‘What is interesting and important happens mostly in secret, in places where there is no power. Nothing much of lasting value ever happens at the head table.’ - Michael Ondaatje, The Cat’s Table.
Strategy setting often suffers from insufficient diversity and expertise, with leaders removed from the implications of their decisions, and hampered by experience-based biases. This results in flawed strategies, or strategies not embraced by the people who are tasked to implement them.
One way to address these issues is to create a more participative strategy process, re-thinking who should participate in the strategic conversations - more on the basis of the quality of ideas, rather than where they come from. Such conversations help a company to test leaders and peers’ understanding of the issues, relate the issues to their respective experiences, challenge situations, and foster the sharing of insights. They often break down the formality of the corporate culture to access the best ideas, unfiltered by management, and enable them to be applied straight away.
Soon after Jim Whitehurst took over the position of CEO of Red Hat, the billion-dollar open source software company, he started to have this type of conversations with his employees. As he realised that the corporate mission was poorly understood, he decided to revisit it. For a company that lives and breathes the value of open source development, it obviously started with employees providing their input. Once a more directional mission became available, instead of finalising it behind closed doors with his executive team, Whitehurst released it, in draft form, to the whole company, and asked everyone what they thought of it, and how it could be improved. Asking employees to become part of the process, getting their insights about why they were doing their jobs, and using some of their feedback to improve the mission itself gave the employees ownership of the mission. Whitehurst then went on to spend three and half years inventing and testing a similar participative and open approach to developing more effectively Red Hat’s strategy.
So what are the key lessons that can be learned from Red Hat’s participative strategy development process?
1. Shift the strategic-leadership role of the top executives team from ‘all-knowing decision-makers’ to ‘social architects’.
The starting point is an honest assessment of the readiness of the organisation to open up, which then leads to determining the best way to stimulate engagement. Once the process for interacting with employees is set-up, leaders have to constantly fine-tune it, while continuously reaffirming the open culture, and the vital importance of the contribution of their employees. As part of this, they must demonstrate some vulnerability to match the exposure that their employees might feel when expressing themselves openly. This approach requires a more direct, personal, and empathetic exchange with employees than what traditional town hall meetings allow. Red Hat’s experience shows that making this shift does not imply an abdication of strategic leadership. Its CEO and other top executives still have the responsibility to step in, if things go awry, and to make the difficult trade-offs that are the essence of good strategy.
2. Build a culture of openness, transparency, collaboration, and peer review.
The best way to increase the quality of insights is through variety. To participate in a more open strategy development, employees from across the company need to believe that the environment they work in is capable of metabolizing their diversity of opinions. Red Hat wanted to be more systematic about how they analysed the market, customers, and prospects as an input into their strategy. They initiated an idea generation process (that would ultimately last for five months), and created a cross-functional ‘engagement team’ charged with inventing ever-new ways to maintain transparency, and expand the conversation. They included the use wikis, blogs, as well as company-wide online chats with the CEO, who could be asked any question about the strategy process (or about anything else). In parallel, the strategy team posted status updates to the wikis, and replied to comments on their team's internal blog. This openness and access to a variety of ideas enabled the thinking to evolve as part of the process. For instance, one of the conversations started about the need for a defensive differentiation strategy that would halt competitors’ progress. However, as ideas were shared and discussed openly, it became clear that creating additional value for customers through the products and services would yield more compelling results.
3. Involve employees throughout the process strategic planning – from idea generation to the execution.
The best ideas from Red Hat’s idea generation phase evolved into nine strategic priorities, each with their devoted ‘exploration’ team sponsored by a member of the executive team, such as the CIO or VP of Operations for instance. To execute more efficiently such opportunities, the company headed up each team with leaders one or two levels removed from the senior leadership team. Those, in turn, tapped the people with the most knowledge and most interesting ideas to take charge of actually developing the strategy, and the actionable plans in each area. In most companies, the teams would be asked to present the strategies and plans they had built back to the leadership team, for the latter to make final decisions. But at Red Hat, the accountability and responsibility was left in the hands of the people who knew the most i.e. those who were doing the work. They were trusted to execute the plans without further approvals.
4. Create an open approach to communication and engagement.
To keep a large number of people communicating, informed, and involved at all levels in the company, Red Hat set-up a specific cross-functional team that included representatives from the human resources, branding, internal communication, and information technology teams. Regular updates on progress and deep dives on strategy became a part of most of the company’s managerial meetings. This kept the momentum behind the strategy strong, and ensured that Red Hat stayed focused on executing it. In addition, strategy became a continuous process - updated and evaluated on an ongoing basis, instead of once year, on a fixed calendar. Initiative leaders communicated via town hall–style meetings, Internet chat sessions, and frequent blog posts. Evolving funding needs of the initiatives were directly fed into the company’s annual budget process. The pillar of the communication about the strategy process was an iconic diagram that worked like a "You Are Here" map. It would show people where any discussion might fit into the overall strategy, to ensure that everyone understood how his or her work fit into a larger vision.
5. Fostering a culture that builds up broad skill sets is increasingly important.
Red Hat has focused on stimulating more collaboration across disciplines, as well as on providing more opportunities for people to have experiences in different departments of the company. The results are better leaders, who have a broader set of methods they can use to help solve an issue, or seize an opportunity. Each exploration team is sponsored by a member of the executive team, but rather than naming the "usual suspects", leaders were asked to lead efforts far removed from their daily responsibilities. As a result, senior leaders gained perspective and understanding of worlds they had never spent much time in before.
Red Hat began democratising its corporate strategy in 2008. They have since executed a total of 17 initiatives under the nine original themes it had defined. The resulting strategy has positioned them well against the technological shift towards cloud computing. They have also become nimble, and ready to dream, analyse, prioritise, and execute more efficiently.
While some organisational cultures like Red Hat’s seem naturally open to strategic conversations, other businesses may need to experiment more carefully - whether it means trying it out in a few areas, or creating meaningful opportunities for participation, in the context of a more traditional strategy process.
However the pressure to evolve towards a more participative strategic planning process harnessing the creativity of a more autonomous, and highly motivated workforce will only grow – it is driven by the arrival of millennials in the workplace, the growing use of social media, the need to address a growing disenfranchisement of employees, and deliver sustained results in a rapidly changing world.
More on Red Hat’s latest vision can be found HERE
by Christelle Espinasse - inSTRATEGIA
