Employee-Generated Strategy

Tinfoiling writes:

The lowest employee on the organization chart has the greatest contact with the customer. But why are they the least consulted when it comes to any change in process with the customer?

My take: The reason, Gene, is that there is a lingering perception among many senior execs that only senior managers (can/should) set strategy.

A number of years ago, for a strategy consulting project I was leading (for a client we had already done work for), I put together a project plan that included interviews with a number of mid-level managers. My boss (the partner) asked me why I was planning to talk to “them,” and I said it was because “they” knew what the real issues were — with the firm’s customers, with the firm’s capabilities, and with the firm’s current strategy.

His response: “We’re not going to talk to them. Only senior execs set strategy.”

That was more than 10 years ago, and not a whole has changed. But it will.

While a lot of the discussion on the blogosphere and in the press focuses on the impact of social networking on the consumer landscape, less attention is being paid to how social networking — and the collaborative technologies that enable it — impact how we manage the organizations we work in.

Granted, there have been articles discussing the use of Wikis to enable team collaboration, but not a lot has been written about the impact on how corporate strategy is established.

One of the positive trends in the strategy thought-leadership world over the past few years has been the linkage of strategy to execution (e.g., Blue Ocean Strategy) and the need for organizational alignment regarding strategy (e.g., Alignment: Using The Balanced Scorecard To Create Corporate Synergies).

But most of the authors still start from a top-down perspective of how strategy is determined and decided upon. So we end up with recommendations to create “chief strategy officers” to monitor and align strategy development efforts — in effect (to create a visual), to manage the strategy waterfall.

This is going to change. Rather than create chief strategy officers — who serve as strategy state police, preserving the status quo, firms will change the way they formulate strategy in the first place. And “formulate” won’t even be a word used in conjunction with strategy, because it has all the wrong connotations.

Michael Raynor gets this. In his book The Strategy Paradox, he recognizes that the focus and commitment required to generate the highest returns (the hallmark of today’s strategy formulation approach) is in odds with an inherent inability to plan for an unknowable future. As a result, he advocates for the development of a new competency: “Managing strategic uncertainty through the creation of strategic options.” As David Newkirk writes in Strategy-Business:

As decisions move up the corporate hierarchy, executives’ time horizons should lengthen and their priorities should shift from managing commitments to building options on an uncertain future. “CEOs should not see their role in terms of making strategic choices — that is, commitments,” Raynor writes. “Rather, they should focus on building ‘strategic options,’ that is, creating the ability to pursue alternative strategies that could be useful, depending on how key uncertainties are resolved.”

As “decisions move up the corporate hierarchy”? Doesn’t sound like a lot of today’s firms, at least as it applies to strategic decisions.

Three factors are going to contribute to a new way of “doing” (avoiding that “formulating” word) strategy, which I think of as employee-generated strategy (think user-generated content, but much much better):

1) Technology.
The tools are out there — blogs, Wikis, organizational visualization tools, etc. I’m not sure anyone has quite brought them together in a way to support a new way of doing strategy, though.

2) Demographics.
If the younger generation (Gen Y, Millennials, or whatever you want to call them) are as collaborative as they claim to be, then they’ll help bring about this change in strategy development.

3) Experimentation.
Regardless of the technology or demographic factors, there’s enough dissatisfaction out there to cause firms to experiment with how they develop strategy, and lead them to be more inclusive and collaborative with the process. And prove my old boss wrong — that is not only senior execs who set strategy.

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