Home
Deutsch space Search  Search
IMP THINKTANK    CONSULTING    IMPULSES    NETWORK   
IMP
space
space
space
 
space
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
space    
space
space
   
space
space
space
FEATURE JANUARY/FEBRUARY 2014
 
Professor Kurt Matzler on
 

OPEN STRATEGY

________________________________________________________________

Strategy work is in crisis. Roughly 90 percent of strategies that are created are never implemented. Many strategies are not worth the paper they are written on. They land in a drawer, prove themselves unrealistic when implemented or are already obsolete. Many strategies are also just completely ignored by employees. This obviously leads to a lack of implementation.
________________________________________________________________

A new paradigm in strategy work

A lot has happened since strategy management became a scientific discipline in the 1970. Tools such as the SWOT analysis, the experience curve, portfolio analysis, scenario analysis, and the balanced score card test (BSC) along with the concept of core competencies have made their way into countless company structures. And it's no coincidence. They are very old ideas. In fact, since the 1990s there haven’t been too many major breakthroughs in strategy research. Strategy development in most companies hasn’t changed at all in the last two decades.

Richard Whittington of Oxford University said that, "Strategy work was always seen as 'exclusive' or 'secretive' somehow." It was always reserved for top managers and strategies were therefore "top secret". But there seems to be massive change here at the moment.

Daimler, for example, used a social software-based Intranet platform to invite employees from all departments, business units and hierarchies to help develop new business models. They registered on the platform and presented their own ideas for the company. At the same time, the ideas of others were discussed, commented on, criticized and enhanced.

The result was compelling

  • Over 30,000 employees took part
  • More than 2,000 ideas for new business models were developed
  • Over 35 of those made it into the testing or implementation phase; among them was the now popular mobility concept car2go

Red Hat, a leading American open-source software company was very similar. The strategy process was completely open and every employee was given the chance to contribute over the company Intranet.

Bachmann, a mid-size Austrian company, also gathered valuable feedback of this kind for their strategy work. Using an Intranet forum, all Bachmann employees were invited to discuss and debate strategic topics and issues about the future. The response was overwhelmingly positive.

Increasing numbers of companies are experimenting with these types of approaches to strategy work, where terminology ranges from "Democratizing strategy", "Open source" and "Strategy as a practice of thousands" to simply "Open strategy". The most important driver of this movement is Web 2.0. Internal collaboration is becoming simpler with blogs, wikis, social networking and other Web-based tools, which allow participants to develop ideas and concepts together. More and more companies are using these types of approaches in their strategy work. According to a McKinsey study, in 2011 over 70 percent of companies that were using social software used it specifically to scan the "outside world" for important developments with the goal of generating their own new ideas. More than 40 percent of those companies even developed strategy plans as a result..

What are the advantages of social software-based strategy approaches?

On the one hand, they enable a company to capture its own knowledge base. In his bestseller "The Wisdom of Crowds", James Suroviecki wrote about the phenomenon of collective intelligence. Given certain conditions, a group of average people are more intelligent than the best expert on a subject,
in particular if

  • there is enough cognitive diversity in the group
  • if individual members of the group can independently express their opinions without peer pressure or pressure to conform
  • if decentralized wisdom is made available to everyone
  • and if this knowledge can be effectively aggregated

In traditional companies, however, these preconditions are very rarely met. Historically, companies and organizations treat knowledge in a hierarchical manner. That is all being changed by Web 2.0. Everyone in the company, regardless of position, hierarchy or personal background, may have valuable knowledge in terms of strategy. Using social software-based strategy work, this knowledge can be effectively and efficiently consolidated.

Another decisive advantage of open strategy lies in the commitment to implement. In traditional strategy work, the people who are faced with implementing the strategy were often not involved at all in its development. Resistance to the change emerges from the lack of understanding of its purpose and a lack of identification with its contents. According to management guru Henry Mintzberg, however, strategy is a process of social interaction based on COMMON understanding and SHARED perspectives. One main cause of inadequate implementation therefore lies in the fact that: "The implementers don’t own the strategy".

Open strategy has potential

The knowledge of an organization is first made accessible and then through widespread participation on behalf of employees they are then able to identify with and commit to the process. Still, a number of questions arise:

  • How can a company protect itself from knowledge flight?
  • How do the decision-making and power structures change?
  • How do you handle contentious perspectives?

These are questions that strategy researchers and companies are going to have to face.

One thing should also be clear: Open Strategy does not relieve upper management from its primary task, namely making decisions and determining the right direction for the company. Open Strategy can HELP managers. The task itself, however, can not be TAKEN AWAY from them.

Dobusch, L. & Müller-Seitz, G. 2012. 'Strategy as a practice of thousands?' Academy of Management Best Paper Proceedings.
Matzler, K., Füller, J., Hautz, J., Hutter, K. & Stieger, D. 2014. 'Social media and open strategy: Towards a research agenda.' Manuscript, Dapartment of Strategic Management and Marketing, University of Innsbruck.
Matzler, K., Füller, J., Koch, B., Hautz, J. & Hutter, K. 2013. 'Open Strategy - a new strategy paradigm?' In K. Matzler, H. Pechlaner & B. Renzl (Eds.) Strategie und Leadership: 37-58. Wiesbaden: Gabler.
Mintzberg, H., Allstrand, B. & Lampel, J. 2009. Strategy Safari. Harlow et al.: Prentice Hall.
Newstead, B. & Lanzerotti, L. 2010. 'Can you open-source your strategy?' Harvard Business Review:October, 32.
Stieger, D., Matzler, K., Chatterjee, S. & Ladstätter-Fussenegger, F. 2012. 'Democratizing Strategy: How crowdsourcing can be used for strategy dialogues.' California Management Review, 54:4, 1-26.
Surowiecki, J. 2004. The wisdom of crowds: Why the many are smarter than the few and how collective wisdom shapes business, economies, societies and nations. London: Abacus.
Whittington, R., Cailluet, L. & Yakis-Douglas, B. 2011. 'Opening Strategy: Evolution of a Precarious Profession.' British Journal of Management, 22:3, 531-44.

space
space
space



Increasing numbers of companies are experimenting with "open" approaches to strategy work. The terminology here ranges from "Democratizing strategy", "Open source" and "Strategy as a practice of thousands" to simply "Open strategy".

The most important driver of this movement is Web 2.0.

 

 Kurt Matzler, IMP and University of Innsbruck

PROFESSOR KURT MATZLER ON OPEN STRATEGY

Kurt Matzler is Managing Partner at IMP and Director of the Institute for Strategic Management at the University of Innsbruck.

 

 

space
space
spaceHomespaceContactspaceTerms & conditions