“Only 11 percent of executives feel strategic planning truly adds value.”
Harvard Business Review
INTRODUCTION
In an era where rapid transformation is the norm, the traditional strategy process has often lagged, bound by top-down directives that move at the speed of annual reports rather than real-time insights. This whitepaper unveils a revolutionary approach: a dynamic, bottom-up strategy that not only engages employees and stakeholders at all levels but also harnesses the transformative power of Artificial Intelligence.
A staggering 89 percent of executives are skeptical about the value of their strategic planning, as reported by the Harvard Business Review. This new strategy process aims to reclaim and revitalize the essence of strategic planning, transforming it into a robust, participative journey.
In the following pages, we present a clear 3-step method that discards the echo chamber of executive boardrooms and opens the floodgates to the collective genius of an organization. From the ingenious ideation reminiscent of Adidas North America's resurgence to the AI-driven insights that rival the intellect of top MBA students, we explore how strategic development is evolving from a painstaking process into an exhilarating venture of discovery.
STEP 1
Spend one hour in your management team meeting to arrive at a common view on the current and desired state of the company’s strategy.
Exercise
Each MT member asks themselves the following question: Over the next few years, how is the organization going to reinvent itself and the world around it?
Each writes out their answer in "from-to" statements.
Then discuss the answers and evaluate:
Is there consensus on key priorities?
Would our agenda surprise competitors?
Does the strategy imply significant stretch?
The answer to these questions will be ‘no’ or ‘not enough’. This is normal. The next step therefore is to discuss as a team what to aim for. For example, “A good strategy will define how we increase relevance, it will aim for having a point of view about the future that ensures consistency, spurs creativity and inspires bravery.”
STEP 2
Decide on method, go for a top-down strategy process ‘roll-out’ or open strategy ‘roll-up’.
A top-down process can be fast, structured, grounded in consultants’ analysis, and ready for town hall presentations. Responsibility lies with the CEO or often the ‘Chief Strategy Officer’.
The downside
A recent Harvard Business Review study found that only 11 percent of executives feel strategic planning truly adds value. A classic process uses only a tiny fraction of the organization’s collective imagination; it's the opposite of an exciting, participative quest to discover new opportunities. It assumes top leadership has a full view of all key trends. It limits the chance to generate game-changing ideas based on having many strategic options, using the wisdom of the crowd.
The alternative
A company-wide conversation that is open to employees, customers, external partners. A process that encourages radical thinking and includes new voices. One where you diverge before you converge on key themes.
An open strategy process is messier and potentially more time-consuming than the top-down alternative, yet it has the following benefits:
More radical and ambitious ideas
More granularity in ideas and business plans, therefore more actionability
More credibility and commitment, therefore faster adoption and execution
OPEN STRATEGY EXAMPLE
Adidas North America
Context
In 2014, Adidas NA was losing market share, with a capable but dispirited Management Team and approximately 3,500 employees
The challenge
Develop and implement a growth strategy in months, not years.
Solution
A 10-week initiative, teaching employees how to think like game changers and inviting them to help shape the company strategy.
Weeks 1 and 2 Participants go through the Adidas Innovation Academy to unlearn incremental thinking.
Weeks 3-6: Participants are challenged to come up with fresh insights and post them on a shared platform. Some challenged the existing strategy, others highlighted trends that weren't yet on the company's radar.
Weeks 7-10: Participants turn insights into business ideas.
Result
Approximately 1000 ideas were peer-rated for impact and doability. While the ideation process placed no constraints on the sort of ideas, most ended up clustering around a dozen or so strategic themes. During an all-hands ‘shark tank’, key proposals were pitched; several were fast-tracked.
“This process fostered a culture of curiosity and moved us more towards thinking and challenging. You can get compliance top-down, but you can’t get commitment top-down”
Mark King, CEO Adidas North America, 2014 – 2018
STEP 3
Design and initiate the process, considering the degree of AI support you use
If you decide not to go for a company-wide conversation, then here are some ways to somewhat open the strategy process:
Ensure every future-focused meeting includes a disproportionate number of young people, newcomers, and individuals who have worked in other industries. For example, present plans before hundreds of young employees who live-tweet/comment criticisms and suggestions.
Make outsiders feel like insiders. Build an open discovery network, invite customers, suppliers, and industry experts, and host a conversation about the future and ask, “What do you think we should start/stop/keep doing?”
Install a council ('headlight team'), whose members spend time with customers, employees, and check out competitors, extracting insights and ideas to fuel their strategic thinking.
If you opt for a company-wide conversation:
Invest in building creative skills, training people to think differently to increase the signal-to-noise ratio.
Make it social. The magic happens when ideas collide, and curious people interact on an online strategy platform, enabling innovators to find colleagues working on similar ideas and then collaborate if they choose to.
Buy or build the online strategy platform, e.g., MS Teams, Miro, Circlelytics.
Determine process and formats:
Design the appropriate process, for example: (i) the new council meets weekly to identify key strategic themes to be addressed, (ii) launch an employee survey (start/stop/keep), (iii) ask the top-50 for their 3 key constraints that must be tackled, (iv) decide on a 2-day offsite or a series of executive dialogues, e.g., (i) current state including goals & boundaries, (ii) future environment, (iii) future desired state, (iv) walk-back requirements, and (v) implementation plan moving forward.
Define the structure and granularity of the strategy template; take, for example, the One Page Strategic Plan, which captures the Vision and Values, BHAG (Big Hairy Audacious Goal), the Where, the What (objectives for the next 12 months), and the How (90-day priority), the next quarter's theme & celebration, etc.
Eventually, guide the process and consolidate inputs in such a way that the classic sections are covered; the current situation, the future environment and desired state, the walk-back in terms of required initiatives, and the plan forward including financial and operational implications. Ensure execution by embedding new routines such as the quarterly adjustment of the One Page Strategic Plan (or OKR, OGSM, etc.) for departments and individuals.
Integrate Artificial Intelligence (AI) across the strategic development continuum, ranging from AI-assisted to AI-driven methods.
AI-assisted: In this model, generative AI is leveraged to categorize and synthesize inputs during various stages of idea generation, similar to the approach in the Adidas Open Strategy initiative. Generative AI excels at processing and structuring textual data. It can automatically parse submissions, remove redundancies, highlight the most commonly addressed points, and propose questions that prompt further refinement and enhancement of ideas and strategies. This capability transforms the traditionally labor-intensive task of evaluating inputs, such as those from employee feedback surveys, into a more efficient, AI-mediated process.
AI-enhanced: AI examines the depth, completeness, and coherence of ideas by contrasting them with established strategy frameworks and benchmarks. It then provides constructive feedback, offering suggestions for augmentation or modification.
AI-supported: AI is utilized to formulate components of the strategy or certain aspects of the developmental phase. For instance, our experiences with creating consumer personas and identifying their unmet needs—functional, emotional, and social—have been highly positive. The accuracy, comprehensiveness, and speed of GPT's output have been a valuable preliminary step before consumer validation, saving us several weeks of consumer interviews. In the case of a fashion brand, we used AI to conceive product concepts addressing these needs and to visualize these ideas promptly, enabling immediate consumer response. The AI demonstrated creativity in generating relevant concepts and the ability to quickly depict them in realistic scenarios, greatly aiding consumer evaluation and market testing.
AI-driven: An experiment at INSEAD took this approach to a new level: A classroom study contrasted a strategy formulated by MBA students through traditional methods with one crafted using a virtual AI assistant. This assistant was an interactive tool that combined the "Blue Ocean" strategic framework with the generative capabilities of Chat GPT. The outcomes of both processes were comparable, with the AI-derived strategy being notably more innovative in some aspects. The most striking contrast was the time investment: students spent a week, whereas the AI required merely an hour. For a detailed account of the INSEAD experiment, refer to the Harvard Business Review article: Can GenAI Do Strategy?
Sources: IntotheNXT.com; ‘Scaling up’ by Verne Harnish; ‘Humanocracy’ by Gary Hamel and Michele Zanini; HBR ‘Can GenAI Do Strategy?’ by Michael Olenick and Peter Zemsky
IntotheNXT
IntotheNXT is a strategy consultancy that unlocks growth potential. Our approach is people-first, driven by unconventional thinking, and action-oriented. If you’re seeking better strategy and execution for disruptive technologies, improved commercial performance, or culture transformation, reach out to us. C-level coaches and thinkers and doers for effective execution. Our goal: transform 25 companies by 2050.
About the author
Bas Kemme has 20+ years of experience as a top-tier strategy & innovation consultant and start-up founder. During his start-up time he became inspired to bring the start-up spirit back to corporates and went through several learning journeys since then, related to innovation, human motivation and organization models. Bas helps organizations serve customers better and be a great place to work through better application of human and artificial intelligence. In his works he applies leading thinking on strategy, innovation, leadership, and organization psychology.
Email: Bas.kemme@intothenxt.com