At its heart, strategy is a people process. Even though the emphasis is often on the analytical side, at the end of the day it is people who drive the process, interpret how things are, come up with ideas for the future, and execute the strategy. Therefore, I favor a participative approach to strategy making, in which a wide range of people is involved throughout the strategy process. This is not just a personal taste or preference. No, research provides substantial evidence that participation works. From top-down to participation
The fact that strategy is traditionally generated at the top of the organization suggests that the more complex and important a decision is, the fewer people should be involved. If you think about it, and let conventional ideas about strategy go for a moment, this doesn’t make sense. It actually is quite absurd. Wouldn’t it be far more logical that, the more complex and important something is, the more people should be involved?
Strategy, especially in today’s dynamic times, is pretty complex and important. Furthermore, with the fast changes around us, people’s expertise is often the only available source that we can rely on because "hard data" is lacking. Therefore, I can only conclude that strategy making needs to be participative to be successful because you simply need all the expertise that is available. What we can learn from other disciplines and from research
In other disciplines such as quality management and innovation, the idea of involving as many people as possible is widespread. Approaches such as lean, six sigma and other forms of continuous improvement have turned quality management from a centralized staff function to a part of everyone’s job description.
One of the key ideas behind this is that everyone can have some ideas for improvement based on their own role in an organization. And in innovation, the advantage of involving many people is a cornerstone of open innovation and crowdsourcing, where the idea of the "wisdom of the crowd" has already long been discovered.
In strategy, however, "wisdom" is mostly still assumed to reside within the heads of a few people at the top of the organization. With perhaps the exception of the Bransons, Jobs and Musks of this world, there is no evidence whatsoever, though, that executives have better foresight or insight or more creative ideas and solutions than other people. Therefore, there is no reason to assume that everyone in an organization could not contribute to strategy making as well and thereby make strategy more effective.
Research supports this. Both in practice and in the literature, there is substantial dispute about the advantages and disadvantages of participation in strategy making. Participation, it is argued, can lead to better strategies and more commitment, but also to delays, political games, and unproductive compromises. Empirical research, however, is quite clear about it: the advantages of participation are real, while the disadvantages are not. As it turns out, if done well, participation even results in faster, less political, and less compromised strategy making.
The two key reasons
How can this be? Isn’t it, for example, super inefficient to involve everyone in strategy making?
Involving more people may look inefficient on the short run since it consumes time and resources that cannot be spent otherwise. If involved in strategy, people are "distracted" from their day-to-day work and spend their time on things that don’t immediately lead to tangible outputs. But on the long run, however, involvement is more efficient. If we look at an organization over time and include the execution of strategy as well and also the early discovery of strategic issues and the timely response to these issues, involving people from throughout the organization in strategy making is actually very efficient..
Along these lines, the advantages of participation in strategy can be summarized in two key reasons why participation in strategy works:
What participation means
- Better strategy: the more people who participate, the bigger the knowledge base to tap and the more different perspectives can be taken into account. Especially if people have different types of expertise and experience, involving them in strategy making leads to more and better ideas. It also reduces the likelihood of narrow-minded groupthink. And, by having people from different parts of the organization collaborate, participation also creates more coherent and cohesive strategy.
- Smoother execution: for effective execution, it is crucial that people want to execute a strategy; because people have had their say in the process, participation significantly increases the chances that they will. This is especially the case if they agree with the strategy and feel a bit of co-ownership: it is their strategy too. But even if they disagree with the outcome, they will at least feel that the strategy process has been fair by involving people throughout the organization.
Extending the involvement in strategy to everyone—or at least many—in the organization does not mean that strategy making consists of a single dialogue in which all are involved and that should lead to a shared understanding amongst all of them. It also does not mean that strategy becomes a democratic process or that everyone in the organization has an equally important role in strategy making. Neither does it imply that leaders’ roles as visionaries, direction setters, or champions would disappear. Such roles are still relevant and needed as ever.
What it does mean, though, is that strategy making is a joint effort of people at different levels in an organization who all contribute from their own particular roles and viewpoints. Everyone in an organization has specific expertise about something and knows at least one or two things better than anyone else. And based on that expertise they can offer valuable contributions to strategy making.