their communications practices con-
tribute directly to corporate strategy implementation.
We define strategic communication as communication aligned with the
company’s overall strategy, to enhance its strategic positioning. (See “The
Framework for Strategic Communication,” p. 85.) Over the past year, we
conducted primary research into strategic communication, conducting
SPRING 2005 MIT SLOAN MANAGEMENT REVIEW 83
The Strategic
Communication Imperative
T
Companies that con-
tinue to take a tactical,
short-term approach to
communicating with key
constituencies will find
it increasingly difficult
to compete. Developing
an integrated, strategic
84 MIT SLOAN MANAGEMENT REVIEW SPRING 2005
The research not only indicates the drivers, best practices and
We found that the companies most likely to recognize the
strategic communication imperative are those in which the
CEO has an inherent understanding of how communication
can be a differentiator for a business and thus can drive strategy.
Executives at PepsiCo Inc. and Dell Inc., for example, are keenly
aware of the need for a strategic approach to communications.
Dell chairman Michael Dell says, “I communicate to customers,
groups of employees and others, while working on a strategy. A
key part of strategy is communicating it. Communications is
key to operations and execution and an integral part of the
This indicates that communications professionals need to
have a seat at the strategy-making table. Indeed, the communica-
tions professionals we met with agreed that their job was not only
to reinforce and help implement the company’s strategy by com-
municating with key constituencies but also to interpret con-
organization. The messages articulate the strategic direction of
the company and motivate people to move behind it.”
Best Practices of Strategic Communication
Strategic-communication leaders allow their corporate strategy
to drive their communication choices. They are equally adept at
tailoring their communication activities to support existing strat-
egy or drive new strategy.
FedEx The emphasis placed on communications at FedEx is
goes back to [founder] Fred [Smith] and his military training. His
management philosophy is ‘Shoot, move, communicate.’”
For example, when the economy took a downward turn a few
years ago, FedEx, like many companies, determined it had to lay off
employees. But FedEx realized that the goodwill and morale of its
employees is central to the success of its exceedingly customer-fac-
ing strategy. The company not only offered generous voluntary
severance packages to its departing employees, but it clearly com-
municated this both internally and externally using a multifaceted
approach across a variety of platforms to maintain employees’ loy-
alty, customers’ trust and the good graces of Wall Street.
“It was like changing a tire on a moving truck because an
entirely new organizational structure was being developed and
communicated in phases to nearly 13,000 employees,” says Bill
Margaritis, corporate vice president of worldwide corporate
Web sites where we collected questions and answered them for all
employees to read. And each of those processes had to be coordi-
nated with the others.”
According to Eric Jackson, vice president of corporate com-
munications, “FedEx is now held up as an example of how to
transition, of how to keep the hearts and minds of employees
while meeting business needs.”
Our primary research into strategic communications com-
prised more than 50 individual interviews, conducted one-
on-one and in person, by all three members of our research
team over a period of six months. Our selection of compa-
nies included those representing the state of the art in cor-
porate communications (Dell, FedEx and Pepsi), companies
that have faced and survived major crises (Cendant, Knight
Trading and Textron), and some unsung heroes (Cognex,
At each company, we met with (at least once) the CEO,
CFO, chief communication officer and investor relations
officer. The interviews were structured in advance, but
often veered from the initial questions. We did, however,
ask each executive key questions about the role of commu-
nication in strategy formulation and implementation, com-
munication strategy, how the function is structured in their
companies, what process exists for communication and
what role they play in communicating, including how
About the Research
panies. Today, its principal businesses include Bell Helicopter,
Cessna Aircraft, Textron Fastening Systems and Textron Finan-
cial. One of the repercussions of such frenetic buying and selling
was the absence of common systems, procedures and a shared
culture across the corporation. Despite these internal hurdles,
Textron rode the wave of the buoyant market during the 1990s,
only to watch its stock fall by 80% when the bubble burst in the
stock market.
“The core of our existence was shaken,” says chairman, presi-
dent and CEO Lewis Campbell. He realized he had to articulate a
new vision and strategy for Textron — to become the premier
multi-industry company in the world recognized for its world-
class enterprise processes — and that selling it internally and
externally would require a coordinated communications effort.
To date, the process has been focused internally to get align-
ment and commitment from within. Prior to the transforma-
tion, the business units operated as independent, self-directed
and streamlined processes. Textron has hundreds of communi-
cation programs under way to support the “one company”
objective. For example, it holds an annual Corporate Commu-
nications Council to develop one message and incorporate that
message into the business units. In addition, the council holds a
monthly Internet teleconference to ensure compliance. At an
even more tactical level, all relevant press releases are reviewed
at the corporate level as well.
For Textron, strategic communications came in the form of
the corporation, while at the same time keeping the financial
community apprised of the company’s progress at implement-
ing its new strategy.
Dell Founded by Michael Dell in his dorm room at the University
of Texas in 1984, Dell Inc. generates more than $49 billion in
annual sales, has 55,000 employees and does business in every cor-
ner of the world by selling directly to end users. The phrase “Dell
Direct” not only describes the company’s business model, but it is
about as clear a unifying communications statement as a company
could possibly have. It defines how Dell relates to its customers, its
tions has to be in the center to be optimally effective.”
For Dell, strategic communication means functional integra-
tion. CEO Kevin Rollins uses communications to create alignment
among strategy, messages, employees, Wall Street and the media.
“You have to modify messages by constituency,” says Rollins.
“Which elements of the overall strategy do you want to discuss
with each constituent? The communication function breaks strat-
egy into pieces and sells the right pieces to the right audience.”
Cendant Cendant’s commitment to strategic communication
grew out of crisis. One of the foremost providers of travel and
real estate services in the world, the company was created by the
merger of HFS Inc. and CUC International Inc. in December
1997. Cendant was hit hard in April 1998 when it was discovered
threatening the credibility of both the company and chairman
and CEO Henry Silverman and spurring a barrage of questions
from numerous constituencies. How could a company and its
Strategy
• Sent by messengers
• Sent through
media/channels
Messages
Feedback
Based on:
• Markets
• Products/
Services
• Research &
Constituents
Including:
• Customers
• Employees
• Shareholders
• Suppliers
The framework for strategic communication comprises a wide
variety of iterative loops, encompassing multiple connections
with multiple constituencies on multiple strategic levels.
Those strategic elements include the markets addressed, the
products and services offered in those markets, the underlying
research and development that supports those products and
The Framework for Strategic Communication
86 MIT SLOAN MANAGEMENT REVIEW SPRING 2005
CUC’s fraudulent reporting of this magnitude before the trans-
action was completed?
Silverman realized that, to regain credibility, complete hon-
esty and financial transparency was the only viable course of
action. He established the mantra, “Tell the truth. Tell it all. Tell
it now,” insisting that all the accounting irregularities be
acknowledged as soon as they were known. Silverman and the
company’s senior vice president of corporate communications
and investor relations, Samuel Levenson, continue to tell the
Drivers of Strategic Communication
Even if a CEO or CFO does not have an active interest in or inher-
ent understanding of strategic communications, a number of fac-
tors, both external and internal, can necessitate such an approach.
Regulatory Imperatives New regulations often drive companies to
revisit communications strategies and practices. In 2000 when
the U.S. Securities and Exchange Commission adopted Regula-
tion Fair Disclosure prohibiting companies from communicating
preferentially with certain outside
trary, companies have developed
regular conference calls and other
procedures to get their message
out fairly and consistently. “Com-
munications now have to be
crisper and give more clarity,” says
Ted French, executive vice presi-
dent and CFO of Textron Inc., on
the topic of Reg FD.
The Sarbanes-Oxley bill requir-
ing that CEOs and CFOs certify
their companies’ financial results
and attest to systems of internal
controls, also has changed the way
standable and complete and to make the management discus-
sion and analysis section of annual reports more comprehensible
and accessible.
Organizational Complexities As an organization grows in size and
complexity — more markets, customers, products, services,
employees, suppliers, investors and so on — the need for a con-
sistent communications strategy becomes even more critical
because it must communicate to a diverse and rapidly expanding
it!’ And that is exactly what we have to respond to.”
“As Dell matured,” says Michael Dell, “we had to put a pre-
mium on making sure we had communication nailed down.
While we’ve done a better job in the last couple of years, there
were times when communications wasn’t well integrated, partic-
ularly over parts of the worldwide operations. As a global busi-
ness, it is essential that we have a clear, consistent strategy.”
The Need to Increase Credibility Corporate crises, both internal
and external, also can drive companies to reconsider how they
communicate. In the high-flying 1990s, “making the quarterly
Recent polls show that over 80% of the American public feel
that business does a poor job of balancing profit and the public
interest.1In fact, the 2005 Edelman Trust Barometer poll shows
that nongovernmental organizations are held in higher esteem
than businesses, and executives in large companies are among
the lowest rated in terms of credibility, ranking below even
lawyers and government officials.2Given such low levels of
approval and trust, the need for a more strategic approach to
communication truly becomes imperative as companies strive to
differentiate themselves.
Aligning Communication With Strategy
Corporations have multiple constituents, and their communica-
tions must be responsive to all of them. “The job of a senior man-
“Being on mes-
sage is critical,”
says Leonard
Forman, executive
vice president
and CFO of the
New York Times
Co., “but it has
SPRING 2005 MIT SLOAN MANAGEMENT REVIEW 87
explaining to shareholders why it didn’t meet fourth-quarter pro-
jections, employing a coherent communication strategy is criti-
cal. “We break messages into pieces and try to give the right piece
to the right audience,” says Rollins.
Executives have to think carefully about an organization’s
objectives for each specific communication, determining which
constituencies are critical to meeting that objective and under-
standing what kinds of messages to deliver to them through the
Communications professionals and other executives we spoke
with agree that strategic communication requires clarity and
consistency of message.“Communication has to be able to talk to
people inside and outside the company,” says FedEx Corp. execu-
tive vice president and CFO Alan Graf.“We have to have the same
messages and conflicts.” Repetition is also crucial. “You almost
can’t communicate a message frequently enough, particularly to
the employees,” says Russell Lewis, former president and CEO of
the New York Times Co. “Use every mechanism.” And, perhaps
munication process. Senior managers need to focus on using the
right channel(s) for each message to each constituency. Given the
complexity and array of choices available as distribution channels
today, this offers managers an opportunity to choose on the basis
of the preferences of their constituents, who are more sophisti-
cated than ever before as a result of media exposure, the evolu-
tion of technology and the ability to access communications in
real time. Companies also must realize that there is great overlap
ful implementation of strategy in general. For example, “In
[investor relations], you get real-time feedback as people vote
every day with their shares,” says Ron Nelson of Cendant. “The
feedback isn’t determinative, but it’s valuable in picking out
what troubles shareholders.”
A strategic communications approach also attempts to tie its
activities to both financial and behavioral outcomes. On the
financial side, senior managers are increasingly interested in
measuring communications activity in terms of market value.
Strategic communications requires an integrated, multilevel approach. Each communication function fulfills specific objectives, is
targeted at specific constituencies that are critical to meeting those objectives and is delivered through the channels most appro-
priate to and effective for those constituencies. To achieve full strategic impact, all communications to all constituencies through all
channels must be customized to a given objective, yet consistent both with one another and the corporate strategy.
Using a Strategic Approach to Communications
COMMUNICATIONS OBJECTIVES CONSTITUENCIES CHANNELS
FUNCTIONS PRIMARY SECONDARY
Media relations Public relations, All Media Press releases,
crisis management constituencies interviews
Employee communications Internal consensus building Employees Customers, families Town hall meetings,
memos, newsletters
Financial communications Transparency, meeting Investors Analysts, media Conference calls,
financial expectations CEO/CFO
Community relations Image building Communities NGOs, media Events, speeches,
88 MIT SLOAN MANAGEMENT REVIEW SPRING 2005
our valuation, credibility and the ease with which we enter mar-
kets,” says Dell senior vice president and CFO James Schneider.
Over the next several years, with the development of more
refined frameworks, as well as the creation of industry stan-
dards, the connection between a company’s communications
Lessons of Strategic Communications
Our research suggests there are some basic lessons to be learned
about how communication can add to the process of translating
boardroom strategy to front-line execution, as well as the ability
of communications to support strategy development.
Lesson 1: Senior managers must be involved. The CEO and
other top leaders, including the CFO, must understand the impor-
tance of communication and leverage communications strategi-
cally with all their constituents. Jean-Pierre Garnier, CEO of
GlaxoSmithKline, said it best, “At the end of the day, the commu-
nications aren’t owned by the communication department. You
have to have good executives who can and will communicate.”
While there have been sensational headlines in business pub-
lications about the decline of the charismatic CEO, it is clear
from our interviews that the role of top leaders in communica-
tions actually has expanded in
the past few years. Now, more
than ever, the CEO is not only
the thought leader but also the
face and voice of the company,
setting the tone for the execu-
tive team and the organization
as a whole. Those senior exec-
utives who think that commu-
nications can be delegated to
the head of the corporate
communication function are
mistaken. In fact, in many
Surprisingly, CFOs also are
more involved in the overall
communications activity of
corporations, seemingly as a
result of their connection to
investor relations executives
who sit on the senior executive team. Alan Graf of FedEx says that
“[communication] is the vast majority of my time. I’m either
communicating or thinking about it. I’m an input-driven CFO.
I’m absorbing, translating or communicating.”
As outcomes-based measures of communication continue to
must play in that effort.
Lesson 2: Communications must be integrated. Bob Shillman,
president, chairman and CEO of Cognex Corp., a Natick, Massa-
chusetts-based manufacturer of machine vision systems, puts
integration into perspective: “Communication is not a separate
function. It’s hard to separate it out. It’s like a car. What’s the most
important part? An engine can’t get you anywhere without the
wheels. It all has to be integrated.”
Integration develops in a variety of ways. JetBlue Airways, the
budget-oriented airline, achieves integration through the close
connection between its CEO and CFO; the New York Times Co.,
FedEx and Cendant achieve integration by having one person
manage the function; Dell achieves integration through the rela-
tionships developed between corporate communications and
investor relations professionals; and Textron and Infosys Tech-
nologies Ltd., an Indian company focused on outsourcing,
achieve integration through their communications processes.
However structured, communication must be integrated and
adept at delivering a harmonious message to all constituents.
So what can you do to integrate communications activities at
your company? First, realize that while communication is some-
thing that everyone does, the communication function must
ensure that communications emanating from the business units
are aligned with and support the company’s overall strategy.
Martha Lindeman, Playboy Enterprises Inc. senior vice president
of corporate communication and investor relations, says: “[We
integrate] because we’re concerned with maintaining the
integrity of the brand. The brand means different things to dif-
“But we still have one story here — one basic message.”
Third, think about the opportunities that integration of com-
munications will create, which would otherwise be missed.“Before
investor relations and corporate communications were integrated,”
says Russell Lewis, formerly of the New York Times Co.,“we didn’t
have problems, but we failed to take advantage of opportunities.”
In many companies,
the CEO acts, in
effect, as the senior
Dell’s Kevin Rollins
said, “Can you go
above 100%?”
SPRING 2005 MIT SLOAN MANAGEMENT REVIEW 89
And, finally, pay attention
to detail. Dell is exemplary
in this regard. The company
integrates its communications
activities down to specific mes-
sages, such as the mandate
to “be direct” in all activities,
Lesson 3: Structural integra-
tion is not the only choice.
Some companies strategically
integrate their communica-
tions functions by combining
them under one executive. It is
surprising, however, how often
structural change is not used
Communications executives are integral to the extent that
they have a strong personal network, access to information,
awareness of how their work connects to the overall strategy of
the company and the ability to measure its impact on share-
holder value. Senior executives at the companies we studied
were quick to point out attributes such as broad perspective and
personal credibility as the reasons communications executives
earned a seat at the strategy-making table.
Lesson 4: Communications must have a long-term orientation.
It has been suggested that the most enduring companies are
those that focus on the long term, have a strong set of values
and are proactive rather than reactive in communicating.4
Just as companies have long-term marketing and budgeting
plans for the organization as a whole, they also must have a
master communication strategy. For many, however, this is a
about meeting next quarter’s numbers. We have 30 years of his-
tory and want 100 more.”
Lesson 5: Top communicators must have broad general man-
agement skills. All too often, the corporate communications
function is a dumping ground for tactical managers who are
uncomfortable with the quantitative skills needed for success in
munication function or from formal education, personal credi-
bility with senior executives, a wide organizational reach,
integrity and a strong leadership position in the company. One of
the best ways to acquire these attributes is to work at building an
informal network of contacts within the company, getting
involved in every aspect of the business. When Lynn Tyson, Dell’s
vice president of investor relations and corporate communica-
tions, first joined the company, she attended operations and
other functional meetings so that she could learn about Dell
the addition of an integrated, strategic focus will be critical to
success. For communications professionals, this imperative will
not be a threat but an opportunity to not only get a seat at the
table, but to stay there.
ACKNOWLEDGMENTS
The authors would like to thank the National Investor Relations Insti-
tute’s Center for Strategic Communication for support of our research.
REFERENCES
1. P.A. Argenti, “Corporate Communication” (New York: McGraw-Hill,
2002), 4.
2. “Trust Shifting From Traditional Authorities to Peers, Edelman Trust
Barometer Finds” (New York: Edelman USA, 2005), www.edelman.
com/news/ShowOne.asp?ID=57.
3. There is, in fact, growing evidence to suggest that intangibles do
communications are
separate functions,”
says GlaxoSmith-
Kline’s CEO Jean-
Pierre Garnier.
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