"Identify your most important problems as an organization, and then think whether you have a way to address them. That's the sweet spot where you should concentrate your strategy on."
In this episode, we are delighted to welcome Prof. Dr. Christian Stadler, a strategic management expert and Professor of Strategy from the Warwick Business School.
Together with Christian, we delve into the concept of "Open Innovation" exploring how businesses can democratize strategic planning by involving a broader range of voices within the organization. Christian shares insights and experiences from his book "Open Strategy", illustrating the value of diverse input in strategy formulation and execution. The conversation also touches on the evolving role of technology, such as AI, in enhancing strategic processes and the importance of adaptability and experimentation in corporate cultures embracing open strategy.
Tune in for an insightful episode and learn about the sweet spots in your business that your strategy should focus on.
Below you will find the full transcript for the episode.
The Genesis of Open Strategy
Chris: This is the Innovation Rockstars podcast where we share unfiltered conversations about all things innovation with leading minds who are shaping innovation. And my name is Chris Mühlroth and with me today I have Christian Stadler, Christian Stadler, if I want to pronounce it in his mother tongue. Christian is professor of strategic management at the Warwick Business School in the UK. And yeah, Christian, you've written several books, one of which is called “Open Strategy”. You're also a well-accomplished leader and speaker on strategic thinking and business. And as I learned, you're featured in numerous outlets that include, you know, the New York Times, CNN, Wall Street Journal, BBC, CNBC, Financial Times, the list goes on and on. So thanks for joining me. It's a pleasure to have you on this episode.
Christian: Thanks Christian, thanks for having me. Looking forward to this conversation.
Chris: Conversation it is, yes. So Christian, strategy, the term strategy is used very broadly. And you've done a lot of work in this area in recent years. Could you maybe distill its essence from your perspective? So what is a quote-unquote strategy?
Christian: Sure. The way I like to think about it, identify your most important problems as an organization and then think whether you have a way to address them. That's the sweet spot where you should concentrate your strategy on. You could also phrase it a little bit like, where do I stand today? where do I want to go? And how do I get there? It's three simple, straightforward questions that allow you to get some form of guidance on what you want to achieve in strategy.
Chris: So very much like the three questions, because they're easy to remember. “Where are we at the moment?”, “Where do we want to go?”, and “How do we get there?”. So basically understand where you are right now, and then the vision of the future, or maybe a goal. Um, some call it North Star goal, objective aim. There are probably different words for that. And then, you know, how do we get there step-by-step and make a plan? Why do you think we're making strategy oftentimes? Maybe a bit more complicated.
Christian: I don't know. Maybe there's a whole industry that sells strategy. And if you make it too simple, maybe it's harder to sell stuff. We need to create this myth about some sort of - you know - magic happening where only a few extremely clever magicians are able to do so. There might be, you know, some of it, even though it's often more difficult to really drill down along these very simple lines of questioning. I don't know if there are any other reasons why we do it. It has puzzled me often why we don't keep it like this. I had this conversation with Ashok Vaswani a little while back, who used to head the retail business for Barclays in the UK. And he's actually the one who shared these three questions with me that I mentioned just earlier, which I thought is a brilliant way that allow everyone to be involved in strategy. And why not? You know, it doesn't have to be the domain just of a few selected individuals.
Chris: It is a brilliant way of phrasing it. And honestly, I feel you because we've seen the same thing. Now, tell us more about your journey to your book called “Open Strategy”. Because oftentimes, there might be a moment of clarity, a moment of experience that leads to new ideas, such as opening up traditional strategy-making processes. So, what made you write and publish your book on “Open Strategy”?
"This is something unusual, to find ways, smart ways, to involve large groups of people in decision-making, in strategy-making. It does not mean turning a company into a democracy, but consulting large groups of people."
Christian: So, it was actually kind of an unusual and funny story. I had three co-authors on this book, and one of them runs a consulting firm in Germany. They're called IMP. They have helped clients to open up their strategy for a long time. Furthermore, they've done hundreds of projects. I've sort of known him and the other two who are professors at the University of Innsbruck for many years. The three of them talked about writing a book about this, and they knew that I'd written previously a book for the U.S. market, which they wanted to do. And because I've worked with the two professors, that's Julia Hautz and Kurt Matzler, on numerous projects before, they knew that we would work well together. So they really had this sort of conspiratory meeting in Munich to discuss how they could kind of bring me into this and convince me. And I admit when they first told me about this, I thought they were crazy. Strategy in my mind was something that is the domain, the kind of exclusive playing ground for the senior management. That's what they do. That's what they are known for. That's what they stand for. How could you possibly involve large groups of people? But in hindsight, I'm quite glad that I'm a curious person, so I decided that I would look into this a little bit more. So I joined some of the workshops that the German consulting company did, then started to talk to other firms who have done things that involve larger groups of people, and it started to grow on me. And with time, I realized this is something really outstanding. This is something unusual to find ways, smart ways, to involve large groups of people in decision-making, in strategy-making. It does not mean that, you know, you turn a company into a democracy, which was my first reaction. I think often people think so, open up, well, you know, everyone can now decide. That's not what it is, yeah, but consult large groups of people. It's an unusual story, I guess. Yeah, I cannot claim that I had the idea, but at least I was smart enough to notice with time that there's something in here.
Unlocking Strategy: Inclusive Decision Making
Chris: So your comment on democracy is a very important one. And I think the approach to open strategy is, as you said, it's quite a departure from where we are today. The traditional way, the old way, for lack of a better word, the current way is really, as you say, the C-suite or some comparable group, they lock themselves in boardrooms or do a quote-unquote strategy retreat, maybe bring in one of the big consultancies to cover their butts and then they communicate top-down what's to be done. When do you think this approach has become a problem?
Christian: Well, it probably has always been a problem, but there's a bit more urgency today because people are used to having a stronger voice than in the past. If we go into earlier times when everything was a bit more hierarchical, you might remember when you were younger and you went to one of the government offices, yeah, there's a sort of an automatic intimidation, yeah, you would believe the government official who sits there in the office, you have lots of respect. Nowadays, people don't take these things just like this, yeah, they expect to have more engagement and more discussions. And, you know, certainly, that's true in Western Europe out here. All the opportunities on social media that we have to constantly comment on everything. With that, there's an expectation, particularly for younger people, that they don't just take orders, but have an opportunity to contribute to what is being done. So that, I think, created more urgency. Now, having said that it would have always been a good idea to probably consult more people in order to figure out what's doable. Even in the old days, there might not have been a sort of open revolution against ideas, but everyone who was not sort of onboard probably found small ways to somehow undermine orders that come from above. You sit it out, basically. A CEO is going to be there for a few years, and the tenure time of CEOs has become shorter and shorter. Well, you know, whoever is the CEO, maybe she's going to be around for another couple of years or so. I'll pretend to do what they are telling me, but really I do what I think is right.
"Today, people are used to having a stronger voice than in the past. With that, there's an expectation, particularly for younger people, that they don't just take orders, but have an opportunity to contribute to what is being done."
Chris: And how does it work? So, you know, the strategy process, I mean, there are many frameworks and how strategy processes typically work in organizations, and they're employed by, you know, in some sort of color and some forms by all the organizations. Obviously, you know, larger organizations have maybe a much more structured process, but at least, you know, they take some time and smaller companies is different. But how does it work? What are the core elements of, you know, the open strategy approach
Christian: There are many different techniques. So I guess before you jump into this, you need to figure out for the type of situation, for the part of the process that you want to open up with, what's the right instrument in this particular instance. It will be different if it's about idea generation if it's about formulating the strategy in detail, or if it's about more the implementation side of strategy. One technique that I like a lot is a nightmare competitor exercise. And the idea is that if organizations possibly could face disruption, then the smartest way to prepare yourself is to think about potential nightmare competitors. So companies, they do not exist, but were they to come into existence, they would present an absolute nightmare for you. The reason we think about it as nightmare competitors rather than sort of, you know, a great opportunity that comes from disruption is that we know from previous research, a lot of this comes from Clayton Christensen, the professor at Harvard, who first came up with this idea of disruptive innovation, that organization will find it hard to actually do something about disruption partly because this is the day-to-day business. If it's just an opportunity, we'll always say, yes, sure, there's a great opportunity. We'll do it, but we'll do it tomorrow because today we need to run our business. On the other hand, if something is seen as a substantial threat, I'll act. I'll do it immediately. So in this exercise, you set up separate teams that create nightmare competitors. And it's a bit sort of drag and dance style or shark tank if we have an American audience of these groups competing for the best business idea with rounds of voting, judges, et cetera, you know, involved in all of this. And it helps you to think outside the box. It helps you to bring in unusual voices into this process. An ideal setup for this is that half of the participants in such a setup actually come from outside the organization. That's where you really open up even beyond the doors of your own organization to get fresh ideas.
“An ideal setup for this is that half of the participants in such a setup actually come from outside the organization. That's where you really open up even beyond the doors of your own organization to get fresh ideas.”
Chris: Yeah, and you're touching on many aspects. One is ambidexterity, which means, yes, you need to run the core business, but at the same time, there needs to be also a group or many groups in the organization that drives innovation forward. Sure, that is one of the things. And for the nightmare competitor exercise, I'm with you. I believe that it promotes a sense of urgency that maybe wouldn't be in the process if you did not care about nightmare competitors and how they could disrupt your business in maybe a week or maybe even a month using technology, using whatever kind of stuff there is.
Christian: It doesn't necessarily mean that the idea is entirely new, that no one in the organization thought about this before. First, Alpina, a large steel company, did an exercise of that kind once. And one of the ideas that emerged from it is to use hydrogen-based technology to produce steel, reducing emissions dramatically. And there were some people in the senior management who have come across this before, but the momentum that came out partly from this workshop, the sort of concrete business model that was created there as well, helped them to spur this further along, and they set up a pilot plant. In the meantime, they created some patents. They've actually set up plans to step-by-step convert all of their production facilities to this new technology. They don't take time, but it gave them the sort of extra kick that made it possible to move faster than anybody else in the industry.
Chris: And does a greater quantity and also diversity of input, strategic input, ideas, always correlate with better outcomes?
Christian: No, not necessarily. So we conducted a survey and asked about the benefits of opening up to strategy. There were managers both in Europe and the US whom we asked, senior executives, and middle managers, and their response was, I think it was 69% of them said that one of the biggest benefits was in fact more diversity, more ideas. And of course, you know, the chances that you get more of that does somewhat increase with more people. But in that little, you know, nightmare competitor exercise that we just discussed, for example, if you have 60 people in the room, you get fantastic results as well. You want to lean towards a larger group of people the more you think about the implementation side of things. You know, and that's where open strategy goes wrong. Not that the ideas are bad, but somehow people either don't understand what's required or they don't like what they hear. By giving people an opportunity to be involved, they're more likely to actually buy into this. Steelcase, an American company that produces office furniture, did so at the tail end of their strategy making, where the big headlines were all fixed. They did an exercise where they invited everyone to join. I can't remember the exact numbers, but it was, I think, 20, 30,000 or so possibly joined in that process. Now, here you wanted a lot of people because it's really about getting everyone on board in that step of the strategy-making process.
“By giving people an opportunity to be involved, they're more likely to actually buy into this.”
Chris: And that makes a lot of sense. So where would you draw the line between, as you said earlier, democracy and an open strategy process? It can be open internally, but also open to the external environment. But where do you draw the line between those two things? Because I think it's really important to do it.
Christian: So I think, you know, from the very beginning, it's really important that there's clear communication about this. If expectations are raised that everyone has a say, then you either disappoint people in the end, or you do things that maybe don't make sense. There's a certain sort of, you know, proprietary information that maybe only the top management has. Hence, some of the things that are suggested, cannot work for some reason that is just not clear and also cannot be shared with everyone. So clarity from the beginning is really key. And I would never, in really no instance, turn this into, OK, this is a vote and this is what we will do. Now, of course, what happens if there's a lot of momentum behind certain ideas, then it's more likely that something happens. Steelcase, which I just mentioned a moment ago, didn't want to really change anything in terms of big initiatives, but there was a fresh idea coming out of this initiative. What happened is that somebody mentioned that they have opened the design process for a particular product. It was some sort of TV that was rising out of a table to a big client. And the client was extremely happy about this involvement. So it was less about that the client's involvement created new ideas. It was more that it was really attractive for the client to be involved. And the management then understood, “oh, this is actually something really smart”. And they did spread this more widely, where key account managers had the opportunity to involve very important clients in the design process as well. But this is still not that the decision is being taken by everyone that it does. It's more that because there's so much support behind an idea that the top management saw this as an opportunity and then decided to do something about it.
Chris: So it's about giving everybody a voice, but not a vote. I think that's exactly what it is, yes. Yes, yes, yes. So what you're basically doing is you want to increase your surface area of success because you allow for these inputs, you know, externally, internally, giving them a voice, which is also, you know, in light with the trends on, you know, expectations on the workforce and all the things you mentioned earlier, that makes a lot of sense. Then you have a lot of data, right? You have a lot of ideas, opinions, maybe even evidence, depending on how you manage the process. How could companies then manage the information overload or let's say conflicting ideas that come with opening the strategy process?
Christian: Okay, you know, it depends a bit again on what exactly you do, which sort of process. In the nightmare competitor exercise, the way you converge is by having rounds of voting and you sort of, you know, let those who participate in the process select more promising ideas until you're down to a manageable number of those ideas. If you do those massive open processes the way Steelcase did it, then you probably need some IT power behind it, some AI and machine learning type techniques. IBM is the company that probably did most of the development in this particular space. They use Watson as a supercomputer and have a specific jam technology that helps both while an engagement, they call it strategy jams, where I think the largest engagement they ever had was with 160,000 people. So while this is ongoing, AI already helps the moderators to see certain ideas that they can bring others' attention to. And afterward, in order to analyze the data, they can again use some of those technologies to filter out really good things. For example, one tool that they have is a debater tool. And the debater tool on a particular argument then filters out the pro and con arguments for this specific idea, which helps you as a manager to afterward see, you know, what are the different voices on a particular issue that has been discussed.
Technology's Role in Revolutionizing Strategy
Chris: So if we turn to the role of technology in all of this, you just mentioned the tool, the debater tool, for example. And I think technology in this particular process or set of processes can be a double-edged sword. Because of course, they enable now the offering of platforms for collaboration, also for machine learning techniques, for text analysis, and even for reasoning. But on some occasions, they might also raise concerns about privacy security. And all these things we're discussing today. Hallucination is another thing that might not necessarily be bad if you want to get to the extreme side of, you know, get me something out of a large language model that's very creative and novel and humans didn't think of. So it might also be a tool actually in some cases, hallucination, if you will. You know, what are some of the other tools that can be used? You mentioned JAMS and the debate one. Are there more tools that are being applied today based on leading organizations in that process?
Christian: Sure, there's a fair bit, yeah. One company I'm aware of that does something really cool is a small Dutch company, they're called Circlelytics. And they have a technique where they essentially use AI to confront you with ideas from other people who think very differently than you. So the way this works is companies have a question, you know, let's say they lost 10% revenue use and they're trying to figure out. So they post this question in that platform that the company has, the Dutch company, and ask their employees, why do you think we lost 10% revenue last term? And, you know, everyone writes answers, sort of, you know, Twitter-length type answers to that. Then all of this goes into this sort of AI magic tool that the company has. And in the second round, everyone who participated first round got 15 answers from people who thought very differently from themselves. You then rate those answers. You can highlight certain words. You also have a possibility to respond to some of those things. And once again, there's a bit of AI magic going on to then in the end deliver the five best and the five worst answers from this entire exercise. I think, you know, it's a really smart way to get you thinking as you see how people think very differently about an issue that you put some thought into this. Yes, I also for a moment want to go back to this point that you made about, you know, hallucination and how do you deal with, you know, the input that you get? I guess we're talking particularly ChatGPT in this instance, as that's been the most widely used large language model in the past year as it's been so advanced. Now, when it first came out, I started to do a bit of research mainly with Martin Reeves, who leads the BCG Henderson Institute, the think tank from the Boston Consulting Group on this. And one of the things that we did was we went through different strategy problems and engaged with the tool in a sort of conversation to see what the tool would suggest in this particular situation. And an important conclusion that we made at least up to now, it is the best, the most experienced strategies that probably benefit the most from engaging with this tool. The reason is that It's highly convincing the way this tool responds, but you need to know how to ask questions and maybe also push it in a certain direction if the answers, once you're kind of in the know, really go somehow in the wrong direction. For example, we asked the tool to come up with an idea for an innovative new streaming service. And it was a sort of list of recommendations. One was an entertainment-type streaming service. And, you know, me being a professor, I naturally was interested in this. So I started to probe more in this direction. At one point we got to, okay, so how do I get this off the ground? You know, I need obviously people to provide content. And the tools' suggestion was, well, you set up contracts with universities to get the professors to contribute. Now, working at a university, I know that this is not at all how universities work. Professors cannot be ordered really what to do. Professors do what they want to do. It's a nightmare for anybody who is in management at a university, but that's a reality. Now, knowing this, I started to probe more in that direction, and then, as I pushed in the right direction, it did come up with useful suggestions about, you know, it's maybe more junior faculty where you can provide the ability to get them more, you know, public space, help them to become more known, that is most likely to contribute to this. So I need to target maybe this particular type of faculty rather than somebody who is already well known and is unlikely to just sort of, you know, provide content for you.
“An important conclusion that we made at least up to now, it is the best, the most experienced strategies that probably benefit the most from engaging with AI tools. The reason is that It's highly convincing the way these tools respond, but you need to know how to ask questions and to maybe also push it in a certain direction.”
Chris: And how do you imagine the future of all of this looks like? I mean, you know, right now, we're experimenting with all these tools, and they're, you know, starting to get really useful in certain, in certain, you know, contexts and for certain questions for certain tasks. Again, probably there is a hype, and maybe expectations are a little bit inflated these days as to what it can do exactly and nobody knows exactly how it works. All the things that happen with emerging technology and maybe with technology disruptions on the horizon, and we can debate whether we are already in such a disruptive phase or not. Okay, now this is a crystal ball question, right? But just from what you're seeing and what you're researching these days, how do you imagine strategy processes, including maybe open strategy processes, are going to look like in a couple of years from now?
Christian: Okay, so I think in the shorter run, this type of technology and better as co-pilots. So, people who are already in that strategy domain, they will use it in order to help them with the task, sort of, you know, maybe replace junior researchers, junior consultants that would gather some of the data to be more effective, maybe stimulate new ideas for them. There was a relatively big experiment that the Boston Consulting Group conducted recently involving around 100 junior consultants. Some of them used ChatGPT as support, some didn't, and they found that the tool was particularly good if there are tasks that require the junior consultants to come up with new ideas, and they were beating those who had no support, whereas the kind of classic problem-solving tasks that you know, probably consultants who are hired by top firms like BCG are good at already in this space, the humans will continue to beat the tools. But we could also, you know, envision quite easily how even in these tasks, support from those tools is becoming, you know, a real advantage for those who are in the strategy-making side of things. That's one part. A bit more long-term, I do think there are opportunities for automation in some sort of strategy aspects. And the kind of market I see that this could be interesting for is for companies who cannot afford the expensive, highly qualified strategy consultants in the first place, yeah? Because here the choice is really be trying to figure it out yourself and probably, you know, if you are a founder, if you are the owner of a mid-sized business, you're already so overloaded with work, and you have a limited number of staff who can really devote their time to strategy, where a tool that can take over some of that process, it does stuff that doesn't happen at all otherwise. So I think here I do see potential for going even in the direction of automation. I mean, you know, there will always be some sort of sensitivity check from the person in the end who is responsible. But at least, you know, a more systematic strategy-making possibility arises through those techniques.
Chris: And will this lead us to a time when things are getting even more accelerated? Because every company, specifically the ones that cannot, you know, work on the sophisticated strategies, now have the tools at hand to make things more competitive in the market. Because now, you know, they're strategizing against each other with tools that are available. So will this actually accelerate, you know, competition and, you know, the rising levels of competition in the market? Because now everybody is kind of developing these supercharged strategies. Yeah. Is that where we are going?
Christian: Not necessarily. So when you look back at the last decade or maybe a decade and a half, even though we talk about everything getting more and more competitive, the numbers don't necessarily speak that language, at least not in all industries. You have a high concentration of power in a few big tech companies that can easily just eat up any competitor who comes along. They make an acquisition, they squeeze them out of the market. So I don't necessarily more and more competition in all spaces. There'll be other areas where this is probably true and this is the case, but not across the board just because we have this technology.
Chris: That's fair to say. Now, so we have opened up the strategy process, and we have the role of technology in all of this. Let's quickly also look at the human side of all of this. So, you know, when we're advocating for open strategy, still I think, you know, deeply ingrained corporate cultures are kind of challenged to some degree because they often, you know, they opt for secrecy. But at the same time, openness, and we're probably talking about true openness at a certain level of transparency, maybe not 100%, but much more than what we've seen today, but also requires a level of vulnerability sometimes that maybe some of the leaders might be uncomfortable with, at least, you know, today. So what does it do, you know, opening up the strategy process, introducing technology, specifically AI technology? What does it do to, you know, leaders and executives on a human level, on a personal level?
“So, you know, it's not a black and white, there is some sort of, you know, continuum, where you either open up a little more, a little less, depending on the circumstances, and in some circumstances, you actually won't open up.”
Christian: You know, one thing I always stress with CEOs, if they, you know, approach me about these open strategy techniques, if they're not into it if you don't want to do this and truly want to do it, it's better not to do it at all. Because then we are in this place where you raise expectations, but in the end, you will ignore whatever comes out of this. You will not really share. So that's a choice. Yeah. And I would, you know, I definitely don't want to argue that in all instances opening up is the right answer. It depends on the circumstances. Even occasionally there are legal barriers that would not make it possible, say in an M&A type situation, where you simply are not allowed to do this. Or it might be a situation where You have propriety information. If that gets out, then somebody else will quickly copy you and take away your competitive advantage. So, you know, again, in these circumstances, I would be reluctant to recommend opening up as well. And you also raised this important point about dependency on the culture of an organization. Some organizations are simply not like this. There might also be differences in different countries of how things are usually run in a particular society. So in some of those societies that are still more hierarchically organized, I tend to emphasize that it's not necessarily opening up to everyone, involving important stakeholders in this process. And that makes sense, even in settings of that kind. So, you know, it's not a black and white, there is some sort of, you know, continuum, where you either open up a little more, a little less, depending on the circumstances, and in some circumstances, you actually won't open up.
"One thing I always stress with CEOs is to see if they're really into open strategy techniques. Because if you don't really want to do it, you're better off not doing it. Because then we get to this place where you raise expectations, but in the end you ignore whatever comes out of it."
Chris: And if we think about times in crisis, you know, we just, you know, basically globally, you know, lived through a time of crisis with, you know, the recent pandemic that the world was going through. And I think particularly in times of a crisis, we often like to think We need somebody, a captain of a large ship, they need to navigate through a storm, through dangerous waves and all these things. In such a crisis, maybe you don't want everyone on the ship to be part of your decision-making process, but also maybe even the voting process, but you actually want someone to take responsibility, decide what to do next, radiate maximum confidence and tell others what to do. So is there also a timing perspective in this where you say, well, in good times, it might make sense, but maybe in tough times, go back or at least not open up as much? What is your take on that?
Christian: So, first, yes, I agree that not at all times you would do that. Now, what I would be reluctant is to fully sign off in times of crisis, you need a charismatic superstar to somehow lead you. In one of my previous books, I wrote about organizations that survived for 100 years and longer. The move that most often ended a period where an organization was surviving and thriving was when they were reliant on these charismatic superstars because that's when the sort of natural resistance from an organization goes down, and they just sometimes follow blindly in this direction. Now, the results tend to be extreme. It could be that it is extremely good, but it can also be extremely bad. Now to this, my question tends to be, you know, what's your chance that your leader is Steve Jobs? It's a kind of one-in-a-million. So you could have, in this one instance, this one charismatic superstar who is also just picking all the right spots. More likely, That's not the case. So why not go on the model that is a bit more reliant on a slightly larger group of people and not just follow one person blindly? I mean, I noticed it's taking us a little bit away from the core of our conversation, but I noticed with some concern of how in a growing number of countries on the political side, there is, you know, again, this strong attraction of a populist, super charismatic leader. And, you know, I feel that might have to do with leading to extreme and extremely bad results. You know, the worst example of them would be out of Hitler, that we can think of. Yeah, but you don't even have to go to those extremes. Somebody who is sort of maybe a little bit less shiny, a consensus builder, is possibly more effective for a country. And, you know, the person, if I have to put myself out there, that I, in the political sphere, admired a lot was Angela Merkel. That was not somebody who was maybe shiny. No one kind of, you know, thought that she would stand out among world leaders, but she was highly effective and was navigating Germany through a period that was not easy.
The Future of Strategy and Closing Thoughts
Chris: Very interesting, very interesting perspective. And if we want our listeners of this episode to take away some You know, if they consider, okay, well, you know, open strategy might be interesting. Obviously, you know, they just can go on Amazon or wherever and, you know, buy a book and then start learning about this in greater. Uh, detail, but, um, what, what could be some, you know, first and also actionable steps if, you know, companies consider, or, you know, leaders, executives, whatever, you know, whoever's listening, I would consider, well, you know, it's worth a try or at least worth a thought, um, where, where to start.
Christian: OK, I guess the first thing you need to do is figure out if you're ready for this.
Chris: Yeah.
Christian: And there's kind of, you know, some simple questions that you can ask yourself to prepare yourself or to find out if you are. So you can ask yourself if you are a Prince of Serendip. You may be familiar with the story of three princes who go on a quest and all sorts of, you know, happy coincidences happen to them that turn out to be to their advantage. So are you comfortable with things just happening to you and not having to know and plan everything in advance? The second question you can ask yourself is, are you a Sebastian Bach or are you a Miles Davis? So Sebastian Bach, the symbol of classical music, and Miles Davis, the symbol of jazz. Jazz has an element of improvisation, and if you're more comfortable with more of an improvisational approach rather than a pre-planned, well-executed, sort of pass again, you know, you're probably more comfortable opening up your strategy. The third question you can ask yourself is are you Adele, you know the famous British singer, she's known for her voice, that she was first and foremost a really strong team player who gave a lot of space and freedom for others to contribute to her productions. And that was what made her productions so fantastic. You know, are you comfortable with that? And finally, you have to ask yourself if you love pirates. Well, this is sort of, you know, a little nod to a group of people at NASA who, you know, managed to get themselves the freedom to come up with evolutionary ideas to build a mission on smaller computers that could be networked together rather than a supercomputer. And they were given the freedom to do that. So, you know, people who do not conform to the norms of your organization, are you comfortable giving people some space? If you find yourself answering those four questions in the affirmative, then on a personal level you are probably more prepared for what you will find when you open up your strategy. Once you've gone through that, the second thing I suggest is that you start experimenting a little bit, rather than doing a big thing in the core business of your organization. Do a small initiative, see how it works, and do a pilot. If it works well, you can build momentum around it. Dr. Oetker, a large German company, first experimented with some of these techniques in the cereal business, which is a smaller business for them. Once they saw how it worked, what worked, they moved into the frozen pizza business, which is one of their biggest businesses.
“Are you a Sebastian Bach - the symbol of classical music, or are you a Miles Davis - a symbol of jazz? Jazz has an element of improvisation, and if you're more comfortable with more of an improvisational approach rather than a pre-planned, well-executed, sort of pass again, you know, you're probably more comfortable opening up your strategy.”
Chris: And once you started experimenting with it, in case it goes wrong, is there a way back? Because you now raise all the expectations on collaboration, participation, again, giving everybody a voice, um, and maybe not a vote, maybe a smaller vote or however you want to do this. Is there a way back, or is it you who is now locked in?
Christian: No, you know, as you do it, hopefully in some sort of small space, you learn how things work and how things don't work. I'm generally a big fan of experimentation in the strategy domain. It's sort of, you know, easily overlooked because we think the strategy always needs to be the one thing and the one thing that works. But, you know, think of how many companies in the online space do A-B testing, sort of, you know, run multiple versions of a particular website. You know, in some cases, thousands of those versions. And through this constant testing of different versions, you figure out what works best. You know, if you perceive opening up your strategy in the same manner where I do a little bit of an experiment here. OK, you know, certain things work that we can take along to another version of this, which we try somewhere else until we figure out what's best. And then maybe, you know, we scale it to something more big. Then, you know, with that expectation, I don't think something that does not initially work necessarily kills it for all times.
Chris: Agreed. And who can we learn from? What companies are leading the way in this? What are some of their stories?
Christian: OK, so one of my favorite stories I ever came across is from Barker's retail business. I mentioned the beginning of our conversation, Ashok Vaswani, and it was actually when he took charge of the retail business. It was in 2012 that he decided he wanted to involve a large group of people in this strategy, the future of the organization. The big sort of question that started to arise is whether banking is becoming more mobile. Banking is going more online, what do we do? And put yourselves in the shoes of somebody who is taking this job in retail. They can probably expect a lot of resistance against online stuff because those who work at the counter of a bank, the first thing they'll think is, what about my job? When they hear about this. So by involving them, you know, starting conversations that give them a voice and an ability to think about how it may change my job but doesn't take my job away, you probably get a more positive engagement. So they set up this online jam for three days and Everyone was allowed to contribute, there were 30,000 people in the UK. You had very interesting conversations. For example, somebody mentioned in one of those discussion streams that Domino's Pizza can tell you quite a lot about their pizza. When you order it, they can tell you, we just got your order. They can tell you the ingredients are on. Then they can tell you this is going into the oven. They can tell you when it comes out of the oven. They can tell you when it will arrive in your house. In the mortgage department of Barclays at that point in time, all they could tell their clients was in the beginning, we received your application. And in the very end, you either tell them you get a mortgage under whatever conditions, or you don't get a mortgage at all. That's sort of a bit, you know, off considering that as a pizza company, I could tell my clients more about the pizza that they order. And, you know, conversations of that kind made it real, allowed people to think about how technology helped them to do better in what they're doing. Now, you know, shortly after The exercise, Barclays introduced its first mobile app. Almost overnight, they got a million users. Today, more than nine million users. One of the most successful fintech products in the United Kingdom. And that's a legacy bank. They're 325 years old. They've managed to transition into this digital age. Self-help groups were springing up, the digital eagles they called themselves, where those who are more digitally literate help those who are less so. I heard a story about a grandfather showing up in one of the Barclays branches one day with his new iPad, saying that his grandson had told him, Barclays no digital, can they help him set up the iPad? Now in another computer store, it highlights that the wider population in the UK do think that Barclays has arrived in the digital age. I think, you know, without this broad engagement, you would have never been able to bring everyone along into this new era.
Chris: And that's an achievement. And I guess in your research, but also in your books, you highlight, you know, other stories in the articles you write. So, you know, if anyone's interested to learn from others that are, you know, leading the way, you know, feel free to, you know, look at the publications and also the posts that Christian that you've made. Christian, this has been a fantastic conversation. But before this conversation ends, we actually have a new tradition on this podcast. The tradition is that my previous guest leaves a question for the next guest without knowing who my next guest is and what we're going to talk about. So, my previous guest left a question for you. And actually, her question was: “Will we ever go back to normal or will everything keep on accelerating from here onwards?”
Christian: Well, you know, my answer, and I can go back again to the book that I've written about long-term success is, that we always think that we live in the most dramatic of times. But then, you know, put yourself in the shoes of a young man in 1941 who was sent to the front lines of the Second World War. Put yourself into the shoes of somebody living in the rural area in, you know, 19th century UK and for the first time, there's a train coming along. All of them would have also thought this is sort of stuff that has never happened. So, you know, my answer would be I'm not sure if we really do live in the most dramatic of times. It probably also depends on where you live. Yeah. For people who are living in a conflict zone at the moment, you know, that's probably true for them personally. But for us sitting here comfortably somewhere in an office, you in Germany, me in the UK, you know, well, You know, I'm sure other people had a bit more change and stress coming their way in the past. I don't necessarily think that we're in the most dramatic of all time.
Chris: And that's, you know, I can resonate very well with that. It's always a thing of perspective and, you know, change is part of nature, and it has always been in different forms and, you know, sorts and speed as well. So thank you for that. And, you know, offline, I'm going to ask what your question will be for my next guest, but we'll not do this on record because for obvious reasons. And you know, Christian, that's it for this episode. Thank you so much for being my guest. It was a pleasure to listen to you. Thanks for sharing your experiences.
Christian: It was fun. Thanks for having me.
Chris: And to everybody listening or watching, if you want to learn more, you know, we're going to link some of the assets and books that Christian has written in the show notes of this episode. And yeah, that's it. Thanks for listening. Take care and bye-bye.
Show notes
Interested readers can find Christian's book here: "Open Strategy - Open Strategy: Mastering Disruption from Outside the C-Suite"
About the authors
Dr. Christian Mühlroth is the host of the Innovation Rockstars podcast and CEO of ITONICS. Prof. Dr. Christian Stadler is Professor of Strategic Management at the Warwick Business School in UK.
The Innovation Rockstars podcast is a production of ITONICS, provider of the world’s leading Operating System for Innovation. Do you also have an inspiring story to tell about innovation, foresight, strategy, or growth? Then shoot us a note!
