Open Strategy

Professors Christian Stadler, Julia Hautz, Kurt Matzler, and Stephan Friedrich von den Eichen describe open idea sourcing. It is a centuries-old method that involves varied groups of insiders and outsiders. They enhance their facts and data with step-by-step frameworks for brainstorming, strategy jams, contests, and competitions. All of which are meant to encourage broad opinions and diverse thought in the service of innovation.

“The wisdom of the crowds” matches or exceeds that of experts.

Sailors had a tough time calculating longitude until the early 1700s. As a result of the navigational errors, many ships were lost. Until the British government launched an open contest to fix the problem. Sir Isaac Newton was among those seeking a solution to the problem of calculating latitude. But in reality, the award was won by a clockmaker with no formal education.

“Open strategy is more vital than ever – but, thanks to executive hubris, still all too rare.”

Today, wise corporations and governments use crowdsourcing tools to create ideas, solve problems, and develop strategies.

Disruption, unprecedented competition and complexity render traditional strategic planning obsolete.

Attempts by a closeted team of senior executives to design, discuss, and successfully execute a business strategy often appear hopeless. A small group’s biases and blind spots are rarely overcome. The participants’ perspectives are too similar. And they are too receptive to one another’s opinions to generate new ideas, solutions, or tactics. Furthermore, they may prioritise cash cows and pet projects over innovation.

A tiny leadership team cannot recognise all aspects of a firm, or fast-changing market, much alone constantly changing client preferences. A top-down strategy necessitates the breakdown of large goals into smaller, more detailed, and actionable targets. Few executive-driven plans provide enough depth for that breakdown. 

Nokia used an open approach to strategy in its heyday. It unlocked the pooled knowledge, insights, and intelligence of thousands of brains by turning to its employees. This method revealed details that executives were unaware of. It produced a strategy that was ready for implementation and had the enthusiastic support of the workforce. Nokia’s crowdsourced strategy propelled the company to the top of its field. Then, the leaders returned to their old ways, and Apple and Google quickly crushed Nokia.

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The strategy involves asking, and answering, some key questions: “Where are you now? Where are you going? How will you get there?”

In general, asking as many people as possible gives the best results. Executives must reject the notion that their eminence endows them with superhuman intelligence and foresight. They must recognise that a modern organisation

  1. can only see around corners,
  2. anticipate disruption,
  3. identify the largest range of opportunities, and
  4. vet strategy before committing to it with different opinions from workers and outsiders.

For example, Barclays Bank uses an online “strategy jam” driven by a social networking and analytics platform. Thus they can use the ideas and thoughts of its 30,000 workers. Employees at Barclays adopted concepts from Domino’s Pizza app. In-app, it can notify you of each step to ordering the pizza from preparing to delivering your door. The app has been downloaded by over 9 million users. Barclays plays offence against digital disruption from fintech start-ups by discovering and embracing digital solutions. It guarantees that everyone in the company understands the strategy, and can put it into action from the start.

Employees, consumers, specialists, and members of the public can use an open strategy to get different opinions and experiences. Wise businesses prefer transparency, but when it comes to privacy, it needs some restrictions. 

Privacy restriction in open strategy

When the Canadian mining company Goldcorp hit a brick wall in its prospecting, for example, its directors made the full data set available to the public online. It provided a reward to anyone whose advise resulted in new gold discoveries. A total of 1,400 people took part, finding 110 drill locations and producing eight million ounces of gold!

Contrast Goldcorp’s strategy with that of GE’s Jeff Immelt. Immelt took a once-thriving, dominant company and, by limiting major strategy choices to the C-suite, made a series of disastrous actions. As much as 90% of corporate strategies planned by executives fail. When executives meet behind closed doors to negotiate strategy, they almost always stick to the current system. However, differentiation is required for competitive advantage. Leaders expose their blind spots by rejecting outside opinions.

Many corporate disasters can be traced back to organisational divides and internal competitiveness. Your teams do not share information while they compete. Open strategy gathers ideas from the firm’s heart and brings your staff together. Open strategy avoids the trap of benchmarking against the usual suspects, which adds to stagnant thought, by including employees, customers, and outsiders.

Before embracing an open strategy, assess your readiness.

Executives who enjoy jazz improvisation will certainly welcome the ambiguity of open strategy. Those who seek to put a good concept into action rather than identifying reasons why it could not succeed may be more open-minded. Open strategy will be appreciated by executives who welcome incidental interactions that invite creativity. It will benefit leaders that seek partnerships, encourage change, and believe people can learn and grow.

Consider the following: When you have a problem, do you immediately try to solve it, or do you consider who you should solve the problem with? Do you jump to conclusions when faced with difficult questions, or do you wait for others to weigh in? Do you prefer to keep or share information? Or do you prefer to be in control of situations, or do you prefer to be uncertain?

Positive responses to the second portion of these and comparable questions indicate readiness. If you don’t feel ready, create openness by connecting with your employees, reading more and discussing new ideas with diverse colleagues, reshuffling board members to increase diversity, and encouraging collaboration throughout your organisation.

Prepare your organisation for an open strategy.

Consider your organisation’s present level of autonomy, collaboration, inclusivity, and psychological safety. Without risking disruption, broaden your strategy talks as much as possible. Let employees know that leadership will continue to meet to discuss strategy and will have the final say, but that they can expect openness and involvement. Include outsiders whenever possible. They are likely to bring surprising ideas or recognise threats that you are not aware of.

Consider employing platforms and social networks for invitations to large groups in order to allow broader, dynamic, and simultaneous debate and data analysis. Most businesses use open strategy to increase strategy knowledge, buy-in, and execution; others wish to generate new ideas or better transparency. Adjust your approach to your objectives. The more people who contribute – including outsiders – and the more diverse the input, the more and better ideas there will be. The more personnel you involve, the more they will comprehend, accept, and contribute to the strategy’s implementation.

The US Navy use crowdsourcing through their multilayer video game MMOWGLI, which generates thousands of ideas and hundreds of actions address problems like how to combat crime off the coast of Somalia. The Navy states that any concepts created by the game are exclusively owned by the US Navy. And its lawyers are involved from the start.

Proactively engage in and encourage open strategy.

Clearly and precisely describe the problem for which you seek solutions. Don’t leave your goals open to interpretation, and don’t limit participation. If you crowdsource externally, like the US Navy does, set a reasonable compensation while capitalising on people’s motivation to compete and collaborate for the sake of the task and the reputational or financial benefits that victory may bring. Establish the regulations, such as who may participate, how you’ll choose the winner, and how you’ll distribute incentives, using a solid vendor platform or your own.

Disrupt yourself before others disrupt you.

Use the goal scenario process as an early warning system and in your yearly strategic planning. Combine it with a “Nightmare Competitor Challenge,” where you engage internal and external participants to expose your weaknesses and challenge your ideas and strategy. Use this war game strategy to explore trends and their potential consequences. Assign players the role of a hostile competitor out to destroy your firm. This motivates leaders to take action in order to avert threats.

Take a couple of days to meet in person off-site. Bring together CEOs, carefully selected staff, relevant external experts, customers, and potential disruptors. Articulate the patterns you want to discuss and divide the group into small groups to produce suggestions that the entire group will then evaluate and rank. Request that these teams create business models for the top-ranked ideas, and then use those models to construct strategy. 

Consider using contests and gamification to crowdsource the creation of business models. Allow others, both inside and outside the company, to discuss your business model, develop ideas, and make forecasts to inform your strategy in ways you may not have considered.

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