Open, Adaptive Strategy Make employees partners in the strategy process

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Strategic planning is evolving, with new approaches that are more inclusive and adaptable. Traditional, closed strategies limit employee involvement, leading to blind spots and disengagement. Organizations can create more effective strategies through broader participation and continuous adjustment by adopting open and adaptive strategy approaches.

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One approach is called open strategy, and the other is adaptive or agile strategy.

Open strategy is fundamentally about recognizing that no single CEO or small strategy team can know it all, especially in a complex, rapidly evolving world, and that more employees need to be involved in strategy formulation.

Adaptive or agile strategy, on the other hand, is about recognizing that separating strategy formulation and implementation into two sequential phases is a poor approach in a fast-changing, complex environment and that a more dynamic, adaptive, agile approach is needed where formulation and implementation is an iterative, interactive process.

Let’s look at the two innovations in more detail:

Open Strategy

Traditional strategy formulation and implementation

There are many different definitions and perspectives on strategy reflected in both academic research and practice, but in whatever way it is defined or executed, formulating an organizational strategy is traditionally a job reserved for the CEO, top management, or a select strategy team.

This can be a somewhat secretive process in many organizations, and even the strategy itself may remain secret.

Once the strategy team has formulated the strategy, they present it as a fait accompli and impose it on lower levels of the organization.

Moreover, the strategy is frequently only shared with senior management and middle management. Employees lower down the organization are not briefed at all. Lower-level employees play no part in its formulation and no conscious role in its implementation.

The problem with this approach

In today’s complex, fast-changing world, it is a daunting challenge for a single CEO or small elite team to formulate a good strategy, never mind prescribing its implementation. The business environment is too complex.

Although the CEO and the senior management team may understand the business and the business environment, they will have blind spots.

They may be unaware of rising new competitors or emerging disruptive technologies, and even when they are aware, they may not appreciate their relevance or their threat.

They may also be subject to various cognitive biases. For example, groupthink, wherein a desire for harmony or conformity they make irrational or dysfunctional decisions, or group polarization where they make decisions that are more extreme than their initial inclinations.

There need to be more perspectives brought to bear. More people need to be involved. There needs to be more cognitive diversity. There needs to be more interaction – the strategy needs to be talked about.

Not involving employees is not only a waste of talent, but as the people involved in implementing the strategy are not involved in its formulation, they will not feel any ownership and may lack the intrinsic motivation to see it through.

It is not just that the strategy itself may be a bad one or flawed in some way. The strategy could be a good one, but the organization may not have the capability to see it through, or internal divisions and politics may undermine it severely.

You need employees not only to be involved but also to speak up and express their opinions and doubts without fear of retribution.

They also need to be able to convene together in such a way as to avoid group cognitive biases such as groupthink and group polarization.

The Open Approach

In a handful of organizations, the approach to strategy has been transformed.

Strategy formulation is no longer closed but open. Employees from all departments and business units have the opportunity to contribute to the organizational strategy.

In some cases, customers and partners are also invited to participate. Not only can employees now contribute, but in participating, they gain a sense of ownership and are thus more motivated to make it a success.

It is, in fact, more than this – they can now contribute to its formulation and implementation on a day-to-day basis – they can live and breathe the strategy.

This approach to strategy is called Open Strategy.

At its heart, Open Strategy is merely about involving more people in the strategy process regardless of how it is formulated and implemented.

Three reasons:

1. 1. To improve the strategy itself
   2. To improve the way that it is implemented
   3. To ensure ownership by the employees

Open Strategy Spectrum

In practice, the formulation and implementation of a strategy are neither fully open nor closed. They lie somewhere on the spectrum between these two polarized ends—open and closed.

Where an organization chooses to sit on that spectrum is a function of its unique context, the type of business, its size, and the culture of the organization, but it is probably more likely to be determined by the leanings of the CEO or top management.

A large traditional industrial organization may choose to work closer to the closed end of the spectrum. In contrast, a small, agile startup in the software industry may decide to work closer to the open end of the spectrum.

Who to involve in the process

A broad range of people, including the organization’s seemingly closed-minded, non-critical thinkers, need to be involved in the conversations.
Hopefully, this is not true of the senior managers themselves. If they are closed-minded, though, it is unlikely that they will be open to taking an open-adaptive approach to strategy development in the first place,

How else do people learn? How else do they get to feel part of the sense-making process and not feel bitter and resentful that their opinions have not been taken into account or at least that they have been listened to?

Giving people space to voice dissent is good – not something to be swept under the carpet.

Top Management Responsibility

Open Strategy does not relieve senior managers from their responsibility for developing and implementing the strategy.

They involve more people in the sense-making phase, bring in a broader range of perspectives, and see the process as more dynamic than they did in the past.

Senior managers still make the final decisions. The retention of this responsibility should be made clear at the start of the strategy development process.

Adaptive Strategy

Adaptive Strategy is based on the philosophy and concepts of Agile Software Development.

Agile software development describes a set of principles for software development under which requirements and solutions evolve through the collaborative effort of self-organizing cross-functional teams.

It advocates adaptive planning, evolutionary development, early delivery, and continuous improvement, and it encourages rapid and flexible response to change.

These principles support the definition and continuing evolution of many software development methods.

Credit: Wikipedia

Traditionally, software development is a linear process. An elite team of systems analysts gathers requirements and develops the software specification, which they then pass on to a development team for implementation. The software application is then developed before being delivered to the customer.

There are several problems with this traditional sequential methodology that I won’t go into here, but hopefully, you can see the parallels between software development and strategy formulation and implementation.

Long-term planning is irrelevant, if not a hindrance.

Strategy should not be about the realisation of prior intent, but rather emphasis on the importance of openness to accident, coincidence and serendipity.

Strategy in this case is the emergent resultant.

Successful strategies, especially in the long term, do not result from fixing an organisational intention and mobilising around it, they emerge from complex and continuing interactions between people.

Credit: Mee-Yan Cheung-Judge

Strategy formulation and implementation are traditionally conducted in three independent, sequential phases.

• The strategy is formulated
• The strategy is “sold”
• The strategy is implemented

This is a simple linear view of strategy development that causes many problems.

The critical problems of separating formulation from implementation:

1. Separating strategy formulation and implementation kills momentum
2. The implementation team fails to buy into the strategy as it is not involved in its creation
3. The perfect strategy is created that in practice, is unimplementable
4. Internal politics kills or incapacitates the strategy
5. The strategy is not readily adaptable in the face of change

Strategy formulation and strategy implementation are intimately entwined. They should not be separated.

Strategy formulation needs to morph and adapt in response to change continually, and implementation needs to follow.

Strategy development should be alive – and dynamic.

Open or Adaptive or both?

Although an open approach to strategy formulation can still be traditional in the sense that implementation follows formulation and not need to be agile in the implementation phase, agile strategy pretty much demands that the strategy is also open. How else can adaptive strategy be agile, dynamic, and adaptive if all employees are not involved?

Fusing these two ideas into a single open-adaptive strategy approach makes enormous sense.

The Role of the Knowledge Café

With these considerations in mind, one of the best ways to make sense of the world, to better formulate or implement a strategy, is to bring a diversity of people together and engage in open conversation.

The Knowledge Café is an ideal tool to help achieve this.

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To apply these innovations, we need to involve more employees in strategy discussions and make strategy development an ongoing, flexible process. We should also encourage open dialogue, listen to diverse viewpoints, and adapt as situations change. These steps will help build a strategy that is resilient, inclusive, and aligned with real-world dynamics.

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Resources

• Blog Post: Open Strategy by Prof. Kurt Matzler
• Harvard Business Review: Can You Open-Source Your Strategy?
• Research Paper: Open Strategy: Consolidated Definition and Processual Conceptualization
• Harvard Business Review: Executives, Let Stakeholders Drive Your Strategy

Posts that link to this post

•  Strategic Conversations Have the potential to influence the future direction of an organization
•  Ownership, Not Buy-in We need to move from buy-in to ownership
•  Conversation Sharpens the Saw It is not a waste of time
•  The Four Levels of Knowledge Management The relation between Conversational Leadership and Knowledge Management

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