Release strategy from the grip of a corporate priesthood
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
As companies blundered towards new ways of working during the pandemic, many turned to staff for help. Do you want to return to the office? What do you need to do your job better?
Even now, though, few businesses dare pose big strategic questions to their employees, let alone to their suppliers, customers, or competitors.
That could be a mistake. Volatile market conditions have created threats and opportunities that simply did not appear in the strategy plans that executives shredded in early 2020. Lockdown gave employers and workers a crash-course in how to use new collaboration tools, from online polls to digital whiteboards.
So why not apply this experience to something more fundamental than the right office layout or the next brand campaign?
The short answer is fear. To directors and senior managers, strategy is a sacred preserve, formed by a select corporate priesthood through the time-honoured rituals of closed-door away days and board meetings. Open strategy-setting to the masses, they fret, and chaos is bound to ensue.
“It’s a board’s duty; it’s the CEO and executives’ duty,” responded Tobías Martínez, chief executive of Cellnex, the Spanish telecoms infrastructure group, when I asked for views about the value of “open strategy” at a recent conference organised by Iese Business School. “This is a company, not a club where you ask for the agreement of the membership.”
He is not alone. Most senior leaders open less than one-third of their strategic initiatives to people outside the executive team, according to a recent survey. At the same time, though, those initiatives account for half their companies’ revenues and profits. That gives advocates of open strategy hope that they can prise open the boardroom door further.
“Often, the senior people have this problem that they live in a bubble. Those in the level below them want to please them,” says Christian Stadler, strategic management professor at Warwick Business School, who conducted the survey with colleagues. “How do you get through to someone who is even further away?”
In their new book Open Strategy, Stadler, Julia Hautz, Kurt Matzler and Stephan Friedrich von den Eichen offer plenty of ways.
For instance, Barclays’ retail bank consulted groups of senior staff and frontline employees in 2012, asking the latter what the bank should look like in eight years. Senior leaders might have analysed only traditional rivals. After involving all 30,000 staff in a two-week “strategy jam”, the wider group came up with unorthodox challenges such as why, if Domino’s Pizza could track customer orders, Barclays could not keep borrowers up to date with the progress of their loans. The exercise helped give birth to new digital products and platforms.
Kinari Webb, co-founder of a non-profit called Alam Sehat Lestari, turned to Indonesian villagers to tackle the problem of illegal logging in Borneo. The locals’ unexpected solution was to gain more access to affordable healthcare, to stop them having to fell the rainforest to pay for treatment.
Open strategy even helped Nato and the EU set their security priorities in an online session during lockdown last year. That they managed to co-ordinate 2,800 participants, including ministers and generals, shows that one common fear — that involving more people will bog down progress — is groundless. Properly controlled, says Stadler, open strategy can actually be “a quicker way to find stronger consensus”.
Speaking at the Iese conference, Baroness Denise Kingsmill, a director of Inditex, owner of retailer Zara, agreed companies needed to consult widely with, say, non-governmental organisations. “It would be foolish not to open up your strategic direction to those sorts of influencers,” she said.
None of this is simple, or cheap. Think again if you hope open strategy will put consultants out of business. Structuring a strategy jam, and collating the thousands of ideas it may produce, requires help to prevent it becoming a messy free-for-all (two of Open Strategy’s authors are consultants). There are also exceptions where opening up is unnecessary, such as when core businesses are not threatened by disruption, or inappropriate, as in merger discussions that prudence dictates should involve only a small group of intimates.
Senior executives should not assume, either, that a strategy will magically emerge from the crowd, absolving them of responsibility. Cellnex’s Martínez is not wrong about his duty. As Stadler told me: “We’re not saying this turns into democracy: the final say still rests with managers.”
The big difference, however, is that once involved, staff are more likely to support the strategy that emerges. No amount of exclusive top-down planning guarantees that outcome.
Twitter: @andrewtghill
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