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Draft:Open Strategy

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  • Comment: Filled to the brim with marketing jargon and biased verbiage. Picking three random examples of such: "The Open Strategy phenomenon is evident across different sectors..." - a phenomenon? What reliable, independent source has referred to this as such; this description doesn't appear anywhere else beyond the lead. "Today, Open Strategy continues to draw inspiration from, and is often interlinked with..." - how could this be possibly known outside of a self-published press release? "The exploration of Open Strategy has been enriched through various theoretical lenses..." - enriched? Is the intention to praise "open strategy" from its use of "various theoretical lenses"?
    As it stands, this article takes lists of talking-points that seemingly come directly from the Open Strategy gospel, and presents it here as fact. On Wikipedia, sources should almost exclusively be sought from reliable and independent publishers, and any primary sources should be constricted and limited in use, as Wikipedia should not be a means of WP:SOAPBOXing. Utopes (talk / cont) 13:46, 13 August 2024 (UTC)
  • Comment: While there are improvements since the previous submission, this still reads like an ad. Must follow WP:NPOV. – Broccoli & Coffee (Oh hai) 05:04, 19 July 2024 (UTC)
Schematic representation of the evolving contributions of Strategic Planning, Strategic Management, and Open Strategy to strategic openness over time.[1]

Open Strategy is an approach to strategy-making in organizations that emphasizes greater inclusion and/or transparency compared to traditional strategic management. This involves engaging a wider range of internal and external stakeholders, such as employees, customers, suppliers, partners, regulators, and the general public, in both the strategy formulation and implementation.

The term Open Strategy was introduced by Henry Chesbrough and Melissa Appleyard in 2007,[2] and the contemporary concept developed by Richard Whittington, Ludovic Cailluet, and Basak Yakis-Douglas in 2011, emphasizing "the secular shift towards more open forms of strategy-making, with more transparency inside and outside organizations and more inclusion of different actors internally and externally."[3]

Open Strategy seeks to leverage diverse sources of knowledge and ideas, enhance legitimacy and commitment, and foster innovation and learning.[3] The approach is hereby associated with the general challenges of increased openness such as managing information overload,  safeguarding intellectual property, balancing conflicting interests, and ensuring (strategic) coherence.[4][5] The motivations, challenges, and outcomes of Open Strategy initiatives are influenced by various factors, including the nature of the industry, the organizational culture, the regulatory environment, and the information technological infrastructure.[1]

The Open Strategy phenomenon is evident across different sectors and types of organizations. Examples include private companies like Barclays, Daimler-Benz, and Zurich Insurance Group; public entities such as the City of Vienna and the United States Navy; and community groups and cooperatives, including Wikimedia and Premium-Cola.[6][7]

Driving Forces and Origin

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The shift towards Open Strategy in the field of strategy-making is driven by societal, cultural, technological, and organizational forces:[3][8]

  • Cultural forces: The postmodern era's skepticism towards established norms calls for more inclusive approach to strategy-making. The democratization of strategic expertise has broadened strategic discussions and knowledge beyond organizational leaders.
  • Technological advances: Innovations in information technologies, such as digital platforms and collaborative tools, facilitate transparency and broader participation in strategy processes by enabling the efficient, fast, and cost-effective dissemination and collection of information via intra- and internet.
  • Organizational dynamics: Organizations adapting to global changes by evolving their structures and dynamics. Transnational organizations, in particular, have recalibrated their strategic practices to be more decentralized and transparent responding to increased complexities through financial capitalism, involving activist shareholders and hostile takeovers. The emergence of digital platform-based businesses likewise inclines towards openness, emphasizing collaboration and joint value creation.

These forces have driven the adoption of openness in various organizational activities, reflecting a broader societal shift towards transparency and inclusion.[5] Initially stemming from the realm of Open Source Software, the ethos of openness has expanded across various fields including Open Science, Open Innovation, Open Data, Open Government, and more recently, Open Strategy.[9][10][11][12][3]

In business management, a shift toward more openness became primarily evident in 1995, emphasizing that a strategy is not solely created by top management.[13] This idea was furthered by Gary Hamel's idea of "strategy making as a democratic process" in 1996.[14] Concepts such as Open Innovation (Henry Chesbrough, 2003),[10] Wisdom of the Crowd (James Surowiecki, 2004)[15], the democratization of innovation (Eric von Hippel, 2005)[16], and Crowdsourcing (Jeff Howe, 2008)[17] reinforced this shift.

The evolution of Open Strategy has been significantly influenced by Henry Chesbrough’s concept of Open Innovation, which emphasizes the importance of leveraging both external and internal sources of knowledge and ideas at an operational level.[10] Chesbrough’s initial definition of Open Strategy highlighted the potential for organizations to integrate these principles into their strategic planning, thereby dissolving traditional boundaries and enhancing adaptability to complex, dynamic, and interconnected business environments.[2] The contemporary understanding of Open Strategy, developed in 2011, extends beyond Chesbrough’s initial idea, incorporating broader dimensions of transparency and inclusivity in strategic decision-making processes.[3][1]

  • Chesbrough et al.'s understanding of Open Strategy: Leveraging external knowledge to enhance strategic planning and create a competitive advantage by integrating external ideas into the strategic plan.[2]
  • Whittington et al.'s understanding of Open Strategy: Making the strategy-making process itself open, transparent, and inclusive, involving a broader range of stakeholders in a participatory process to ensure diverse perspectives in strategic decisions while maintaining control over the strategic direction.[3]

Today, Open Strategy continues to draw inspiration from, and is often interlinked with, other more open practices like crowdsourcing, democratizing innovation, and collective intelligence. Crowdsourcing, for instance, involves issuing challenges to large and diverse groups to generate novel solutions, aligning with the aim of Open Strategy to engage diverse stakeholder input. Similarly, the principle of collective intelligence, which posits that aggregated knowledge from a diverse group fosters better decision-making and innovation, underscores the close relationship with other, more open approaches.

The evolution of openness in strategy-making practices is characterized by three key phases:[1]

  1. Strategic planning (1960s–early 1970s): Marked the beginning of a more structured approach to strategy-making, initiating a dialogue among managerial elites and setting the foundation for future developments in strategic practices.
  2. Strategic management (late 1970s onwards): Shifted the focus towards strategic management, expanding the dialogue to include middle managers and employees, emphasizing the importance of their roles in effective strategy implementation.
  3. Open Strategy (1990s onwards): Extends inclusivity and transparency in strategy-making processes, involving a broader range of stakeholders even during the initial stages of strategy formation, reflecting a movement towards increased openness in organizational practices.

Each phase represents a significant shift towards increased openness in strategy-making, evolving from a closed dialogue among top management to a more inclusive and transparent process involving a wider array of stakeholders.[1]

Dimensions and Dynamics

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Open Strategy is “as a dynamic bundle of practices promoting greater strategic transparency and/or inclusion among internal and external actors. The balance and extent of openness adapt to evolving contingencies from within and outside organizational boundaries".[18] Open Strategy is understood along two key dimensions: inclusion and transparency, addressing internal and external stakeholders, expanding beyond the confines of managerial elites. [3][18][4]

Inclusion in Open Strategy involves engaging a variety of actors in the strategic discourse, enriching the strategy-making process by diversifying the range of voices and perspectives in strategy development and implementation. It emphasizes both external and internal consultation in order to exchange “information, views and proposals intended to shape the continued evolution of an organization’s strategy”.[19] This shift departs from traditional strategy paradigms, which were exclusively the domain of top management, breaking down the monolithic structure of conventional strategy-making.

The sub-dimensions of inclusion in Open Strategy include:[4]

  • Stakeholder diversity: Open Strategy focuses on the number and diversity of stakeholders invited into the strategic discourse. The range of actors in an Open Strategy process can span different hierarchical levels and functions within the organization, and include external stakeholders, ultimately encompassing the general public.[20][5]
  • Topic breadth: The scope of topics considered in Open Strategy highlights the variety of strategic issues open for discussion, ensuring attention to all relevant, including peripheral or non-traditional issues.[4]
  • Involvement depth: The degree of involvement describes how deeply stakeholders engage in the strategy-making process, ranging from basic consultations to deep, collaborative engagements. The form of involvement pertains to the various methods of stakeholder participation, whether through formal or informal channels. While Open Strategy emphasizes active participation in strategic deliberations, it does not necessarily entail transferring decision-making rights to stakeholders.[4][3] Open Strategy is generally less democratic than other open organizational principles[14][21]  where ultimate decision-making authority generally resides with traditional strategy actors.[20]
  • Participation procedures: The openness regarding participation procedures emphasizes the accessibility of the processes guiding the stakeholders’ participation in strategy-making. This includes decisions about whether structures and rules are set by the management or remain open for discussion among participants,[22][20] ensuring flexible procedures that promote equal opportunities for all stakeholders to engage and contribute to the strategy-making process.[20]

Transparency in Open Strategy refers to the availability and accessibility of strategic information to a diverse set of audiences. Transparency is “the internal or external visibility of information about an organization’s strategy”[18] and signifies the shift from traditionally guarded strategic processes to those that are more open and accessible, ensuring that all stakeholders, both internal and external, are well-informed about strategic directions and decisions.

The sub-dimensions of transparency in Open Strategy include:[4]

  • Range and diversity of audiences: Transparency focuses on the variety and number of stakeholders who have access to strategic information. This includes various hierarchical levels within the organization, different functional areas, and even external entities. An organization's dedication to transparency is evident in its proactive efforts to disseminate strategic insights across a broad spectrum of stakeholders.[3][18][4]
  • Extent of topics disclosed: Transparency emphasizes the amount of strategic information made available to stakeholders, including goals, objectives, initiatives, and the rationale behind decisions, potential risks, and the expected impacts of those decisions. Organizations can demonstrate high transparency by revealing a small part of their strategy to a broad audience or disclosing all strategic information to a more limited group. The selective revelation of strategic information to different audiences may evolve over time, depending on the contextual needs of the strategy process.[23][4]
  • Openness of transparency procedures: This aspect pertains to the clarity and accessibility of the processes used for sharing strategic information. It involves establishing clear communication channels, providing regular updates, and implementing feedback mechanisms, ensuring that shared information is relevant and valuable to recipients.

In the context of Open Strategy, inclusion and transparency are recognized as dimensions that exist along a continuum.[18] Firms may calibrate their level of openness, opting for varying degrees of transparency while maintaining a different level of inclusion, or vice versa. The concepts of openness and closure in strategy-making are not binary but strategies can manifest with different intensities of transparency and inclusion, along the continuum, offering a multitude of different extends and forms of openness for strategy formulation and execution.[1]

Dynamics of Open Strategy[18]

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  1. Transition from closed to Open Strategy: A traditionally closed strategic management process can evolve in its openness by either enhancing its inclusiveness, its transparency, or both, transitioning towards a fully open strategy.[18]
  2. Enhancement of partially open processes: Processes that are already partially inclusive or transparent can further augment their openness, culminating in a fully Open Strategy.[18]
  3. Contraction of partly Open Strategies: Conversely, a partly open strategy process can retract, becoming more closed by either diminishing its inclusiveness or its transparency.[18]
  4. Reduction in fully Open Strategies: A fully open strategy process might also reduce its degree of openness, partly or completely reducing its inclusiveness or transparency.[18]

Dynamics leading to Increased openness

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Various dynamics are driving organizations towards increased openness, characterized by practices of transparency and inclusiveness. Some organizations opt for greater transparency in strategic decisions without necessarily expanding the stakeholder group involved in decision-making. Conversely, organizations such as Siemens have actively sought to involve their employees in strategy formation, encouraging them to contribute ideas and suggestions.[24] In certain instances, organizations are increasing both transparency and inclusion, gaining additional insights while also sharing more strategic information broadly. It is important to recognize that an increase in one dimension (transparency or inclusion) does not necessitate a corresponding increase in the other.[3]

Dynamics leading to reduced openness

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Despite the trend towards increased openness, some dynamics can lead organizations to lessen their level of openness.[20] Some organizations, faced with challenges associated with increased openness, may revert to more traditional, closed strategic methods. For instance, start-ups that initially adopted a more inclusive approach might find it more efficient to revert to a primary focus on transparency over time.[25] The decision and degree of openness are influenced by various internal and external factors, including the competitive landscape, organizational structures, and the skills of the individuals involved. As organizations navigate the intricacies of an open strategy, they must remain agile, constantly re-evaluating and recalibrating their approach in response to changing circumstances.[26]

Practices

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Open Strategy, drawing from the Strategy-as-Practice (SAP) research field[27], extends the focus on activities and interactions in strategic management to include greater inclusivity and transparency, manifesting in various practices.[4] These include online platforms, crowdsourcing, wikis, blogs, social media, town hall meetings, workshops, surveys, or open contests. These practices are applicable across different stages of the strategic management process, including analysis, idea generation, formulation, implementation, evaluation, and refinement.[7]

Inclusion practices in Open Strategy[8]

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  • Traditional methods:
    • Physical workshops and roundtables (e.g., Shell's engagement in Peru in the 1990s)[28]
  • Modern methods:
    • Online platforms (e.g., IBM's 2006 Innovation Jam, Siemens' crowdsourcing for sustainability strategy)[29][24]
    • Digital collaboration tools like Mural combined with video conferencing software[8]
    • Internal strategy jams[7] and inter-organizational strategy workshops[30]

Transparency practices in Open Strategy[8]

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  • Modern methods:
    • CEO strategy blogging (on the organization’s website or intranet)[3]
    • CEO webinars for continuous communication and interaction with audiences[25]

Opportunities and Challenges

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Open Strategy presents various opportunities and challenges associated with increased inclusion and transparency. These aspects reflect the motivations driving organizations towards adopting Open Strategy and the potential hurdles they may encounter.[4]

Opportunities of Open Strategy [4]

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Inclusion
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  • Sourcing of new ideas: A broader set of stakeholders contributes to a rich pool of ideas, leveraging the collective intelligence of internal and external actors[33][34]
  • Pluralism of perspectives: Different stakeholders bring unique perspectives that challenge the dominant logic and potentially lead to innovative solutions[29][28]
  • Commitment (sense of ownership): Engaging middle managers and other stakeholders in strategy formulation may lead to a better understanding and implementation of strategies[35][21]
  • Legitimacy: Open Strategy can foster collective legitimization of strategic decisions across different levels of the organization and external stakeholders[25][36]
  • Identification of strategic talents: Uncovering and engaging individuals with strategic insight from within and outside the organization[1]
Transparency
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  • Simplifying coordination/collaboration: Transparency facilitates shared understanding and eases coordination among various stakeholders[37]
  • Trust building: Clear and open communication of strategies can foster trust among stakeholders[4]
  • Compliance with regulation: Transparency in strategic processes can aid in adhering to regulatory requirements and standards[38]
  • Legitimacy: Enhanced transparency can also contribute to legitimacy by garnering stakeholder confidence and investment[37]
  • Information advantage: Transparency provides a pathway to broader access to information crucial for strategic decisions[33][34]

Challenges of Open Strategy[18]

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The challenges of Open Strategy involve a range of dilemmas faced by organizations when adopting a more inclusive and transparent approach to their strategic planning. Central to these dilemmas is the trade-off between the benefits of wider stakeholder engagement and the operational, informational, and relational challenges that come with it.[18]

  • Dilemma of Process: While inclusiveness harnesses diverse expertise and perspectives, it might compromise speed, flexibility, and control over the strategy-making process due to extended discussions and potential misalignments. This can lead to a greater strain on organizational resources.[18]
  • Dilemma of Commitment: Involving more participants in strategy development can strengthen organizational commitment, yet the practical difficulties in managing such inclusiveness may foster frustration and disengagement if expectations about the impact of one’s contributions remain unmet.[18]
  • Dilemma of Disclosure:  Open Strategy may foster legitimacy and collaboration, but it also risks exposing sensitive information to competitors, may inadvertently engender distrust, and may foster misunderstandings due to information overload or misinterpretation.[18]
  • Dilemma of Empowerment: Offering individuals a voice in strategic matters might also burden them with additional responsibilities and pressures.[18]
  • Dilemma of Escalation: Realizing the benefits of openness in specific areas of strategy might give rise to potential pressure on organizations to progressively widen the scope of openness in strategy. While this might be beneficial for strategy development, it may also set unmanageable expectations and raise allegations of insincerity in cases where full openness is not feasible or desired.[18]

Additional Challenges of Openness

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Inclusion
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  • Overload of Opinions: The influx of diverse opinions can lead to decision paralysis and may divert focus from core strategic issues.[39][34]
  • Conflict of interests: The inclusion of the wrong or a non-diverse set of stakeholders can lead to strategic outcomes that might not be in the best interest of the organization. Managing conflicting interests among participants may pose challenges.
  • Stakeholder Commitment: Ensuring active and meaningful participation of stakeholders can be demanding and may not always be met with enthusiasm.[21][30][40]
  • Overemphasis on consensus: An overemphasis on consensus may inhibit bold strategic ideas and moves.
Transparency
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  • Increasing efforts for communication: The more open communication of strategic information may result in increased efforts and resource engagement, as sensitive information must be disguised or content tailored specifically to different addressees.

Perspectives

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The exploration of Open Strategy has been enriched through various theoretical lenses, each highlighting distinctive facets of this domain. They can be broadly categorized into six distinct groups:[4]

  1. Practice theories: Suggest that Open Strategy is an eclectic bundle of practices aimed at fostering transparency and inclusivity in strategic deliberations. Prominent theories within this domain, such as Giddens’s structuration theory and Schatzki’s theory of practice bundles, provide avenues for exploring the diverse practices of Open Strategy and their implications.[4]
  2. Communication-based approaches: Emphasize the pivotal role of discourse in facilitating broader participation in strategy formulation and implementation. Theories like discourse theory and dialogue theory have been utilized to explore how different forms of communication can either enable or hinder wider engagement in strategic processes.[4]
  3. Sensemaking theories: Underscore the importance of cultivating shared understandings among diverse stakeholders, particularly when dealing with complex strategic issues. Key theories like Karl Weick’s sensemaking approach and the theory of negotiated order offer insights into how Open Strategy can enhance collective sensemaking.[4]
  4. Stakeholder-related approaches: Considers Open Strategy as a novel platform for engaging a variety of stakeholders. Through theories like stakeholder theory and collaborative decision-making, researchers examine how Open Strategy fosters joint decision-making and stakeholder engagement.[4]
  5. Institutional Approaches: Link Open Strategy to wider societal expectations and institutionalized norms, aligning it with other openness phenomena like Open Government and Open Science. Theories like World Society Theory and the sociology of professions are some of the institutional theories that provide a framework for analyzing the societal drivers and the institutional work necessary for the enactment of Open Strategy.[4]
  6. Information/Knowledge-based approaches: Treat Open Strategy as a mechanism for facilitating the exchange of knowledge and information among organizational members. Theories like the knowledge-based theory of the firm and network theory elucidate the epistemic and design dimensions of Open Strategy, highlighting how different arrangements influence the flow of strategy-relevant information.

Further Reading

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  1. Wilson, A., Engelbach, R., Morton, J., & Amrollahi, A. (2024). Open strategy. In International Encyclopedia of Business Management. https://doi.org/10.1016/b978-0-443-13701-3.00298-x
  2. Chesbrough, H., & Appleyard, M. M. (2007). Open Innovation and strategy. California Management Review, 50(1), 57–76. https://doi.org/10.2307/41166416
  3. Whittington, R., Cailluet, L., & Yakis-Douglas, B. (2011). Opening strategy: evolution of a precarious profession. British Journal of Management, 22(3), 531-544. https://doi.org/10.1111/j.1467-8551.2011.00762.x
  4. Full special issue edited by Whittington, R., Hautz, J., & Seidl, D. (2017). Open Strategy: Transparency and Inclusion in Strategy Processes. Long Range Planning, 50(3), 297-426. https://doi.org/10.1016/j.lrp.2016.12.001
  5. Seidl, D., von Krogh, G., & Whittington, R. (2019). Cambridge Handbook of Open Strategy. Cambridge University Press. https://doi.org/10.1017/9781108347921
  6. Whittington, R. (2019). Opening Strategy - Professional Strategists and Practice Change, 1960 to Today. Oxford University Press. https://doi.org/10.1093/oso/9780198738893.001.0001
  7. Stadler, C., Hautz, J., Matzler, K., & Friedrich von den Eichen, S. M. (2021). Open strategy: Mastering Disruption from Outside the C-Suite. MIT Press. https://doi.org/10.7551/mitpress/13719.001.0001
  8. Full special issue edited by Dobusch, L., von Krogh, G., Splitter, V., Walgenbach, P., & Whittington, R. (2022). Open Organizing in an Open Society? Conditions, Consequences and Contradictions of Openness as an Organizing Principle. Organization Studies, 44(1), 1-169.
  9. Pittz, T. G., & Adler, T. R. (2023). Open strategy as a catalyst for innovation: Evidence from cross-sector social partnerships. Journal of Business Research, 160, 113696.

References

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