Chief executives must be their companies’ chief storytellers, according to McKinsey partner Julia McClatchy. In this first episode of the CEO Insights series, Julia sits down with Laurel Moglen, McKinsey’s managing producer, to share how CEOs effectively engage stakeholders and communicate with impact.
CEO Insights, which features short, sharp perspectives on the evolving role of the CEO, is produced by The McKinsey Podcast in partnership with the CEO Special Initiative.
This transcript has been edited for clarity and length. To catch the full episode, click here.
Laurel Moglen: Julia, why is a good story so important?
Julia McClatchy: It’s mission critical. Having a great story creates a virtuous cycle that enables CEOs to build a track record of consistency. It allows CEOs to take action, accelerate the idea, and make change in the organization. Second, it facilitates a mutual exchange between the CEO and his or her stakeholders to come up with new ideas and improve the business. It also creates an opportunity to pressure-test ideas, collect feedback, and improve strategy based on insights. Third, it gives something for teams to rally behind in a strong, consistent message. Our research shows that high-performing organizations are almost three times more likely than others to say that their organizations express narratives well.
Laurel Moglen: I’m so curious about that data point. Do you think it has a cascading effect where people just understand what their purpose is?
Julia McClatchy: I think it does. It creates this flywheel because if you’re a high-performing organization, odds are people from the very top to the front line know exactly what their role is and how they fit into the broader purpose of the organization. They understand their narrative, and they think their company expresses it well because it’s fueling them to do what they do every single day to drive value for the company.
Laurel Moglen: How should CEOs think about shaping their organizations’ story?
Julia McClatchy: The ability to tell a great story is grounded in a singular narrative that encompasses the CEO’s vision and their strategy for the future. CEOs should think about telling their story in two lenses. The first lens is being holistic in nature because their story must transcend multiple stakeholder groups, whether they’re talking to their board, the media, or their employees.
Beyond a great narrative for CEOs, we know that adult learning principles tell us that things must be communicated in different mediums again and again. Repetition and consistency are critically important; they do not come naturally to most people, but great CEOs master them.
Laurel Moglen: What are the key factors to consider when CEOs tell their story?
Julia McClatchy: In managing stakeholder relationships, the first step for a CEO to consider is their audience. The way that the narrative is delivered [cadence, depth of candor] should be customized based on the audience. For example, imagine the way a CEO might communicate with the media. It would differ greatly from the radical transparency that he or she might use when communicating with his or her board.
Second, given the pace of change and what is expected of a CEO as they evolve in a role, that narrative has to be renewed across various stages of the CEO life cycle. While a new CEO might be most focused on setting a bold direction, a more tenured CEO might need to focus on combating complacency or articulating a vision for the company’s next S-curve. This enables CEOs to multiply the value of their story over time as they grow in their role.
The third point is that CEOs need to inject a strong sense of the “why” into their narratives. This means linking whatever it is that they’re saying back to the company’s purpose so that it feels grounded. Ideally, CEOs should include some of their own personal purpose in that narrative, too. They can share their personal hope and passion for the company. This enables the best CEOs to move beyond that first step of influence, to inhabit the mindsets of their audience by injecting a lot of personality into their stories, which ties back to having a firm grasp on their “why.”
Laurel Moglen: Leaders have to pay attention to a variety of competing stakeholder issues. What do you find the best CEOs do well as they think about this balancing act?
Julia McClatchy: We see a few different archetypes of how this materializes and how they then balance opposing views.
I’ll share three examples. The first is sharing versus staging. You see this mostly on investor calls where CEOs have the unique ability to share what stakeholders need to know now while laying what we would call “breadcrumbs” to keep them coming back for more in the future. These breadcrumbs might be an allusion to growth or an allusion to future focus on productivity.
The second is business versus society. Stakeholders, whether that’s customers or employees, care just as much about what you stand for as what you sell. CEOs have to confidently represent the company, its values, ideals, and purpose. This means speaking out on topics that at times can be divisive and complex.
The third is self versus collective. They’re positioned uniquely to make communications a team sport as they establish and develop their own platform. If we take the analogy “a rising tide lifts all boats,” what we see is that CEOs make communications a core capability, so the CEO doesn’t have to go at it entirely alone.