Making strategy behind closed doors is a prescription for failure when disruptions are coming from all directions.

Formulating and executing a sound organizational strategy is complex.

Strategy is often made by elite teams and can thus be limited by their biases about competitors, customer needs, and market forces. And it can be an uphill battle convincing stakeholders across the organization to channel money, time, and energy in a new and unproven direction.

The alternative appraoch to strategy formulation and execution challenges may sound radical: the strategy process must be opened up. By adopting an open strategy, leadership teams can access diverse external knowledge sources and become aware of their biases, while also building buy-in to accelerate execution.

The question then arises, how can corporates open up the strategy-making process without losing control?

During our recent Innov8rs Learning Lab on Innovation Strategy, Leadership, Governance and Portfolio Management, Christian Stadler (Professor of Strategic Management at Warwick Business School and bestselling author) provided easy-to-follow guidance and key tools to implement it successfully.

Open Strategy: The Starting Point

During the 80’s and 90’s, Borneo experienced the largest amount of illegal logging in the world, with more wood coming from thatregion than from all of Africa and the Amazon combined. Dr. Kinari Webb, an American physician and environmentalist, traveled to Borneo during this period and quickly realized that the local people relied on cutting down trees to meet their needs. In response, she founded an NGO to stop logging.

Many NGOs set up in the West believe they have a one-size-fits-all solution to problems and often introduce these solutions without considering the local context. However, Dr. Webb took a different approach. She engaged in a process called “Radical Listening” by talking to about 400 people in the area and asking a simple question: what would it take for you, as the guardians of the rainforest, to protect it?

Through this process, Dr. Webb learned that the local people needed a solution to their medical problems. They engaged in illegal logging and other environmentally damaging activities to pay for medicines and medical procedures. In response, Dr. Webb founded “Health in Harmony”, an NGO that provides affordable healthcare to the communities in exchange for their commitment to protecting the rainforest. This program has successfully reduced deforestation and improved health outcomes for the communities involved.

The lesson learned from Dr. Kinari Webb's experience is that engaging with those responsible for implementing a plan is crucial to its success. This principle can be applied to the corporate world as well. Unfortunately, in many organizations, important decisions are made by a small group of executives at the top. This approach to strategy-making can lead to two major problems:

  • Firstly, the ideas generated this way may not be innovative or inspiring. When the same people work together day in and day out, they're more likely to think alike.
  • Secondly, even if a well-developed strategy is formulated, it may fail during implementation because those responsible for execution are not prepared or invested in its success.

The good news is that you can overcome these problems by involving people in the strategy-making process. Similar to Dr. Webb's approach in Borneo, organizations can benefit from finding ways to involve a larger group of people and give them a voice. By doing so, diverse perspectives and fresh ideas can be explored. Additionally, involving those who will execute the strategy from the beginning can bridge the gap between development and execution, ultimately leading to more effective implementation.

“When people are involved in the strategy-making process, they can better understand what the strategy means for them. It also provides the opportunity for cross-functional discussions, preventing employees from feeling that decisions are being imposed upon them. And that's a massive advantage for the overall success of the business".

Are You Ready To Open Up Your Strategy?

Christian reports that corporates with open-minded leadership have over 50% of all strategic initiatives open. It follows that to unleash and harness the power of open strategy within your organization, as a leader, you must be prepared for it. If you're considering open strategy but aren't sure if you're ready to implement it, here are four questions to ask yourself to gauge your readiness:

1. Is Your Style More Like Miles Davis or Johann Sebastian Bach?

If we were to compare Miles Davis and Johann Sebastian Bach in a corporate context, we could say that the main difference between them lies in their approach to creativity and innovation.

Miles Davis was known for his innovative and experimental approach to jazz music. As he explored new sounds and techniques, he constantly pushed the boundaries of the genre. In a corporate context, this could be seen as an entrepreneurial mindset, always seeking out new opportunities and taking calculated risks to stay ahead of the competition. If you're more like Miles Davis, you're used to improvising, shifting, and adapting to what happens.

On the other hand, Johann Sebastian Bach was a master of classical composition who adhered to strict rules and conventions. He didn’t often stray from established musical forms but instead found ways to innovate within them. This approach can be compared to a more conservative, structured method in the corporate world, where adherence to established best practices is valued to optimize existing processes. And so, if you’re more like Bach, you’re more comfortable in a structured world that can be planned and neatly organized.

Miles Davis' innovative and risk-taking approach contrasts with Johann Sebastian Bach's structured and conservative approach. Those who lean towards a Miles Davis mindset are more likely to adopt an open approach to innovation. In contrast, those who lean towards a Johann Sebastian Bach mindset may prefer a more structured and rule-bound approach.

2. Are You a Prince of Serendip?

Opening up the strategy also means being open to unexpected opportunities and discoveries. This requires adopting a "prince of Serendip" mindset, which involves being receptive to new ideas and experiences and recognizing the potential for innovation in surprising places.

In "The Three Princes of Serendip", a thousand-year-old Persian fairy tale, the main characters make fortunate and unforeseen discoveries by chance or accident. Translated into a business context, a "prince of Serendip" can identify and capitalize on unpredictable discoveries, whether they result from chance encounters, experiments, or exploration.

Leaders who embrace this mindset are more likely to identify fresh opportunities and stay ahead of the competition. Adopting an open strategy-making process entails being open to unanticipated possibilities, as fixed and rigid ideas can hinder progress. Only by embracing unexpected opportunities can the power of open strategy be unleashed.

3. What Do You Think of Pirates?

The NASA Pirates are an excellent example of how allowing employees to do slightly unconventional things can lead to better results. The NASA Pirates – a group officially disbanded in 2002 whose effects still reverberate – were a group of engineers who challenged the traditional practices at NASA. They introduced new, unconventional, and unusual ideas that improved NASA’s processes and technologies. This story holds important lessons for today’s organizations.

The “pirates” are individuals embedded in operations who understand looming challenges and have the expertise and motivation to seek and create better solutions. Leaders should allow their “pirates” to take slightly unconventional actions that diverge from the usual practices to drive success. In turn, this will foster creativity and innovation. When employees are given the freedom to experiment and take risks, they’re more likely to come up with new and groundbreaking ideas that help the organization spot emerging problems and create radically new solutions, ultimately keeping ahead of the competition.

4. Can You Match Adele's Talent (not as a Singer)?

Adele, the famous English singer and songwriter, is well-known not only for her voice but also for her recognition of the people behind the scenes who contribute to making her music and shows outstanding. Adele works in an industry where, typically, the attention is catalyzed by the “star”, the person on the stage. And this is not uncommon in many corporates where the CEO seems to run the show themselves. However, you need to move away from this self-centric role to open up your strategy.

Business leaders should follow Adele's lead in acknowledging the work and value of all their employees. This approach can create a positive work environment, foster teamwork and collaboration, improve employee morale and job satisfaction, and build trust and loyalty. In fact, when employees feel valued, they’re more engaged and motivated, resulting in better performance, higher productivity, lower turnover rates, and improved retention of top talent.

Once you answer the four questions that define how ready you are to open your strategy, the next step is to determine how to open it up. We'll dive into this in the following paragraph.

Opening Up The Strategy: The Nightmare Competitor Contest

According to Christian, the development of strategy can be broken down into three phases. A corporate may want to open up its strategy to determine its direction (idea generation phase), formulate the details of the strategy (formulation phase), or mobilize its staff around the strategy (execution phase). The amount and type of data required for each phase may differ depending on the overall goals. However, sharing private information may hold corporations back from opening up their strategy.

Fortunately, tools such as workshops can help prevent the disclosure of this information. Workshops bring together a diverse but small group of people, which can prevent the leakage of sensitive information, as the scope of the participants is limited. Ideally, workshops should include both external participants who can offer fresh and different thinking and internal participants who are knowledgeable about how the business operates.

One such tool is the Nightmare Competitor Contest. This workshop-based tool can aid in opening up and improving the introduction and implementation of new ideas. It approaches disruption as a threat and aims to provide a solution to handle this threat. Setting it up is fairly simple and can help your corporate stress test its strategy and immediately identify potential threats. Follow these steps to get started:

  • Invite a diverse group of participants: it's essential to create mixed groups with half outsiders and half insiders. As such, invite 50% of the participants from outside and 50% from inside representing different parts of your organization and create subgroups accordingly.
  • Set the goal: the goal is to create a nightmare competitor. Encourage participants to think creatively and develop ideas that could potentially destroy your corporate, should they materialize.
  • Follow a structured process: every subgroup is to present their idea and, after a round of voting, the subgroups with the most voted ideas are to develop detailed business models for a nightmare competitor. Repeat the presentation and voting process at the end.
  • Analyze the result: by the end of the contest, you'll have a detailed picture of what these imaginary but potentially dangerous competitors could do. Use this information to stress test your current strategy and identify potential threats.
  • Take action: with the insights gained from the Nightmare Competitor Contest, your organization can stay ahead of the competition and be better prepared for potential threats. And so, depending on the outcome, corporates can either start a new business initiative or use the results as a reflection point to refine their strategy.

In Summary

It's becoming increasingly clear that corporates can reap significant benefits from opening up the strategy-making process. In fact, an open strategy can be precious when they face disruptive threats and are contemplating transformational change, as it's much easier to navigate disruptions when the strategy is developed in collaboration with those who bring diverse perspectives and ideas to the table.

By involving people from outside the leadership team - and even outside the organization - in strategy-making, corporates not only gain access to a wellspring of fresh ideas but also mobilize and galvanize everyone involved. This makes execution an integral part of the strategy. The best part is that all of this can happen without losing control over the strategy-making process.

Open strategy means giving people the opportunity to voice their opinions and feelings. As a leader, you will naturally respond to some of these suggestions, including some that you may have never considered before. However, it's important to note that, eventually, the leadership team still calls the shots. Decisions are not made ‘solely’ by a vote.