The men and women who run the world’s largest organizations increasingly marvel at how different everything feels from even a decade ago. In this volatile new business environment, the tempo is faster, the dynamics more complex. Leaders struggle to stay on top of everything they need to know to do their jobs. They have to make decisions under extreme uncertainty while operating continually in the limelight.
In response, some innovative CEOs are redefining their roles and rethinking their leadership methods. They are doing so by introducing more participatory and bottom-up modes of strategy and business planning—often using online tools such as blogs, wikis and discussion forums that allow employees at every level to have a say. No longer are these CEOs generals issuing orders to the troops; instead, they are moderators of an organization-wide conversation. Executives who have embraced more “social” strategy and planning cite two major benefits.
First is the improved quality of strategy and business plans. As IT services provider HCL Technologies rapidly grew in scale and complexity, its vice-chairman and former CEO Vineet Nayar found it increasingly difficult for him and his team to weigh in on literally hundreds of business plans that required their attention. In response, he introduced a new planning process that required 300 HCL executives to post their business plans online and asked 15,000 employees to rate and review them. The system is now in its fourth year, and HCL executives are convinced it consistently yields much richer and more detailed feedback than would be possible through traditional approaches. The reason? Its ability to pull diverse and more granular insights from the front lines and across business units.
The second benefit is cultural. A more social approach can foster greater employee engagement at all levels—a critical component of long-term organizational health. Statoil, one of the largest oil and gas companies in the world, has implemented a highly participatory, transparent and dynamic performance management process. At the heart of this approach is a common template called Ambition to Action that teams and units across the company use to set objectives. These plans are developed by each unit, drawing on the experiences of the teams around them—a process Statoil calls “translation.” A highly transparent online platform is what allows executives to “drill down” but also “drill across” (what are our peers doing?) and “drill up” (what is the company’s overall strategy?). Since starting the program in 2005, Statoil reports that teams show greater ownership of their performance, and communicate better with one another.
Implementing participatory strategy and planning, of course, requires a major shift in mindset among leaders. It takes a commitment not just to the technology, but to the principles of the web: transparency, peer review, inclusion and autonomy. It also changes the role of the CEO in the organizational network; but that change is much easier said than done.
Orchestrating an effective social strategy and planning process requires three important shifts from leaders. First, they must become comfortable with soliciting and receiving feedback and questions from any corner of the company, and responding candidly. Second, they must tolerate, and in fact encourage, a culture of constructive skepticism so that people can express dissenting views without fear of repercussion. Third, they have to trust the process and, above all, its participants. As Statoil CEO Helge Lund says, “One of the main principles in our Ambition to Action concept is that Statoil consists of mature, professional and able people who both can and want to accept responsibility.”
While it’s still early days for crowd-sourced strategy and planning, the potential of more participatory approaches to enhance the quality of dialogue, improve decision-making and boost organizational alignment is intriguing. Realizing that potential will require strategic leaders to flex new muscles—and display real courage.
Dominic Barton is the global managing director of McKinsey & Co.