In signal processing there's a measurement called Signal to Noise Ratio or SNR. A given 'channel' can only carry a limited, finite amount of information during a given time period and will have a particular SNR. Here's a practical example of SNR. Let's say you are talking on a phone to someone with a cellular phone. They're standing on a windy street. Some of what you hear is the wind blowing across the microphone. This is noise. Your voices are the signal. You can talk louder and that may help but as the wind gets louder you will have to start repeating yourselves in order to be understood. It will eventually get to a point, if the wind is strong enough, at which you will not be able to understand anything he/she is saying. As the noise increases, the amount of information that can be conveyed drops.
The same is true of political correctness. Have you ever felt you couldn't speak directly about a problem because if you did people would become offended or angry? In consequence they may dismiss what you're saying because their defensiveness will get in the way of them placing any value on what you're saying. This need to couch uncomfortable realities in niceties is a problem. All of the finessing that goes into our politically correct conversations is noise, preventing the information - that which is valuable - from getting through. This doesn't mean we should dispense with manners or politeness. As Peter Drucker says in his essay, Managing Oneself,
"Manners are the lubricating oil of an organization. It is a law of nature that two moving bodies in contact with each other create friction."
Rudeness or insensitivity are no more justifiable if done in the name of 'honesty'. Let's consider the following two approaches:
"Although it was a sound decision to delay the move on our process improvement effort until some of the uncertainty around our contracts and revenue was sorted out at the time, we really need to reconsider our position on this given the new competitive information we have..."
"We made a mistake in delaying this decision. We're now behind the eight-ball and haven't got the efficiencies we should have. Our bid on the such and such contract failed because we were too expensive, too inefficient. Now that we know this a) we'd better act to fix it and b) we need to challenge our thinking more. We shouldn't have delayed. What other negative outcomes are facing us now because of this inability to make tough decisions we seem to have? How are we going to learn from this?"
The first approach is soft and non-confrontational. No one could possible get offended. No one will feel any urgency to change. The sins of the past/present will be repeated in the future. You can bet on it. The honesty and directness of the second approach lets us see the problems so we can make the changes we need to. It also shows you have confidence in the maturity of your colleagues and that they are capable of confronting and dealing with reality - even if it's unpleasant.