Howard Perlmutter, Emeritus Professor at Wharton, once gave a radical assignment to a group of 600 CEOs -
Have a real conversation with one another; not about the weather or the skiing at the Swiss retreat where they were gathered for the World Economic Forum. He arranged to have them break into random groups and actively discuss ways they could work together in the next five to ten years. The executives came from all kinds of industries in all parts of the world.
Even chosen at random, after a few hours of discussion 75% found potential alliance opportunities and 20% actually made plans to follow up. All it took was the opportunity to engage in a serious, constructive discussion.
Perlmutter later termed such discussion a "Deep Dialog." As the global business environment becomes more diverse and complex, Perlmutter believes that "Deep Dialog" will be one of the most important capabilities for organizations.
"The more I study global challenges – from new product launches to post-merger integration - the more I see the potential of Deep Dialog," he says.
"If you are very good at it, it becomes an important advantage, a core capability for the 21st century firm, which will be less hierarchical and often involve electronic networks extending around the world."
Deep Dialog Defined
Perlmutter, a pioneer in the study of global corporations, has worked with managers and companies around the world on improving the global mindsets of the senior executives and managers as well as the quality of their cross-cultural communication. Through these experiences, he has developed a framework for systematically building dialog and for diagnosing dialog deficits.
So what is Deep Dialog? It is purposive communication that involves the exchange of information as well as constructive feelings and attitudes to reach shared objectives. Westerners might describe it as an "exchange of meaning" or "two-way communication." Easterners might characterize it as "warm feelings" or "conversation from the heart."
It is differentiated from superficial conversations in which information is exchanged. The issue is, "How do you move beyond the differences to establish mutual trust, share knowledge (often implicit) and reach goals none of the parties could reach by themselves?" Perlmutter says.
Global Challenges and Opportunities
Perlmutter points out that the process of engaging in Deep Dialog is not the same as negotiating. Negotiation, as BP Amoco’s CEO John Browne once put it, encourages a "bazaar mentality." In contrast, Deep Dialog inspires those who engage in it to share knowledge and identify processes that promote or hinder communication. Deep Dialog, in fact, prompts people to go beyond communication to communion.
Two studies in 1997 and 1998 - one of a global insurance firm and the other of a high-tech conglomerate of entrepreneurial companies - found that the Deep Dialog process was extremely helpful. In fact, at both firms Perlmutter found that the absence of dialog resulted in costs that could have been avoided if communication were enhanced.
In addition, Perlmutter discovered that when executives in an Advanced Management Program in June of 1999 were asked to compare relatively successful and unsuccessful cases of new product development and launch, building alliances, post-merger integration, headquarters-affiliate relationships, cross-cultural negotiations and even virtual global team building, the trends were similar: Successful cases involved Deep Dialog, while in unsuccessful cases Deep Dialog was absent or minimal.
In an earlier instance, when Whirlpool acquired the European appliance division of Philips Electronics a decade ago, some 90% of Whirlpool executives had not been outside the U.S. Managers faced a steep learning curve. Perlmutter, who worked with the firm on the post-merger integration issues, said one of the most effective strategies was simply to bring managers from different parts of the world together and ask them to engage in real discussions, in which they got to know each other, not as "Americans" or "Europeans" but as unique persons and to look for ways they could work together.
By the end of the first such session, managers had identified a variety of joint projects. "The only way you could get there is to have a good dialog," Perlmutter says.
As business operations become more global, virtual teams spanning continents, whose members communicate primarily by e-mail and over the Internet, will become common. Perlmutter says that the emergence of such teams increases the need for Deep Dialog.
"A series of steps must be taken to increase trust and bonding among virtual teams," he notes. The most important step companies can take is to conduct regular face-to-face meetings among virtual team members, so that they have time to bond and band together. Perlmutter says that an international consumer products company that tried this approach with its global products group found that it greatly improved dialog among team members. "You have to gather people in one spot," he says. "That investment of face-to-face time is vital."
While most managers understand the importance of this type of connection, few organizations have a systematic process for encouraging it. Through his work with global corporations and other organizations, Perlmutter has identified seven essential processes for successful Deep Dialog.
Many organizations either stall out in their pursuit of Deep Dialog, or worse, end up in a cacophony of conflicting voices. What can go wrong with Deep Dialog? Perlmutter has identified five "dialog deficits" that are the most common ways the process is undermined.
Perlmutter says that in the two studies he conducted recently, both firms scored high on the frequency of all types of dialog deficits between the affiliates of the decentralized global firm or between the high tech entrepreneurial companies of the conglomerate. When the affiliates were brought together at a global meeting they could list many costs associated with these gaps and took steps to increase their access to each other. The same occurred in the conglomerate where the heads of the companies found that the deficits were too costly and were able to define new channels where dialog would be easier.
"In our increasingly global civilization, deep, constructive dialog competencies are essential," Perlmutter says. "This is true not only in the world economy, but also between persons in the political, social-cultural, scientific, technological, medical and ecological domains. In business, domestically and internationally, where the boundaries of markets and corporations are more fluid than ever and where managers are thrown together into new international organizations and alliances, these competencies are vital. Especially in the political realm, it is dialog or death," he says.
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