Draft:Open Strategy

Open Strategy is an approach to strategy-making in organizations, distinguished by a higher degree of openness than traditional strategic management, involving greater inclusiveness and/or transparency in the processes and outcomes of strategy formulation and implementation.

The concept of Open Strategy was initially introduced by Henry Chesbrough and Melissa Appleyard in 2007. It was further developed by Richard Whittington, Ludovic Cailluet, and Basak Yakis-Douglas in 2011, who described the phenomenon of engaging a wider range of internal and external stakeholders, such as employees, customers, suppliers, partners, regulators, or the general public, in strategic decision-making.

Open Strategy aims to leverage diverse sources of knowledge and ideas, enhance legitimacy and commitment, and foster innovation and learning. The approach, however, presents various challenges and dilemmas, such as managing information overload,  safeguarding intellectual property, balancing conflicting interests, and ensuring strategic coherence. The motivation for as well as the challenges and results of Open Strategy initiatives are influenced by several contextual factors, such as the nature of the industry, the organizational culture, the regulatory environment, and the technological infrastructure.

In general, 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.

Driving Forces and Origin
In the field of strategy-making, there has been a notable shift from traditional methods characterized by secrecy and exclusivity to more inclusive and transparent processes. This transition is primarily driven by four key forces: societal, cultural, technological, and organizational.


 * Societal Shifts: The trend towards more openness is evident in increasing demands for transparency and accountability from various stakeholders, such as regulators, investors, consumers, and activists. These demands are further amplified by a generational change, with younger, digitally-native generations seeking greater levels of inclusion and transparency, particularly in matters that affect them. Additionally, the rise of corporate social responsibility (CSR) and ethical considerations in business practices have further emphasized the importance of transparent strategy processes.


 * Cultural Forces: In the postmodern era, characterized by a pervasive scepticism towards established norms, there is a challenge to the conventional paradigms of strategy. This era calls for a more inclusive approach to strategy-making. Complementing this cultural shift is the democratization of strategic expertise, whereby strategic discussions and knowledge are no longer the sole domain of an elite group of leaders but are disseminated more broadly.
 * Technological Advances: Technological developments further played an essential role in fostering a new era of openness in strategy-making. Innovations in information technologies, including digital platforms and collaborative tools, have enabled broader participation in strategy processes. These technologies ensure efficient, fast, and cost-effective dissemination of information via intra- and internet.
 * Organizational Dynamics: Organizations are adapting to the changing global landscape by evolving their structures and dynamics. Transnational organizations, in particular, have recalibrated their strategic practices to be more decentralized and transparent. This change is a response to the complexities of financial capitalism, characterized by factors such as activist shareholders and hostile takeovers. In addition, businesses built on digital platforms, emphasizing collaboration and community engagement, are naturally inclined towards great openness, emphasizing collective effort and joint value creation.

As general drivers of openness, these forces have fueled the adoption of openness in many different areas of organizational activity. The growing trend of openness in strategizing aligns with a broader societal shift observed over recent decades. Initially stemming from the realm of Open Source Software, the ethos of openness, underpinned by transparency and inclusion processes, has expanded across various fields. These include Open Science, Open Innovation, Open Data, Open Government, and more recently, Open Strategy.

In the field of business management, a shift toward more openness became primarily evident in 1995. The discourse began with the assertion that strategy is not created only by the people at the top of a company or its planning department. This fundamental idea was further developed a year later, with an emphasis on the democratization of strategy-making. As the new millennium unfolded, several related concepts emerged. In 2003, Henry Chesbrough introduced the paradigm of Open Innovation, followed closely by James Surowiecki's concept of the Wisdom of the Crowd in 2004, and the democratization of innovation by Eric von Hippel in 2005. After Gary Hamel's emphasis on the democracy of ideas in 2007, Jeff Howe introduced the idea of Crowdsourcing in 2008, further reinforcing this shift. In 2011, this evolution resulted in the emergence of more open forms of strategy-making, advocating transparency and inclusion in the strategic management process.

In the evolving landscape of organizational strategy, the Open Strategy phenomenon is significantly influenced by other movements towards more openness, especially Open Innovation. This approach underscores the importance of leveraging both external and internal sources of knowledge and ideas on an operational level. By expanding the principles of Open Innovation to a strategic level, organizations are able to blur the conventional boundaries that traditionally separated strategic planning from other organizational processes. This enables them to adapt to the complex, dynamic, and interconnected business environments of the modern era.

Open Strategy also draws inspiration from, and is often interlinked with, other more open practices like crowdsourcing, democratizing innovation, and collective intelligence. For instance, Crowdsourcing, involves issuing challenges to large and diverse groups to generate novel solutions, which aligns with the aim of Open Strategy to engage diverse stakeholder input. In a similar vein, 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) Strategic Planning (1960s–early 1970s) marked the beginning of a more structured approach to strategy-making. It initiated a dialogue among managerial elites, setting the foundation for future developments in strategic practices.
 * 2) Strategic Management (late 1970s onwards) shifted the focus towards strategic management. This phase expanded the dialogue to include middle managers and employees, emphasizing the importance of their roles in effective strategy implementation.
 * 3) Open Strategy (1990s onwards) further extends inclusivity and transparency in strategy-making processes. It involves 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.

Dimensions and Dynamics
Open Strategy is conceptualized “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.” Open Strategy can consequently be understood along two key dimensions: inclusion and/or transparency, both addressing internal and external stakeholders, expanding beyond the confines of managerial elites.

The concept of “inclusion” within Open Strategy encompasses engaging a variety of actors in the strategic discourse, thereby enriching the strategy-making process. This aspect aims to diversify 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”. This shift marks a departure from traditional strategy paradigms, which were exclusively the domain of top management, breaking down the monolithic structure of conventional strategy-making. Inclusion manifests in several sub-dimensions:the variety and diversity of participating constituencies, the degree and form of involvement (including decision-making), and the openness and transparency of participation procedures.


 * Key elements of inclusion in Open Strategy include:
 * Stakeholder Diversity: Open Strategy primarily centers around the number or range and diversity of stakeholders invited into the strategic discourse. Whittington et al. initially focused in 2011 on the numerical aspect of inclusion. However, subsequent works have deepened the understanding of this dimension by emphasizing the importance of a diverse set of stakeholders that are to be included, ensuring to also recognize minority views when discussing strategic issues. The range of actors that might be included in an Open Strategy process could span across different hierarchical levels and functions of the organization and even include a multitude of external stakeholders, ultimately the entire general public.
 * Topic Breadth:The scope of topics considered in Open Strategy highlights the variety of strategic issues open for discussion. This approach encourages a comprehensive exploration of strategic facets, ensuring attention to all relevant, including peripheral or non-traditional issues.
 * Involvement Depth: The degree of involvement describes how deeply stakeholders engage in the strategy-making process. This can range 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.  Open Strategy is generally less ‘democratic’ than other models.  Although stakeholders contribute their perspectives, ultimate decision-making authority may still reside with traditional strategy actors.
 * 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. Ensuring flexible procedures for participation in Open Strategy can promote equal opportunities for all stakeholders to engage and contribute to the strategy-making process. The concept of “transparency” in the context of Open Strategy refers to the availability and accessibility of strategic information to a diverse set of audiences. As defined by Hautz and colleagues in 2017, transparency in Open Strategy is “the internal or external visibility of information about an organization’s strategy”.  This concept signifies the shift from traditionally guarded strategic processes to those that are more open and accessible. It aims to ensure that all stakeholders, both internal and external, are well-informed about strategic directions and decisions. The degree of transparency is directly proportional to the number of audiences privy to such information.The sub-dimensions of transparency include the range and diversity of audiences, the extent of topics disclosed, and the openness of procedures governing transparency.
 * Range and Diversity of Audiences:In the realm of Open Strategy, transparency primarily focuses on the variety and number of stakeholders who have access to strategic information. An organization's dedication to transparency is evident in its proactive efforts to disseminate strategic insights across a broad spectrum of stakeholders. This includes various hierarchical levels within the organization, different functional areas, and even external entities.
 * Extent of Topics Disclosed: The aspect of transparency in Open Strategy emphasizes the amount of strategic information made available to stakeholders. This encompasses not only traditional strategic elements like goals, objectives, and initiatives but also the rationale behind decisions, potential risks, and the expected impacts of those decisions. By being transparent about a wide array of topics, organizations can ensure that stakeholders have a holistic understanding of the strategic direction. By being transparent about a wide range of topics, organizations enable stakeholders to gain a comprehensive understanding of the strategic direction. An organization can demonstrate high transparency either by revealing a small part of its strategy to a broad audience or by 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.
 * Openness of Transparency Procedures: Similar to the inclusion sub-dimension, this aspect pertains to the clarity and accessibility of the processes used for sharing strategic information. It is not merely about the availability of information but also about ensuring that it is presented in a manner that is understandable and actionable for the addressees. This involves establishing clear communication channels, providing regular updates, and implementing feedback mechanisms. These practices are essential to ensuring that the shared information is relevant and valuable to the recipients. In the context of Open Strategy, transparency and inclusion are recognized as dimensions that exist along a continuum. Firms may calibrate their level of openness, meaning they might opt for varying degrees of transparency while maintaining a different level of inclusion, or vice versa. This implies that companies might not embrace both dimensions simultaneously. They can navigate these continuums in either direction, leading to a dynamic and multifaceted approach to Open Strategy. This perspective is reinforced by Whittington and colleagues in 2011, who posited that the concepts of openness and closure in strategy-making are not simply binary but rather constitute a continuum. Consequently, strategies can manifest with different intensities of transparency and inclusion, offering a nuanced approach to strategy formulation and execution.

Dynamics of Open Strategy

 * 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.
 * 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.
 * 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.
 * 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.

Dynamics Leading to Increased Openness
In the context of Open Strategy, a variety of dynamics are driving organizations towards an increased state of 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. In certain instances, organizations are increasing both transparency and inclusion, gaining additional insights while also sharing more strategic information broadly. However, it is important to recognize that an increase in one dimension (transparency or inclusion) does not necessitate a corresponding increase in the other.

Dynamics leading to reduced openness
Despite the noticeable trend towards increased openness, there are also dynamics that can lead organizations to lessen their level of openness. 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. The decision and degree of openness are influenced by a myriad of 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.

Practices
Drawing from the Strategy as Practice (SAP) tradition, which emphasizes the activities and interactions in strategic management, Open Strategy extends this focus into a more inclusive and transparent realm. Depending on the degree of inclusion and transparency, Open Strategy can manifest in various forms and practices. These include online platforms, crowdsourcing, wikis, blogs, social media, town hall meetings, workshops, surveys, or open contests. These practices can be applicable across different stages of the strategic management process, encompassing analysis, idea generation, formulation, implementation, evaluation, and refinement.

Inclusion Practices in Open Strategy

 * Traditional Methods:
 * Physical workshops and roundtables (e.g., Shell's engagement in Peru in the 1990s).


 * Modern Methods:
 * Online platforms (e.g., IBM's 2006 Innovation Jam, Siemens' crowdsourcing for sustainability strategy).
 * Digital collaboration tools like Mural combined with video conferencing software.
 * Internal strategy jams and inter-organizational strategy workshops.

Transparency Practices in Open Strategy

 * Traditional Methods:
 * Visual communication tools like PowerPoint presentations and flip charts.
 * Media releases, especially during mergers and acquisitions.


 * Modern Methods:
 * CEO strategy blogging (on the organization’s website or intranet).
 * CEO webinars for continuous communication and interaction with audiences.

Opportunities and Challenges
The following overview provides a summary of the most relevant opportunities and challenges associated with increased inclusion and transparency, reflecting on the motivations that drive organizations towards Open Strategy and the potential hurdles encountered in this endeavor.

Inclusion

 * 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.
 * Pluralism of Perspectives: Different stakeholders bring unique perspectives that challenge the dominant logic and potentially lead to innovative solutions.
 * Commitment (sense of ownership): Engaging middle managers and other stakeholders in strategy formulation may lead to a better understanding and implementation of strategies
 * Legitimacy: Open Strategy can foster collective legitimization of strategic decisions across different levels of the organization and external stakeholders.
 * Identification of Strategic Talents: Uncovering and engaging individuals with strategic insight from within and outside the organization.

Transparency

 * Simplifying coordination/collaboration: Transparency facilitates shared understanding and eases coordination among various stakeholders.
 * Trust building: Clear and open communication of strategies can foster trust among stakeholders.
 * Compliance with regulation: Transparency in strategic processes can aid in adhering to regulatory requirements and standards.
 * Legitimacy: Enhanced transparency can also contribute to legitimacy by garnering stakeholder confidence and investment.
 * Information advantage: Transparency provides a pathway to broader access to information crucial for strategic decisions.

Dilemmas of Open Strategy
The dilemmas of Open Strategy introduced by Hautz et al. in 2017 describe the challenges 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:


 * Dilemma of Process: While inclusiveness harnesses diverse expertise and perspectives and thus a wider source of knowledge, this might compromise speed, flexibility, and control over the strategy-making process as it complicates decision-making due to extended discussions and yields potential misalignments. This might lead to a greater strain on organizational resources.


 * 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.
 * Dilemma of Disclosure: While Open Strategy may foster legitimacy and collaboration, it also risks exposing sensitive information to competitors, may inadvertently engender trust, and may foster misunderstandings due to information overload or misinterpretation.
 * Dilemma of Empowerment: Offering individuals a voice in strategic matters might also burden them with additional responsibilities and pressures.
 * 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.

Inclusion

 * Overload of Opinions: The influx of diverse opinions can lead to decision paralysis and may divert focus from core strategic issues.
 * 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. Especially, 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.
 * Overemphasis on consensus: An overemphasis on consensus may inhibit bold strategic ideas and moves.

Transparency

 * 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
The exploration of Open Strategy has been enriched through various theoretical lenses, each highlighting distinctive facets of this domain. David Seidl and colleagues have broadly categorized the theoretical perspectives on Open Strategy into six distinct groups:


 * 1) Practice Theories: These 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.
 * 2) Communication-based Approaches: This perspective emphasizes 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.
 * 3) Sensemaking Theories: These 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) Stakeholder-related Approaches: This view 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.
 * 5) Institutional Approaches: These 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.
 * 6) Information/Knowledge-based Approaches: These 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.

Most Relevant Literature (in chronological order)

 * 1) Chesbrough, H., & Appleyard, M. M. (2007). Open Innovation and strategy. California Management Review, 50(1), 57–76. https://doi.org/10.2307/41166416
 * 2) 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
 * 3) 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
 * 4) Seidl, D., von Krogh, G., & Whittington, R. (2019). Cambridge Handbook of Open Strategy. Cambridge University Press. https://doi.org/10.1017/9781108347921
 * 5) 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
 * 6) 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
 * 7) 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.
 * 8) 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.