A GUIDE TO OPEN STRATEGY
Authors, Christian Stadler, Julia Hautz, Kurt Matzler, and Stephan Friedrich von den Eichen | Adapted from HBR
“Strategy is developed in three distinct phases, each of them requiring a different solution to get the balance between openness and secrecy. Whether a company wants to open up in order to determine the direction it wants to take, work out the exact details of their strategy, or mobilise staff around its strategy, strategy making will involve different numbers and types of people, and requires different amounts and type of data.”
The framework can benefit strategy-makers in utilising outside perspectives while maintaining appropriate levels of secrecy.
A Framework for Strategists
Companies benefit most from a large crowd of very diverse participants in the early stages of strategy-making because this offers new thinking and legitimises a new idea. This helps executives to unite around a particular direction. Participants here don’t need very much company-specific information to get the ideas flowing, making secrecy easy to maintain in this phase.
In this phase, openness requires you to release an ample amount of information to get meaningful and valuable outcomes. You will want to select your own staff and perhaps include people from outside the organisation.
In the final phase of strategy-making, companies have to share company-specific knowledge to be able to extract the main benefits, understand the strategy and win buy-in from those who implement it. Secrecy becomes difficult in this sharing but the benefits of openness here far outweigh the dangers. Although competitors might learn your plans, they are at this stage committed to their own. Secrecy is also less of an issue as the main participants here should be employees and business partners rather than outsiders.
Here are some open strategy mechanisms which can help executives choose the right tools for engaging with outside participants.
When strategic challenges are complex, online contests typically prove most productive without established best-practice approaches and when companies don’t know which precise combinations of skills or areas of expertise are required to succeed. Opting for a large crowd increases the chances of spotting anomalies and lends legitimacy to new ideas, facilitating collective decision making.
This process allows you to derive a shared understanding of emerging developments. It is useful if you are looking for new ideas which require you to share some sensitive insider-knowledge, as the tool has been designed with the intention to achieve maximum diversity with relatively low numbers of selected participants.
“Business Logic Contest”
The Business Logic Contest helps leaders to think about the “what” and “how” of strategy together — to elaborately integrate the customer interface to value creation with value capture and its process. This ensures collective engagement in developing a unique proposition that works coherently.
Social Network for Employees
Internal social networks can be used effectively here to mobilise the workforce. Simple actions help to create momentum such as, emphasising social element, establishing clear rules, communicating what exactly will happen with contributions, and strong moderators. Leaders also have to take interest since employee participation, acceptance and satisfaction rise substantially.
Even though jams are primarily used to mobilise, it can have effects on the detailed direction. An online event called a strategy jam helps ensure that people actively buy-in and champion it, providing an opportunity for large groups to engage in moderated strategy discussions. This meant that they could all understand what the shift could mean for them.
It is easy for executives to hold back when confronted with the risks of open strategy. But it is becoming clear how much companies can gain from the wisdom of the many, changing engagement with customers, innovation, and many other domains. Executives should no longer be afraid to open up.