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Between 50 and 90 percent of the time, strategy failure is due to issues in execution. Given the vast resources companies invest in formulating strategies, this is a disheartening statistic. However, Christian Stadler, a professor at Warwick Business School, suggests that the solution to strategy formulation and execution issues lies in a more inclusive approach. He advocates for involving the entire organization in the strategy process. (As someone who wrote a book entitled Flat Army, I couldn't have agreed more with him.)
By democratizing the strategy process, businesses can secure enhanced buy-in from employees, who are ultimately the ones implementing the strategy. When employees are included in strategy development discussions and planning, they naturally assume psychological ownership of the strategy. This approach can alleviate common issues like employee or leadership resistance to strategies they dislike and confusion over how to convert a strategy into operational action.
Stadler cited outcomes from companies that have adopted open strategy processes, sharing that "70 percent of them said that opening up helped them with getting more commitment around strategic goals."
He acknowledged that such an open strategy process might be more compatible with companies that lack hierarchical structure.
Hierarchically structured organizations may resist the notion of open strategy due to established beliefs about who should participate in decision-making, namely senior leaders. In these instances, Stadler suggests emphasizing that those responsible for strategy implementation can significantly influence its effectiveness. He explains, "I think what resonates everywhere is the need to involve different important stakeholders."
Gathering Input During an Open Strategy Process
Collecting input can be accomplished hands-on, in person, or through digital tools such as various web-sharing platforms. The method best suited for you will depend on multiple factors.
Organizational size significantly influences the choice as well. Smaller entities might find it simpler to gather in-person input from a broad range of employees and departments. However, large organizations may struggle to gather feedback in person, particularly if they wish to solicit a wide array of opinions. Stadler advises a thoughtful consideration of the stakeholder count, noting that "even large organizations should include more people than usual, but it doesn't mean that everyone necessarily needs to be involved."
Another influencing factor is the stage of the strategy process. It is crucial to strike a balance between obtaining a broad perspective of needs across the organization and avoiding "analysis paralysis." The latter stages of the strategy process — those focusing on execution and implementation — will benefit from maximum involvement. However, the initial stages may be adversely affected by excessive participation.
Nightmare Competitor Exercise
Stadler suggests an activity that could prove beneficial in eliciting employee input in organizations of all sizes, known as the Nightmare Competitor Exercise. The foundation of this exercise is the inevitability of disruption for every company. Companies prepare for this disruption, framing it as either a threat or an opportunity. The Nightmare Competitor Exercise, inspired by Harvard Business School professor Clayton Christensen (who sadly passed away in early 2020), posits that presenting the disruption as a threat can rally the company against a common adversary.
Stadler describes the Nightmare Competitor Exercise as one that "brings together people from both outside the company and inside the company to develop a fictional company that would disrupt your organization if it existed."
Subsequently, mixed internal and external stakeholders teams are formed to construct business models in an engaging, Shark Tank-style workshop. Stadler insists on the importance of external stakeholder input, which provides impartial insights. Ensuring a balance between internal and external stakeholders prevents the external voices from being overshadowed.
The exercise's outcome not only provides decision-makers with insights into different departments' needs and issues but also helps individual employees comprehend the organization as a whole. In addition, they gain insights into how different departments and external stakeholders perceive the organization.
Collecting Valuable Input
Stadler alluded to a famous experiment conducted in Southern California that asked participants about their motivations for conserving energy. While most cited environmental concerns, the researchers then issued various prompts suggesting common reasons for energy conservation to different households. For example, one such prompt indicated that individuals were motivated to save energy because their neighbors were doing so.
Interestingly, upon subsequent surveys, the researchers discovered that many participants cited their neighbors' energy-saving habits as their primary motivation. Stadler explains this phenomenon, saying, "I don't think that people maliciously lied when they responded to the survey. They just didn't understand the implication."
This demonstrates why start-ups gather customer feedback through controlled experiments known as A/B testing. Rather than directly asking customers what they prefer, start-ups observe customer behavior to determine what truly works.
Stadler summarizes this strategy: "That's a much smarter way to get the kind of inputs that are truly helpful for you."
By adopting an open strategy process and implementing techniques like the Nightmare Competitor Exercise, organizations of all sizes can ensure that their strategic plans are well-conceived and well-executed.
More importantly, this approach allows employees to feel a sense of ownership and commitment to the strategy, thereby increasing the chances of successful implementation and ultimate business success.
Watch the full interview with Christian Stadler and Dan Pontefract on the Leadership NOW program below, or listen to it on your favorite podcast.
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