Open Strategy is about actively involving people outside top management in the strategy process.
This can include front-line staff and other management who are outside the top exec team.
It should also include people outside the organisation’s ‘four walls’ including – customers, partners and suppliers.
So why would you consider using it? How is the approach different?
The traditional approach to strategy is becoming ineffective.
In the typical top-down approach to strategy, management hold annual offsites to develop bold, innovative, new strategies based on their own experience, knowledge, and assumptions.
Although there might be some staff & customer surveys or data in the mix, it’s largely executives developing the strategy themselves.
Top management then communicate the strategy (or in some cases try and ‘sell it’) for the rest of the organisation to execute it.
But the problem with this is when staff are not involved in strategy, they don’t understand it or have genuine ownership to execute it effectively.
When external people like clients, partners and suppliers are not directly included in the strategy process in some way over and above surveys and feedback, blind spots and incorrect assumptions start to appear.
Some serious cracks are starting to appear in the traditional top-down approach to strategy
That’s why a shift to open strategy is now becoming so important.
Here are five reasons of what and why open strategy is so effective.
1) Staff have direct buy-in to execute the strategy
Involving different levels of frontline staff and management in the strategy process means there is no need to try and convince people of the strategy. Instead, they are already a part of it.
Gone are the days of trying to ‘sell’ the strategy from the top. It’s no longer effective. Strategy and execution should no longer be detached disciplines done by different people.
Like the authors of Open Strategy – Christian Stadler, Julia Hautz, Kurt Matzler and Stephan Friedrich von den Eichen articulate, if people don’t have a voice in strategy, there will be minimal psychological ownership or conviction to execute it.
An open strategy approach lets staff know they are listened to, involving them so they are committed to executing the strategy.
2) Clients, partners, and suppliers become more connected to the organisation.
When external people to the organisation like clients, partners and suppliers are included in the strategy process, they bring unique perspectives and help to identify problems that will have the greatest impact when solved.
If clients & partners are not involved in some way, it’s very likely several big insights and market opportunities will be missed.
By co-designing strategy with key external stakeholders, this only strengthens that relationship.
Just like applying design-thinking principles to strategy, by using an open strategy approach, clients know they are listened to and become more like an extended community of the organisation, rather than a transactional customer.
The open strategy process inherently uncovers & progress’s new business development opportunities. Clients and partners bring their biggest jobs-to-be-done to the table to be solved.
When involved in the process correctly, clients, partners and suppliers feel valued as they are helping shape the direction and outcomes of the problems the organisation is focused on solving.
3) Open strategy yields immediate & visible results.
In a survey of more than 200 top executives it found that:
- When Open Strategy was applied to just 30% of their organisation initiatives, those same initiatives generated 50% of revenues and profits.
- 70% agreed that an Open Strategy approach increased organisation-wide commitment to strategic initiatives.
- 72% stated that open strategy improved the communication and understanding of strategy.
One of the largest telcos in Europe – Telefonica experienced a 25% increase in employees’ sense of belonging by opening up their strategy process.
Organisations including the US Navy, NASA, Adidas, NATO, Barkley’s Bank UK and Microsoft are starting to use these principles in some of their key initiatives, with significant results.
Reference: Open Strategy Info
4) It removes blind-spots, biases, and incorrect assumptions
By including broader perspectives from outside just the top executive team, this helps remove blind spots, unconscious biases and incorrect assumptions that may blur the accuracy, value, and impact of the strategy.
It’s impossible for top management to be across all relevant perspectives and scenarios, especially in a world and environment where so many unknowns and ambiguities exist.
Having the voices of frontline staff and management, together with external clients, partner, and supplier perspectives avoids missing major market shifts and changes in customer sentiment.
It removes the pressure of executives thinking they should have all the answers, which we know is never the case.
5) Open strategy uncovers unique insights, to make the best strategy choices.
By opening up the strategy process, we get access to a broader and more diverse group of stakeholders. We get insights and wisdom from the crowds (Harvard Business Review – A User’s Guide to Open Strategy) that would never be considered just inside top management.
More than 81% of the most important inventions & insights of our time happened because people from seemingly unrelated fields got connected (What is Open Strategy – Podcast)
The open strategy approach brings in voices from other seemingly unrelated industries.
This brings the needed mindset shifts, diversity of thought, and we get strategy that is discovered from meaningful insights, not just developed from big ideas inside our four walls.
As a dedicated strategy advisory, we’ve been seeing the tangible first-hand results of applying open strategy principles with our clients. Open strategy extends our approach of using design-thinking based principles across strategy.
You get genuine buy-in from staff, customers and partners. ‘Selling’ a strategy is no longer required.
Designed in the right way, the approach does not compromise any competitive details or internal IP. Leaders become more of a facilitator role, but they still retain control and make the final decisions.
Don’t fall into the trap of just ticking-the-box with internal strategic planning.
If leaders don’t start to adapt, we’ll see this impacting the bottom-line of organisations sooner rather than later.
Start opening up your strategy. It’s here to stay. Don’t get left behind.
To find out how to start applying open strategy in your own organisation and leadership, check out our Strategy Assessment here.
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