Traditional models of strategy making don’t take advantage of what the age of the internet makes possible in terms of sourcing innovative ideas. That’s partly because many executives take a narrow view of the process, fearing that if they open it up they will muddle decision-making. They may also fear that they only will expose their ignorance by reaching out for ideas. And finally they worry that the whole process will become unmanageable. Leaders who fall into these traps lose out. Instead, CEOs should map their process out to see where they’re short of ideas — most likely in the information-gathering stage — then treat that part of strategy-making as a process of exploring and discovering what they don’t know, like an exercise in innovation, and, finally, embrace the volume and complexity of the ideas they receive.
Through most of the 20th century, business strategy was usually developed by a small executive team who sat down to work out solutions to “strategic issues.” Typically, this team was composed of the CEO and his or her direct reports. They analyzed trends and changes, reviewed competitor activity, examined financials, and devised solutions, which they captured in a strategic plan.
It’s no longer feasible to rely on this industrial-age way of developing strategy. The internet age has produced highly informed, extremely well-connected user communities that have ever-stronger opinions about what businesses should do. The confluence of high-speed internet, social media, sophisticated search and mobile connectivity has given those users unprecedented access to knowledge, choice, and influence. Small wonder that senior executives at Proctor & Gamble have described the old top-down approach to innovation and strategy design as a “broken model.”
So why do so many companies cling to it and how can they make the shift to what has been described as the “participation age?”
There are basically three barriers trapping executives in the old model:
- A narrow view of the strategy process. Paul is founder and CEO of a business that makes complex communication cables for the defense, aerospace, telecommunications, and transportation industries. When I asked why he didn’t use broader participation in designing his business strategy, his response was immediate. “We’re not going to have strategy by popular vote.” This blanket response comes from a narrow view of the strategy process. What Paul hasn’t realized is that participation is not the same as decision-making.
- Fear of losing face. Ashok heads up a government-owned waste-disposal business that operates a landfill site. It takes in all types of rubbish, from green waste to asbestos. Ashok’s business environment is far from stable as there’s increasing pressure to reduce and recycle waste. At the same time, his landfill site will be full within the next decade and other sites are difficult to find. Valuable ideas about the future of the business and its mix of activities are hot topics of conversation locally and online – coming from environmentalists and hard-nosed local businesspeople. When I suggested he might tap into their ideas via participative strategy he half-jokingly replied, “People might think I don’t know what I’m doing.” For Ashok, the fear of loss of face outweighs the benefits of accessing potential solutions.
- Fear of process overload. Can you have too many ideas? Some executives think “yes.” Managing people’s suggestions takes time – time to collect them, time to sift through them and time to report back to contributors. Maureen heads up a government business enterprise issuing motor vehicle and trade licenses. When I suggested that she try participative strategy design she expressed this risk: “That could let the cat out of the bag. It will take an enormous amount of time to manage – how would we process all that information?”
There are three ways CEOs and other senior executives might overcome those barriers and shift to adopt a more participative approach to strategy.
Map your strategy process.
The strategy process involves at least four stages. Two of these, strategic analysis and idea generation, feed into the third, strategy selection. These three constitute strategy design. The fourth is strategy execution. Of course, there are feedback loops in all of this.
CEO Paul’s fear springs from his narrow view of the strategy process. He sees it mainly as “selection.” So, if you’re in that boat think again. Participative strategy does not remove the power of selection from decision makers; it simply hands them a richer field of options, especially in the idea-generation phase.
So, step one, map out your strategy process and determine where you lack innovation and ideas. This is where participation may be most beneficial.
Name your weakness.
Strategy-making is a collaborative process of discovery. It’s in what you don’t know much about that you’re likely to find the best answers.
Consider the case of Rachel, the CEO of a government-owned business that runs the state’s lottery. She wasn’t sure which way to go so she assembled her new board to identify industry changes and trends and to explore strategic options. But she also included the executive team and other staff members in a session of 26 participants. It was called a “blues skies session.”
Rather than pretending to know everything, Rachel actively canvassed for ideas that could be fed into her organization’s strategy process. Did she look like she didn’t know what she was doing? On the contrary – Rachel’s inclusive and participatory process showed leadership and energized the planning process.
Planning for processing.
Once you accept that strategy is about discovery, the next step is to embrace the complexity and volume of ideas. Strategy-making should not be seen as a repeatable, controlled business process, but rather as an exercise in innovation. A good example is supplied by Megan, general manager of a regional city council, who saw giving up control as an opportunity for fresh thinking. She and her team had been producing strategy documents mainly focused on addressing state-government requirements. They were dull, box-ticking exercises that lacked innovation and conviction.
To change this, Megan set about involving the community in generating options for the council’s strategic plan. She devised a clever table with the council’s key stakeholders on the left side and the method of engagement across the top.
The methods included online engagement, summits, forums, special meetings, and surveys. One was a “deliberative engagement process,” whereby 50 residents — randomly selected to represent diversity across the region — participated in a community panel to help define the council’s future vision.
Each was tailored to a stakeholder type, e.g., local business or senior citizens, and each included a plan for processing and categorizing the ideas generated through that engagement. An evaluation team was employed to code and categorize responses, collate statistics, and present a summary of the ideas with the most traction to the executive and councillors.
As Megan reports: “We’ll never go back to the old ways. The new, participative approach has given us confidence that we’re delivering what our citizens want as an executive team. And the community’s understanding of our strategic plan has led to easier execution.”
. . .
Your strategy design and execution environment has changed with the advent of the digital age. People are used to forming and expressing opinions on everything – and your business is no exception. But this is a good thing: The strategic insight of the marketplace has become a vast resource waiting for you to tap into. By accepting the new reality you can gather ideas from a wider pool of employees along with key stakeholders outside the organization like clients, suppliers and the community. It’s not always going to be easy — we’re still in the early stages of getting this right — but keeping up with the explosion of information, and the increased complexity it brings, is the strategic challenge of our time.
Leave a Reply