Cambridge Handbook of Open Strategy 1108424864, 9781108424868

Table of contents :
Cover
Front Matter
Cambridge Handbook of
Open Strategy
Copyright
Contents
Figures
Tables
Introduction
PART I: The Concept of Open Strategy
1 Defining Open Strategy:
Dimensions, Practices, Impacts, and
Perspectives
2 Participation Research and Open
Strategy
3 Open Innovation and Open Strategy:
Epistemic and Design Dimensions
4 Strategic Openness and Open
Strategy
PART II: Practices of Open Strategy
5 Practices of Inclusion in Open
Strategy
6 Interorganizational Strategizing
7 Crowdsourcing in Open Strategy:
What Can Open Strategy Learn from
Open Innovation?
8 Practices of Transparency in Open
Strategy: Beyond the Dichotomy
of Voluntary and Mandatory
Disclosure
9 Orientations of Open Strategy:
From Resistance to Transformation
PART III: Technological Assemblages for Open
Strategy
10 Open Strategy and Information
Technology
11 Social Media in Open Strategy:
A Five-Flows Model of Strategy
Making and Enactment
12 Visuals in Open Strategy
PART IV: Theoretical Perspectives
13 Practice-Theoretical Perspectives on
Open Strategy: Implications of
a Strong Programme
14 A Sensemaking Perspective on Open
Strategy
15 A Dialogic Perspective on Open
Strategy
16 A Social Network Perspective on
Open Strategy
17 An Institutional Perspective on Open
Strategy: Strategy in World Society
PART V: Challenges of Open Strategy
18 The Politics of Openness
19 The Relation between Openness and
Closure in Open Strategy:
Programmatic and Constitutive
Approaches to Openness
Index

Citation preview

Cambridge Handbook of Open Strategy The first of its kind, this Handbook mobilizes research on an emerging phenomenon, Open Strategy. As new technologies and societal pressures have precipitated employees, business partners, shareholder groups and other stakeholders into deeper involvement in strategy, various Open Strategy initiatives now promise greater transparency and inclusion in the strategy process. Providing a wide-ranging introduction to the concept of Open Strategy and its various dimensions, the chapters of this Handbook detail key practices, discuss the roles of technology, and propose various theoretical perspectives for researching Open Strategy. Finally, this Handbook addresses the ongoing challenges and politics involved in Open Strategy. It will appeal to organization and strategy scholars, master’s students in business and management, practitioners, such as consultants and strategy staff in established firms, and anyone concerned with new trends in strategy development and its implications for organizations and their members. is a Professor of Organization and Management at the University of Zurich. He is a member of several editorial boards including Organization Studies where he is currently a Senior Editor. He has written and (co)edited several books, including the Cambridge Handbook of Strategy as Practice (Cambridge University Press, 2012).

D A VI D S E I D L

R I C H A R D W H I T T I N G T O N is Professor of Strategic Management at the Saïd Business School and New College, University of Oxford. He has published ten books, including the leading textbook Exploring Strategy (12th edition, 2019) and the research monograph Opening Strategy: Professional Strategists and Practice Change, 1960 to Today (2019). He is an Associate Editor of the Strategic Management Journal. G E O R G V O N K R O G H is a Professor at the ETH Zurich and holds the Chair of Strategic Management and Innovation. He also holds an honorary position as Research Fellow at Judge Business School, University of Cambridge. Von Krogh has published several books on strategy, organizations, and innovation, and serves as Editorial Board member of various journals including the Academy of Management Journal, and Journal of Strategic Information Systems, amongst others. He is a Senior Editor at the Academy of Management Discoveries.

Cambridge Handbook of Open Strategy Edited by D A V I D SE I D L University of Zurich

R I C H A R D WH I T T I N G T O N Saïd Business School, University of Oxford

GEORG VON KROGH ETH Zurich

University Printing House, Cambridge CB2 8BS, United Kingdom One Liberty Plaza, 20th Floor, New York, NY 10006, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia 314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India 79 Anson Road, #06–04/06, Singapore 079906 Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning, and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781108424868 DOI: 10.1017/9781108347921 © Cambridge University Press 2019 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2019 Printed and bound in Great Britain by Clays Ltd, Elcograf S.p.A. A catalogue record for this publication is available from the British Library. Library of Congress Cataloging-in-Publication Data Names: Seidl, David, editor. | Whittington, Richard, 1958– editor. | Von Krogh, George, editor. Title: Cambridge handbook of open strategy / edited by David Seidl, Universitat Zurich, Richard Whittington, Said Business School, University of Oxford, Georg von Krogh, Swiss Federal University (ETH), Zurich. Description: Cambridge, United Kingdom ; New York, NY : Cambridge University Press, 2018. Identifiers: LCCN 2018055387 | ISBN 9781108424868 (hardback) Subjects: LCSH: Strategic planning. | Management. Classification: LCC HD30.28 .C3479 2018 | DDC 658.4/012–dc23 LC record available at https://lccn.loc.gov/2018055387 ISBN 978-1-108-42486-8 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

Contents

List of Figures List of Tables

viii ix

Introduction 1 David Seidl, Georg von Krogh, and Richard Whittington

PAR T I T HE CO NC EPT OF O PEN ST RATEGY 7 1 Defining Open Strategy: Dimensions, Practices, Impacts, and Perspectives 9 David Seidl, Georg von Krogh, and Richard Whittington 2 Participation Research and Open Strategy Eero Vaara, Anniina Rantakari, and Jeannie Holstein

27

3 Open Innovation and Open Strategy: Epistemic and Design Dimensions 41 Georg von Krogh and Nina Geilinger 4 Strategic Openness and Open Strategy Xian Xu and Oliver Alexy

59

PART II PRACTICES OF OPEN ST RATEGY 85 5 Practices of Inclusion in Open Strategy Julia Hautz, Kurt Matzler, Jonas Sutter, Katja Hutter, and Johan Füller

87

6 Interorganizational Strategizing 106 Vincent de Gooyert, Etiënne Rouwette, and Hans van Kranenburg 7 Crowdsourcing in Open Strategy: What Can Open Strategy Learn from Open Innovation? 121 Arvind Malhotra and Ann Majchrzak

v

vi Contents

8 Practices of Transparency in Open Strategy: Beyond the Dichotomy of Voluntary and Mandatory Disclosure 136 Tanja Ohlson and Basak Yakis-Douglas 9 Orientations of Open Strategy: From Resistance to Transformation 151 Stefan Haefliger

PA R T III TEC HN O LO GIC AL AS SEMB LA GES F O R O P E N ST R A T E G Y 167 10 Open Strategy and Information Technology 169 Josh Morton, Alex Wilson, Robert D. Galliers, and Marco Marabelli 11 Social Media in Open Strategy: A Five-Flows Model of Strategy Making and Enactment 186 Renee Rottner, Danielle Bovenberg, and Paul M. Leonardi 12 Visuals in Open Strategy 205 Sotirios Paroutis and Eric Knight

P A R T I V T H E O R E T IC A L PERSPECTIVES

219

13 Practice-Theoretical Perspectives on Open Strategy: Implications of a Strong Programme 221 Violetta Splitter, David Seidl, and Richard Whittington 14 A Sensemaking Perspective on Open Strategy 241 Nicolas Bencherki, Joëlle Basque, and Linda Rouleau 15 A Dialogic Perspective on Open Strategy Loizos Heracleous

259

16 A Social Network Perspective on Open Strategy 272 Julia Hautz 17 An Institutional Perspective on Open Strategy: Strategy in World Society 289 Jan Goldenstein and Peter Walgenbach

Contents vii

PART V C HALL ENGES OF O PEN STRATEGY 30 5 18 The Politics of Openness 307 Stewart Clegg, Mark van Rijmenam, and Jochen Schweitzer 19 The Relation between Openness and Closure in Open Strategy: Programmatic and Constitutive Approaches to Openness 326 Laura Dobusch and Leonhard Dobusch Index

337

Figures

4.1

4.2 4.3 4.4 7.1 7.2 8.1 9.1 9.2

viii

Comparing Open Innovation, Open Strategy, and Strategic Openness 61 Graphical illustration of the cocitation analysis 74 Graphical illustration of the bibliographic analysis 75 Graphical illustration of the key word analysis (OS marked red) 77 Crowdsourcing for Open Strategy (OS) vs. Open Innovation (OI) 122 Benefits of Open Strategy Formulation 127 Drivers of Transparency 140 Dimensions of Open Strategy 155 Three Organizations with an Open Strategy 156

10.1 Developments of Information Systems Strategizing (adapted from Galliers, 1987) 170 11.1 The 5-Flows Model of Open Strategy 192 12.1 The Visual Semiotic Process Applied to the Construction of PowerPoint Slides (Source: Knight et al., 2018) 212 18.1 Circuits of Power 313

Tables

1.1 1.2 1.3 2.1 3.1

3.2

4.1 4.2 4.3 5.1 5.2 5.3 5.4 6.1

7.1

8.1 9.1 9.2 10.1 10.2

Dimensions of Open Strategy 12 Overview of Studies 13 Theoretical Perspectives on Open Strategy 20 Three Perspectives on Participation and Open Strategy 32 Recent Exemplars of Conceptual Discussions of the Relationship Between Open Strategy and Open Innovation 45 Issues for Open Strategy Research Along the Epistemic and Design Dimensions 49 Co-citation Analysis Results 73 Bibliographic Analysis Results 76 Key Word Analysis Results 78 Analog and Digital Forms of Inclusive Practices 89 Motivations and Phases of the Strategy Process 91 Breadth of Inclusion Scope and Technology 98 Areas for Future Research on Increased Inclusion in Strategy Processes 99 Empirical Studies on Interorganizational Strategizing 107 Differentiating Dimensions of Challenges for Open Strategy (OS) vs. Open Product Innovation (OI) 124 Literature on Transparency in Strategy 139 Variations Across the Orientations of Open Strategy 157 Research Questions 162 A Typology of IS Resources (based on Wade & Hulland, 2004) 171 Types of IT Used for Open Strategy 174

10.3 11.1 12.1 12.2

13.1 13.2 14.1

14.2

15.1

15.2

15.3 16.1 16.2 16.3 16.4 16.5

18.1 19.1

Themes in Open Strategy and IT 175 Types of Social Media and Their Use in Open Strategy 198 Three Areas of Focus on Visual Strategy Research 209 Focus on Visuals and Their Relation to Dimensions of Transparency and Inclusion in Open Strategy 210 Overview of Practice-Based Approaches 223 Overview of Practice-Based Studies on Open Strategy 232 Studies Offering Cases in Interorganizational Open Strategy 246 How the Three Cases Illustrate Presentification, Embodiment, and Translation in Open Strategy 248 Dialogical Perspectives Along Functional, Interpretive, and Critical Lines 262 Juxtaposing the Bohmian Dialogic Process with Strategy as a Directive Practice 265 Dialogical Tensions in Wikimedia’s Open Strategy Process 267 Level of Networks 274 Structural Network Properties 276 Types of Network Relationships 277 Relational Properties 278 Types of Network Research and Future Avenues for Open Strategy Research 280 Power: Over, to, and with 313 Examples of Closure in Empirical Studies on Open Strategy 329 ix

Introduction DAVID SE I D L , G E O R G V O N KROGH, an d RI CHARD WHITTINGTON

This Handbook provides foundations for research on a phenomenon, going under many names, that is gripping more and more organizations: Open Strategy. There is a kind of revolution here. Whereas once strategy processes were reserved for senior managers and their immediate advisers, and strategy was highly confidential, now organizations are welcoming new and larger constituencies into strategy making and sharing unprecedented amounts of strategic information both internally and externally. Compared to the old conventions, Open Strategy promises radical advances in strategic inclusiveness and transparency (Whittington et al., 2011; Hautz et al., 2017). Open Strategy initiatives come in many forms. Greater inclusion is a common theme. Thus, IBM’s 2006 Innovation Jam invited 150,000 employees, family members, business partners, clients, and university researchers into its strategy process, receiving more than 46,000 ideas (Bjelland & Wood, 2008). When the Wikimedia Foundation launched its 2009 strategy process, it received contributions from more than 3,000 users, and recruited 100 members to 14 strategy task forces from nearly 2,000 volunteers (Heracleous et al., 2017; Dobusch et al., 2019). For its 2013 strategic planning initiative, the US Navy used a massive online war game to crowdsource ideas from 646 individuals drawn not only from the Navy itself but also from industry partners, academia, and the general public, resulting in more than 5,000 inputs (Aten & Thomas, 2016). Transparency is important too, with approaching half of large corporations nowadays presenting their strategies regularly to analysts and the media. When Daniel Zhang, the new chief executive of Chinese ecommerce giant Alibaba, presented his new “Let’s Go Global” strategy in 2015, one week after his appointment, the company’s stock price rose immediately by

1%, the equivalent of $2.2 billion, with further rises in the following days (Whittington et al., 2015). The innovative nature of Open Strategy, and the variety of its practices, sets an exciting but challenging task for researchers. Accordingly, this Handbook is intended as a fundamental guide to research on the complex phenomena of Open Strategy. As explained in the following pages, the chapters provide a wide-ranging introduction to the concept of Open Strategy and its various dimensions, they detail some of the most prominent practices of Open Strategy, they discuss the roles of technology in Open Strategy, and they propose various theoretical perspectives for researching Open Strategy. Finally, this Handbook addresses some of the challenges surrounding Open Strategy, particularly its politics and its limits. All of these chapter provide clear guidance for future research in their specific areas. However, before elaborating further on the contents of the Handbook and their rationale, we want to establish the importance of Open Strategy and its claims on research.

Motivating Research on Open Strategy Open Strategy has a lot to offer researchers. There are links to related phenomena, both in management and in society at large. Open Strategy makes some heterodox claims. The implications of Open Strategy are diverse, in many respects positive but potentially problematic as well. And there are many ways to explore it, theoretically and empirically. To start with, Open Strategy echoes much wider trends in contemporary society. Openness has become a leitmotif in many domains, for example Open Source Software, Open Science, and Open

1

2 David Seidl, Georg von Krogh, Richard Whittington

Government (Tkacz, 2012; von Krogh et al., 2012). Openness is in the spirit of the times. Research on Open Strategy can, therefore, take some of its motivation from its participation in broader shifts within advanced societies that have implications on a very large scale. There are some big questions here. To what extent are organizations aligned in their openness with changes in society generally and to what extent are they able or even bound to resist? Does the shift to Open Strategy share drivers in common with those in software, science, or government, and how much can be learned from these apparently related phenomena? In other words, strategy researchers have in Open Strategy the opportunity to reach out to other disciplines – sociology, politics, and technology – to make explanatory links and to set their particular interests in wider contexts. Similarly, there are opportunities to connect with other traditions and specialisms within management research in particular. Contemporary organizations in general are undergoing radical transformations, with the widespread dissolving of boundaries and the flattening of hierarchies both tending to favor strategic transparency and inclusion (DiMaggio, 2009; Turco, 2016). Open Strategy gathers up many tendencies in contemporary management that go in similar directions, for example middle management inclusion in strategy making (Floyd & Wooldridge, 2017), the role of stakeholder engagement (Henisz et al., 2014), and new forms of disclosure for investors (Kirk et al., 2016). As an umbrella term, Open Strategy gives coherence to otherwise disconnected trends affecting many aspects of strategic management. Open Strategy researchers have the potential not only to draw these trends together, but to build on the insights and methodologies that have already been developed in these discrete areas. As they collate the recent insights of their own and adjacent disciplines, Open Strategy researchers will be mounting a radical challenge to powerful traditions in strategy research. Thus, the seminal early theorists of the strategy discipline preached exclusivity rather than inclusion. Chandler (1962) argued for excluding operational managers from strategy because they lacked the objectivity and perspective necessary for long-

term strategizing. The future Nobel prizewinner Oliver Williamson (1970: 215) assigned strategy to “a team of top executive specialists who are removed from operating responsibilities and . . . supporting this group of general officers with an elite staff capable of performing the depth analyses necessary to discharge the strategic overseer task effectively.” Transparency too is anathema in the dominant Resource-Based View: there imperfect imitability is seen as critical to the sustaining of competitive advantages (Barney, 1995). Opacity seems to offer the best protection against rivalrous imitation (Vicente-Lorente, 2001). At the same time, the elaborate mechanisms of inclusion, and the greater accountability implied by transparency, seem to challenge the move from formal strategy processes that has become orthodoxy over the last couple of decades (Mintzberg, 1994; Wolf & Floyd, 2017). Online platforms are substantial investments in strategy design rather than emergence; Chief Executive strategy blogs make explicit what might otherwise have been tacit. In sum, Open Strategy’s leanings toward inclusion, transparency, and formality are all radical alternatives to conventional wisdoms in the strategy discipline. Building robust performance evidence in favor of the new principles of Open Strategy has only just begun (Whittington et al., 2016) and demands substantially more research. Given these challenges to orthodoxy, the implications of Open Strategy are certainly up for debate. Open Strategy researchers should not shirk in this respect. An important starting place of course is the performance question, on which there are some early positive signs (Whittington et al., 2016; Yakis-Douglas et al., 2017). The performance mechanisms are likely to be complex, with motivational, knowledge, and legitimacy benefits at war with such traditional advantages as objectivity and opacity. Effects need teasing out. However, the impacts of openness go wider. On the one hand, Open Strategy may be experienced by many employees as oppressive or manipulative, as have earlier initiatives at greater inclusion within the strategy process (Knights & Morgan, 1991; Oakes et al., 1998). Here Open Strategy needs a critical eye. On the other hand, there may be public benefits, as

Introduction

transparency renders the strategic decisions of powerful corporations more accountable to external stakeholders. The United Kingdom, for instance, now requires annual “strategic reporting” by large corporations on their objectives, key environmental trends, business models, and strategies (Financial Reporting Council, 2014). For researchers, the moot point is the extent to which Open Strategy should be legislated for in the public interest. It is clear then that Open Strategy raises many pressing issues for strategy researchers, with opportunities to make some exciting connections. The result of such diversity, of course, is a rich set of theoretical and methodological resources by which to address the phenomenon. As we explain in the next section, relevant theoretical perspectives range from the theory of social practice to the sensemaking approach and institutional theory. Research methods can be both qualitative and quantitative. The scope of Open Strategy as a research domain is fully matched by the plentiful means by which to approach it.

Reading This Handbook This Handbook offers readers many different kinds of resources for research on Open Strategy. Reading the volume as a whole will give researchers the most comprehensive understanding of Open Strategy currently available. However, readers may prefer to dive into particular chapters, whether those focusing on the overall concept of Open Strategy, or those addressing particular practices, or those interested in technologies, or those concerned for theory and critique. Regardless of approach, readers will find authoritative guides to Open Strategy from scholars with long track records of relevant research coming from around the world – Europe, Canada, Australia, and the United States. The Handbook is divided into five Parts. Part I addresses the very concept of Open Strategy, its definition and relation to adjacent specialty areas within management studies generally. In Chapter 1, the editors – Seidl, von Krogh, and Whittington – develop extant definitions of Open Strategy in order first to emphasize its internally diverse and dynamic

3

character, and second to mark its boundaries with other closely related phenomena such as Open Innovation. They also introduce key practices and impacts of Open Strategy and propose promising theoretical perspectives capable of building cumulative knowledge on these. The remaining chapters in Part I of the Handbook address Open Strategy’s relationships with adjacent traditions of research, and the learnings available from them. Thus, in Chapter 2, Vaara, Rantakari, and Holstein consider the extensive findings on strategy participation in parallel and preceding traditions of research and point to the dilemmas that these have already revealed. Vaara and his colleagues distinguish three different approaches to research so far – respectively, Open Strategy as limited participation, as co-creation, and as deep engagement – and explore the implications of each for future research. In Chapter 3, von Krogh and Geilinger compare Open Strategy with the closely related phenomenon of Open Innovation along the epistemic dimension concerned with sources of knowledge, and the design dimension focused on how this knowledge is applied. Based on that they argue for “portable” theorizing between the two streams of research. Chapter 4, by Xu and Alexy, continues this exploration of links between the Open Innovation stream of research, which emphasizes “strategic openness,” and the central stream of this Handbook, Open Strategy. Using a systematic literature review, Xu and Alexy find a surprising lack of connection between the two streams and point to opportunities for Open Strategy researchers to learn from Open Innovation’s research on performance and boundary conditions. Part II addresses specific practices involved in Open Strategy. In Chapter 5, Hautz, Matzler, Sutter, Hutter, and Füller document a range of inclusion practices, both analogue (such as physical workshops) and digital (such as online platforms and idea contests). They discuss motivations for these various inclusion practices (“why”), the breadth of stakeholders included (“who”), and the stages at which they are typically invited (“what”). Hautz and colleagues demonstrate the need for research establishing clear guidelines for the alignment of the why, who, and what of Open Strategy.

4 David Seidl, Georg von Krogh, Richard Whittington

The following chapter, Chapter 6, by de Gooyert, Rouwette, and van Kranenburg, examines interorganizational strategizing practices, both faceto-face and online. De Gooyert and colleagues establish an exciting agenda for a counterintuitive phenomenon, with challenging questions for example on the relationship of external strategizing processes with internal ones and the roles of participants caught in between these processes. Chapter 7, by Malhotra and Majchrzak, considers how the Open Strategy practice of crowdsourcing can be informed by experience and research in Open Innovation. While establishing clear differences between Open Innovation and Open Strategy in terms of both specific risks and benefits, Malhotra and Majchrzak propose that experience in the first domain suggests the need for rethinking Open Strategy crowdsourcing in at least three dimensions: motivations, processes, and the crowd itself. Next, in Chapter 8, Ohlson and Yakis-Douglas document a range of different transparency practices and highlight the different drivers behind them. They demonstrate a continuum of disclosure practices and focus on three that lie in between the purely mandatory (e.g., regulation-driven) and the purely voluntary, each associated with distinctive drivers. Concluding Part II, Chapter 9 by Haefliger discusses different orientations that lie behind the choice of particular openness practices. He distinguishes four basic orientations, which he terms “Resist” (organizations that prefer to stay closed), “Share” (organizations that prefer to share with outsiders without including them in strategy work), “Join” (organizations that prefer to include outsiders in strategy work without particular investments in transparency), and “Transform” (organizations that prefer to combine inclusion and transparency). Part III addresses the role of technology for openness practices. Chapter 10, by Morton, Wilson, Galliers, and Marabelli, reviews how various types of information technologies are employed in Open Strategy. The authors argue that researchers need to elevate IT from the position of a “silent partner” in Open Strategy – IT is not just a neutral enabler of Open Strategy but is actively shaping strategizing practices. In

Chapter 11, Rottner, Bovenberg, and Leonardi examine the role of enterprise social media in Open Strategy. They discuss how it can contribute to the flow of knowledge between senior managers and employees and thereby strengthen the organization’s strategy-making capacity. Closing Part III, Chapter 12 by Paroutis and Knight explores the role of visual artifacts in Open Strategy. The authors argue that visuals can reduce cognitive challenges, making strategic information more widely accessible compared to traditional strategy formats. As such, visuals can help in the communication with and engagement of wider audiences. Part IV provides an overview of central theoretical perspectives on Open Strategy. Opening this part, Chapter 13 by Splitter, Seidl, and Whittington discusses how the different theories of social practice, in particular Giddens’s structuration theory, Bourdieu’s praxeology, Foucault’s discourse theory, Schatzki’s Site Ontology, and Latour’s Actor-Network Theory, can contribute to our understanding of different aspects of Open Strategy. The following chapter, Chapter 14 by Bencherki, Basque, and Rouleau, reviews how the sensemaking approach has been mobilized in studying Open Strategy so far. The authors highlight several unexplored dimensions of openness that require more research, which they refer to as “presentifying,” “embodying,” and “translating.” In Chapter 15, Heracleous introduces a dialogic perspective on Open Strategy, which allows examining central tensions inherent in the very concept of Open Strategy: Open Strategy tries to marry strategy as a directive practice with a dialogue practice, which doesn’t go well with the notion of directives. In Chapter 16, Hautz discusses the potential of the network approach to analyze and explain the behaviors and consequences resulting from increased transparency and inclusion in strategy making. She introduces the different methods of network analysis and shows how they can be applied to different aspects of Open Strategy. In Chapter 17 of Part IV, Goldenstein and Walgenbach explain how institutional theory, and particularly world society theory, can help explain the emergence of Open Strategy as a new phenomenon. From this perspective, the trend toward more

Introduction

open forms of strategizing can be understood as the result of the expansion of globally shared cultural beliefs within an increasingly isomorphic world society. Part V closes the Handbook by reflecting on the challenges of Open Strategy. Chapter 18 by Clegg, van Rijmenam, and Schweitzer discusses the dark side of the politics of openness. The authors argue that contrary to how it is often presented, openness practices often heighten rather than reduce structures of power and control. In Chapter 19, the final chapter, Dobusch and Dobusch argue that openness in Open Strategy is not possible without some forms of closure. They propose that this paradoxical relation between openness and closure is the basis of current challenges in practicing and researching Open Strategy. Together the 19 chapters of this Handbook provide a wide range of conceptual, theoretical, and methodological resources for exploring Open Strategy as a novel and evolving set of strategizing practices. The chapters capture what we already know but they will hopefully also inspire readers to set out on their own exploration of this growing and intriguing phenomenon. References Aten, K., & Thomas, G. F. (2016). Crowdsourcing strategizing: Communication technology affordances and the communicative constitution of organizational strategy. International Journal of Business Communication, 53(2), 148–180. Barney, J. B. (1995). Looking inside for competitive advantage. Academy of Management Perspectives, 9(4), 49–61. Bjelland, O. M., & Wood, R. C. (2008). An inside view of IBM’s “Innovation Jam.” MIT Sloan Management Review, 50(1), 32–40. Chandler, A. D. (1962). Strategy and structure: Chapters in the history of the American enterprise. Massachusetts Institute of Technology Cambridge, 4(2), 125–137. DiMaggio, P. (2009). The twenty-first-century firm: Changing economic organization in international perspective. Princeton, NJ: Princeton University Press. Dobusch, L., Dobusch, L., & Müller-Seitz, G. (2019). Closing for the benefit of openness?

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The case of Wikimedia’s Open Strategy process. Organization Studies, 40(3), 343–370. Financial Reporting Council (2014). Guidance on the Strategic Report. www.frc.org.uk/getattachment/ 2168919d-398a-41f1-b493-0749cf6f63e8/ Guidance-on-the-Strategic-Report.pdf (accessed May 12, 2018). Floyd, S. W., & Wooldridge, B. (2017). Handbook of middle management strategy process research. Cheltenham: Edward Elgar. Hautz, J., Seidl, D., & Whittington, R. (2017). Open strategy: Dimensions, dilemmas, dynamics. Long Range Planning, 50(3), 298–309. Henisz, W. J., Dorobantu, S., & Nartey, L. J. (2014). Spinning gold: The financial returns to stakeholder engagement. Strategic Management Journal, 35(12), 1727–1748. Heracleous, L., Gößwein, J., & Beaudette, P. (2017). Open Strategy-Making at the Wikimedia Foundation: A dialogic perspective. The Journal of Applied Behavioural Science, 54(1), 5–35. Kirk, M. P., & Markov, S. (2016). Come on over: Analyst/investor days as a disclosure medium. The Accounting Review, 91(6), 1725–1750. Knights, D., & Morgan, G. (1991). Corporate strategy, organizations, and subjectivity: A critique. Organization Studies, 12(2), 251–273. Mintzberg, H. (1994). The rise and fall of strategic planning. New York: Free Press. Oakes, L. S., Townley, B., & Cooper, D. J. (1998). Business planning as pedagogy: Language and control in a changing institutional field. Administrative Science Quarterly, 43(2), 257–292. Tkacz, N. (2012). From open source to open government: A critique of open politics. Ephemera: Theory and Politics in Organization, 12(4), 386–405. Turco, C. J. (2016). The conversational firm: Rethinking bureaucracy in the age of social media. New York: Columbia University Press. Vicente-Lorente, J. D. (2001). Specificity and opacity as resource-based determinants of capital structure: Evidence for Spanish manufacturing firms. Strategic Management Journal, 22(2), 157–177. von Krogh, G., Haefliger, S., Spaeth, S., & Wallin, M. W. (2012). Carrots and rainbows: Motivation and social practice in open source software development. MIS Quarterly, 36(2), 649–676.

6 David Seidl, Georg von Krogh, Richard Whittington Whittington, R., Basak-Yakis, B., & Cailluet, L. (2011). Opening strategy: Evolution of a precarious profession. British Journal of Management, 22(3), 531–544. Whittington, R., Yakis-Douglas, B., & Ahn, K. (2015). Wall Street rewards CEOs who talk about their strategies. HBR.org, 28 December. https://hbr.org/2015/12/wall-street-rewardsceos-who-talk-about-their-strategies Whittington, R., Yakis-Douglas, B., & Ahn, K. (2016). Cheap talk? Strategy presentations as a form of chief executive officer impression management. Strategic Management Journal, 37(12), 2413–2424.

Williamson, O. E. (1970). Corporate control and business behavior: An inquiry into the effects of organization form on enterprise behavior. Englewood Cliffs, NJ: Prentice Hall. Wolf, C., & Floyd, S. W. (2017). Strategic planning research: Toward a theory-driven agenda. Journal of Management, 43(6), 1754–1788. Yakis-Douglas, B., Angwin, D., Ahn, K., & Meadows, M. (2017). Opening M&A strategy to investors: Predictors and outcomes of transparency during organizational transition. Long Range Planning, 50(3), 411–422.

PART I

The Concept of Open Strategy

CHAPTER

1

Defining Open Strategy: Dimensions, Practices, Impacts, and Perspectives DAVID SE I D L , G E O R G V O N KROGH, an d RI CHARD WHITTINGTON

1.1 Introduction Recent years have seen increasing initiatives involving more open strategizing. These initiatives, referred to as Open Strategy, imply greater transparency and/or inclusiveness in strategy processes (Hautz et al., 2017; Whittington et al., 2011). As such, Open Strategy forms part of a larger societal trend toward greater degrees of openness in all domains of life – such as Open Innovation (Chesbrough, 2003), Open Source Software (von Hippel & von Krogh, 2003), Open Government (Janssen et al., 2012), Open Data (Huijboom & van den Broek, 2011), and Open Science (David, 1998). By comparison with some of these domains, research on Open Strategy is still nascent. While substantial theoretical groundwork has been laid, and both qualitative and quantitative studies are now appearing, there remain significant opportunities for more research on what is a fastdeveloping and wide-ranging set of initiatives. Given this breadth, we identify the key dimensions, practices, and impacts of Open Strategy, and propose promising theoretical perspectives capable of building cumulative knowledge regarding these. We also guide researchers by offering a practical definition that sets boundaries on the phenomenon. Transparency and inclusion in strategy are not entirely new phenomena. In terms of inclusion, there has been a long-standing debate on procedural justice in strategic decision making (Korsgaard et al., 1995; Kim & Mauborgne, 1998); for many years, researchers have explored the distinctive benefits of including middle managers in strategy making (Westley, 1990;

Wooldridge & Floyd, 1990); and there is also a well-established discussion on the strategic potential of “stakeholder engagement” (Henisz et al., 2014). Strategy scholars have also advanced models and concepts whereby unconventional thinkers or traditionally peripheral employees could be included in strategy making in order to bring more creativity and foresight to the process (Hamel, 2000; Regnér, 2003). In terms of transparency, prior strategy scholarship has underscored the advantages of improved communications to shareholders and other interest groups in order to foster greater support for companies’ strategies (Rindova & Fombrun, 1999). Disclosure of strategic information has also been an important aspect in the corporate governance debate (Forker, 1992; Bini et al., 2016). Hence, in some sense, Open Strategy embraces a variety of older developments and debates, offering researchers the opportunity to recombine earlier insights in novel and insightful ways (Dobusch et al., 2017). However, recent Open Strategy initiatives do mark a distinctive step in terms of their drivers and, consequently, their likely extent. Contemporary information and communication technologies (ICT), especially social media (Faraj et al., 2016), have provided a radical stimulus toward greater openness. Thus, ICT has made it possible not only to communicate strategically relevant information more widely, more comprehensively, and in a timelier manner, but allowed for the inclusion in strategic conversations of larger groups of audiences in more effective ways (Baptista et al., 2017; Neeley & Leonardi, 2018). At the same time, there have been new 9

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nontechnological drivers for greater strategic openness: for example, societal pressures from consumer and shareholder activists, growing cultural resistance to hierarchical forms of control, and a widespread dissolving of organizational boundaries (Whittington, 2019). Organizational responses to these pressures have sometimes been proactive, sometimes merely reactive (Haefliger et al., 2011). But in any case, new technological capabilities and societal, cultural, and organizational changes together support a general spread of strategic openness that goes beyond isolated experiments by individual organizations. As these introductory remarks indicate, Open Strategy is a varied phenomenon. It has different dimensions, it involves a wide range of practices, and it might be pursued for different reasons. In the following we will take a closer look at the concept of Open Strategy with the aim of providing a clearer delineation of the phenomenon and its various manifestations. The first section features a discussion of the different dimensions and subdimensions of Open Strategy: these allow us to draw clear boundaries around the phenomenon. In the second section, we provide an overview of the different practices of Open Strategy described so far in the literature, organized along the two dimensions of transparency and inclusion. Following that, the third section elaborates on the various impacts of Open Strategy, both benefits and challenges. In the fourth section, we offer a short overview of how Open Strategy is approached from different theoretical perspectives, highlighting particularly practice theory, stakeholder theory, sensemaking, communications theories, institutional theory, and information-based views. These perspectives suggest promising programs of further research.

1.2 Dimensions of Open Strategy The term “Open Strategy” with its current meaning was first introduced in an article by Whittington et al. (2011). These authors described the empirical trend toward more “openness” in strategy making, which they compared to the contemporary interest in Open Innovation, with its openness to

knowledge flows from outside the organization’s own boundaries (Chesbrough, 2003). Open Strategy was defined as “an openness in terms of inclusiveness, in other words the range of people involved in making strategy; and an openness in terms of transparency, both in the strategy formulation stage and, more commonly, in the communication of strategies once they are formulated” (Whittington et al., 2011: 532). As with Open Innovation, both inclusion and transparency could go beyond organizational boundaries. The authors contrasted Open Strategy with two influential traditions in strategy research: on the one hand, Chandler’s (1962) sharply exclusive strategy processes, with his emphasis on top management objectivity and control; on the other, Barney’s (1991) Resource-Based View, preferring secretiveness to transparency for fear of imitation by competitors in the marketplace. Whittington and colleagues emphasized that openness and closure should not be understood as a binary phenomenon but as a continuum. As is the case for Open Innovation, strategy making can be more or less open; that is, more or less transparent and more or less inclusive. Building on this definition, subsequent work has elaborated on each of these two dimensions. Transparency and inclusion each have further subdimensions. With regard to transparency, Whittington et al. (2011) focused primarily on the range of internal and external audiences with access to strategic information. Accordingly, strategy processes are more transparent the larger the number of audiences to whom strategic information is made available. Dobusch et al. (2017) refer to this as the social dimensions of transparency. However, Dobusch and colleagues point out that in addition to the range of audiences, the degree of transparency also hinges on the selectivity of the content disclosed; they refer to this as the factual dimension of transparency. An organization might be high on one of these dimensions but low on the other, such as when it reveals a very small part of its strategy to all interested audiences or, vice versa, when it reveals all strategic information just to a restricted set of audiences. We concur, and add that strategic information is contextual such that over time and embedded within a strategy process,

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Defining Open Strategy 11

strategic information can be revealed selectively across audiences. For example, while the organization may reveal to a broad audience extensive information on the markets it wants to enter and the products it intends to offer, information on a planned acquisition may be shared only with those vitally involved in order to prevent undue reactions in the stock market (see Sinatra et al., 2016). With regard to inclusion, again Whittington et al. (2011) concentrated on the range of invited stakeholders. However, there are other important subdimensions as well. One important subdimension of inclusion is qualitative. Thus, Hautz and colleagues (2017) highlight the conceptual distinction between participation and inclusion put forward by Quick and Feldman (2011): “Participation,” they explain, “is lower-strength: it is concerned with the gathering of stakeholders’ input in terms of ideas and information. . . . Inclusion is deeper, entailing the creation and sustaining of a community of interacting stakeholders” (Hautz et al., 2017: 301). This terminological distinction suggests a second subdimension to inclusion: the qualitative depth of involvement, beyond the simple numbers involved. Here inclusion is deep in terms of involving stakeholders in ongoing, frank, and mutually respectful conversations about strategy. Depth implies reciprocal learning among participants over extended periods of time. We shall go further and suggest a third subdimension of Open Strategy: the degree to which participants are involved in actual strategic decision making. The original definition of Open Strategy underlined that inclusion did not necessarily imply the transfer of decision rights, though it did not disbar it (Whittington et al., 2011). However, Dobusch et al. (2019) point out that the very notion of openness is often associated with democratization (see, for example, Stieger et al., 2012, who speak of “democratizing strategy”), which in turn implies some decision-making authority. Dobusch et al. (2019: 348) write: “taking the roots of openness into account, democratic decision-making is one of its irreplaceable pillars (Armbrüster & Gebert, 2002; Popper, 1966). Therefore, we identify decision making as an

essential criterion for evaluating the openness/closure of organizational strategy-making processes labelled as ‘open’.” We accept that decisionmaking rights are a relevant aspect of openness but treat them as contingent – sometimes important, sometimes absent. Nonetheless, the presence of decision-making rights potentially extends inclusion to a still more powerful level. Inclusion can therefore be seen as involving a continuum, from the strongest form of “democratic” decision rights, through Quick and Feldman’s (2011) continuous community of interacting stakeholders, to weak forms of participation such as occasional consultations. We therefore treat inclusion as a comprehensive concept, embracing a wide range of more or less radical degrees of openness: numbers, range, depth, and decision making. Indeed, there is one more subdimension to add. As well as subdimensions specific to either transparency or inclusion, Dobusch et al. (2019) propose a further subdimension relevant to both, which they refer to as “procedural” openness. By that they mean the extent to which the structures and rules of transparency and inclusion are themselves open for discussion or rather are simply pregiven. In some cases, strategy processes are open in the sense that the relevant stakeholders can determine themselves how they participate in the strategy process and which strategically sensitive information they get access to. In some cases, transparency and inclusion are on stakeholders’ own terms. Very often, however, transparency and inclusion are carefully designed and controlled by top management. Openness is on ration. Summing up these discussions of transparency and inclusion, Table 1.1 provides an overview of the various dimensions and subdimensions of Open Strategy. It is important to recognize that these dimensions and subdimensions are more or less independent of each other. The degree of openness in the different dimensions displayed in Table 1.1 might not be aligned. For example, Yakis-Douglas et al. (2017) describe organizations with open strategy making on the transparency dimension, while being closed on the dimension of inclusion. In addition, there might also be variations in the degree of openness across the subdimensions of openness. Thus, Seidl and Werle

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Table 1.1 Dimensions of Open Strategy Primary dimensions

Subdimensions

Transparency

Number/range of audiences Number/range of audiences Number/range of topics disclosed Openness of transparency procedures

Inclusion

Number/range of constituencies Depth of involvement Scope of decision-making rights Openness of inclusion procedures

(2018) describe a strategy process that involved a small range of external audiences, with deep involvement in the strategy making and high degree of procedural openness, but without any decisionmaking rights. Dobusch and colleagues (2017; 2019) argue that some degree of closure in some subdimensions is necessary in order to make possible higher degrees of openness in the other subdimensions. Complete openness in all dimensions would exaggerate complexity in organizational processes, to the point where Open Strategy making would cease to be efficient and/or effective. In addition to variations among the different subdimensions, researchers have also highlighted that the degree of openness might change over time or across different phases of the strategy process, e.g., across environmental scanning, analysis, alternative development, strategic decisions, and implementation. For example, the degree of openness in the different dimensions often varies between the idea generation phase, the initiative development phase, and strategic integration phase (Dobusch et al., 2019). We also find inherent dynamics in the degrees of openness in the different subdimensions. Hautz et al. (2017), for example, describe how higher degrees of openness in some dimensions might lead to pressures for opening up also in the other dimensions. Gegenhuber and Dobusch (2017), in turn, describe how degrees of openness might change across the life cycles of companies. In short, Open Strategy is a multidimensional and dynamic set of practices. This discussion of Open Strategy’s various dimensions allows us to develop a definition that is both comprehensive and sets boundaries with

both traditional strategy theories and related concepts such as Open Innovation. Building on Hautz et al. (2017), we propose that Open Strategy constitutes a dynamic bundle of practices that allows strategic transparency and/or inclusion to internal and/or external actors going beyond senior management and their immediate advisers. Relative to Whittington et al.’s (2011) earlier definition, this bundle of practices is more concerned for other aspects than just the range of people involved. Practices can involve greater openness on any of the subdimensions described previously, and can come in varying strengths: inclusion, for example, ranges from democratic decision rights to occasional participation. Open Strategy thus departs from both the traditional elitism of Chandler (1962) and the reflexive secrecy of the Resource-Based View (Barney, 1991), at least in their strongest forms. It is also distinct from Open Innovation, conventionally understood as involving both internal and external ideas, as well as internal and external paths to markets (Chesbrough, 2003). Innovation is just one of the strategies that Open Strategy might be concerned with. Open Strategy involves outward transparency, not only inward porosity. Unlike Open Innovation, Open Strategy allows for the conceding of decision rights. In sum, Open Strategy is an eclectic but distinctive set of practices, offering strong contrasts with established perspectives in the strategy field.

1.3 Practices of Open Strategy As the preceding section makes clear, Open Strategy varies in degree across many conceptual dimensions and subdimensions. This variety can also be found in the empirical practices of Open Strategy, some allowing just incremental amounts of additional information to employees, others providing platforms for large-scale participation by both internal and external stakeholders. We shall describe these practices of Open Strategy along the two key dimensions of transparency and inclusion (see also Table 1.2). As discussed previously, both transparency and inclusion can vary in terms of

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Defining Open Strategy 13 Table 1.2 Overview of Studies Study

Primary dimensions

Practices

Main impacts

Primary perspectives

Amrollahi & Rowlands (2017)

Inclusion

Crowdsourcing among stakeholders

Information gathering and knowledge building

No specific

Aten & Thomas (2016)

Inclusion and transparency

Crowdsourcing from internal Legitimacy; information and external stakeholders gathering and knowledge using online gaming building technology

Communication-asconstitutive-oforganization (CCO); technology affordance perspective

Bjelland & Wood (2008)

Inclusion

Innovation Jam (online platform)

Innovation; information gathering and knowledge building

No specific

Denyer et al. (2011) Inclusion and transparency

Various technology driven forms (wikis, webbased communities, socialnetworking sites, blogs)

Implementation; commitment challenges

Sociotechnical perspective

Dobusch et al. (2017)

Inclusion and transparency

Various practices

Excessive complexity

Communication theory

Dobusch et al. (2019)

Inclusion and transparency

Strategy wiki software

Gathering information and knowledge building; legitimacy; commitment challenges

No specific

Eppler & Platts (2009)

Inclusion and transparency

Visual practices (PowerPoint presentations, etc.)

Gathering information and knowledge building; implementation; legitimacy

No specific

Gegenhuber & Dobusch (2017)

Inclusion and transparency

Blog-based interactions with internal and external audiences

Legitimacy

Impression management

Hardy et al. (2006)

Inclusion

Interorganizational collaboration

Gathering information and knowledge building; commitment challenges; excessive complexity

Collaborative decision making

Hautz et al. (2017)

Inclusion and transparency

Various forms

Gathering information and knowledge building

Network theory

Heracleous et al. (2018)

Inclusion

Strategy wiki software

Gathering information and knowledge building; implementation

Dialogic perspective

Hutter et al. (2017)

Inclusion

Online crowdsourcing among employees

Gathering information and knowledge building; innovation; commitment challenges

Social exchange theory (organizational sense of community)

Luedicke et al. (2017)

Inclusion and transparency

Emailing list among employees as the primary platform

Gathering information and knowledge building; legitimacy; excessive complexity; commitment challenges

Practice theory

Mack & Szulanski (2017)

Inclusion

Collaborations in projects, workshops, and meetings

Information gathering and knowledge building; legitimacy; exposure of sensitive information

Practice theory

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Table 1.2 (cont.) Study

Primary dimensions

Practices

Main impacts

Primary perspectives

Malhotra et al. (2017)

Inclusion

Crowdsourcing among stakeholders

Gathering information and knowledge building; commitment challenges; excessive complexity

Information processing theory

Mantere & Vaara (2008)

Inclusion

Strategy discourse

Legitimacy

Discourse theory

Neeley & Leonardi (2018)

Inclusion

Nonwork interactions on social media

Gathering information and knowledge building; commitment challenges

Knowledge-based theory of the firm

Pittz & Adler (2016) Inclusion and transparency

Multisector social partnerships

Gathering information and knowledge sharing; commitment challenges; legitimacy

Stakeholder theory

Schmitt (2010)

Inclusion

Collaborations in workshops and meetings

Innovation; information gathering and knowledge building

Actor-Network Theory; negotiated order theory

Seidl & Werle (2018)

Inclusion

Interorganizational strategizing through workshops and meetings

Gathering information and knowledge building; commitment challenges

Sensemaking

Stieger et al. (2012)

Inclusion and transparency

Online crowdsourcing among Innovation; information employees gathering and knowledge building; implementation; commitment challenges

Knowledge-based theory of the firm

Teulier & Rouleau (2013)

Inclusion and transparency

Collaboration in workshops and meetings

Information gathering and knowledge building; commitment challenges; excessive complexity

Sensemaking

Whittington et al. (2011)

Inclusion and transparency

Online platforms, blogging, presentations, workshops, and meetings

Information gathering and knowledge building; innovation; legitimacy; implementation; exposure of sensitive information

Sociology of professions

Whittington et al. (2016)

Transparency

Strategy presentations and updates

Legitimacy; exposure of sensitive information

Impression management

Whittington (2019)

Inclusion and transparency

Online platforms, presentations, workshops, and meetings

Information gathering and Institutional work knowledge building; legitimacy; implementation; talent development; commitment challenges

Yakis-Douglas et al. Transparency (2017)

Voluntary disclosure of information through press and media releases

Legitimacy; exposure of sensitive information

subdimensions such as audiences or topics. Transparency does not necessarily imply inclusion, though inclusion does typically require some initial transparency regarding strategic challenges at least. On the other hand, inclusion may be quite

Information asymmetry theory

opaque with regard to final decision making. As many of these practices rely heavily on new technologies, they are likely to be highly dynamic, with their continuing development calling constantly for further research.

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Defining Open Strategy 15

Nonetheless, the transparency dimension is often pursued through quite traditional technologies. Eppler and Platts (2009) discuss how managers may overcome employees’ limited familiarity with issues by communicating strategies visually with PowerPoint slides or even paper flipcharts. The voluntary strategic disclosures of firms taking part in mergers and acquisitions involve conventional media releases, albeit circulated electronically to shareholders, analysts, and other concerned parties (Yakis-Douglas et al., 2017). Chief executives typically give their strategy updates, reviews, and presentations to financial analysts physically assembled in a conference room, though proceedings may be live streamed to wider audiences (Whittington et al., 2016; Wenzel & Koch, 2018). A more innovative form of transparency is the strategy blogging by some chief executives, especially in high tech environments (Gegenhuber & Dobusch, 2017). Blogging technologies facilitate more continuous and spontaneous communications on strategy, by contrast with episodic disclosures or updates, and they typically allow for greater interaction with their audiences. Inclusion too varies widely in its reliance on new technologies. When Shell undertook an open strategizing project in the 1990s regarding a potential gas field development in Peru, it engaged stakeholders from the local community via a conventional series of physical workshops and roundtables (Schmitt, 2010). Shell’s GameChanger innovation strategy workshops made a merit of physical technologies, with the storyboards arranged along the meeting room walls allowing for intimate and informal conversations between senior managers and the company’s technologists (Whittington, 2019). Physical copresence via workshops or extended meetings is also important for the bringing together of executives for interorganizational strategizing (Seidl & Werle, 2018; Teulier & Rouleau, 2014). Seidl and Werle (2018) describe a series of interorganizational workshops that stretched over six years and brought together as many as forty individuals from twelve different organizations. Project teams and internal surveys are other conventional practices of employee participation and inclusion, as described by Mack and Szulanski (2017).

However, new technologies do allow a radical widening of the number and range of participants that can be included in strategy. One technologically simple extension of conventional inclusion is the email conversations undertaken within a small drinks company, permitting all stakeholders, even external distributors, to contribute on strategic issues such as new products and diversification (Luedicke et al., 2017). As a continuous and accessible form of inclusion, email conversations facilitate extensive interaction on strategy but, as Luedicke et al. (2017) found, are liable to exhaust participants. Online platforms can be designed to provide more constrained but practical environments, facilitating the crowdsourcing and debating of strategic ideas with very large groups both internally and externally. IBM’s 2006 Innovation Jam was open to 150,000 employees, family members, business partners, clients (from 67 companies), and university researchers, and received more than 46,000 ideas (Bjelland & Wood, 2008). It was however confined to just two bursts of three days each. The internal crowdsourcing at the Austrian engineering firm Bachman comprised just two weeks of Dialogtage (Stieger et al., 2012). On the continuum of inclusion from the democratic to the occasionally participative, these occasional exercises in openness fall at the weaker end. Online platforms can allow voting on crowdsourced ideas, as with Siemens’ consultations on its sustainability strategy, which drew in more than 3,000 active participants (Hutter et al., 2017). The US Navy used a thumbs-up ranking system within an online game platform when crowdsourcing ideas from employees, academics, and industry partners for its 2013 strategic plan (Aten & Thomas, 2016). However, final decisions are typically reserved within traditional hierarchies. At Siemens, a senior management jury reporting directly to the company’s board finally selected the winning concepts according to predefined criteria such as relevance and feasibility. Winners received funding and resources for prototypes, projects, and planning, but not for definite new business launches. At the US Navy, game masters exercised influence and control behind the scenes. Thus, although online platforms can massively extend inclusion beyond the physical boundaries of

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workshops and meetings, they do not necessarily increase inclusion with regard to the subdimension of decision-making rights. Indeed, online platforms can be particularly closed with regard to the procedural subdimension. Designs are subject to inbuilt technological limits and platforms are increasingly sold as standard packages. Thus, IBM’s jams are now part of the company’s consulting offer (Whittington, 2019), while Microsoft markets its Jive collaborative software as simply another product in its range (Neeley & Leonardi, 2018). Senior managers will select from available online platforms and negotiate tweaks in their features, but they are generally choosing from within a predetermined menu. Nonetheless, online platforms can gain flexibility in at least two ways. First, they are typically surrounded by a series of more or less traditional physical meetings and project groups. As at Barclays Bank, which supported its jams by bringing together large groups of managers in “agora” on the analogy of the ancient Greek marketplace, these physical mechanisms are subject to more flexible design (Whittington, 2019). Thus, even inflexible technologies can be flexed via the physical processes that generally surround them. Second, online platforms may be subject to the vagaries of human use, as with the unintended consequences and dynamic adaptation of behaviors described by Neeley and Leonardi (2018). In this light, standard online platforms are liable to some emergent procedural openness over time: technologies are always “technologies-in-use,” rather than precisely as designed (Orlikowski, 2000).

1.4 Impacts of Open Strategy As a scientific field, strategic management has always been torn between prescriptive advice based on normative models, and descriptive theorizing concerned with fundamental mechanisms. Practically oriented scholars and consultants have often been quick to identify and endorse new strategic phenomena, while academically oriented scholars have followed up with more independent theorizing and systematic evidence for and against. While our concern for Open Strategy as a set of

managerial practices could leave the reader with an impression of a normative research program, our purpose here is to propose critical research on a phenomenon that is novel, growing, and constantly changing. We do not expect its progress to be smooth or free of unintended consequences. In the following, we therefore propose some likely key impacts of Open Strategy – both benefits and challenges. The points we raise are intended to inspire an inquiring approach to future theorizing and research on Open Strategy, rather than to set a final and exhaustive list of research imperatives. At least five potential benefits can be attributed to Open Strategy. These five benefits are considered in many of the studies listed in Table 1.2, but all deserve further investigation. The first of these benefits lies in the greater access to information and knowledge gained by including a broader set of stakeholders in the strategy process (e.g., Amrollahi & Rowlands, 2017; Malhotra et al., 2017). Valuable knowledge tends to be widely distributed within organizations, embedded in the disparate activities in which internal and external stakeholders are engaged (Tsoukas, 1996). While top management may have a broad understanding of strategic issues facing the organization, strategic decision making often requires detailed information on operational and specific concerns that are remote from the organizational center (Regnér, 2003). By carefully including a wide variety of stakeholders from around the organization and outside, top management can gain firsthand access to such otherwise inaccessible information. In other words, Open Strategy can convey an information advantage. But the achievement of this advantage is unlikely to be costless. The research agenda here is likely to be large but starts with fundamental questions such as the conditions under which Open Strategy yields the greatest information advantages, the most appropriate Open Strategy practices for winning these advantages, and the means for mitigating any costs involved. Second, Open Strategy is often assumed to deliver benefits in terms of implementation (e.g., Denyer et al., 2011; Stieger et al., 2012). In this view, strategies are often poorly executed due to middle-level managers’ inadequate understanding of the logic of strategic decisions (Guth &

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Defining Open Strategy 17

MacMillan, 1986). Many strategies never take full effect. Open Strategy is rooted in the idea that by involving them in strategy making, middle managers may develop a more complete and robust understanding of the strategies they will be commissioned to implement. They will be better able to communicate strategic logics to their teams, interpret general policies in local contexts, and improvise in the face of the unplanned (Balogun & Johnson, 2004). In this view, the more transparent the logic informing the strategy, and the more that middle managers have actually engaged with the making of this strategy, the better the likely implementation. There are good theoretical grounds for accepting these arguments in favor of Open Strategy for implementation, but empirical research here is still lacking. At a minimum, we need more case studies of the impacts of Open Strategy on strategy implementation. A third claimed benefit of Open Strategy is legitimacy (e.g., Gegenhuber & Dobusch, 2017; Mantare & Vaara, 2008; Yakis-Douglas et al., 2017). Scholars have long pointed out that strategy making is not merely a structured decision-making activity, but rather a fundamental and interpretative process, reliant on language, trust, information, and awareness. Hence, in order to have an observable impact in organizations, strategy needs to be collectively legitimized by top managers, middlelevel managers, and other organizational members (Neilsen & Rao, 1987; see also Suddaby et al., 2017; Suchman, 1995). By including a broader set of stakeholders in strategy making, Open Strategy may form the basis for building such legitimacy (Morton et al., 2018). Similarly, by increasing confidence, transparency regarding future strategy can increase stakeholders’ willingness to invest, not only financially but also, potentially, in terms of effort (Whittington et al., 2016). Furthermore, through enhanced transparency and by sharing strategically relevant information with external stakeholders, organizations may also to some extent shape the institutional environment to which they belong, including the building of social acceptance or the influencing of government regulations (Uzunca et al., 2018). Legitimacy however is a slippery thing. Open Strategy initiatives may be seen by stakeholders as manipulative

attempts at co-option on the part of senior managers – “cheap talk,” in the terms of Whittington et al. (2016). The legitimacy impacts of Open Strategy are an area particularly in need of careful and skeptical investigation. Fourth, Open Strategy is vested with powers of innovation, challenging business-as-usual (e.g., Bjelland & Wood, 2008; Schmitt, 2010). In this view, top managers are seen as liable to coherent but conservative “cognitive models” of their organizations, which come to underpin the stream of resource allocation decisions over time. Such models are often referred to as top management’s “dominant logic” (Prahalad & Bettis, 1986). While bringing coherence, dominant logics can also stifle learning, reinforce biases, filter out unfamiliar information, and hence threaten effectiveness of strategy making (Bettis & Prahalad, 1995). Open Strategy promises one potential solution to this strategic conservatism. By making the strategic process more transparent and including a wide variety of organizational members, the historical pattern of strategy making in the organization may be scrutinized, questioned, debated, and reinterpreted. Openness is supposed to improve strategic decisions by including a broader set of perspectives on the organization’s raison d’être. As diverse groups of organizational members and nonmembers engage in the interpretation and conceptualization of the business, novel and dynamic dominant logics may emerge. Of course, entrusting innovative thinking to traditional outsiders is to ignore significant constraints, for example differences in power, thresholds of competence, and the means of their selection (or self-selection). The research agenda here starts with who to mobilize, and how to empower, in order truly to challenge conservatism. A fifth benefit sometimes attributed to Open Strategy is the identification of strategy talents within and outside the organization (e.g., Whittington, 2019). By including a wider range of people, managers can become aware of hitherto peripheral individuals whose passion and gifts for strategic thinking make them potentially valuable resources for strategy making. From prior research on Open Source Software development (Harhoff & Lakhani, 2016), we know that many software firms

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such as Google or IBM set up development contests to identify and recruit talented individuals to this type of work. Open Strategy is similar, admitting new actors into the strategy conversation at the highest echelons of the firm. To the extent that Open Strategy implies a meritocracy of ideas (Whittington, 2019), it should also allow hidden talents to emerge and advance. Within hierarchical organizations, of course, this meritocratic ideal may be naïve. Research on the talent benefits of Open Strategy needs to explore the conditions for the genuinely meritocratic advancement of ideas and people, not taking for granted organizational claims to openness. While Open Strategy may be associated with several potential benefits, we also underscore at least four possible challenges, each deserving further investigation. First, transparency comes with risks. In line with the Resource Based View (Barney, 1991), managers may expose competitively sensitive information, e.g., regarding current market explorations, ongoing product development projects, or potential alliance partners (e.g., Mack & Szulanski, 2017; Whittington et al., 2016). Such exposure may be unintended by managers, for example when included by mistake in a larger batch of information shared with stakeholders or when managers do not fully comprehend the potential competitive relevance of information. A challenge faced by managers is determining what information needs to be revealed for substantive openness, and what information must be withheld in order to protect sources of competitive advantage. Here research on Open Innovation provides a model. As shown in prior research on crowdsourcing in the field of open innovation (Viscusi & Tucci, 2018; Appleyard & Chesbrough, 2017; Chapter 4), striking the right balance in information revealing is an arduous task. For example, when working with an information intermediary (e.g., InnoCentive), many firms hold back information from the crowd of solvers, in order not to reveal anything about the core technologies under development. While nonrevealing protects the firm’s future potential competitive position, it leads the solver crowd to generate solutions that do not fit the firm’s technological problem, and hence advance the

technology (Sieg et al., 2010). A pressing topic for Open Strategy research therefore is the appropriate balance between the proprietary and the transparent, and the conditions that determine this. A second kind of challenge deserving further investigation is the risk of stakeholder pressure on the strategic “reference points” within an industry. Fiegenbaum et al. (1996) developed the concept of strategic reference points by which organizations assess their internal capabilities, external conditions, and performance. Recently, the idea of reference points has been expanded to the domain of social performance. In the spirit of Open Strategy, organizations can be expected to negotiate key reference points for social action with their stakeholders, e.g., in terms of corporate social responsibility or citizenship behavior (Nason et al., 2018). A challenge for an organization is how to respond to stakeholders’ demands during and after such negotiations. By being included, stakeholders are liable to obtain information that makes them more powerful in insisting on agreed reference points even after the strategy work has been completed. In other words, Open Strategy can make organizations more vulnerable to ongoing stakeholder pressure. Research here should focus on how transparency and inclusion shift the balance of power among stakeholders, and the extent to which occasional episodes of Open Strategy have persistent effects. The third challenge arises from the complexity introduced by Open Strategy (e.g., Hardy et al., 2006; Malhotra et al., 2017). Strategy scholars have become increasingly aware of the difficulties, barriers, and complexities involved in formulating strategy problems clearly and effectively (Baer et al., 2013; von Hippel & von Krogh, 2016). Including many diverse stakeholders in strategy processes may undercut efforts to identify the most relevant and pressing strategic problems, typically heterogeneous and ill-structured enough already. By opening up the strategy process to many individuals and groups, each with viewpoints and vested interests of their own, the necessary focus on the organization’s core strategic problems may easily be lost. Thus, research is required to understand when the additional complexity introduced by opening up the strategy process is

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Defining Open Strategy 19

actually worthwhile. Openness will probably not be appropriate for all issues: for example, during an organizational crisis, effective and fast strategic response may demand the involvement of a very few knowledgeable experts and senior executives, rather than the inclusion of a fully representative array of stakeholders. A final potential challenge for Open Strategy is that of stakeholder commitment (e.g., Stieger et al., 2012; Seidl & Werle, 2018; Neely & Leonardi, 2018). Open Strategy, especially inclusion, makes heavy demands upon its participants, with many suspicious of the workloads and manipulations sometimes involved (Oakes et al., 1998). Recorded participations in many Open Strategy initiatives are often surprisingly low. Wikimedia’s Open Strategy initiative was potentially open to all its many millions of users. In fact, contributions to the initiative were limited to just 3,000 out of 9,000 registered users: the top 11 contributors (0.1% of all registered users) were collectively responsible for 42.5% of all edits to the Open Strategy document (Dobusch et al., in press). Luedicke et al. (2017) record a member of their drinks collective pleading to be excluded from the multiple emails involved in its open strategizing work. It is clear that Open Strategy is not necessarily by popular demand. Research here should focus on how best to foster stakeholder commitment and engagement efficiently in terms of demands on participants, and effectively in terms of benefits for the organizations themselves.

1.5 Conceptualization of Open Strategy from Different Theoretical Perspectives Existing research has drawn on a wide range of different theories to explore different aspects of Open Strategy (see Table 1.2; see also the chapters in Part IV on some prominent theoretical perspectives). These theories are each associated with their own distinctive conceptualizations of Open Strategy. In this subsection we will highlight the key theoretical perspectives and outline briefly their implications for the study of Open Strategy. See Table 1.3 for an overview.

A first group of theories can be labeled practice theories in the widest sense (Chapter 13). These theories conceptualize Open Strategy as particular practices for doing strategy; that is, practices that create more transparency and practices that enable greater inclusion. Our earlier discussion has been broadly consistent with this approach, emphasizing openness as a dynamic and eclectic bundle of practices, rather than a single homogeneous entity. Accordingly, researchers have started to identify the different practices of Open Strategy, explored the relation between those practices, and traced the distinctive effects of those practices. For example, Luedicke et al. (2017) identified a set of “radically open strategizing practices,” showing that these are typically combined with closure practices in order to counterbalance the negative effects of radical openness. While the practice perspective is often drawn on in a fairly loose way, Splitter et al. (Chapter 13) highlight three distinct theories of social practice (in the narrow sense): Giddens’s (1984) structuration theory, Bourdieu’s (1990) praxeology, and Schatzki’s (2002) theory of practice bundles. Each offers so far underutilized opportunities to dig deeper into the details of how different openness practices play out. Two variants of practice theory emphasize technological aspects, particularly relevant given the prominent role noted earlier for social media in Open Strategy. Thus, Schmitt (2010) mobilizes Actor-Network Theory (ANT) (Latour, 2005), which encourages consideration of how objects and other “nonhuman actors” are involved in practices of openness. Closely related to ANT are the different theories about sociomaterial arrangements, such as the theory of technological affordances (Gibson, 1977), which highlights the interrelationship between technologies and actions in the enactment of Open Strategy practices (e.g., Aten & Thomas, 2016). A second group of theories are communicationbased approaches, relevant given the role of internal and external communications in openness. For example, Mantere and Vaara (2008) draw on discourse theory (Grant et al., 2004) to examine how different types of discourses restrict or enable wider participation in strategy communications.

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Table 1.3 Theoretical Perspectives on Open Strategy Theoretical approaches

Conceptualization of Open Strategy

Practice perspectives

Open Strategy as open strategizing practices

– Theories of social practice (e.g., Bourdieu, Giddens, Schatzki)

– Actor-Network Theory – Sociomateriality perspectives (e.g., theory of affordances) Communication-based approaches

– – – –

Open Strategy as communication phenomenon

Discourse theory Dialogue perspective Luhmannian communication theory Communication-as-constitutive (CCO)

Sensemaking-related approaches

Open Strategy as open sensemaking processes

– Sensemaking – Negotiated order perspective – Impression management Stakeholder-related approaches

Open Strategy as new forms of stakeholder engagement

– Stakeholder theory – Collaborative decision making Institutional approaches

Open Strategy as institutionalized expectations

– World society theory – Institutional work – Sociology of professions Information/knowledge-based approaches

– – – – –

Knowledge-based theory Social exchange theory Information processing theory Network theory Information asymmetry theory

Heracleous et al. (2018) use dialogue theory (Bohm, 1996) to describe the particular forms of communication found in inclusive strategy processes. Aten and Thomas (2016) mobilize the CCO perspective (communicative constitution of organizations) (Brummans et al., 2014) in order to compare the structures of communication in open and closed strategy development processes. Dobusch et al. (2017) draw on Luhmannian communication theory (Luhmann, 1995), identifying the different communicative dimensions that make up Open Strategy processes. A third group of theories highlight sensemaking (see also Chapter 14). These theories stress how in Open Strategy diverse and variously informed stakeholders must make sense of

Open Strategy as new arrangements of information and knowledge flows

strategic issues with which many are unfamiliar and for which there is no obvious agreed meaning. Thus, Seidl and Werle (2018) draw on Karl Weick’s (1995) classical sensemaking approach, treating Open Strategy as a way of increasing the complexity of the sensemaking system and in this way creating the capacity to make sense of complex strategic issues. In related fashion, Schmitt (2010) uses the theory of negotiated order (Strauss, 1988) to argue that Open Strategy involves the creation of arenas for fighting out diverse interests and definitions of reality. Gegenhuber and Dobusch (2017) and Whittington et al. (2016) mobilize the theory of impression management (Schlenker, 1980), arguing that Open Strategy offers a means of influencing the sensemaking of wider audiences.

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Defining Open Strategy 21

A fourth group of theories are stakeholderrelated approaches. Recognizing the range of actors that may be included, these theories treat Open Strategy as a new form of stakeholder engagement. For example, Pittz and Adler’s (2016) mobilization of stakeholder theory (Freeman, 2010) suggests that Open Strategy can be understood as a platform for bringing a wide range of stakeholders together. Ohlson and YakisDouglas (Chapter 8) highlight that there are different versions of stakeholder theory, such as instrumental stakeholder theory (Clarkson, 1995) and stakeholder management (Hillman & Keim, 2001), which offer slightly different takes on understanding Open Strategy. Hardy et al. (2006) draw on the theory of collaborative decision making (Gray, 1989), arguing that more open forms of strategizing allow for new ways of joint decision making among stakeholders. A fifth group of theories are institutional approaches. These theories treat Open Strategy as based on institutionalized expectations within societies and they help position the phenomenon alongside other forms of openness, such as Open Government and Open Science, which may share similar institutional drivers. Drawing particularly on world society theory (Meyer, 2010), Goldenstein and Walgenbach (Chapter 17) argue that Open Strategy is an example of a rationalized cultural belief within an increasingly isomorphic world society. That is, cultural developments in world society foster the establishment of organizational structures that support open forms of strategizing. Whittington et al. (2011) mobilize the sociology of professions (Abbott, 1988), arguing that there are new professional norms for the strategy profession, resulting in more open forms of strategizing. Whittington (2019) similarly identifies cultural forces promoting Open Strategy, while emphasizing the “institutional work” (Lawrence et al., 2009) required to realize it in practice. Here there is a connection between institutional theory and theories of practice, with institutional drivers reliant upon practical agency. The spread of Open Strategy does not just happen on its own. A sixth group of theories are information-based approaches. The theories in this group treat Open

Strategy as new arrangements for exchanging information or knowledge. Information is the raw material of transparency and inclusion. Thus, Neeley and Leonardi (2018) draw on the knowledge-based theory of the firm (Grant, 1996), showing that Open Strategy arrangements allow for new ways of sharing strategy-related knowledge among organizational members. Taking this a step further, von Krogh and Geilinger (Chapter 3) point out that the knowledge-based theory of the firm directs the attention to two dimensions of Open Strategy: on the one hand, an epistemic dimension (the targeted selection and use of knowledge sources internal and external to the organization), and on the other hand, a design dimension (the mechanisms that organizations use in the search, integration, and use of that knowledge). Drawing on social exchange theory (Emerson, 1976), Hutter et al. (2017) examine the extent to which particular Open Strategy arrangements increase the sense of community among the participants and thus their willingness to engage in the exchange of information and knowledge. Malhotra et al. (2017) mobilize information processing theory (Cronin & Weingart, 2007) to examine the particular challenges of information and knowledge exchange associated with Open Strategy arrangements. Hautz et al. (2017; see also Chapter 16) suggest network theory (Borgatti et al., 2009) as a suitable theoretical lens for examining the information exchange relationships between the actors involved in the Open Strategy arrangement. They show that different network structures have different effects on the flow of relevant strategy information. Yakis-Douglas et al. (2017), in turn, draw on information asymmetry theory (Ambarish et al., 1987) to examine the conditions under which organizations increase the transparency of their strategy process. In sum, as we can see there are a large range of different theoretical perspectives that have been mobilized in research so far, each offering slightly different conceptualizations of Open Strategy and focusing attention on different aspects of the phenomenon. They are all capable of supporting distinctive programs of further research. Practice theory suggests continued close focus on Open Strategy’s constituent practices, especially

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dynamic technology usages. Communicationsbased approaches direct research attention to the quality and character of communications in Open Strategy, with particular regard to the conditions for effective dialogue and the latent distortions of discourse. Sensemaking theory insists on the challenges of building coherent understandings among diverse participants, looking for facilitators and barriers to the shared interpretations required for effectiveness in Open Strategy. Stakeholder theory, with its concern for diverse interests and capabilities, suggests a research agenda focused on the appropriate range of actors for inclusion, the depth of that inclusion, and the extent of information disclosure. Institutional theory introduces a societal dimension, encouraging research on the spread of Open Strategy, the general drivers behind it, and relationships with other open phenomena. Finally, information-based approaches direct researchers to the performance impacts of Open Strategy, for example considering the costs and benefits of creating knowledge-based advantages through more open processes.

Conclusion Open Strategy is a multifaceted and fastdeveloping phenomenon, one that doesn’t sit still for simple definition. Nonetheless, drawing on existing operationalizations, we have provided an overview of the different subdimensions that make up the transparency and inclusion involved in Open Strategy. While strategy processes might be open in some dimensions, they are likely to be closed in others. In this sense, Open Strategy is always a particular combination of openness and closure practices in its various subdimensions. Our definition of Open Strategy therefore emphasizes the fundamental principles of transparency and inclusion, while recognizing that the practices of openness form a dynamic and contingent bundle different in every instance. As such, Open Strategy provides a challenging and exciting object for investigation: researchers will have to move fast and reach wide to keep up with its evolving manifestations in all kinds of organizations.

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von Hippel, E., & von Krogh, G. (2016). Identifying viable “need-solution pairs”: Problem solving without problem formulation. Organization Science, 27(1), 207–221. Weick, K. E. (1995). Sensemaking in organizations. Thousand Oaks, CA: Sage. Wenzel, M., & Koch, J. (2018). Strategy as staged performance: A critical discursive perspective on keynote speeches as a genre of strategic communication. Strategic Management Journal, 39(3), 639–663. Westley, F. R. (1990). Middle managers and strategy: Microdynamics of inclusion. Strategic Management Journal, 11(5), 337–351. Whittington, R. (2019). Opening strategy: Professional strategists and practice change, 1960 to today. Oxford: Oxford University Press.

Whittington, R., Cailluet, L., & Yakis-Douglas, B. (2011). Opening strategy: Evolution of a precarious profession. British Journal of Management, 22(3), 531–544. Whittington, R., Yakis-Douglas, B., & Ahn, K. (2016). Cheap talk? Strategy presentations as a form of chief executive officer impression management. Strategic Management Journal, 37(12), 2413–2424. Wooldridge, B., & Floyd, S.W. (1990). The strategy process, middle management involvement, and organizational performance. Strategic Management Journal, 11(3), 231–241. Yakis-Douglas, B., Angwin, D., Ahn, K., & Meadows, M. (2017). Opening M&A strategy to investors: Predictors and outcomes of transparency during organizational transition. Long Range Planning, 50(3), 411–422.

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2

Participation Research and Open Strategy EERO VAARA, A NNIINA R ANTAKARI, and JEANNIE HOLSTEIN

2.1 Introduction Recent studies have raised participation as one of the key issues of Open Strategy (Luedicke et al., 2017; Mack & Szulanski, 2017). However, participation has a longer tradition in strategy research (Laine & Vaara, 2015; Mantere & Vaara, 2008) from which Open Strategy could learn from and contribute to. In this chapter, we review research on participation in strategy and discuss its implications for Open Strategy and vice versa. Participation is a dynamic and multifaceted phenomenon, the nature and effects of which are not easy to pin down in strategy making. Participation can generate engagement and create commitment to strategy and similarly improve the quality of decision making (Floyd & Wooldridge, 2000). In contrast, limiting participation through secrecy and exclusion may result in ineffective implementation (Mintzberg, 1994), and from a critical perspective, exacerbate organizational inequality (Knights & Morgan, 1991; McCabe, 2010). However, participation can also slow down decision making and constrain the strategy process (Collier et al., 2004; Anderson, 2004). Moreover, widespread participation can create expectations that are then not satisfied, particularly where the decision might be contrary to the advice given by participants (Kornberger & Clegg, 2011). Thus, studies on participation in strategy invite questions about its nature and limits, which should be taken seriously in research and practice. The dynamics of participation can be seen as particularly relevant to research on Open Strategy for two reasons. First, next to transparency, inclusion is one of the defining characteristics of Open Strategy (Hautz et al., 2017; Whittington et al.,

2011). Thus, conceptually participation is at the core of the concept of Open Strategy. Second, current research has identified broad questions that scholarship on Open Strategy might both learn from and contribute to. This is especially the case when the focus is on inclusion, defined as the range of people involved in making strategy (Quick & Feldman, 2011; Whittington et al., 2011). Scholars have elaborated on different approaches when studying participation in strategy making, notably in terms of inclusion (Laine & Vaara, 2007, 2015; Mantere & Vaara, 2008). These range from traditional studies of top-level strategy making that tend to see participation as a nonissue, to studies of the strategy process, to the practices that enable or constrain participation in strategy making, and to the consideration of how participation and the subjectivities of the people involved are defined in discourse (Laine & Vaara, 2015). Nonetheless, there remain broad questions such as who is included and how they are included; how this inclusion leading to participation is enabled or impeded through social practices, technologies, and discursive resources; and how in relationships between participants shared meaning about inclusion may be developed or at times resisted. Thus, in this chapter we review existing research on participation in strategy and examine how that can inform our understanding of participation in Open Strategy. We start by offering an overview of how previous strategy literature has dealt with participation. We then distinguish between three distinctively different approaches to participation that can inform our understanding of inclusion in Open Strategy: Open Strategy as limited participation, Open Strategy as co-creation of strategies, and 27

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Open Strategy as “deep engagement” defining the rules of the game. We will then elaborate on these three approaches, their characteristics, and implications for research in this area. Finally, we will move on to discuss key theoretical and methodological issues and suggest a research agenda for future studies of participation in Open Strategy.

2.2 An Overview of Participation in Strategy Research In this section, we offer an overview of how strategy research has dealt with the issue of participation. Traditionally, strategy research has treated strategy making as the activity of top management; participation has thus remained a nonissue in the mainstream literature (Laine & Vaara, 2015). This emphasis on top management decision making can be traced to the military origins of the strategy discipline (Bracker, 1980; Mintzberg et al., 1986; Rumelt et al., 1994), as exemplified by the Greek verb “stratego,” which means planning the destruction of one’s enemies through the effective use of resources (Bracker, 1980: 219; Kanter, 1989). Thus, strategy formation has been typically viewed as purposeful planning by top managers, and the role of others has been to implement these strategies (e.g., Andrews, 1987). However, recent research in strategy process and practice has offered alternative views on strategy making in general and participation in particular (e.g., Burgelman et al., 2018). We next distinguish between three main views on participation in strategy research: participation as an inherent part of the strategy process, participation as enabled or constrained by practices, and participation as an issue of subjectivity.

2.3 Participation as Part of Strategy Process In contrast to more conventional strategy research, strategy process research (Pettigrew, 1973, 1992; Mintzberg, 1978) has offered important insights into participation in strategy making – even if not usually explicitly focusing on participation per se.

These studies have concentrated on the processes through which strategy is practically formulated and enacted (Bourgeois, 1980), the sequence of events associated with strategy, its temporal nature, and how it evolves over time. This led to a pivotal change of focus, on emergent strategies (Bower, 1970; Mintzberg & Waters, 1985) and on strategy as a pattern of multiple actions (Bower, 1970; Mintzberg, 1978). As a result, participation in strategy has been extended out of the boardroom and into the behavior of those involved in a strategy process. It is this wider participation that started to assume strategic importance, from the entrepreneurial potential of middle management and the initiatives shown in projects by experts such as engineers, to the skills of lower middle management needed in new projects and the work of upper middle management in conceptualizing the strategic impact of the projects (Burgelman, 1983, 1991, 1994). One of the key contributions of the early strategy process studies has been an increasing interest in the participation of middle managers as strategic actors. In an early study, Wooldridge and Floyd (1990) focused on how middle management participation influenced corporate performance. They showed that decision making by middle management, and with it the successful integration of diverse ideas, could lead to superior strategy formulation. However, their analysis unexpectedly demonstrated that middle management did not necessarily show commitment to strategy, and moreover demonstrated the importance of maintaining a critical stance toward strategy proposals. Soon after, Floyd and Wooldridge (1992, 1996) continued on the topic of middle management’s role by classifying the actions of middle management into roles linked to both top-down and bottom-up strategizing and to either the integration of ideas or their diversification. In their subsequent work, Wooldridge and Floyd (2017) have in turn concluded that in the complex social processes that underpin successful performance, participation from top-level managers and importantly middle managers distributed across the organization is required. Moreover, each are required to play integrative strategic roles, while only some of them need to perform divergent strategic roles.

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Participation Research and Open Strategy 29

Westley (1990) examined strategy conversations and elaborated on the antecedents and implications of inclusion around strategic issues. She elucidated how middle managers experience inclusion as motivating and energizing if they are allowed to dominate or at least codetermine some aspects of the conversation. Ketokivi and Castañer (2004) in turn considered the integrative process and effect of participation in more detail. They showed that participation in strategic planning and subsequent communication of its results reduces the possibility that employees would engage in subgoal pursuit and cause an integration problem. They contend that reducing bias is likely to lead to greater integration and less diversification of goals and in this way to increase commitment to the strategic objectives. In another study, Andersen (2004) showed that the autonomous participation of middle managers, allowing them to take initiatives, is linked to positive economic performance. However, this distributed decisionmaking authority can be more efficient when the company also has a formal strategic planning process that integrates strategic actions. This supports the view that while participation is valuable, restriction on participation – inclusion that is in some way constrained – is more crucial to strategic performance. Moreover, there needs to be constraint because participation of middle management in strategic decision making is both timeconsuming and resource-demanding and as a consequence can outweigh any subsequent positive performance. Participation of middle managers is in any case constrained within any system of management control. Values, purpose, and direction of the organization communicated by top management within such a system can enhance the proactiveness of middle management (Marginson, 2002). Administrative control systems in turn affect the location of strategic initiative and inclusion; some managers are assigned to make strategies concrete, while others are held accountable for assuring the efficiency of current activity. In strategy making, multiple key performance indicators nevertheless lead middle managers to favor some measures at the expense of others. A study by Currie and Procter (2005) confirmed part of the results of

Marginson’s study around manager proactivity and also found that ambiguity of role expectations among stakeholders, including top managers, does in fact prevent middle managers from enacting their strategic roles. However, they also pointed out that the training of middle managers contributes to development of active strategic leadership.

2.4 Participation as Enabled or Constrained by Strategic Practices Relatedly, strategy-as-practice scholars (Vaara & Whittington, 2012) offer a distinctive focus not on the process of strategy formulation and emergence, but on activities and practices through which strategy is practically formulated and enacted. From much of the work of practice-based strategy research (Golsorkhi et al., 2015; Jarzabkowski & Spee, 2009; Vaara & Whittington, 2012), not only has the participation of a broader range of actors in strategy making been considered (Mantere & Vaara, 2008; Laine & Vaara, 2007; Laine et al., 2015), but the modes of participation and nature of inclusion have also been explored (e.g., Balogun et al., 2014). This inclusion is not simply about who might be considered a strategy practitioner (and thereby included), but also specific practices enabling or constraining participation have been in the focus of analysis. Just like in strategy process research, strategyas-practice research has focused attention on the role of middle managers’ sensemaking (Balogun & Johnson, 2004, 2005; Rouleau & Balogun, 2011). For example, Rouleau and Balogun (2011) have illuminated the importance of both middle management sensemaking and sensegiving. Furthermore, there have been some studies that have examined the role of external actors such as consultants who are known to influence outcomes when they participate in, for example, strategy workshops (Hodgkinson et al., 2006) or strategic reorganization initiatives (Molloy & Whittington, 2005). However, such studies have been relatively few and there is opportunity to broaden research into participation of nonorganizational or other internal actors (Dobusch et al., 2017; Jarzabkowski & Spee, 2009).

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In addition, strategy-as-practice scholars have examined the practices of strategy making and even if these studies have not often focused on participation per se, they inform us about the problems and challenges of inclusion in strategy making. For instance, there is a body of research on strategy meetings and the social practices involved (Guérard & Seidl, 2015; Jarzabkowski & Seidl, 2008). Scholars have also focused on use of the material artifacts such as PowerPoint in strategy making (Jarzabkowski & Spee, 2011; Kaplan, 2011; Dameron et al., 2015). From these studies we know that interaction that stimulates open discussion tends to promote participation, and further that inclusion can also be both enhanced (Holstein et al., 2018; Abdallah & Langley, 2014) or derailed (Jarzabkowski et al., 2010) through a degree of ambiguity in communication.

2.5 Participation as Subjectivity and Power Closely related to parts of strategy-as-practice research, scholars have also examined the role of subjectivity and power in strategy making (Dameron & Torset, 2014; Kornberger & Clegg, 2011; Laine & Vaara, 2007; Mantere & Vaara, 2008; Samra-Fredericks, 2005). This perspective has examined participation as the construction and reconstruction of subjectivities, i.e., how specific actors and not others are given rights to participate in and exercise influence in strategy making (Dameron & Torset, 2014; Laine & Vaara, 2007). Participation in this perspective becomes a question of power in terms of who is included and who is excluded from participating. All this depends on how strategy making is socially and discursively constructed, which some studies have shown can provide ontological security as a sense of order and control for some, at the same time as marginalizing others (Samra-Fredericks, 2005). For instance, Laine and Vaara (2007) studied how subjectivity is linked with the mobilization of strategy discourse, which was the case of top management launching a strategy process or middle managers working on their own strategies. Interestingly, they also showed how engineers

could resist strategy work. In their study, Ezzamel and Willmott (2008) in turn demonstrated how specific organizational practices, such as accounting, gain strategic significance, and how these practices influence what is considered strategic. This is relevant for participation since specific strategic practices can define who in organizations can participate in strategy processes. In another relevant study, Kornberger and Clegg (2011) highlighted how the performative effects of strategizing mobilized the public and legitimized outcomes of the process while silencing other voices. In this way, studies of subjectivity have contributed to strategy research by advancing our understanding of participation in terms of agency and power dynamics. In one of the rare studies focusing explicitly on participation in strategy making, Mantere and Vaara (2008) identified discourses that either impede or enable participation. The discourses impeding participation included “mystification” (obfuscation of organizational decisions), “disciplining” (use of disciplinary techniques to constrain action), and “technologization” (ways in which technology limits degrees of freedom), and those that promoted participation comprised “self-actualization” (the ability of people to define objectives for themselves in strategy processes), “dialogization” (integrating top down and bottom up approaches to strategizing), and “concretization” (establishing clear processes and practices in and through strategizing). Understanding how different discourses can either promote or hinder participation in the context of strategy making can provide a nuanced understanding of the dynamics of openness in general and inclusion in particular, not least regarding its breadth and depth. Despite these advances, there are many issues that are as of yet poorly understood in research on participation in strategy making. In particular, although some studies have provided insights into the broader range of actors found in organizational strategy and strategy making, most studies have been limited to middle managers, and the role of other organizational members such as lower-level employees or external actors has been less apparent. Moreover, despite advances in research on the practices of strategy making, our understanding of the various methods and technologies allowing for

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Participation Research and Open Strategy 31

participation is limited. Finally, even more critical studies have highlighted key issues in terms of subjectivity and power relations and there are many issues related to for example resistance that warrant specific attention in future research.

2.6 Three Approaches to Participation in Open Strategy As our review shows, participation can be seen as one of the central dynamics in strategy making. Importantly, Open Strategy has recently emerged as a particularly interesting phenomenon that has a great deal to offer to our understanding of participation in strategy making (Burgelman et al., 2018; Seidl & Whittington, 2014). In fact, Open Strategy may be seen as the most novel and even radical form of participation that may include “extreme inclusion” (Luedicke et al., 2017; Mack & Szulanski, 2017; Whittington, 2011). However, conceptual diversity and even ambiguity prevail as to what “openness” and “inclusion” may mean and how they can be theorized and empirically examined in strategy research in general and in Open Strategy research in particular. We next elaborate on how we can advance understanding of participation in Open Strategy. Based on our review of prior research we outline three approaches to participation in Open Strategy: Open Strategy as limited participation, Open Strategy as co-creation of strategies, and Open Strategy as “deep engagement” defining the rules of the game. The key idea is to offer an organizing framework that elucidates distinctively different ways in which Open Strategy can be understood and what it entails in terms of the nature of participation, control, and agency, the dynamics of strategy making, and the problems and challenges encountered. Table 2.1 offers a summary of the key characteristics and the key issues involved.

2.7 Open Strategy as Limited Participation Although the term Open Strategy implies widespread transparency and inclusion in strategy

making, real-life examples and practices mostly tell a story of more limited participation. That is, oftentimes Open Strategy may involve transparency and inclusion in specific parts of the strategy process but not others. Moreover, the various tools and technologies that have made Open Strategy possible often focus on specific aspects of strategy making – for which they have been designed. For instance, for quite some time organizations have been able to gather information such as “weak signals” and generate new ideas by approaching stakeholders with IT solutions ranging from new types of surveys to brainstorming online. There are also various kinds of technological solutions that allow for very open collaboration in the implementation of strategic ideas and initiatives. Thus, participation is enabled but also constrained by the methods or technologies available. For example, a survey or even brainstorming online is set up with preconditions, such as who can participate and by when, and also less obviously by assumptions about the technical competence of participants, a long-standing constraint on participation (Dachler & Wilpert, 1978). In this approach, the strategy process is typically controlled by top management, or middle managers acting as “proxy” for this control. There may be participation that allows for idea generation, voicing of concerns, or influence on the implementation of strategic ideas and initiatives, but this participation is often a consultative one. Thus, the actual formulation of strategy statements, the crafting of the strategy documents, and the key decisions and choices tend to be in the hands of top management as “strategists.” Thus, this approach has its challenges. For instance, participation may look like “windowdressing” or “open-washing” that may not have a significant effect on strategy making. Moreover, the participants may experience their role as limited or even “ceremonial” – especially if their ideas and views are not visible in the formal strategy documents or influential in terms of the decisions and actions made.

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Open Strategy as “deep engagement” defining the rules of the game

Open Strategy as co-creation of strategies

Open Strategy as limited participation or constrained by the methods or technologies available

or constrained by specific methods or technologies

define the parameters or “rules of the game” of the strategy process, with no predetermined process model

pre-determined by specific methods or technologies

• The actors together • Participation is not

characteristically designed to allow for widespread participation in terms of co-creation of strategies with a defined payoff

Control/agency

for idea generation, voicing concerns, and/ or influence on the implementation of strategic ideas and initiatives

• Participation allows

Implications on strategy making

seen as “window dressing” and may not have significant effects on strategy making • People who are invited to participate may be disappointed if their voices are not heard or views made visible

• Participation may be

Problems/ challenges

inclusion unconstrained

• Immersive, i.e.,

• Participation is • Organization of principle equal in widespread and can “extreme inclusion” terms of impacting not generate novel ideas is challenging for only the coconstructed (often in an organizations, strategies but also the unanticipated manner) including a risk of • Commitment is practices of strategy “anarchy” created by widespread • Full equality cannot making • Top management is participation usually be reached, not in a privileged but specific actors position tend to gain control and have more power than others

• All actors are in

• Strategies are • Participation is • Organization for parts of the organization coconstructed by top widespread and can impactful co-creation and outside the managers and others generate novel ideas is challenging and • Commitment is organization, with some alike may involve selection • Top management still created by widespread constraints, for and limitations • Open Strategy work determines the rules of participation example, over nature of may be challenged or the game in terms of inclusion and length undermined by other the practices of the decision-making strategy process processes or practices in the organization

reach inside or outside typically in charge of the organization, in the strategy process either breadth or depth • Participation of others is limited to specific parts of the strategy process

• Participation as enabled • Limited in terms of • Top management

Nature of inclusion

• The strategy process is • Participation is enabled • Reaches widespread

visible in methods or practices in specific parts of the strategy process

• Open Strategy is

Part in strategy process Nature of participation

Table 2.1 Three Perspectives on Participation and Open Strategy

Participation Research and Open Strategy 33

2.8 Open Strategy as Co-creation of Strategies Open Strategy can also imply a more fundamental reorientation in strategy making. That is, rather than limiting participation to specific parts of the strategy process, strategy making can be based on widespread participation in the co-creation of strategies. Although not often used in strategy making, the idea is exemplified in co-creating organizational strategies as wiki pages (Dobusch et al., 2017). Thus, anyone in a specific organizational setting may be invited to participate in strategy making with an opportunity to have an impact on the outcome. Unlike more limited participation, the co-creation of strategies is based on an understanding that participation is not only about providing information or ideas but having a “real” impact on the organization’s strategy. In this approach, strategies are co-constructed by top managers and others alike with a focus on inclusion and transparency, but there is still someone – typically top management – orchestrating the process to determine the rules of the game in terms of the practices of the strategy process. The key element here that distinguishes co-creation from limited participation is the intent to open up the strategy process to a greater degree and exercise less top management control, within either the Open Strategy initiative or the organization as a whole. This kind of openness does not mean the absence of rules or prescribed procedures (Dobusch et al., 2017) and thus the actual forms of participation are enabled or constrained by specific methods or technologies – the choice of which is typically in the hands of the key decision makers in organizations. Organizing such co-creation of strategies is not easy and it may very well be that many attempts still do not quite live up to the ideals of genuine cocreation or equality of participation. In addition, the actual orchestration of such processes could mean an escalating departure from the initial principles. There may be limitations in how co-creation can be organized in real time for instance, or how different voices can participate equally. Indeed, the rules that determine openness and closure play a key role in the co-creation of strategies. For

example, Dobusch et al. (2017) investigated the challenges of opening up strategy making by looking at an extreme case of Wikimedia to understand the involvement of external actors in organizational strategizing. They found that there are limits to participation; for example, in terms of who is allowed to vote for the administrators or who has the rights to delete content on Wikimedia. Furthermore, it may be that strategy processes specifically designed as following the principles of Open Strategy may be challenged by other forms of decision making in the organizations; for instance, issues that may be seen as particularly sensitive or requiring secrecy may not be dealt with in the Open Strategy forums at all due to the risk that competitors may get hold of strategic information (Appleyard & Chesbrough, 2017; Hautz et al., 2017). Moreover, people may not become committed to the new practices of Open Strategy, which may undermine both the effectiveness and legitimacy of Open Strategy work.

2.9 Open Strategy as “Deep Engagement” Redefining the Rules of the Game The third approach to Open Strategy that we outline involves deep engagement beyond the cocreation of strategies. This view implies that the actors – not only top or middle management – together not only work on the strategies but also define and redefine the ways in which strategy processes are organized. Thus, this extreme type of participation implies a process that is not predetermined or controlled by top management – or any other actor. This may even result in an entirely different “game” being played. This approach is not limited to specific forms or practices of strategy making, nor is it predetermined by specific methods or technologies. In this view, participation is in principle widespread and can generate novel ideas, often in an unanticipated manner. Thus, the organization of strategy work happens alongside widespread participation, which also resonates with the ideas of Open Innovation and tends to create strong commitment. This approach to participation is like

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a social movement that emerges in a network society – empowered by the opportunities of virtual technology and social media; for example, the Wiki tool is central to inclusion and wide participation at Wikimedia, precisely because it provides a collaborative, IT-mediated workspace of interlinked web pages (Dobusch et al., 2017), making contribution seamless and almost instant. This approach may also be best understood as a utopia or an idealistic form of Open Strategy–making – reflecting the values of equality and unlimited engagement in a virtual and global society. Thus, most attempts to enact these principles probably lead to limitations and make such efforts resemble our second approach – Open Strategy as co-creation of strategies. This organization of “extreme inclusion” is indeed challenging for organization (Hautz et al., 2017). On the one hand, extreme inclusion can include a risk of “anarchy” if and when people are not able to reach some kind of co-orientation or shared views – not to speak of full agreement. Indeed, this extreme form of inclusion and participation can even lead to a “tyranny of structuralessness” (Freeman, 1972/ 1973) where participation for certain groups may even be reduced (Dobusch et al., 2017), since a lack of structure may replicate power effects in other ways. On the other hand, it might also be important to acknowledge that increased inclusion is not always that welcomed by potential participants since it may bring more expectations and additional tasks that require extra time and effort on top of everything else (Hautz et al., 2017). Hence, unlimited engagement may then sow the seeds of its own failure or limitation. Further, full equality is rarely reachable since specific actors tend to gain control and have more power than others – depending on how strategy work then gets to be organized and on whose terms. However, we argue that it is very important to point to this third approach that challenges the usual assumptions about specific actors – typically top managers – in charge of the organization or orchestration of strategy work. By highlighting this third approach, we also come closer to the fundamental issues of subjectivity and power that more critical researchers have started to highlight in strategy making (Ezzamel & Willmott, 2008;

Laine & Vaara, 2007). Open Strategy, like other forms of strategy, is not neutral. Indeed, Open Strategy as it is typically thought of or practiced also includes assumptions and power relations that have a significant impact on participation and inclusion – with implications on subjectivity and power relations in terms of how organizational members at different organizational levels can position themselves into strategy and its practices (Laine et al., 2015). It is these practices and assumptions that are in our view the most interesting ones to be examined in future research on Open Strategy, not least because of the potentially uncontainable nature of Open Strategy.

2.10 Key Issues for Future Research We have argued that there are three distinctively different approaches to participation in Open Strategy: limited participation, co-creation of strategy, and deep engagement. However, we acknowledge that the boundaries between the three approaches are merely analytical distinctions and moreover can become increasingly blurred in the practice of Open Strategy. However, either in design or through practice, there are some common issues to each. It is these issues we wish to highlight for future research on participation in Open Strategy. They include authenticity vs. ceremoniality, technology as an enabler and constraint, the relation between openness and closure in participation, power, and control, and the influences of sociocultural practices on Open Strategy.

2.11 Authenticity versus Ceremoniality of Participation Open Strategy involves new ways of developing organizational strategies, but it can also be understood as a performance (Kornberger & Clegg, 2011) or even ritual (Johnson et al., 2010). We have already acknowledged that participation in strategy making could be seen as “windowdressing” or “open-washing” in the case of limited participation. In other words, this can mean that even though participation is explicitly talked about

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as having a central role in the organization, inclusion may be limited in scope and authenticity. In this way, participation may become a performance or game that designated members of the organization have to play, but actually the rules (and thereby the objective) of the game have already been esoterically decided. Ceremoniality, or performance for its own sake, can have a long-standing impact on any future inclusion or engagement in Open Strategy. In addition, it can also diminish the efforts of top management to both communicate and build shared commitment in terms of shared strategy objectives. Moreover, ceremoniality in participation can deflect the enactment of strategies. In contrast, authentic participation might provide a fillip to inclusion, engagement, commitment, and effectiveness. The challenge for future research is to examine how and to what extent Open Strategy as a performance may involve ritualization and ceremoniality – and the implications thereof.

2.12 Technology as an Enabler or Constraint of Participation Technology and particularly social software technologies are key enablers of Open Strategy (Whittington, 2014). This is not to say that conventional practices that encourage wide inclusion (Mack & Szulanski, 2017), such as large scale meetings, are irrelevant in Open Strategy, but rather that technology enables the scale and scope of inclusion to be manifestly different. The platforms provided by technology allow people to connect from virtually anywhere in the world in virtual spaces such as social media, instant messaging platforms, and videoconferencing. Open Strategy practices such as “jamming,” an online collaboration event, where participants post ideas and vote on solutions and widely used in organizations such as IBM, are technology enabled. Thus, using such technology can make strategy formation less resource intensive and quicker, as well as more extensive, reaching through hierarchical layers (Stiegler et al., 2012), operating in real time, with instant feedback loops, unconstrained by any sequencing. Thus, technology can add

scale to Open Strategy and enable the participation of a/the crowd in Open Strategy. However, technology can also be used to artificially constrain inclusion, channeling and reinforcing bias through a series of algorithms, in a similar way to that which has been labeled against Cambridge Analytica using Facebook data (Cadwalladr, 2018). Technology can therefore add scope to inclusion in Open Strategy, but equally technology can generate a loss of scope, unknowingly or unwittingly for the participants. Such crowdsourcing is perceived as intrinsically democratizing. However, participation is not necessarily equal, and a virtual space does not necessarily eliminate hierarchies. Further, any virtual space is moderated in some form, and the technology that promotes inclusion also serves moderation, and thereby places limits of inclusion both in quantity and type. Moreover, how limits are set is not necessarily transparent. Technology can be used to constrain transparency more easily than in conventional strategic episodes where setting ground rules for participation is intrinsic to eliciting that participation (Hendry & Seidl, 2003). In other words, technology can appear to enable inclusion without necessarily doing so. Thus, future research needs to consider the enabling and constraining effects of technology on participation and inclusion in Open Strategy, alongside questions of how demarcation between idea generation and decision making can be sustained in the case of highly digitally mediated inclusion.

2.13 Openness and Closure in Participation As shown in our review, participation involves a number of processes and practices – and the orchestration of strategy work. This orchestration requires specific platforms or arenas that may be opened or closed to allow for engagement or participation, and these processes of opening and closing as well as the social and organizational practices involved require attention in future research on Open Strategy (Dobusch et al., 2017). In particular, certain forms of closure may be necessary to achieve desired open qualities in

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strategy making. Dobusch et al. (2017) noted that any attempt to achieve greater openness requires at least some degree of closure of the overall procedures (e.g., specifying who is allowed to participate and how) to enable certain open qualities (e.g., content creation) (Dobusch et al., 2017). This is a crucial issue especially in terms of participation since it allows the elaboration of where and when participation begins and ends, how closure is best determined and realized, and under what circumstances optimal commitment in that participation occurs over time. These are important questions to be explored in future research where one could also highlight differences between the three different approaches to participation outlined in our framework.

2.14 Power and Control in Participation Both power and control are key issues in Open Strategy as top management is more often than not seen as the key actor in strategy making (Hardy & Thomas, 2014). Existing studies have examined top management’s role from a critical perspective and emphasized the question of organizational inequality in terms of lack of inclusion (Knights & Morgan, 1991; McCabe, 2010). However, participation may also be seen as a form of control in and through which organizational members or other actors are drawn into organizational decision making that is largely orchestrated by top management. This goes back to the historical tenets of strategic management that have stressed the role of top management in providing goals, directions, guidelines, structures, and control systems to other managers (Burgelman, 1983). Moreover, this can lead to a situation where participation is taken into account, but it is then considered instrumentally as a means to achieve strategic goals. Thus, it is interesting and important to ponder whether Open Strategy may be used as an instrument of control to align lower level organizational practices with the goals and objectives crafted by top management. In addition, there is a need to reflect upon whether organizational members can be “seduced” to participate in strategic decision making even if that would not be in

their interest (see also Allard-Poési, 2015). Furthermore, we may ask whether organizational members can be forced to participate – as in “participation by command” (Eriksson & Lehtimäki, 1998, 2001) – and on which terms. The issue of disagreement warrants special attention in future research on Open Strategy. When approached from the perspective of power and control, the space created for participation is unlikely to be a neutral one, even if designed as such. At some point there is likely to be disagreement, and such disagreements can even be integral to the creativity and diversity of an Open Strategy process. However, disagreement between participants can also potentially destabilize the whole process, and it may be hard to contain. Similarly, the nature of participation, and how it is organized, can itself create discontent among participants. If there is no productive outlet for this discontent, the implications could be severe. How discontent in participation is managed or filtered out, as part an ongoing process, is therefore of concern in future research. Moreover, disagreement may also lead to resistance (Rantakari & Vaara, 2017), and exploring the various modes of resistance and their implications on Open Strategy is another important issue that requires specific attention in future research. Finally, new processes and practices of Open Strategy may also involve shifts in power positions and relations within organizations; for instance, technological competence may imply new authority and power vis-à-vis more conventional power related to organizational hierarchy.

2.15 The Influence of Sociocultural Practices on Participation Embedded within the Open Strategy framework is the assumption or even prescription that participation is a good thing. This is because it has some shared intellectual ground with innovation, where a belief in the diversity of opinions, and the engagement of the many, is central. However, the practices of inclusion, even those subsequently labeled as Open Strategy, are culturally steeped in wider social practices. Thus, the way we typically see Open Strategy tends to reflect Western values

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and practices, whereas the views might be very different in other cultural and societal contexts. In addition, there are differences between AngloAmerican or European modes of corporate governance and employee rights that can have a major impact on how specific methods of Open Strategy would work in particular contexts (see Kornberger et al., 2017, for a rare comparison of strategymaking practices in Sydney and Vienna). Furthermore, societies that are based on consensus decision making rather than participatory democracy would necessarily question whether each voice is equal but would also have a tradition of spending more time in the process of consultation to reach a consensus rather than a majority agreement or a representative position. The cultural context, specifically a democratic tradition in the macro, meso, or micro setting, and the relationship to participation and inclusion is of future research interest. Similarly, there are other conditions that have not yet gained much attention in research on participation. These conditions can be related for example to ethnicity, gender, and different backgrounds that have an impact on how we define what participation can mean. These conditions tend to produce specific assumptions about the nature of strategy making and the role of participation in it. Thus, we should be conscious about the broader underlying assumptions related to strategy making among practitioners but also focus attention on the assumptions that we as strategy scholars may reproduce.

to be able to advance our understanding of participation in a theoretically grounded manner. Thus, drawing on prior research on participation, we have outlined three distinctively different approaches to participation in Open Strategy: Open Strategy as limited participation, Open Strategy as co-creation of strategies, and Open Strategy as “deep engagement” defining the rules of the game. We have also highlighted a number of issues that warrant attention in future research on participation in Open Strategy: authenticity vs. ceremoniality, technology as an enabler and constraint, openness and closure in participation, power, and control, and the influences of sociocultural practices on Open Strategy. We hope that this chapter inspires not only scholars but also practitioners to see both the huge potential and also the challenges in participation in Open Strategy. Open Strategy offers an umbrella term and a set of practices that can be used very effectively to promote participation in strategy making – in ways that could not be imagined just a few years ago. Nevertheless, there is no single approach to Open Strategy and it is important to understand that the conceptions and applications of Open Strategy may be very different in different contexts. Thus, there is a need for both theoretical and empirical work to elucidate what the processes and practices of Open Strategy imply in terms of participation. This is an exciting challenge for researchers and practitioners alike. References

2.16 Conclusion Open Strategy involves inclusion and transparency in strategy making within and outside the organization (Hautz et al., 2017; Whittington et al., 2011). In particular, inclusion implies a need to involve and engage a number of stakeholders, and thus Open Strategy holds great promise in terms of advancing participation in strategy making. Nevertheless, this promise has not as of yet been fully realized, and this is why there is a need to link this new stream of research to the existing bodies of knowledge in strategy process and practice research – as well as to go beyond strategy research

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CHAPTER

3

Open Innovation and Open Strategy: Epistemic and Design Dimensions GEORG V ON KROGH a nd NINA GEILINGER

3.1 Introduction The past decade has seen a multiplication of theory and research on Open Innovation as a set of practices by which firms bring novel ideas to the market (Chesbrough, 2003; Gassmann et al., 2010). In the early stage of the work on Open Innovation, research was primarily driven by a focus on practical approaches and critically important insights into how firms went about exchanging knowledge and ideas with the outside world. Lately, however, studies of Open Innovation have benefited greatly from building on the knowledge-based theory of the firm (Cohen & Levinthal, 1990; Kogut & Zander, 1992; Nonaka et al., 2006), which draws attention to the sources of innovation-relevant knowledge and the designs of mechanisms to tap and replenish such sources. If knowledge is the focus of theorizing, the opening up of organizational practices entails an epistemic dimension – the use of knowledge sources internal and external to the firm – and a design dimension – the mechanisms firms apply toward implementing the search, integration, and subsequent utilization of internal and external knowledge for innovation (Colombo et al., 2011; Foss et al., 2013; Laursen & Salter, 2006; Puranam et al., 2006). In terms of these two dimensions, Open Innovation contrasts with traditional innovation approaches, in which firms draw exclusively on internal sources to generate novel and economically significant ideas and develop and commercialize these ideas using internal pathways (Knight, 1967). Recently, strategy scholars have turned their attention to another instance of opening up traditionally closed organizational practices: Open Strategy, a set of practices that is increasingly made visible to internal or external audiences or that consults

internal or external actors who were traditionally excluded from the strategy process (Hautz et al., 2017; Whittington et al., 2011). In this chapter, we shall argue that scholarship on Open Strategy can benefit from the past work on Open Innovation, and we draw insights for the former from the latter. Our arguments apply in particular to Open Strategy practices of inclusion, aimed at accessing and learning from internal or knowledge sources that have traditionally not been included in a firm’s strategy practice, and to a lesser extent to Open Strategy practices of transparency, aimed at increasing legitimacy or commitment. Examining such practices of Open Strategy from the epistemic dimension and the design dimension will hopefully inspire strategy scholars to increase their efforts to understand the phenomenon of Open Strategy as it unfolds. We begin by discussing how knowledge-based theory has advanced the study of Open Innovation. We proceed by comparing the history, benefits, and practices of Open Strategy and Open Innovation. Next, we draw upon and build commonalities in Open Innovation and Open Strategy theorizing to formulate a portable theory between the two. To this end, we identify the most common issues and solutions posed in Open Strategy and Open Innovation along the epistemic dimension and the design dimension, which we believe function well as a platform for theory development on Open Strategy and that offer areas for future research on Open Strategy.

3.2 The Epistemic and Design Dimensions of Open Practices In this section we illustrate how the knowledgebased theory of the firm has provided important

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theoretical underpinnings for the advancement of Open Innovation research. We then suggest that those insights could also be useful for the study of Open Strategy, including the study of managerial decisions involved in Open Strategy along the epistemic and design dimensions introduced previously.

3.2.1 Open Innovation and the Knowledge-Based View of the Firm At the outset, it is useful to note two major reasons (among others) that led to the surge in academic interest in Open Innovation. First, it is primarily a concept that originated in managerial practice (Chesbrough, 2003), and many well-known organizations have employed and diffused Open Innovation practices in industry, including Google, IBM, NASA, Novartis, Procter & Gamble, Siemens, and Tesla. As an essential element of these practices, organizations search in external knowledge sources, structure conduits for knowledge from these sources, design collaborations with external actors, and in the process document and explain to the public how these practices constitute the opening of their innovation activities. For example, at the energy company Shell, Open Innovation is set up as a collaborative platform that seeks input from individuals (e.g., technology entrepreneurs) and organizations (e.g., universities) that offer insights into how to transform the energy sector. The firm documents these designs and their benefits to the public as a means of obtaining inputs.1 Google’s Android operating system is developed in an Open Source Software project that leverages the contributions of collaborating organizations and individual programmers (Boudreau & Lakhani, 2009). As is common for Open Source Software development, the details of the development activities are to a large extent publicly accessible. Lastly, Novartis’s Open Innovation approach in drug discovery and development involves designing collaborations with several hundred universities, research institutes, and individual scientists. Novartis also publicly explains their approach to enlist future collaborators.2 Second, the publicly available information and documentation on Open Innovation practices of

these and other organizations have opened unprecedented research opportunities for innovation scholars (von Krogh & von Hippel, 2006). It is now possible to examine various practices of Open Innovation, trace their similarities and differences, and analyze their strengths and weaknesses (Chesbrough & Crowther, 2006; Chiaroni et al., 2011; Di Gangi & Wasko, 2009; Dodgson et al., 2006; Spaeth et al., 2015). Today, therefore, we have an extensive understanding of how firms practice Open Innovation by designing collaborations, searching knowledge sources, and using external knowledge (Bogers et al., 2018; West & Bogers, 2014). Novel research opportunities have led to an increasingly systematic and rigorous approach to theorizing and analyzing the antecedents, forms, and outcomes of Open Innovation. For some time, there was considerable uncertainty as to whether or not Open Innovation was a fad that would soon wither and vanish (Chesbrough & Brunswicker, 2014) and whether alternative established concepts such as “supplier innovation” already captured sufficiently well the novel practices pursued by firms (Groen & Linton, 2010). Critics remarked that although the many case studies showed how firms adopted novel practices, the economic significance of these practices remained poorly understood. The study by Laursen and Salter (2006) marked a turning point for scholarship on Open Innovation by its two distinct accomplishments: first, establishing a foundation in the knowledge-based theory of the firm (Cohen & Levinthal, 1990; Grant, 1996; Katila & Ahuja, 2002), and second, demonstrating that a firm’s depth and breadth of search in external knowledge sources were associated with innovation performance in an inverted U-shape. Several studies followed (Criscuolo et al., 2018; Garriga et al., 2013; Rothaermel & Alexandre, 2009) that demonstrated the relationships between a firm’s search and utilization of external knowledge sources and its economic performance and further contextualized those relationships. While external search benefits Open Innovation, these studies showed that theory and research must address various features of firm and environmental context, such as the nature of the knowledge sources, the type of knowledge (e.g., explicit or tacit, local or distant), the

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abundance of knowledge in the firm’s environment, or the information-related constraints in the pathways to the market. Today, it is well understood that firms benefit economically from searching and utilizing external knowledge sources in innovation but that this relationship is contingent on various contextual factors.

3.2.2 Open Strategy Theorizing Along the Epistemic and Design Dimensions The short history of scholarship on Open Innovation offers both conceptual and methodological insights for the rapidly emerging study of Open Strategy. First, we think Open Strategy can benefit from theorizing along the epistemic and design dimension that can be abstracted from prior knowledge-based studies of Open Innovation. Along an epistemic dimension, by including audiences with diverse histories, backgrounds, expertise, and interests (individuals, firms, or communities), the firm can access novel sources of knowledge relevant for making more effective and efficient strategies (Baer et al., 2013). Key issues to be examined are the location and nature of sources to search, the abundance of external knowledge, and the constraints in the pathway to a strategy. The epistemic dimension also captures increased transparency in strategy practices (Hautz et al., 2017; Whittington et al., 2011) and thus makes external audiences more knowledgeable about the elements of the strategy practices, the relevant information on strategic problems and solutions, and the critical choices in a firm’s strategy practices. Along a design dimension, the firm needs to coordinate the interdependencies between knowledge sources throughout the strategy process and manage where and when to open up the strategy process. Key issues to consider in theory and research include incentives in contributions to Open Strategy, how to enable collaboration, and what technologies to adapt. Second, studies of Open Innovation have demonstrated the complementarity of case-based studies and econometric analyses of novel practices. Today, the literature on Open Strategy has been greatly advanced by case studies that document a new practice, its antecedents, and its

potential outcomes (Dobusch et al., 2017a; Mack & Szulanski, 2017; Seidl & Werle, 2018). Although some exceptional work has also examined the economic impact of Open Strategy (Whittington et al., 2016), there is still opportunity for more work along these lines. Studies may also seek to establish a theoretical foundation along which a consistent performance-oriented empirical research program may emerge. While many attractive theories exist for this purpose (e.g., organization design, transaction-cost theory, institutional theory, resource-based theory, or agency theory), the knowledge-based theory of the firm (Grant, 1996; Kogut & Zander, 1992; Liebeskind, 1996; Nonaka et al., 2006) presents a useful starting point, as seen in work on Open Innovation. With intellectual roots in the Carnegie School, theories of economic organization, and organizational knowledge creation theory, knowledge-based theory has advanced the study of Open Innovation by providing a theoretical foundation (Appleyard & Chesbrough, 2017). We propose that it may also be useful for the study of Open Strategy. For example, activities by the firm to search, integrate, and combine strategic input from stakeholders could be consistently approached through the lens of the firm’s capacity to absorb such inputs (Cohen & Levinthal, 1990; Zahra & George, 2002). To further apply such a knowledge-based lens on Open Strategy research, we describe in section 3 the current characteristics of the research streams on Open Innovation and Open Strategy.

3.3 A Comparison of Two Research Streams in the Making Research on Open Innovation and Open Strategy has essentially developed in two parallel tracks. We know a good deal from the knowledge-based view of the firm about the relationship between Open Innovation and innovation performance. Separately, Open Strategy scholars have shown how firms use new practices to open up their strategizing to internal and external actors. Even though Open Strategy scholars have made the link to Open Innovation explicit since the beginning (Whittington et al., 2011), only recently have

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they linked insights from the two sets of “opening up” in terms of innovation and strategy practices in firms (e.g., Dobusch et al., 2017b; see also Xu & Alexy, Chapter 4). In Table 3.1, we compare three recent conceptual discussions that elaborate – more or less in detail – on the relationship between Open Strategy and Open Innovation and their key similarities and differences (Appleyard & Chesbrough, 2017; Dobusch et al., 2017b; Whittington et al., 2011). We include Whittington et al. (2011) because they initially drew on the Open Innovation literature to introduce Open Strategy as a broad concept that can involve internal or external actors and offers practical relevance for various sectors. They treat Open Innovation as a subtype of Open Strategy, as do Appleyard and Chesbrough (2017), the second of the three comparisons, who distinguish between the process branch of Open Strategy, concerned with opening up the strategy process, and the content branch of Open Strategy, corresponding to an Open Innovation strategy. Their comparison has been challenged by Hautz et al. (2017), who argue that in addition to their Open Innovation strategy, firms can also open other content areas of their strategy; thus, the content and process branches of Open Strategy overlap at times and are not to be regarded as mutually exclusive dimensions of openness. In the third contribution in Table 3.1, Dobusch et al. (2017b) provide the most detailed comparison, taking a communication perspective toward Open Strategy and Open Innovation. Their comparison differs from the other two comparisons in that they delineate Open Innovation and Open Strategy as related but separable and analytically distinct concepts. They argue that in both of them, firms open up their communication on three different dimensions: participants, topics, and purposes. In their review of empirical papers on both concepts, they find that compared to Open Innovation, Open Strategy typically involves a narrower range of participants but opens up to a broader range of purposes and topics that are discussed. Such observations resonate with Whittington et al. (2011), who describe Open Strategy as a broader concept than Open Innovation that applies to a higher variety of industries and actors.

The contributions displayed here underscore that researchers from both fields have the potential for mutual learning by exchanging ideas and findings in order to advance theory and research. For example, all three comparisons in Table 3.1 emphasize a firm’s economic benefit in some form or other as a goal of Open Innovation, but less so as a goal of Open Strategy. Yet, empirical studies have shown that firms can gain economic benefits by adopting Open Strategy practices, too (see Bjelland & Wood, 2008; Malhotra et al., 2017; Whittington et al., 2016). To pursue this topic further we suggest a performance-oriented research program for Open Strategy in section 2. With the advancement of empirical research in both fields, we can expect to see further conceptual discussions of their relationship in the near future, maybe supported by investigations on the common issues of Open Strategy and Open Innovation along the epistemic and design dimensions that we will also propose further in this chapter. The following short review organizes the emerging insights according to the history of the research fields, the practices, and the benefits of Open Innovation and Open Strategy.

3.3.1 Observations on the Intellectual History Starting with Henry Chesbrough’s seminal work (Chesbrough, 2003), research on Open Innovation was primarily phenomenon-driven and focused on exploring the plethora of new innovation practices with which firms engaged. Soon after launching the term, different sub-streams of Open Innovation research emerged, each problematizing a distinct aspect of Open Innovation. These research streams have contributed to counter then-prevailing assumptions about innovation strategy and the management of innovation, such as assuming the development and commercialization of ideas to be tightly controlled within the boundary of the firm to mitigate the cost of losing innovation-related intellectual property. Today, some of the sub-streams of Open Innovation have developed into slightly separate discourses, often with limited sharing of conceptual work and empirical findings (Enkel et al., 2009; Randhawa et al., 2016; Stanko et al., 2017;

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Open Innovation and Open Strategy 45 Table 3.1 Recent Exemplars of Conceptual Discussions of the Relationship Between Open Strategy and Open Innovation

Relation of Open Strategy to Open Innovation

Whittington et al. (2011)

Appleyard & Chesbrough (2017)

Dobusch et al. (2017b)

Open Strategy: – Broad concept

– Has two dimensions:

Open Strategy:

Open Innovation and Open Strategy are analytically distinct in three dimensions of openness: – Range of participants – Range of topics – Range of purposes

Open Innovation: – One subtype of Open Strategy

Key similarities

Key differences

content and process Open Innovation: – One subtype of Open Strategy: the content dimension

Both Open Strategy and Open Innovation: – Consist of different practices – Can exhibit different degrees of openness – Are driven by similar factors. In practice, both innovation and strategy are affected by increasing openness

Both Open Strategy and Open Innovation: – Are concerned with opening up communication regarding the three dimensions

Open Strategy: – Brings many different threats for organizations – External and internal actors – Relevance for many different industries Open Innovation: – Clear net benefits for organizations – Only external actors (most commonly) – Relevance mainly for high-tech industries

Process dimension of Open Strategy: – Goal is to enhance strategy formulation

Content dimension of Open Strategy (Open Innovation): – Goal is to profit economically

West & Bogers, 2014; Xu & Alexy, Chapter 4). For example, while studies of Open Innovation initially focused on high-tech industries, recent work has centered on established industries, university– industry relations, platform systems, policy, and science (Bogers et al., 2018). In Chesbrough’s and others’ treatment of Open Innovation, the focus was descriptive in the early publications and in recent years has shifted toward the limits of Open Innovation (Tucci et al., 2016). Recently,

Both Open Strategy and Open Innovation:

– Are based on a decision to open up an

aspect of strategy, either the innovation strategy (content dimension) or the strategy process (process dimension)

Open Strategy:

– Broader on the range of topics and purposes – Narrower on the range of participants (focus on internal actors)

Open Innovation: – Broader on the range of participants – Narrower on the range of topics and purposes

studies of Open Innovation have also contributed to the understanding of digital technology in management and organizations and to how such technology shapes the way firms can source external knowledge and ideas (Haefliger et al., 2011; Trantopoulos et al., 2017). Since Laursen and Salter’s paper (2006), a centerpiece of the Open Innovation research stream, has been research on the impact of Open Innovation on firm innovation performance. Many

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subsequent studies have contributed to an understanding of the boundary conditions and the antecedents of using external knowledge to enhance innovation performance. They have demonstrated how the relationship between Open Innovation and innovation performance is not necessarily linear (Berchicci, 2013; Cassiman & Valentini, 2016; Grimpe & Sofka, 2009; Rothaermel & Alexandre, 2009). However, through much of this research, an explanation of Open Innovation practices as organizational practices at a microlevel was for a long time conspicuously absent. Recently, recognizing that Open Innovation practices are conceived of and implemented by managers and innovators at different levels of organization, researchers have devoted more attention to the processes and the controls that individuals facilitate and apply. Salter et al. (2015) and Foss et al. (2011) argued that external knowledge must be properly utilized by managers and R&D workers for such knowledge to affect firm innovation performance. Their initial insights suggest that organizational practices, such as knowledge exchange across hierarchies and departments, delegation of responsibility to autonomous teams, or individual incentives to distribute knowledge, are central to achieving successful outcomes from Open Innovation practices. Similar to Open Innovation, research in Open Strategy was initially phenomenon-driven and only gradually recognized as an identifiable research stream. However, as a field of inquiry, it has developed differently from Open Innovation. One factor that has accelerated the development of Open Strategy research is the fact that scholars have been able to learn from other research streams in organization studies, strategy, and technology and innovation management that are already concerned with various types of openness and the involvement of internal and external actors, including alliances, crowdsourcing, platforms, or technology ecosystems (Afuah & Tucci, 2012; Gawer & Phillips, 2013; Yoo et al., 2012). Organizational decision makers are becoming more experienced in reusing Open Innovation tools and building on established relationships with Open Innovation partners to adopt

Open Strategy practices on their own terms. The increasing number of real-world Open Strategy instances further accelerates the development of the field (Criado et al., 2013; Lee et al., 2012; Vanhaverbeke et al., 2017). Open Strategy scholars have rapidly explored internal and external contingencies of successfully opening up strategy (Hautz et al., 2017), drawing from various theoretical perspectives including the practice view and the process view. Overall, by “riding the wave of openness,” the field of Open Strategy has had a strong start in developing empirical and theoretical groundwork for a growing research community. This groundwork on Open Strategy is intriguing and promises to change our understanding of the very essence of strategy. At this stage, however, we can observe that prior work has examined many critical aspects of openness, including the transparency toward and the inclusion of stakeholders, and the relationship of these open practices to the legitimacy, commitment, and justification of and in organizations, without an appreciation of the wider implications for strategy. While this concern initially applied to the field of Open Innovation research, it was eventually overcome (Groen & Linton, 2010).

3.3.2 On Practices Studies have examined numerous well-established and emerging Open Innovation practices. Firms may develop products fully or partly with external parties such as Open Source communities (Haefliger et al., 2008; von Hippel et al., 2003), users or customers (Cui & Wu, 2016; von Hippel, 1986), suppliers (Dyer & Nobeoka, 2000), or universities (Perkmann & Walsh, 2007). A number of studies have demonstrated that rather than engaging outsiders throughout the entire innovation process, from idea generation to commercialization, firms benefit most from selectively involving partners for specific activities (Stuermer et al., 2009). Firms may solve specific development and process-related problems with the assistance of expert outsiders (Felin & Zenger, 2014; Sieg et al., 2010) or crowdsourcing (Afuah & Tucci, 2012; Poetz & Schreier, 2012). In such setups,

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Open Innovation and Open Strategy 47

firms increasingly rely on external information and technology to improve internal processes (Trantopoulos et al., 2017; von Krogh et al., 2017) and to seek out external knowledge sources (Katila & Ahuja, 2002; Laursen & Salter, 2006). The benefit of posing a problem via a technological infrastructure to a crowd of possible problem solvers lies in increasing the variance of information sets (Jeppesen & Lakhani, 2010). The larger the crowd of experts, the more likely that one individual will hold solution-relevant information for the problem at hand. Overall, research has documented manifold practices of Open Innovation that are targeted by firms to solve specific challenges in innovation. Scholars have examined the ways in which activities are organized at the boundary between customers and the firm, and their impact on information absorption into firm internal processes (Foss et al., 2011). Recent work has also argued that organizing dynamic shifts between Open and Closed Innovation is related to a firm’s innovation performance (Kim et al., 2016). Lastly, an important stream of work on the practices of organizing has focused on the relationship between the design of technology and organizing. For example, a modular design of technology has been shown to correspond to a modular organizing in Open Source Projects (MacCormack et al., 2006). Moreover, scholars have argued that modular design of Open Source Software, where internal and external actors self-allocate their effort to develop specific modules, can mitigate the free-rider problems associated with the production of a public good (Baldwin & Clark, 2006; Spaeth et al., 2010). One commonly examined practice of Open Strategy is a firm’s communication of strategic information to internal or external stakeholders (Baptista et al., 2017; Stieger et al., 2012; Whittington et al., 2016; Yakis-Douglas et al., 2017). For example, a firm may voluntarily share merger and acquisition (M&A) announcements with analysts during the deal process (YakisDouglas et al., 2017), or share the content of strategic initiatives on internal social media platforms (Tavakoli et al., 2017). Another documented Open Strategy practice combines the communication to the public with the sourcing of ideas and solutions

from stakeholders in strategy jams, wiki conversations, or interorganizational collaborations (e.g., Malhotra et al., 2017; Seidl & Werle, 2018). For example, Clarke and Fuller (2010) report how several organizations participated in developing a collective strategy that justified sustainable development across regions. A closer examination of the empirical evidence reveals a major difference in the types of participants involved in Open Innovation versus Open Strategy practices. Often driven by Chesbrough’s adage, “not all the smartest people work for your company,” Open Innovation practices have been mostly about opening up externally (Dobusch et al., 2017b). Open Strategy practices, in contrast, have been mostly about opening up internally and involving employees traditionally not involved in strategy. While Open Strategy can also be about opening up externally, to date there has been a lack of empirical evidence regarding the extramural agents involved in Open Strategy (Dobusch et al., 2017a; Seidl & Werle, 2018). Opening up the strategy process to external participants mostly entails communicating the strategy to external stakeholders, but not essentially involving them actively in formulating a strategy. One reason for the prevalence of internal participants in Open Strategy practices may lie in the fact that strategy per se is associated with sources of current and future competitive advantage for the firm, which in turn rests on some not only valuable but also unique or rare information. If opening up strategy means forfeiting sources of competitive advantage, it could in fact prove unattractive to engage external actors in strategy formulation. Access to strategy-relevant information may create parity between competing firms or incentivize competitors to engage in strategic ploys jeopardizing the focal firm’s position. What may be called for is a strategic view of openness as the design of a process that portions, partitions, absorbs, and reveals competitively sensitive information (Xu & Alexy, Chapter 4). As argued previously, much work on Open Innovation has dealt specifically with this issue of designing processes that open up specific tasks to outsiders (Spaeth et al., 2010). More recently, we have observed a rise in new studies on external stakeholder engagement for

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idea collection and “Open Strategy communities” (Gegenhuber & Dobusch, 2017; Mack & Szulanski, 2017; Seidl & Werle, 2018), which indicates an ongoing shift in Open Strategy research toward studying a more diverse set of participants. This trend finds empirical support in prior streams of research in the strategy field related to stakeholder-based strategic management or political strategy. The idea of broadening participation in strategy processes has a long and successful tradition in practice (Ashmos et al., 1998; Floyd & Wooldridge, 2000; Tegarden et al., 2005). Participation can be enlisted from various stakeholder groups internal and external to the firm (Freeman, 2010; Hillman & Hitt, 1999). A broader coverage of stakeholders may be related to the firm’s proactive strategies, in particular in the environmental and social domains (Buysse & Verbeke, 2003), and lead to the development of intangible assets that positively relate to firm performance (Hillman & Keim, 2001). Some scholars have even encouraged management to consider strategic inputs through participation from nontraditional groups, such as young employees who assist management by developing unusual strategic foresight (Hamel & Prahalad, 1991). Involving individuals and collectives with high stakes in a firm’s vision may also embody an essential element of the firm’s purpose and is thus imperative to strategy processes (Mitchell et al., 1997). For example, Spicer and Evans (2006) reported how the Children’s Fund, an organization devoted to advancing children’s rights, took essential steps to involve children and young people in its strategy process (see also Lombe & Sherraden, 2008).

3.3.3 Benefits of Open Innovation and Open Strategy Practices By opening up their innovation practices, firms may create and capture more value from innovation outcomes. Open Innovation practices may reduce a firm’s costs of product development (Bogers et al., 2010; von Hippel, 1994) and production (Trantopoulos et al., 2017). When firms effectively absorb and apply external knowledge of customer needs and solutions for innovation, the innovative products likely increase in quality and

value, as perceived by customers, and carry a reduced risk for market failure during introduction (Chatterji & Fabrizio, 2014; Chesbrough, 2003). Furthermore, research has demonstrated that firms can introduce products faster to the market when codeveloping or in other ways collaborating with suppliers, customers, or other external partners in Open Innovation activities (Bogers et al., 2010; West & Bogers, 2014). In a similar manner, scholars have discussed several benefits that firms can achieve by opening up their strategy practices. Open Strategy practices may enhance a firm’s image (Yakis-Douglas et al., 2017), raise company stock prices by improving investor confidence (Whittington et al., 2016), enable collective sensemaking or buy-in (Seidl & Werle, 2018) – as a counterpart to reducing risks of new product introduction in Open Innovation – or generate creative contributions toward strategic decisions (Birkinshaw, 2017). To the best of our knowledge, however, Open Strategy scholars have not yet considered the costrelated benefits of opening up strategy practices (for cost increases from additional efforts in Open Strategy practices, see Gegenhuber & Dobusch, 2017), as has been done in the research on Open Innovation. A firm that uses crowd-based generation of relevant information to decision making, for example, may potentially save on hiring external consultancies or on conducting large studies to identify and formulate new strategic objectives and market opportunities. However, it may also need to sort suggestions and deepen those that may seem most beneficial. The firm can perhaps also increase the speed of strategic decisions or reduce the risks by considering the opinions from diverse stakeholders during early stages of strategy formulation. Another open issue is to what extent crowds can be designed to deliver input to trend scouting and forecasting. Open Innovation researchers have studied a practice to crowdsource information on longterm trends and technology road maps using social media technologies (Langen & Kammergruber, 2013). Moreover, one question concerns to what extent the crowdsourcing of strategic ideas is more efficient and effective than traditional methods for generating expert input in strategy, such as the Delphi method.

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Open Innovation and Open Strategy 49 Table 3.2 Issues for Open Strategy Research Along the Epistemic and Design Dimensions Epistemic dimension

Design dimension

– What are the types of – How can firms incent knowledge and the participants to contribute locations of sources to to their open practices? – How can firms enable search for relevant effective collaboration in information? – What is the abundance open practices? of internal and external – How can technologies enable firms to adopt knowledge and open practices? information? – What are the constraints on the use of internal and external knowledge?

3.4 In Search for a Portable Theory: Common Issues and Solutions Along the Epistemic and Design Dimensions What are the most common issues addressed by Open Innovation and Open Strategy, leading to common solutions? This question is key if we wish to create a “portable” theory that can inform our understanding of openness simultaneously in the fields of innovation and strategy. Drawing upon and building commonality in theorizing is likely to advance Open Strategy and Open Innovation more rapidly and effectively. In this section, we draw on the knowledge-based theory of the firm to identify the aims and issues for the theoretical development of Open Strategy research. As noted previously, the knowledge-based theory of the firm has been used extensively in work on Open Innovation and has helped to build a solid theoretical foundation on which modeling and empirical research can proceed (Alexy et al., 2013; Garriga et al., 2013; Laursen & Salter, 2006). The issues addressed in the theory are, among others, the sources of knowledge created and transferred by the firm, and the organizational designs to facilitate knowledge processes (Easterby-Smith et al., 2008; Grant, 1996; Kogut & Zander, 1992; Nonaka, 1994; Nonaka et al., 2006; van Wijk et al., 2008). In the introduction to this chapter, we have defined the epistemic and design dimensions of open practices against the backdrop of the knowledge-based view, which have been a focal point of investigation in prior work on Open Innovation

(Stuermer et al., 2009; Tucci et al., 2016). Along the epistemic and design dimensions, it is obvious how Open Innovation contrasts with traditional innovation approaches in which firms draw exclusively on internal sources to generate novel and economically significant ideas and further develop and commercialize these ideas using internal pathways (Knight, 1967). Practically, they also indicate a different type of managerial decision involved in Open Innovation. Along an epistemic dimension, decisions are made about what specific sources of knowledge the firm shall utilize for innovation and to what extent; for example, the R&D department, sales personnel, customers, universities, expert crowds, or research institutes. Along a design dimension, decisions are made about the appropriate mechanism to search, integrate, and utilize knowledge sources; for example, through strategic alliances, innovation intermediaries, customer codesign, contract research, competitive intelligence, innovation contests, or crowdsourcing. To produce the desired outcome of opening up strategy practices, a firm depends on the right configuration of the epistemic and design dimensions. Next, we therefore map out research issues for Open Strategy along these two dimensions, summarized in Table 3.2.

3.4.1 The Epistemic Dimension One important aim of Open Strategy is to include individuals and collectives with diverse backgrounds, expertise, and interests and thereby access novel sources of knowledge that are relevant for making effective and efficient strategies. Our epistemic dimension of open practices builds on and extends the “inclusion” dimension (Whittington et al., 2011) by specifying what particular knowledge sources are relevant for strategy making today and in the future. By viewing Open Strategy along an epistemic dimension, inclusion has not only a powerful symbolic function associated with involvement but also a very specific target to foster what Thomas et al. (2001) call “strategic learning,” which is contemporary learning in the firm that fosters its future strategic initiatives. Such learning hinges on a targeted gathering of knowledge, interpretations, and validations from specific sources.

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Moreover, along our two dimensions, we can disentangle the type of knowledge source and the type of design to access this source and utilize knowledge that may be present in inclusion. From a knowledge-based view, three important issues emerge along the epistemic dimension, which the firm needs to resolve when adopting Open Strategy practices. First, what are the types and the locations of sources to search for information relevant to strategy? More precisely, firms should consider what type of knowledge – expert or general, explicit or tacit – is needed to solve problems specified in the strategy process and to thereby foster strategic learning in the firm. Contingent on such considerations, does the firm search many knowledge sources broadly or does it focus on a deep search (Laursen & Salter, 2014)? To shed light on these issues, it will be important for research to identify internal or external experts, describe the characteristics of their knowledge, and determine why their knowledge may be key in the firm’s strategy making (Seidl & Werle, 2018). The literature on Open Innovation has specified many distinct knowledge sources and attempted to characterize the information offered by these sources (Criscuolo et al., 2018). A similar exercise will shed light on Open Strategy practices along the epistemic dimension. Specific attention should be given to the role of tacit knowledge flows (e.g., competence, experience) through observation and imitation (Faraj et al., 2016) for Open Strategy and the steps firms take to access and use such knowledge. One may speculate that accessing some unique sources of expert knowledge may be a necessary condition for strategic learning in the firm, which in turn enables future strategic initiatives. For example, in developing a strategy for capturing technological opportunities that reside not within the business of specific divisions but in between them (so called “white spaces”), the firm may need to engage and involve external experts who map out these opportunities. Second, what is the abundance of external knowledge and information? More precisely, firms should identify in which environment it pays to conduct Open Strategy. For example, in the field of Open Innovation, Garriga et al. (2013) found that the innovation performance of

firms and their choice to search in external knowledge sources are impacted by the abundance of innovation-relevant knowledge in their environment. Similarly, Open Strategy scholars can examine the knowledge environment of the firm that chooses (or not) to pursue an Open Strategy practice. In an information-poor environment, the expected payoff from opening up to outside involvement may be too low to warrant an Open Strategy practice. Conversely, it may be expected that in an organization where employees have extensive information on technology trends and market developments, it will benefit the firm to open up the strategy process internally. Likewise, if the environment is not abundant with knowledge, there may be some specific external information that is beneficial for the firm to tap into. For example, a research institute may be working on developing a novel technology that could represent new business opportunities to the firm. However, the information on this technology and the pathways of its commercialization may remain tacit among a few developers at the institute. Managers may single out and consult on these important sources of knowledge in the strategy process. Moreover, managers of a financial services firm may include its internal investment banking talent in the strategy process in order to identify potential acquisition targets to assist its entry strategy into a foreign market. Third, what are the constraints in the pathway to an Open Strategy? Garriga et al. (2013) found that external constraints on the use of resources impact a firm’s search in external knowledge sources and its innovation performance. Under conditions of strong constraints, firms tend to search more intensively in external knowledge sources. While strategies are generally shaped by a firm’s external and internal constraints (Morgan, 1983), a challenge for management is to evaluate strategic options in light of such constraints. Many years ago, Richard Rumelt (2003) expressed concerns that managers often neglect key constraints in strategy making and suggested that a strategy must feature consistency among plans and objectives, ensure adaptation to a changing environment, secure a competitive advantage for the firm, and avoid overtaxing the existing resources

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Open Innovation and Open Strategy 51

of the firm or creating unsolvable problems. We believe Open Strategy offers some distinct advantages in creating what Rumelt terms a “robust strategy.” Including participants in the strategy process who are internal and external may help management identify inconsistencies; for example, by employees voicing concerns about the direction the strategy takes and the current objectives the firm is pursuing. Their specific information and experience may be particularly useful to detecting and to better understanding the constraints of an Open Strategy. Decisions on the previous issues along the epistemic dimension of Open Strategy can lead to different knowledge-related benefits for firms. For example, by engaging internal and external agents in strategy making, such as customers or other stakeholder groups, managers may assess the extent to which the strategy responds to recent market development and pressing social and economic issues (Malhotra et al., 2017; Seidl & Werle, 2018). Firms may also shape strategic learning by discovering new business opportunities and novel ideas for business models that give rise to future strategic initiatives (Luedicke et al., 2017; Tavakoli et al., 2017). Strategic initiatives in turn may create sources of competitive advantage for the firm (Thomas et al., 2001). Lastly, by opening up strategy practices to external knowledge sources, managers may gain important information on the feasibility of strategic options, given the current and future resource situation of the firm, and better discern problems that may occur in the later implementation of the strategy.

3.4.2 The Design Dimension From a knowledge-based view, and given that the aim of Open Strategy is to exchange knowledge relevant for making effective and efficient strategies, the design dimension of Open Strategy is concerned with the interdependencies between the knowledge sources throughout the strategymaking process. We borrow the idea that a focus on knowledge demands efficient coordination from Puranam et al. (2012), who also underscore that knowledge work, cf. the effective search, integration, and utilization of knowledge in an

organizational context, requires attention to the management of interdependencies. Our design dimension of open practices complements the inclusion dimension by Whittington et al. (2011) by focusing on the interdependencies of knowledge sources that are relevant for current and future strategy making. The interdependencies can range from weak to strong. A consulting report commissioned by management or the internal communication of a strategy to acquire another firm may signify weak interdependencies. Strong interdependencies may entail the creation of an advisory board of outside technology experts that provides critical information on opportunities to invest in technology during regularly scheduled meetings, evaluates the technology strategy, and suggests approaches for its implementation. From a knowledge-based view of Open Strategy, three important issues along the design dimension emerge that firms must resolve when adopting Open Strategy practices. First, how can firms incent participants to contribute to their Open Strategy practices? Prior studies have found a variety of motivations that drive participants’ engagement in online communities, including intrinsic, extrinsic, and internalized extrinsic motivations (Faraj et al., 2016; Franke & Shah, 2003; von Krogh et al., 2012). Firms as online community sponsors can, for example, provide encouragement for repeated interactions among newcomers and expert participants to strengthen their sense of belonging to the community. The formulation of the strategic problem and the types of provided tasks might also motivate participants differently and hence affect their idea quality and quantity. As the firm begins to motivate nontraditional inputs to strategy, it needs to continue motivating valuable and complementary inputs from its traditional strategic employees. Similar to R&D professionals and Open Innovation practices (see Kellogg et al., 2006; Lifshitz-Assaf, 2017), some strategists might fear that Open Strategy practices will make their most notable work redundant, while others will be better able to adapt their work model to Open Strategy practices. Second, how can firms enable effective collaboration in Open Strategy practices? In Open Innovation, successful collaborations tend to be

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structured with formalized manuals and processes and targeted to predefined performance goals, but also rely on informal networking (Brunswicker & Chesbrough, 2018). Some of the Open Innovation tools have also proven to be helpful in structuring Open Strategy collaborations (see Tavakoli et al., 2017). Beyond the decisions on structure, firms can choose from a plethora of other tools for the coordination of Open Strategy participants through teams, contracts, or crowds. As in Open Innovation research, where studies on the collaboration in Open Source Software communities have contributed to our understanding of new forms of governance and structure (Lakhani & von Hippel, 2003; von Hippel et al., 2003), future studies will elicit how firms can enable different forms of Open Strategy collaborations. Third, how can technologies enable firms to adapt to Open Strategy practices?3 Information and communication technologies provide the interface for knowledge exchange and communication with outsiders and for the recombination of internal and external knowledge that has previously been impossible (Schlagwein et al., 2017). Thus, adopting a new practice of Open Strategy or Innovation usually entails adopting information and communication technologies to connect and communicate with knowledge sources, to provide and collect strategic or innovation-related information, or to evaluate and integrate contributions from participants (von Krogh, 2012). To better understand the value of using information and communication technology in Open Strategy, strategy research may benefit from an in-depth examination of the knowledge flows and other types of interactions between participants (see Faraj et al., 2016). We can expect to see more future work on organizations that use a combined design of Open Innovation and Open Strategy practices. Such combined designs are driven by a heightened need for technology experts to address complex global challenges such as climate change or poverty, and by increased strategic interdependencies between organizations in ecosystems or technology platforms (Alexy et al., 2018; Dobusch et al., 2017b; Vanhaverbeke et al., 2017). A recent example of an organization design combining Open Strategy with Open Innovation practices is

digitalswitzerland, a cross-industry collaboration with over 100 members from academia, industry, and government. Among these are the largest national financial service providers, the national postal service, the national railway, the major telecommunications provider, and several large technology corporations.4 This “meta-organization” creates a strategy for developing and implementing digital technology in Swiss society and organizations by including ideas and initiatives from its various members. At the same time, this inclusion enhances the transparency of such strategy making to all relevant stakeholders. As such, digitalswitzerland aims to define and implement a digital transformation strategy for business and society and to jointly develop innovative digital applications for both on an “open challenge platform.” In this sense, digitalswitzerland pursues an open approach to both innovation and strategy. By supporting such collaborations, the Swiss government can benefit by creating social welfare, in cases when firms would benefit individually from Open Innovation only at a later point and therefore would keep innovation closed (see Gambardella et al., 2017).

3.5 Conclusions The purpose of this chapter has been to review the Open Innovation literature, to examine the links between the academic conversations on Open Innovation and Open Strategy, and to offer promising next steps with the potential of significantly enriching the research agenda on Open Strategy, based on what we have learned from the knowledge-based studies of Open Innovation and on knowledge as a focus of theorizing. We identify issues along the epistemic dimension and the design dimension that a firm must consider when adopting Open Strategy practices. A firm must decide about the right configuration of knowledge sources and design mechanisms to effectively search, use, and integrate internal and external knowledge and to facilitate strategic learning. The decision criteria include, among others, how tacit or distant the knowledge to be accessed is, how constraints in the environment may impact the

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Open Innovation and Open Strategy 53

process, and how participants should interact during the Open Strategy process. In delving into a comparative discussion of the research streams of Open Innovation and Open Strategy, we have identified valuable links and differences between Open Innovation and Open Strategy. While the relationship between Open Innovation and Open Strategy has been discussed before (Dobusch et al., 2017b; Whittington et al., 2011), the theoretical insights we can derive from Open Innovation for the future advancement of Open Strategy have largely been overlooked. Attention to the theoretical underpinnings of Open Innovation research should help build a novel and powerful Open Strategy theory. Furthermore, our analysis enables future research to focus on a few critical issues while remaining open to new emerging topics and challenges in empirical studies and to new theoretical links that may advance our understanding of Open Strategy. We have demonstrated throughout this chapter that there are unequivocal benefits to scholars engaged in these conversations by analyzing, appraising, and contributing to theory and research that evolves within and across Open Strategy and Innovation. As we write, Open Innovation is a major, established, and vibrant “branch” of study on technology and innovation management. Open Strategy is still in its infancy as a research field, with less of a history and a narrower stream of publications. Undoubtedly, there are benefits to students of Open Strategy in considering the evolution of scholarly work on Open Innovation, as we have done in this chapter. We believe, however, that there are equally powerful incentives for Open Innovation scholarship to investigate the many and rapid advances in Open Strategy, including the management of transparency in Open Innovation (see Chapter 4) and the fostering of organizational legitimation and commitment through inclusion of stakeholders. The question of an organization’s openness to internal and external actors matters from the perspective of strategy research. Addressing this question will allow us to better understand the facets of openness and the value of knowledge that has traditionally not been considered, shared, or

communicated in strategy, and the answers to this question may ultimately contribute to theoretical perspectives in management research, such as the knowledge-based theory of the firm. Research on Open Strategy will also provide insights into the more general question of a firm’s ability to remain competitive in a rapidly changing and complex business environment. We hope our review will allow researchers of Open Strategy to appreciate the value of exploring and understanding the details and the contingencies of Open Innovation research for their own future explorations, and vice versa for researchers of Open Innovation.

Notes 1. See www.shell.com/energy-and-innovation/ innovating-together.html 2. See www.novartis.com/our-science/novartisinstitutes-biomedical-research/collaborations 3. For more on this topic, see the chapter in this book by Galliers et al. 4. www.digitalswitzerland.com/ References Afuah, A., & Tucci, C. L. (2012). Crowdsourcing as a solution to distant search. Academy of Management Review, 37(3), 355–375. Alexy, O., George, G., & Salter, A. J. (2013). Cui Bono? The selective revealing of knowledge and its implications for innovative activity. Academy of Management Review, 38(2), 270–291. Alexy, O., West, J., Klapper, H., & Reitzig, M. (2018). Surrendering control to gain advantage: Reconciling openness and the resource-based view of the firm. Strategic Management Journal, 39(6), 1704–1727. Appleyard, M. M., & Chesbrough, H. W. (2017). The dynamics of open strategy: From adoption to reversion. Long Range Planning, 50(3), 310–321. Ashmos, D. P., Duchon, D., & McDaniel, R. R. (1998). Participation in strategic decision making: The role of organizational predisposition and issue interpretation. Decision Sciences, 29 (1), 25–51. Baer, M., Dirks, K. T., & Nickerson, J. A. (2013). Microfoundations of strategic problem

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CHAPTER

4

Strategic Openness and Open Strategy XIAN XU and O L I V E R AL E XY

4.1 Introduction Just by their names, the concepts of Open Strategy (OS) and Strategic Openness (SO) seem to have a lot in common – at the very least, they both constitute equally viable outcomes in a forced relationship technique exercise using the words “open” and “strategy.” Indeed, authors on both topics would arguably agree that both concepts somehow deal with behavior that has to do with strategy and in which certain aspects are open, with “open” implying at least a partial reduction of access restrictions (also see, e.g., OED Online, 2013). More precisely, Open Strategy is defined as an inclusive and transparent way to develop and enact strategy (Tavakoli et al., 2015), and Strategic Openness as how firms voluntarily forfeit control over their resources (Alexy et al., 2018). As authors in one of these streams of literature, however, we note a surprising paucity of conceptual linkages between these similarly sounding concepts. Although scholars from both research areas frequently talk about similar or even the same phenomena, events, or practices, such as crowdsourcing or co-creation, we notice that they do not really seem to exchange views with each other. For instance, from a Strategic Openness perspective,1 scholars such as Seltzer and Mahmoudi (2013) or Frey, Lüthje, and Haag (2011) address crowdsourcing, referring to a process of solution finding and idea sourcing outside the boundaries of the firm. In the Open Strategy context, scholars such as Aten and Thomas (2016) or Amrollahi, Ghapanchi, and Talaei-Khoei (2014) talk about crowdsourcing in terms of a bottom-up collective strategizing

procedure. Although these authors share a similar intellectual heritage (see, e.g., Howe, 2006), it appears to us that they do not engage in a direct intellectual exchange. The missing link between these specific papers, so we argue, is symptomatic of the two literatures at large. In turn, we propose that if Open Strategy and Strategic Openness are indeed isolated from one another, there may be a large, currently untapped potential for synergies across these two streams of research. Accordingly, our goal with this chapter is to scrutinize systematically the existing as well as the potential linkages between Open Strategy and Strategic Openness. In doing so, we aim to improve the connections between these two literatures by identifying ways in which scholars participating in either discourse may advance their research agenda by relying on the insights the other has made, and to point to areas in which further joint work may be appropriate. To do so, we begin with the development of a simple taxonomy (derived from the literature on Open Innovation) that allows us to jointly conceptualize and structure these literatures, so as to see where and to what extent gaps between these concepts exist. To substantiate our argument on the disconnect between Open Strategy and Strategic Openness, we conduct a systematic, key word–based literature review (see appendix) using the search term “open* AND strateg*” across the management literature. We do so to inquire empirically into the existence of a shared intellectual heritage (by identifying core citations in each paper), connections between the papers (by studying how they are co-cited), and

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shared self-classifications (via key words). Finally, to study in-depth specific aspects in which Open Strategy and Strategic Openness should relate, we conduct a comparative literature review along four major perspectives: (1) process, (2) transactions, (3) strategy, and (4) organizational design. In sum, we find surprisingly little evidence for existing direct relationships between works on Open strategy and Strategic Openness. In our framework and in our comparative literature review, we show that existing works share very few links. Rather, extant connections between the two concepts exist via a selected few shared references to the topic of Open Innovation, many of which seem to be of symbolic rather than substantive nature. We argue that this lack of relationship is a result of their different epistemological and ontological roots. Based on these insights, we identify opportunities for how Open Strategy and Strategic Openness may benefit from each other in future scientific endeavors. In particular, we propose that Strategic Openness literature could benefit from adopting some of the process focus of Open Strategy, and that Open Strategy scholars should begin to inquire more into questions of performance and boundary conditions, which constitute key aspects of work on Strategic Openness.

4.2 Definitions and Origins 4.2.1 From Open Innovation to Open Strategy and Strategic Openness Over the past few decades, “open” approaches have found their way into many fields of management literature – besides Open Strategy and Strategic Openness. Most generally, work on organization theory has long had a perspective of organizations as “open systems,” in which boundaries, knowledge flows, etc. are often fluid (see, e.g., Scott & Davis, 2007 for a review). The perspective that knowledge would and should flow across the boundaries of the firm also featured prominently in network perspectives on innovation (e.g., Powell et al., 1996) as well as

work on user innovation (von Hippel, 1976, 1988), before being aptly summarized and connected to business strategy in Chesbrough’s Open Innovation (2003) concept. His skilled observation of the effects of globalization and the maturation of Internet technologies such as social and collaboration software help explain the tremendous influx of new interest this field of literature has seen since (see also Altman et al., 2014; Bogers et al., 2017; Tucci et al., 2016; von Krogh, 2012; West et al., 2014). Both Open Strategy and Strategic Openness draw on Chesbrough’s idea of Open Innovation (see also Chapter 3 in this book). Hence, Open Innovation is a great starting point to link Open Strategy and Strategic Openness conceptually. In providing this foundational connection between the two literatures, we can identify existing as well as missing links between these two literatures. To establish this link, in the following, we conceptualize Strategic Openness and Open Strategy briefly in terms of Open Innovation. As for all innovation processes (e.g., Dodgson et al., 2008), we schematically segment Open Innovation into three phases: input (research), process (development), and output (commercialization) – in the Open Innovation language, these would correspond closely to the logic of outsidein (input), coupled (process), and inside-out (output) processes (Gassmann & Enkel, 2004). Here, the lion’s share of work on Open Innovation refers to the input perspective, studying how firms can increase the inflows of knowledge they receive into their innovation funnel by integration of external sources of knowledge such as suppliers, customers, competitors, or public and commercial institutions (Chesbrough, 2003; Dahlander & Gann, 2010; Laursen & Salter, 2006; West & Bogers, 2014). Prominent input-focusing examples include innovation networks (Chesbrough & Prencipe, 2008), crowdsourcing (Howe, 2006), or innovation intermediaries (Lakhani & Lonstein, 2008). From a process or development perspective, the Open Innovation literature has studied co-creation processes, in which external individuals or organizations collaborate with the focal firm to advance an innovation project, similar to joint ventures or

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Strategic Openness and Open Strategy 61 Research/Input

Development/Process

Market/Output

Open Innovation

R&D/innovation

Strategic Openness Strategy

Open Strategy

Figure 4.1. Comparing Open Innovation, Open Strategy, and Strategic Openness

strategic alliances. Examples include the lead-user methodology (Urban & von Hippel, 1988), Open Source projects (von Hippel & von Krogh, 2003, 2006), or commons-based peer-production (Benkler, 2002). Finally, at the commercialization and output level, innovation means disclosing the fruit of (open or closed) labor to others. Here, firms have the choice to engage in selective revealing, defined as the purposive, voluntary, and irrevocable disclosure of R&D outputs that a firm could have kept proprietary (Harhoff et al., 2003; Henkel, 2006). At the same time, we argue that this simple three-phase segmentation does not merely capture the innovation or R&D function, but also the strategy function, in which actors would similarly gather information, develop and execute strategic plans and initiatives, and then reap their rewards (see also Mintzberg et al., 1998). In turn, the Chesbrough definition of Open Strategy (Chesbrough & Appleyard, 2007; Appleyard & Chesbrough, 2017) would emphasize an alignment of Open Innovation activities with the (to-be) deployed strategy definitions used by Open Strategy scholars (often building on Whittington et al., 2011), which we will adopt here, emphasizing the opening of the strategy function to the external environment – similar to what Open Innovation does for the R&D function. Based on these reflections, in the following, we can derive a framework to classify literature “on open” consisting of a simple 3 × 2 matrix with the horizontal axis describing the input, process, and output perspectives and the vertical axis capturing the R&D/innovation or strategy

functions (see Figure 4.1). In the following, we will use this framework to locate and elaborate studies on Strategic Openness and contrast it with Open Strategy. For more precise definitions of Open Innovation and Open Strategy, we point the interested reader to Chapter 1 and Chapter 3.

4.2.2 Defining Strategic Openness The literature on Strategic Openness has its grounding in theories describing the value of resources (Barney, 1991) and their strategic acquisition (Emerson, 1962; Pfeffer & Salancik, 1978), as well as theories describing innovative search (Cyert & March, 1963). This also links Strategic Openness to the literature of Open Innovation and open models of organizing, as well as Chesbrough and Appleyard’s (2007) original definition of Open Strategy. The roots of Strategic Openness lie in Henkel’s (2006) idea of “selective revealing” (see also Harhoff et al., 2003). Henkel proposes that companies, under certain conditions, benefit from disclosing some of the software they have produced, and hence need to develop capabilities in identifying what needs protection and where sharing is beneficial. Strategic Openness starts precisely there, trying to specify further when, where, and how giving up (some) control over resources may be strategically advantageous to the focal firm. Building on Alexy, George, and Salter (2013a), Strategic Openness refines the core idea of selective revealing in two important respects: first, the resources to be disclosed are not necessarily outputs – the firm may also legitimately consider

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sharing problems or ideas as well as assets or routines in the development process. Second, this concept emphasizes a perspective on control rather than ownership; for example, just because ownership is waived does not mean the firm may not still hold control by regulating access or establishing social norms about use (see, e.g., Alexy & Reitzig, 2013; Pfeffer & Salancik, 1978). Accordingly, in Strategic Openness, firms may not even need to own the actual (to-be-produced) resource in the first place, but rather design plans about sharing some or all elements (or their production) in a first stage. Examples in the literature abound, from pharmaceutical companies effectively eliminating upstream competition in favor of joint research (Perkmann & Schildt, 2015), to institutional entrepreneurs signaling their ideas and commitment to potential allies to elicit external parties’ commitment to collaboration (Alexy & Reitzig, 2013; Dodgson et al., 2007). Accordingly, three aspects are central to the definition of Strategic Openness (Alexy et al., 2018). First, it has a clear transactional perspective, focusing on the strategic impact of disclosing one specific resource (also see Dahlander & Gann, 2010). Second, it has a strategic portfolio perspective: in order for the disclosure transaction to be valuable to the firm, there needs to be another way (i.e., at least one other, complementary resource) through which the firm now can capture more value (also see Henkel, 2004, 2006). Third, there is the organization design perspective, as an appropriate organization design will be necessary (a) in structuring what is open and what is closed, (b) to ensure sufficient complementarities between open and closed, and (c) to ensure that these complementarities actually come into play, and continue to do so over time (Alexy et al., 2013a; Dattée et al., 2017). If we segment Strategic Openness according to our previous framework, we can see that – on the horizontal axis – our notion of this concept covers all dimensions of input, process, and output. On the vertical axis, we locate strategic openness between R&D and the strategy function to highlight that this concept includes both value creation and appropriation. Concerning the input perspective, authors in what we would summarize as the literature on

Strategic Openness (i.e., articles that would fall under our previous definition, even if not explicitly referencing “Strategic Openness” or “selective revealing”) have contributed to an understanding of inputs firms may choose to open up (see, e.g., Boudreau & Lakhani, 2015). Often, these are “inputs for the future” resources, which firms disclose to influence the future investments of others, such as through the disclosure of problems the firm holds, in the hope that others will rally to solve them (Jeppesen & Lakhani, 2010). For example, a firm may choose to reveal its future plans to customers, suppliers, or complementors – a common practice in the semiconductor industry, as demonstrated by Intel’s 10-year road map of its microprocessor plans (Borkar et al., 2005). Following the logic of mimetic isomorphism (DiMaggio & Powell, 1983), such practices seem particularly promising when goals are ambiguous and uncertainty is high, and could be of great assistance in particular to firms seeking to establish standards or ecosystems (Alexy et al., 2013a; Boudreau & Lakhani, 2009; Boudreau, 2010; Dattée et al., 2017). At the process level, Strategic Openness covers issues like the organization of openness and decision-making procedures to ensure a successful implementation of Strategic Openness. To organize Strategic Openness, West and O’Mahony (2008) describe how organizations have a vast range of possibilities to control the degree to which the firms disclose resources to support the open projects. They can decide for a one-time disclosure or even found an independent subsidiary. Furthermore, when thinking about what and how to open, questions about product design and modularity abound (Baldwin & Clark, 2006; Henkel & Baldwin, 2011; Henkel et al., 2013), as well as the role of IT (Trantopoulos et al., 2017). Regarding decision-making processes, firms need to establish rules of cooperation, including definitions of who is allowed to participate how (Shah, 2006) and what type of decisionmaking power is held by whom (Dahlander & O’Mahony, 2011). Finally, to ensure that openness is successfully implemented, Gassmann, Enkel, and Chesbrough (2010) explain that firms need to establish systems to monitor and measure the

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success of their activities, a nontrivial endeavor given the substantial process change a more open mode of production will cause (Alexy et al., 2013b; Foss et al., 2011; Lifshitz-Assaf, 2017). The output and commercialization level of the Strategic Openness construct is probably what is unique about this literature and follows from its anchoring in selective revealing. Here studies looking at the disclosure of “outputs of the past” have examined how firms cede control over resources they have produced (through innovation) to achieve competitive advantage in new ways, in that such behavior may foster novel competitive strategies and allow for new solutions for existing business problems. For example, Alexy et al. (2013a) and Alexy and Reitzig (2013) argue how by disclosing past inventions to the environment, firms can initiate collaborative behavior required to successfully exploit these inventions or complements in the future. In particular, these authors argue that Strategic Openness represents a new alternative under conditions where traditional approaches such as alliances would be unconceivable, such as when partners are unknown, unwilling to collaborate, or unable to recoup the costs of setting up a contractual exchange. Polidoro and Toh (Clarkson & Toh, 2010; Polidoro & Toh, 2011; Polidoro & Theeke, 2012) further highlight how Strategic Openness, in improving one’s relative competitive advantage, need not be beneficial (in absolute terms) for the focal firm – decreasing others’ performance has a structurally equivalent effect. Specifically, their work highlights how disclosure by leading pharmaceutical firms leads others to switch from an innovation to an imitation strategy, hence decreasing their likelihood of ever surpassing the focal firm in terms of innovativeness. And finally, the homogenization and standardization dynamics that Strategic Openness may cause should ultimately help support a horizontalization of industries (Baldwin & Clark, 2000) in which the value created increasingly moves from individual layers of industry architecture to the end consumer. Accordingly, firms can either collude on the joint production of upstream assets (Perkmann & Schildt, 2015) or establish norms about not enforcing intellectual property (IP) upstream (Alexy &

Reitzig, 2013) to ensure freedom to operate as well as lower production cost. At the same time, in particular those firms in monopoly positions on integral architectural layers – i.e., occupying bottlenecks (Jacobides & Tae, 2015; Jacobides et al., 2016) – or holding superior complementary assets (in particular in sales and services) should find how the value customers are willing to pay for migrates more toward them (Alexy et al., 2018; Pisano & Teece, 2007). In sum, Strategic Openness represents a novel, strategic perspective on when, why, and how firms would purposively disclose resources they could otherwise protect. Beyond the existing Open Innovation perspective, this work adds in particular on the output dimension of our framework. Strategic Openness focuses less on how firms can produce more or better inventions by sharing or disclosing inputs or processes, but more on disclosing elements of these (almost ready or even fully produced) inventions to increase their odds of market success, or otherwise improve the future strategic position of the firm.

4.2.3 Linking Open Strategy with Strategic Openness We now turn to place the literature on Open Strategy into our simple framework. As Tavakoli, Schlagwein, and Schoder (2017) explain, Open Strategy literature has highly diverse epistemological and ontological foundations, and includes studies taking (1) an entity view including design science approaches common to information systems (Amrollahi & Rowlands, 2016; Markus & Robey, 1988), (2) a process view (as in Amrollahi & Ghapanchi, 2016; Malhotra et al., 2017), and (3) a practice view (see Hautz et al., 2017; Peppard et al., 2014). Still, across all three groups, we note a consistent underlying theme: a focus on action (and actors) over time, rooted in the perspective of strategy-as-practice (Whittington et al., 2011), or, more generally, structuration (Giddens, 1984). Similar to Strategic Openness, we also consider Open Strategy and Open Innovation as related areas of research; yet, the nature of this relationship seems much more contested than in the Strategic Openness case. Indeed, it has been pointed out that

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the notion of “openness” in Open Strategy and Open Innovation is clearly not identical (Dobusch et al., 2017; Doz & Kosonen, 2008). For instance, Whittington et al. (2011) argue that Open Innovation only constitutes a subset of Open Strategies since it is only about one of a variety of strategy processes. In contrast, Chesbrough and Appleyard (2007) and Appleyard and Chesbrough (2017) point out that insights from the earlier existing literature of Open Innovation should pertain to the relatively new area of Open Strategy. If we try to situate the idea of Open Strategy in our aforementioned framework, we note how the majority of work has focused on the creation and implementation of strategy (i.e., input and process), while there are much fewer studies addressing its performance (i.e., output) – by which we particularly imply studies that would differentially assess the relative efficacy of open vs. closed strategizing. In our view, given its roots in strategy-aspractice work, as represented by Whittington (2006) or Jarzabkowski, Balogun, and Seidl (2007), this is not surprising.2 This perspective, in our reading, seems more focused on the actual process of strategy making, rather than performance consequences or boundary conditions. Work that looks at such questions would often have different epistemological and ontological roots, such as the Resource-Based View or more positivist perspective of organization design. For example Foss’s (2003) inquiry into the performance of Oticon’s “spaghetti” organization – which, at least in our reading, should fit the definition of Open Strategy – would rarely be subsumed by this label. Turning to our framing, the input perspective, as highlighted throughout this book, is hence well covered by Open Strategy research. This work focuses on the inclusion of individuals or organizations that would have traditionally not been involved in the strategy-making process, which is described as an exclusive, secretive, and top-level task for a small number of senior executives (Montgomery, 2008; Powley et al., 2004). The approaches that allow such novel inclusion, in turn, are practices one might also expect to bear the label of Open Innovation or Strategic

Openness, and represented for example by strategy crowdsourcing (Aten & Thomas, 2016; Stieger et al., 2012), strategy jamming (Morton et al., 2015; Palmisano, 2004), or transparent discourse (Tavakoli et al., 2017). Regarding strategy development and implementation, Open Strategy work has been looking into how the assessment, evaluation, and negotiation of strategy inputs may occur in a transparent manner. Here, Tavakoli et al. (2017) show how firms utilize co-creation approaches to gather a group of practitioners to develop strategy collaboratively and iteratively, and use for example impact factor calculations, idea ratings, or semi-automated idea aggregation with machine learning algorithms to evaluate and negotiate a coherent strategy. Another important step is communication and implementation, which involves the writing of final strategy papers and the open distribution of them through intranet and internet (Tavakoli et al., 2017). Finally, Open Strategy scholars have looked at the output dimension via the supposed positive effects of participation and transparency in the strategy-making process (e.g., Whittington et al., 2011). We see three basic arguments to buttress such a positive outcome. First, as in the Open Innovation narrative, involving more stakeholders in the strategy-making process should allow for better strategy, given more diverse perspectives and skill sets on which the firm may draw (Seidl & Werle, 2018). Second, by including stakeholders’ (employees, customers, etc.) ideas and information or by simply taking them on-board in a more transparent fashion, the firm may improve people’s subsequent identification with and commitment to an organizational strategy, and hence facilitate its effective implementation (Stieger et al., 2012; Whittington et al., 2011). Third, communicating strategies openly gives the firm the opportunity to cast a stronger narrative (e.g., Whittington et al., 2016; Yakis-Douglas et al., 2017). That is, in particular, firms that are difficult to understand for audiences (such as the capital market) may benefit from providing more information, so that the audience would not punish the firm purely on grounds of an existing information asymmetry. That logic, interestingly, is not too far away from Strategic Openness arguments suggesting

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voluntary disclosure as a tool to align external actors to the firm’s (technological) trajectory (Alexy et al., 2013a). At the same time, these strategy disclosure efforts – just as Strategic Openness – may be largely symbolic: neither would the strategy need to have been produced openly (but quite likely still by a cadre of experts), nor need the disclosed strategy be any good. Put differently, it is not necessarily clear whether observers would react to the actual (objective) strategy, the strategy presentation (which may be purely symbolic), or the act of presenting (i.e., transparency and participation, as in the beginning of this paragraph). Accordingly, to our own surprise, we were only able to identify few studies to fill the lower right corner of our 3 × 2 matrix with work from the Open Strategy literature. The studies behind the preceding three arguments for why Open Strategy may improve performance center largely on process. Even those studies looking at capital market effects deal largely with the effects of impression management – that is, we openly communicate a closed strategy, and see that this sometimes improves stock price – but do not look at the performance effects of an openly developed strategy. Beyond such (ideally comparative to closed strategy) outcome measurements, if we think about how future work on the output perspective of Open Strategy would look, we could imagine anything from fully open team structures that would govern and accompany strategy rollouts3 to the full disclosure of corporate and business strategies. We acknowledge that work on Open Government (e.g., Lathrop & Ruma, 2010) might fit this bill. As is, still, we note how current work on Open Strategy has a major focus on process as well as input, and with its output perspective often implying “better process.”

4.2.4 From Definitions, to Evidence of Missing Links, to Bridging the Gap When we use our previous review to populate our framework on “open” literature schematically, we find little common ground between Open Strategy and Strategic Openness to indicate vertical links or even overlaps. As we highlight in Figure 4.1, they

largely address different functional areas of the firm – while making assumptions or broad claims to the respective other: Strategic Openness insisting on strategic integration and Open Strategy drawing on tools and techniques from the Open Innovation world. Furthermore, the most prominent part of the Strategic Openness literature, the output perspective, seems to be the one Open Strategy focuses on the least and vice versa for the process perspective of Open Strategy in Strategic Openness. Simply put, we find that Strategic Openness is indifferent as to how a resource was created (open vs. closed) and focuses on opening it up to increase firm performance. Open Strategy literature, in turn, has mainly spoken about the open creation of a resource (if you want to call strategy such) but says little about whether the deployment of said resource happens in an open or closed fashion, and what bottom-line effect it has on the firm.4 In our view, the surprising disconnect between the literatures follows directly from these differences in focus and definitions. Accordingly, in the next section, we will try to proactively link Open Strategy and Strategic Openness alongside their key dimensions: the process perspective of Open Strategy, and the transaction, portfolio, and organization design perspective of Strategic Openness. In doing so, we want to show whether these two literatures could or even should be talking to one another, to point toward areas of potential synergy and future work. Before we do so, however, we want to lend some credence to our relatively strong claims of an existing disconnect between the worlds of Open Strategy and Strategic Openness. To do that, we conducted a bibliographic analysis, on which we report in detail (see appendix). In short, what we did was identify all articles that would feature derivatives of the words “open” or “strategy” in title, abstract, and key words, to get a full map of the literatures we described previously. Then, we looked for existing connections: cross-citations, co-citations, and shared key words. The links that we identified were even sparser than we expected. Suffice it to say here that we see two literatures that have essentially developed in parallel, with no in-depth cross-referencing even when talking

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about precisely the same phenomenon or technique. For example, work on crowdsourcing or transparent sharing of firm internal knowledge and IP in either literature seems largely unaware of the state-of-theart of what the other literature would do, and shared references would boil down largely to common ancestors, such as original work by Howe (2006) or Chesbrough (2003). We would hence put forward that the proactive linking we propose in the following section is all the more necessary. On one hand, such linking would prevent the inefficiency and redundancy that are likely to happen when both fields are isolated. On the other hand, the different epistemological stances reflected in the varying definitions could also point toward new opportunities for fruitful work in the respective other literature.

4.3 Comparative Literature Review In the following, we compare and link Open Strategy and Strategic Openness across what we propose are the four major definitory aspects of these two perspectives. While we admit that the choice of these particular literatures is rather prescriptive, we are certain that they constitute relevant dimensions for a comparison of these two literatures as they are intuitive, logically coherent, and strongly connected to the core definitions of these two phenomena (see the previous sections). In the following, we will begin with the process perspective characteristic of Open Strategy work, and then turn to the transaction, portfolio, and organization design dimensions.

4.3.1 Process Perspective When speaking about a process perspective, we refer to the internal dynamics of the respective opening processes and on how they develop and mature over time. The literature of Open Strategy traditionally has an emphasis on process-related topics, given how it is rooted in the strategy-as-practice literature (see Whittington, 1996; Whittington, 2006). Thus, this area has broadly covered topics on the internal dynamics of a company and the paths of development toward an openly crafted strategy. For

instance, Luedicke, Husemann, Furnari, and Ladstaetter (2017) looked at how a German beverage company applies Open Strategy practices. In this case, Premium Cola performed distributed agenda setting, consensual decision making, and substantial participation to support legitimation of its firm strategy, foster employee motivation, and create a collective identity. Another example is Amrollahi et al. (2014), who examined how an Australian university implemented crowdsourcing through a process of idea submission and refinement to utilize the benefits of collective idea sourcing. Also, Whittington et al. (2011) describe how the open development of a strategy requires a process of exchange of information, views, and proposals. On the contrary, the process perspective does not constitute one of the key aspects of Strategic Openness research. In essence, in Strategic Openness literature, managers are facing a relatively simple “yes or no” decision whether to be open or not (the transactional perspective, see the following) – and the process of “how” is largely defined by the portfolio and organizational design perspective at the point in time of a yes decision (see also the following). Work on the actual unfolding of openness practices is rare, despite a surprising amount of longitudinal casebased work. Thus, we find only very few studies from the literature of Strategic Openness looking for examples of how a firm’s interpretation of the value and design of Strategic Openness changes over time. The study by van Burg, Berends, and van Raaij (2014) on interorganizational knowledge transfer in the aircraft industry is a notable exception. These authors propose a process model of how organizational actors in an openness setting change their decision based on shifts in their framing of innovation developments, opportunities, and threats. Finally, Foss et al. (2011), Alexy et al. (2013b), and Lifshitz-Assaf (2017) describe independently how the process of opening up resources comes with fundamental changes for individuals formally involved in a closed process, which may for example explain initial resistance. We see great promise in the process perspective for work on Strategic Openness. For

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example, how does a resource get considered for opening up, or closing down again? What role do, for example, framing contests (e.g., Kaplan, 2008), middle managers (e.g., Huy, 2011), or organizational attention (e.g., Vuori & Huy, 2015) – or, even more generally, organizational politics and power – play in this process? We feel strongly that the Strategic Openness literature, and the Open Innovation literature more generally, may be able to learn a great deal from Open Strategy and strategy-as-practice work here as well as from practitioner accounts (e.g., Huston & Sakkab, 2006). In particular, as we show in the following section, the dominant transactional perspective in Open Strategy so far largely ignores both the actual process by which opening up occurs as well as the continuous interaction of the firm with its environment.

4.3.2 Transactional Perspective In the transactional perspective, we subsume the question of “open: yes or no?” as well as the corresponding choice of a specific design that is essential to the Strategic Openness literature. Here, most empirical work looks at the choice of being open in general (i.e., not paying attention to the specific motives for Strategic Openness) or of one specific form of Strategic Openness – the latter then usually without comparatively considering other potential forms. Accordingly, the core of the transactional perspective is identifying boundary conditions: the conditions under which Strategic Openness (or a specific form thereof) is beneficial (Felin & Zenger, 2014). While often relying on complementarities to other parts of the firms’ resource portfolio (see the following), these are only one part of firms’ cost-benefit calculations. Primarily, firms will need to clarify their strategic intent: why would we want to be open, that is, what is the goal that openness can likely help us achieve – and why would an open approach be better than a closed approach? Questions about strategic intent may for example boil down to whether firms need more or better ideas, or whether they need development support for a core product or additional peripheral offers. In short, this part of the

transactional perspective, very similar to a makeor-buy decision, is about the focus that firms want in order to achieve specific goals. We understand that similar considerations exist in Open Strategy work (i.e., make better, more transparent strategy), but note that they are not nearly as strongly pronounced (e.g., when does more transparency actually lead to better strategy and performance?). At the same time, the actual practices studied across the two literatures bear significant overlap – while, as we noted previously, the respective studies are largely disconnected. For example, two prominent practices that are covered by both Open Strategy and Strategic Openness literature are crowdsourcing and co-creation. Crowdsourcing enables firms to deal with the challenge of local search and to find solutions that are potentially superior to ones that have been sourced from inside of an organization (Afuah & Tucci, 2012). In Open Strategy literature, crowdsourcing appears to be a newly discovered practice that still is in an early stage of exploration since only few studies exist on this topic, with Amrollahi et al. (2014), Stieger et al. (2012), or Dobusch, Dobusch, and Müller-Seitz (2017a) being examples of early work. On the contrary, crowdsourcing has been looked at in Strategic Openness (and Open Innovation) literature quite extensively and in a variety of settings, including science (Bücheler et al., 2010), the public sector (Mergel & Desouza, 2013), and citizen participation (Seltzer & Mahmoudi, 2013), and including variants such as online innovation contests and online idea competitions (Lampel et al., 2012). Finally, there are also studies that have examined the role of technology (e.g., IT) for crowdsourcing (see, e.g., Hossain, 2012), with newly emerging questions looking increasingly at how you would crowdsource (i.e., what kind of call would be more likely to attract good solvers). The practice of co-creation refers to the development of output in a collaborative fashion between a firm on the one side and customers, employees, or other stakeholders on the other side (Ramaswamy & Gouillart, 2010). Despite the fact that Open Strategy, by definition, is co-creation, few studies, such as Tavakoli et al. (2017), draw on this logic explicitly. However, again co-creation

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has been extensively examined by studies from Strategic Openness and Open Innovation. For instance, Chesbrough, Vanhaverbeke, and West (2014) have proposed a model of co-creation consisting of the stages of problem definition, finding participants, collaboration, and leveraging outcome. Additional examples of studies on these stages have been conducted on external search (West & Bogers, 2014), creating and sharing of knowledge (West & Gallagher, 2006), and the implementation of co-creation processes (Prahalad & Ramaswamy, 2004). As these comparisons suggest, too, we see that even when Open Strategy and Strategic Openness work talk about the same generic Open Innovation practice, a crucial difference between the key focus exists. Work on Strategic Openness would look at the choice or performance outcome of a specific mode, while work on Open Strategy would usually center on the process by which said practice is implemented or enacted. While regarding the choice of an individual practice, we expected that it would be largely the Open Strategy literature that needs to improve its linkages to existing Strategic Openness work, to our surprise, we also identified a significant learning potential for the Strategic Openness literature along its core dimensions “portfolio” in the following section.

4.3.3 Strategy Portfolio Perspective Beyond individual practice enactments, we also compare Open Strategy and Strategic Openness at the level of the firm and its resource portfolio. That is, we follow the Strategic Openness perspective, which builds on the Resource-Based View and its definition of the firm as a bundle of resources (Barney, 1991), which may often be interdependent on one another. In Strategic Openness, the portfolio perspective may be summarized as a set of binary yes-no decisions. Since West’s (2003) original distinction of opening parts (i.e., which resources to open), and being partly open (i.e., segmenting resources into smaller units, and then disclosing those), key to this perspective are the notions of modularity and complementarity. While often referring to modularity in the technical sense (Baldwin & Clark, 1997;

Baldwin & Clark, 2006; Langlois, 2002; MacCormack et al., 2006), modularity may also include IP considerations in how to design a product optimally to balance proprietary rights and openness (Baldwin & Henkel, 2015; Henkel et al., 2013). For example, when firms include Open Source Software in their software or hardware products, they may need to separate source code in a way so code under difference software licenses is not statically combined – even if such linking would allow for more efficient programming. Another important area for research on the strategy portfolio level is the examination of platforms and ecosystems. Examples here are studies on how firms should play the ecosystem game (see, e.g., Dattée et al., 2017), in which organizations try to set up technology platforms ten years into the future, without knowing which of a potential myriad of applications they should invest in, promote, and protect in the present. Again, the core question amounts to the firm selecting specific resources out of its portfolio in a way that complementarities and future revenue potential are maximized (Boudreau & Lakhani, 2009; Boudreau, 2010; Boudreau, 2012). For example, both IBM and Oracle may view “big data” as the future of their industry, yet, they would hugely differ in which aspects thereof they would consider essential to a “big data ecosystem,” and might turn out to be complementors in some areas (Oracle and IBM have a long-standing alliance, in which IBM services implement Oracle solutions) and fierce competitors in others (e.g., if IBM machine learning products could render some Oracle products obsolete). Hence, overall, while at the individual resource level, the decision to be open remains binary, at the company level, various degrees of hybridity are possible (Bonaccorsi et al., 2006; Shah, 2006): the firm may be purposively open in some, but not in other areas, and varying firms in the same industry will not only vary in their degree of openness, but also differ in which of their resources they would like to open up or keep closed (Alexy et al., 2018). Interestingly, even though our strategy portfolio definition builds on the Strategic Openness literature, this perspective is also a major aspect of Open Strategy research. For instance, Dobusch et al.

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(2019) have addressed the question of how open is open enough when openly creating strategy. They show that a successful process of openly crafting strategy requires specific forms of closure (Dobusch et al., 2019). Also, Tavakoli et al. (2017) have reviewed cases of firms performing Open Strategy and analyzed their varying degrees of openness. Another study contributing to the strategy portfolio perspective is Whittington et al. (2011), who propose a model of Open Strategy in which openness is described as a continuum with two dimensions (from transparency to inclusion and from internal to external). In short, in Open Strategy as well, not all parts and steps of the strategizing process need necessarily be open, and considering the interplay between open and closed parts, possibly even over time, is required to unearth the potential of this approach. Comparing both perspectives, we see how both have made unique contributions. Given its process tradition, it seems that the Open Strategy literature can say more about how to find the right degree of openness, and how that degree will be coconstructed and adapted by a multitude of participating agents. The Strategic Openness literature, in line with its transactional perspective, again takes a stern focus on the focal firm, seeming to focus more on the firm prespecifying the optimal degree of openness conditional on potential synergies with other parts of the firm’s resource portfolio and extant market dynamics (Alexy et al., 2018). In turn, for us, it seems evident that each approach can learn from one another.

4.3.4 Organizational Design Finally, we compare Open Strategy and Strategic Openness with regard to their perspectives on organization design. Here, we cover questions of how to configure and shape an organization to make use of openness, including legal and governance topics, such as allocating decision-making rights and exception management (Puranam et al., 2014). Regarding legal aspects, firms often retain important rights when opening up a resource, such as copyrights, or restrict downstream usage rights through licenses (Baldwin & Henkel, 2015). To organize openness, the choices range from

a one-time disclosure to creating a separate independent organization with employees, and the degree to which the firm continues to fund internal efforts to support the open technology’s development (West & O’Mahony, 2008). Finally, regarding decision-making power, firms may assert explicit ongoing authority by controlling the rules of collaboration to their own advantage (Shah, 2006). Or firms may choose to fall back to “lateral authority” (Dahlander & O’Mahony, 2011) and only exhibit a right to decide whether to accept or reject others’ developments to become part of the “official” common pool of knowledge. Various studies from the Open Strategy literature focus on aspects of organization design. For example, Whittington et al. (2011) have elaborated how the profession of a “strategy maker” will change with the occurrence of Open Strategy approaches. From an information systems view, Amrollahi and Rowlands (2016) propose a threelayered design methodology for strategic planning of an Open Strategy approach. Similarly, Verdin and Tackx (2015), in their study on procedural justice in co-creation processes, conceptualize Open Strategy as an IT and web-designed outcome. Organizational design has also been a major topic in Strategic Openness and Open Innovation research. One stream of research, connecting closely to organization theory, elaborates on what Strategic Openness means for the boundary of the firm (Altman et al., 2014; Felin & Zenger, 2014). For example, Tushman, Lakhani, and LifshitzAssaf (2012) elaborate how and why firms pursue boundary options of closed vertical integration, strategic alliances, and open boundaries for Open Innovation endeavors. Another stream, as in Open Strategy work, looks at how integrating actors from outside the firm changes the job roles and routines inside firms (Alexy et al., 2013b; Foss et al., 2011; Lifshitz-Assaf, 2017). In sum, across both streams of literature, we note a general push toward a rethinking of what the organization actually is once the boundary of the firm erodes. That is, regarding organization design, both perspectives – and some authors therein more than others – acknowledge that a more open firm is one that is generally more fluid in its membership. In turn, if more and more members of the

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organization are actually not bound to it by an employment contract, this creates a series of fascinating research questions for Open Strategy and Strategic Openness alike. For example, how should project managers operate, if they do not know who is working with them, let alone tell these people what to do? While this question has led to a plethora of studies on motivation and incentivization, little work exists on fluid organization structures designed to incorporate such models of work from the outset (Majchrzak et al., 2018). Indeed, more open models of work seem not only generally aligned with work demands by the millennial generation (Ng & McGinnis Johnson, 2015), but suggest to bring with them entirely new ideas about how to organize (Puranam et al., 2014; Zammuto et al., 2007), such as new perspectives on hierarchy and authority (Robertson, 2015). For example, who should be included in defining what to work on in staffing teams, and so on? Once again, we see exciting questions emerging around issues of process and sensemaking on one hand (see also Seidl & Werle, 2018) and about structure and search on the other (see also Reetz & MacAulay, 2016). And as previously, we see great promise in Open Strategy work that studies the process of introduction, enactment, or even discovery of these approaches, and Strategic Openness work that identifies boundary conditions of their constructive use.

4.4 Summary Altogether, we find that our two perspectives on firms being open are surprisingly disconnected from one another. Our conceptualization, citation analysis, and comparative review suggest that of the many potential touching points, most overlap or cross-reference is symbolic in spite of shared definitions from the space of Open Innovation. On one hand, the disconnect we find is understandable: Strategic Openness tries to explain what firms should do with a resource they have available – in essence, this literature describes a yes-no decision managers must make. In contrast, the Open Strategy literature focuses more on the

process of strategy making and implementation rather than performance consequences. On the other hand, the relatively strict separation we found is surprising given the common intellectual heritage and shared interest in novel phenomena that exist at least through the joint link to work on Open Innovation. Accordingly, as a word of caution, our findings imply that both strands of literature need to be careful that they do not reinvent the wheel. That is, tools and practices that have been described by the Open Innovation literature more broadly, or the respective other literature stream we have looked at, will apply to both our discourses, and may increasingly do so as they unfold. Briefly and bluntly, we think that our results highlight that we need to make sure that these literatures do not drift apart even further. At the same time, our arguments suggest a great potential for research at what we would consider the intersection of these topics. First, we suggest that the literature on Open Strategy would greatly benefit from additional work on boundary conditions and performance consequences – that is, by focusing on how Open Strategies are deployed, or how strategies are deployed openly, and what that means for performance, under what conditions. Indeed, we second Laamanen, Reuter, Schimmer, Ueberbacher, and Guerra (2015), who point out how future studies (on strategy-as-practice more broadly) could explore boundary conditions of existing works by drawing on quantitative methodology (such as network analysis or event history analysis), and as some work on Open Strategy has begun to do (Whittington et al., 2016; YakisDouglas et al., 2017). We could further envision experiments in which teams would engage in some competitive behavior following an open or closed strategy process, potentially with varying environmental factors. Here, the Open Innovation and Open Source literatures may also present fruitful guidance on empirical settings and research designs (Boudreau & Lakhani, 2015; Boudreau et al., 2016; Guinan et al., 2013; Lakhani & Panetta, 2007; Tushman et al., 2012). At the same time, beyond the literatures described previously, we also see a strong potential link to work on emerging strategies in traditional business contexts (Burgelman, 1991; Mintzberg, 1979), as well as

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strategizing under extreme conditions, such as the military, or rare events, such as natural disasters. Furthermore, we envision how the literature of Open Strategy can benefit from including more strongly traditional notions of organizational structure (and not just process), a shortcoming it has inherited from strategy-as-practice work more broadly (Parmigiani & Howard-Grenville, 2011). For example, we recommend conducting more research on the applicability of community-based approaches on strategy-making processes (Dobusch et al., 2019), looking into, for example, the efficacy of different community hierarchies. Taken together, we call for Open Strategy work that would seek to identify when, how, and why it would be beneficial to engage in open strategizing, so as to be able to make normative recommendations to enhance firm performance and increase competitive advantage. With regards to work on Strategic Openness, our arguments partly call into question precisely the one-time decision focus that characterizes this literature (see also Appleyard & Chesbrough, 2017). Indeed, the success of any openness effort depends on the dynamic processes this decision will lead to, and in particular the larger interaction the organization has (had) with its environment. Hence, when, how, and what is opened, why, and with what effects, may well be conceptualized as the outcome of a firm-level or firm-community level social learning process. Indeed, initial insights garnered from process studies into open online communities (see, e.g., Majchrzak et al., 2006) or ecosystems (Dattée et al., 2017) point to an increasing need for precisely those kinds of studies, in that we do not yet sufficiently understand the intertemporal dynamics of being open. And of course, interdependencies between Strategic Openness decisions need not only be sequential. Rather, process studies may also uncover the configurational nature of Strategic Openness, in that multiple resources, actors, contingencies, and perspectives need to be accounted for at the same time for it to be beneficial. Taken together, we hope that our brief review has made clear how scholars active in both domains, Open Strategy and Strategic Openness, may greatly benefit from talking more and more

substantively to one another. In doing so, they may foster the joint goal that characterizes both literatures: to design better organizations by allowing them to be more open, sometimes.

Appendix 1 Systematic Literature Review To study more comprehensively the linkage between the fields of Open Strategy and Strategic Openness, we conducted a systematic bibliometric analysis, including co-citation analysis (which shows us if the articles between these fields can be anticipated as connected), bibliographic coupling analysis (which provides insights on the intellectual heritage and common intellectual forefathers between the fields), and key word analysis (which gives insights on how scholars classified their works themselves).

Sample We first attempted to collect a suitable set of articles covering the fields of Open Strategy and Strategic Openness as samples. We decided to search the Thomson’s ISI Web of Knowledge (ISI) database, which is considered a comprehensive source of articles including the most influential journals, and also covers key outlets for our topic of interest (e.g., Long Range Planning is home to many ongoing discussions about strategy and has also published a recent special issue on this topic). A potential downside of choosing ISI is that, due to its focus on a select few journals, it does not contain all journals with papers on Open Strategy and Strategic Openness. However, we do not consider this a major disadvantage, in agreement with authors having conducted similar reviews before us (Dahlander & Gann, 2010; Shafique, 2013). To extract the articles that deal with either Open Strategy or Strategic Openness, we eventually opted to limit ourselves to searching the title field using the term “open* AND strateg*” and collected all business and management papers published from 2003 until November 2017 – the left-censoring is given by Chesbrough’s publication of Open Innovation in that year. Originally, we had applied the search term to title, abstract, and key words; however, due to the much larger number of papers

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(>3,700) that resulted in largely illegible graphical outputs,5 we solely draw on this sample to ensure that all patterns reported herein also hold on the larger population in a structurally equivalent fashion, which they do. Accordingly, our final sample includes 149 papers. For these papers, we collected all key words and references, which we further cleaned for processing. For instance, the first publication on Open Innovation by Henry Chesbrough (whose second name is William) has been referred to as both “Chesbrough H. (2003)” and “Chesbrough H.W. (2003).” Another example from the key words was the term “firm,” which also occurred as “firms.” Here, we also cleaned our data by renaming all “firms” to “firm.” A fundamental shortcoming of our analysis is that very few papers exist that are about “Strategic Openness” as we define it, and even fewer that use the term explicitly. However, rather than broadening our search terms (by, e.g., also including words such as “revealing” or “disclosure”), we will use our intimate knowledge of this topic to position this literature appropriately within the Open Innovation articles we can identify.

Bibliometric Methods The bibliometric analysis of this chapter includes three separate methods, namely co-citation analysis, bibliographic coupling analysis, and key word analysis. The software we use to analyze our underlying data is VOSviewer, which is introduced in a paper by its creators (van Eck & Waltman, 2010). In the following, we give a short overview of our analysis techniques and subsequently describe the properties of our three bibliometric methods. All three mentioned methods have in common that we create a distance-based network map between so-called items such as references (for cocitation analysis), documents (for bibliographic coupling analysis), or key words (for key word analysis). The resulting network map consists of bubbles (which are clustered) and lines. Hereby, bubbles represent the respective items and the lines between these bubbles represent linkages between the items. The bubble sizes vary depending on the

nature of items. The bubble size of references of the co-citation analysis and the bibliographic coupling analysis is based on the number of citations while the bubble size of the key words in the key words analysis represents the number of occurrences of the respective key word. To create such a network map, VOSviewer calculates for each analysis the so-called association strength, which is the level of relatedness between the respective items. The association strength is a distinct probabilistic similarity measure that normalizes co-occurrence data (for more details on this index, see Peters & van Raan, 1993; van Eck & Waltman, 2009). For the co-citation analysis, the association strength is calculated based on the frequency of co-citations between references, while it depends on the frequency of references shared for the bibliographic coupling analysis. In the case of the key word analysis, it is based on the frequency with which respective key words co-occur. Furthermore, the items are located in a way that the distance between them reflects their degree of association. This method is based on a minimization technique for the weighted sum of the squared Euclidian distances between the items. This means that similar items are close to each other while unrelated items lie distant to each other. This way of locating items also allows us to identify clusters for our analyses, so we can detect, e.g., major research streams or specific patterns. We also make use of this opportunity for each of our analyses. The goal of the co-citation analysis is the exploration of the structure and theoretical foundation of the underlying research fields of Open Strategy and Strategic Openness. For the cocitation analysis, our dataset originally provided 6,320 references that were cited by our 149 studies. In order to work with a more manageable amount of references, we limited the references by setting a threshold of citations. We decided that we would only include references that were cited at least 5 times from studies of our dataset, resulting in 98 articles. The bibliographic coupling analysis moreover identifies the intellectual heritage and the intellectual forefathers of the articles in our dataset.

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Similar to the co-citation analysis, we limited the amount of studies in our dataset so as to be able to more easily interpret the visualized graphs. Here, we identified 85 documents that had received a minimum amount of one citation. Finally, we performed key word analysis to explore how authors classified their articles themselves. Accordingly, this analysis should show how large the research streams truly are since we expect that authors on these topics explicitly use key words “Strategic Openness” and “Open Strategy” for their articles. In our dataset, we altogether identify 762 key words. In order to gain a more assessable visualization, we limited the number of key words by choosing a minimum number of key word occurrences of 3, which applies to a mere 75 key words.

Results Co-citation Analysis The results of the co-citation analysis are shown in Figure 4.2. First and foremost, we were able to identify four separate clusters. Through review of the works that are entailed in each of the clusters, we broadly assigned specific research fields to each of the resulting clusters. Here the cluster on the right clearly represents the field of Open Strategy. The other fields require a more nuanced assessment. The cluster on the lower left corner largely captures the intersection of Open Innovation and strategy literature, while the cluster on the mid left is Open Innovation specific work that followed after Chesbrough. Finally, the cluster on the top centre builds more on a traditional innovation management perspective, with stronger links also to works in the user innovation tradition of von Hippel. Since the lines between the references represent the links about which of them are cited together, we can clearly see that the Open Strategy cluster is relatively isolated from the three other clusters. On the contrary, works from the remaining three clusters are well connected with each other. Furthermore, we also see that the distance between Open Strategy and the remaining clusters is relatively large while the distance between the three remaining clusters is comparably small.

Table 4.1 Co-citation Analysis Results Cited reference

Total link strength

1. Chesbrough (2003) 2. Laursen and Salter (2006) 3. Cohen and Levinthal (1990) 4. Dahlander and Gann (2010) 5. Chesbrough (2006) 6. March (1991) 7. Huston and Sakkab (2006) 8. Chesbrough and Appleyard (2007) 9. Gassmann and Enkel (2006) 10. West and Gallagher (2006)

418 390 328 318 230 210 188 182 180 178

References that are cited together with Open Strategy papers are primarily Chesbrough and Appleyard (2007), Chesbrough (2003), and Dahlander and Gann (2010) . Indeed, this outcome appears very intuitive to us since Chesbrough and Appleyard (2007) was actually among the first scientific works to use the term Open Strategy. Also, the co-citational relationship between Open Strategy and Dahlander and Gann (2010) appears relatively obvious as this paper constitutes a bibliometric literature review on the openness construct itself. Finally, the linkage between Open Strategy and Chesbrough (2003) is not surprising for obvious reasons. Overall, however, this would suggest that no substantive links between the literatures of Open Innovation, of which Strategic Openness would also be a part, and Open Strategy exist. In addition, Table 4.1 displays the references sorted top-down by VOSviewer’s link strength. Here, we see that the only article that is listed from the Open Strategy cluster is Chesbrough and Appleyard (2007). Bibliographic Coupling Analysis Figure 4.3 contains the outcome of our bibliographic coupling analysis. Similar to the co-citation analysis, we find four major clusters, each of which is supposed to represent a specific field of research referring to openness and strategy. We again broadly assign research fields to the resulting clusters through review of the underlying articles. This time, the cluster on the upper left corner represents

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lerner j, 2002, j ind econ, v5

yin r. k., 2003, case study re fitzgerald b, 2006, mis quart,

teece dj, 1986, res policy, v1

lakhani kr, 2003, res policy,

podsakoff pm, 1986, j manage,

Figure 4.2. Graphical illustration of the co-citation analysis

chiang yh, 2010, r&d manage, v

ahuja g, 2001, strategic manag

katila r, 2002, acad manage j,

grant rm, 1996, strategic mana penrose e. t., 1959, theory gr

fornell c, 1981, j marketing r

trott p, 2009, int j innov man

teece dj, 1997, strategic mana

lichtenthaler u, 2009, j manag

schumpeter ja, 1934, theory ec

strauss al, 1990, basics quali

chesbrough hw, 2007, calif man

haefliger s, 2011, long range

whittington r, 2011, brit j ma

jarzabkowski p, 2007, hum rela

porter m, 1980, competitive st o'mahony s, 2007, acad manage

chesbrough hw, 2003, open inno

cohen wm, 1990, admin sci quar

laursen k, 2006, strategic man

chesbrough hw, 2006, r&d manag

gassmann o, 2006, r&d manage,

chesbrough hw, 2006, open inno

enkel e, 2009, r&d manage, v39 west j, 2006, r&d manage, v36, almirall e, 2010, acad manage

christensen jf, 2005, res poli

arora a, 2001, markets technol

economides n, 2006, manage sci

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sinha (2000)

jaisingh (2008)

bonaccorsi (2006)

sen (2007)

agerfalk (2008)

west (2003)

chesbrough (2007)

harison (2010)

morgan (2014)

bogers (2012)

pittz (2 2016)

boudreau (2010)

rajala (2012)

lecocq (2006)

garud (1993)

bader (2014)

merchant (2014)

wang (20 ( 15)

datta (20 (2 03)

bantell (1 ( 994)

whittington on (20 2011)

malhotra a (2017)

giraudeau au (2008)

Figure 4.3. Graphical illustration of the bibliographic analysis

franccis (2013)

agndal (2010)

hallback (2013)

nummela (2014)

kimiagari (2015)

gabrielsson (2012)

gencerr (2011)

tjosvold (1999)

ericson n (2014)

hautz (2 (2017)

gegenhuber e (2017)

yakis-dougla l s (2017)

baptista (2017)

de jong g (2011)

broring (2010)

barge-gil gil (2013)

su (2015)

igartua (2010)

gianiodiis (2014)

rodriguez z (2016)

basco (2016)

alexy y (2009)

chiang g (2 (2010)

justman (1986)

cui (2 2015 0 )

santamar aria i (2010)

simeth h (2013) (

lichtenth n ale er (2008b)

beluss si (2010) (

cassiman an (2009)

zang (20 (2 14)

cheng g (20 ( 14)

dittrich h (20 (2 07)

lichtenthale lic alerr (2008a)

jeon (2008)

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Table 4.2 Bibliographic Analysis Results Cited reference

Total link strength

1. Bogers and West (2012) 2. Brunswicker and Vanhaverbeke (2015) 3. Lazzarotti, Garcia, Manzini, and Garcia (2014) 4. Cheng and Huizingh (2014) 5. Saebi and Foss (2015) 6. Lichtenthaler (2008) 7. Cruz-González, López-Sáez, Navas-López, and Delgado-Verde (2015) 8. Fiegenbaum, Ihrig, and Torkkeli (2014) 9. Barge-Gil (2013) 10. Zang, Zhang, Yang, and Li (2014)

267 251 243 239 231 225 211 186 183 179

all articles from Open Strategy literature while the cluster on the lower left corner includes articles from the field of Open Source. The large cluster on the right consists of work in the field of Open Innovation and the small cluster on the mid left incorporates articles from the field of openness in general. In this analysis, the links between the documents represent their relatedness based on the number of references they share. Again, we find that the Open Strategy literature does not have much in common with any other research stream, which would suggest that Open Strategy does not seem to share the same intellectual heritage as the other literature fields. On the contrary, we see that, e.g., the field of Open Innovation, or the field of Open Innovation/Open Source are relatively well connected by references of their own field and with ones from other disciplines. Regarding the distances between the fields, we also observe that the distance between Open Strategy and the remaining clusters is again relatively large. The notably bridge-building exceptions are Whittington et al. (2011) and Pittz and Adler (2016). Whittington et al. (2011) explicitly link Open Strategy to Open Innovation, but do not go beyond ceremonial cites to Chesbrough’s work. Pittz and Adler (2016) studied decision making of multisector collaborations with regard to Open Strategy platforms. Thus, they build several bridges

to Open Innovation literature and share some intellectual forefathers with this field’s articles. For a more comprehensive overview of this analysis, Table 4.2 displays the references sorted topdown by VOSviewer’s link strength. Here, we see that no Open Strategy article is represented in the top ten. Key Word Analysis The key word analysis outcomes are illustrated in Figure 4.4. Here, clustering is not as intuitive as in the previous two analyses since key words are less distinct in nature than references or documents. Thus, there might be overlaps in our assignments of research fields to the four largest clusters. This time, the cluster on the mid right seems to deal primarily with process studies focusing on change and interaction. The cluster on the top has a strong touch of strategy, microeconomics, and industrial dynamics, linking strongly to classic strategy topics at the centre. Specific innovation-related topics are woven from the centre to the lower left corner. One of the most noticeable insights of the key word analysis is that Open Strategy as a key word yields very few co-occurrences. Open Strategy is linked with only 19 other key words. As comparison, the key word of Open Innovation yields 66 co-occurrences with other key words. Regarding interlinkages, Open Strategy is closely connected with other strategy-related key words such as “as-practice,” “governance,” or “communities.” Another interesting connection exists with the key word “Open Innovation” although this distance is – as expected – larger. None of these connections surprise us. As we have already pointed out before, Open Strategy literature is strongly focused on strategy-as-practice and areas of sourcing and implementing Open Strategy (which would be covered by such governance and community research streams). Also, the link between Open Strategy and Open Innovation – at least with regard to key words – is intuitive because there is nonetheless a certain degree of association although we have shown that the fields themselves actually do not have many aspects in common. Furthermore, we find that this field of Open Strategy seems to be comparably small. As already mentioned before, we would expect

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know wledg le e

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Figure 4.4. Graphical illustration of the key word analysis (OS marked red)

open innovation strategy

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governance

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research agenda

information-systems strate egy

involvement

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communities

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organizational-change

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financial performance

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technological knowledge

market orien rie tation

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exploitation

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knowledge e netwo n rks

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open source

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economic o s

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product uct deve evelopment

absorptive-capacity

r&d

mode od l

marke rk ts

impac p t

inn nnova ovatio t n

resource-bas ba ed view

netw tworks orks

ind dust ustry

entreprene neurship

diversification

syste tems

behav avior

intellectual al property

busiiness n

perforrman ma ce capaabili bilities ties

innovation strategy

dev velopment c cooperation

se earc ar h

protection

strattegy e

growt wh

china in

78

Xian Xu and Oliver Alexy

Table 4.3 Key Word Analysis Results Key word

Occurrences

1. Open Innovation 2. Research and Development 3. Innovation 4. Performance 5. Industry 6. Firm 7. Perspective 8. Competitive Advantage 9. Management ... 32. Open Strategy

43 23 22 21 20 20 15 14 14

2.

3.

5

that authors explicitly dealing with Open Strategy would also tag such a key word for their articles. Altogether, we only yield five appearances of the key word Open Strategy in our dataset. Table 4.3 presents the key words sorted by the number of occurrences. Since Open Strategy is of particular interest for us, we have also listed this term although it is not among the top results. Strategic Openness is not included as a key word in our dataset. The outcome of the key word analysis provides a decent overview about the status of Open Strategy as a research field. We conclude that this field is still relatively small because key words with “Open Strategy” are considerably scarce. Nonetheless, the key word analysis does not allow us to derive conclusions about the direct relationship of Open Strategy and Strategic Openness on the key word level because “Strategic Openness” as a key word does not exist in our dataset. By definition, however, this key word should appear closely to topics such as “ResourceBased View” and “competitive advantage,” and hence at some distance from Open Strategy. Acknowledgement: We would like to thank Georg von Krogh and Richard Whittington for their guidance and valuable feedback. All remaining errors are of course our own.

Notes 1. Given the recency of the Strategic Openness definition and its overlap with Chesbrough’s definitions of Open Innovation and Open

4.

5.

Strategy, as we elaborate further, we will combine these perspectives where appropriate. Following our naïve interpretation of structuration, we would hence see research on Open Strategy or strategy-as-practice as focusing on a continuous and often iterative process of strategy research and development, but one that would rarely say that a strategy has been fully deployed, or, at least, rarely study such settings. Importantly, we want to draw a sharp distinction to Open Strategy execution, which, in our view, would need to be defined as “it would not matter in the end who carries out the activities defined by the strategy.” That, indeed, would happen in the realms of the other functions of the firm, such as innovation. Rather, in our view, to identify whether the execution of strategy would be open may be resolved by identifying where decision-making power would lie in case something would not develop according to strategy. As stated previously and following, we note that recent work in the Open Strategy literature is trying to tackle precisely these gaps (e.g., Seidl & Werle, 2018; Whittington et al., 2016; YakisDouglas et al., 2017). Interestingly, that work often takes an almost transactional perspective, almost atypical of the Open Strategy literature at large. At the same time, even though this should make these works more closely compatible to the Strategic Openness view, there are still no clear connections between the two literature streams even for those works. We also note how the relative share of Open Strategy articles seems to decline in the full population. Put differently, our current search terms should capture a large share of extant work on Open Strategy in particular.

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battle. Administrative Science Quarterly, 61(1), 9–51. West, J. (2003). How open is open enough? Melding proprietary and open source platform strategies. Research Policy, 32(7), 1259–1285. West, J. & Bogers, M. (2014). Leveraging external sources of innovation: A review of research on open innovation. Journal of Product Innovation Management, 31(4), 814–831. West, J., & Gallagher, S. (2006). Challenges of open innovation: The paradox of firm investment in open source software. R&D Management, 36(3), 319–331. West, J., & O’Mahony, S. (2008). The role of participation architecture in growing sponsored open source communities. Industry and Innovation, 15(2), 145–168. West, J., Salter, A., Vanhaverbeke, W., & Chesbrough, H. (2014). Open innovation: The next decade. Research Policy, 43(5), 805–811. Whittington, R. (1996). Strategy as practice. Long Range Planning, 29(5), 731–735. Whittington, R. (2006). Completing the practice turn in strategy research. Organization Studies, 27 (5), 613–634. Whittington, R., Cailluet, L., & Yakis-Douglas, B. (2011). Opening strategy: Evolution of a precarious profession. British Journal of Management, 22(3), 531–544. Whittington, R., Yakis-Douglas, B., & Ahn, K. (2016). Cheap talk? Strategy presentations as a form of chief executive officer impression management. Strategic Management Journal, 37(12), 2413–2424. Yakis-Douglas, B., Angwin, D., Ahn, K., & Meadows, M. (2017). Opening M&A strategy to investors: Predictors and outcomes of transparency during organisational transition. Long Range Planning, 50(3), 411–422. Zammuto, R. F., Griffith, T. L., Majchrzak, A., Dougherty, D. J., & Faraj, S. (2007). Information technology and the changing fabric of organization. Organization Science, 18(5), 749–762. Zang, J., Zhang, C., Yang, P., & Li, Y. (2014). How open search strategies align with firms’ radical and incremental innovation. Technology Analysis and Strategic Management, 26(7), 781–795.

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PART II

Practices of Open Strategy

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CHAPTER

5

Practices of Inclusion in Open Strategy JULIA H AUTZ, KURT MATZLER, JONAS SUTTER, K ATJA H U T T E R , an d J O H A N FÜ L L E R

5.1 Introduction In responding to changing competitive conditions, organizations are adopting increased levels of openness in the form of greater transparency and the inclusion of a larger number and variety of internal and external actors (Whittington et al., 2011; Hautz et al., 2017). Recent societal changes toward more participation in various domains of society (Dobusch et al., 2015) and technological advances in the form of social technologies (Haefliger et al., 2011), in particular, promote increased inclusiveness in strategizing. In this chapter, we pay specific attention to this dimension of inclusiveness in Open Strategy, which involves external and internal consultation to exchange “information, views and proposals intended to shape the continued evolution of an organization’s strategy” (Whittington et al., 2011: 536; Hautz et al., 2017). Wider participation in organizations and inclusiveness beyond an exclusively small set of actors in strategy has a long research history (Dachler & Wilper, 1978; Vroom & Jago, 1988). This includes work on middle management involvement (see Wooldridge et al., 2008 for a review) and procedural justice theory, which has emphasized the value of giving organizational members “voice” in strategic decision-making processes (Korsgaard et al., 1995; Kim & Mauborgne, 1998). However, beyond middle managers, strategy work has long been characterized by a lack of participation (Mantere & Vaara, 2008). Early examples of Open Strategy show that companies are now beginning to apply diverse practices to engage a wide variety of actors for different strategic purposes such as, for example,

interorganizational workshops (Seidl & Werle, 2018), internal strategy workshops (Mack & Szulanski, 2017), blogging (Gegenhuber & Dobusch, 2017), wikis (Dobusch et al., 2018; Dobusch & Kapeller, 2018), ideation contests and community platforms (Hutter et al., 2017; Malhotra et al., 2017; Matzler et al., 2016a; Stieger et al., 2012), or prediction markets (Borison & Hamm, 2010). This multitude of different practices reflects the various potential forms of inclusion (Hautz et al., 2017). The goal of this chapter is to provide a more nuanced understanding of the variability and contingency of practices of inclusion. To get deeper insights, we aim to capture and document the range of inclusive practices available to organizations, analyze trends in the use of these practices, and discuss contingency factors that could influence their use and effectiveness (Hautz et al., 2017). Literature has already suggested variations of inclusiveness from lower strength participation, which mainly relates to the collection of input in terms of ideas and information, to stronger and deeper inclusion, entailing the creation and sustaining of a community of interacting stakeholders engaged through information sharing, interaction, and decision making (Quick & Feldman, 2011; Mack & Szulanski, 2017). When discussing inclusion in this chapter, we refer to both participation and inclusion. But we aim to provide a more nuanced picture by evaluating practices that enable engagement beyond the traditional set of actors along several additional dimensions: why companies open their strategy to greater inclusion (stated purpose), what phase of their strategy process companies open up to new actors (strategy process phase), the breadth of inclusion scope, that is, 87

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whom companies include in their Open Strategy projects (selection of included actors, internal vs. external actors, number of actors included), and how they include these different actors (social technology, method). This chapter continues as follows. The next section specifically distinguishes between analog and digital forms of inclusion. Reviewing the existing literature and reports on practices of inclusion, we then identify 35 cases of organizations based in different sectors that have focused on the inclusion of a broader set of actors in the strategy process (see Tables 5.2 and 5.3). Based on these cases, we then discuss the motivations of organizations for engaging in increased inclusion, practices identified in the individual phases of a strategy project, the breadth of inclusion scope, and the technologies applied. Finally, we suggest potential avenues for further research on increased inclusion in strategy making.

5.2 Analog and Digital Forms of Inclusion The various forms of practices of inclusion beyond the traditional set of individuals can be broadly divided into analog (e.g., workshops, town halls, World Cafés, surveys) and digital modes (e.g., wikis, blogs, web-based crowdsourcing). The overwhelming majority of existing studies focus on practices of inclusion enacted through digital technologies but analog forms of increased inclusion have also been discussed (see, e.g., Seidl & Werle, 2018 or Mack & Szulanski, 2017 for exceptions). These two forms have distinct characteristics and implications (Baptista et al., 2017). Analog techniques such as strategy workshops usually involve groups of executives who work together intensively for a few days to develop or review a strategy but they can potentially also be a vehicle to involve a wider group of managers (Johnson et al., 2014). Seidl and Werle (2018) even discuss cases where organizations open up their internal strategy process to external actors in the form of interorganizational workshops. This type of analog interorganizational collaboration is typically applied when organizations are faced with making sense of so-called meta-problems of

strategic significance (Hardy et al., 2006) and often involves a series of workshops, mainly attended by middle managers and senior managers from multiple organizations (Seidl & Werle, 2018). This allows for the pooling of participants’ expertise (Hardy et al., 2006) and the development of more complex sensemaking systems (Teulier & Rouleau, 2013). The greater the diversity of the participants’ perspectives, the more comprehensive and rich is the subsequent understanding of the meta-problem at hand (Seidl & Werle, 2018). However, research shows that although diversity of perspectives would increase substantially, analog workshops rarely involve participants beyond manager level (Hodgkinson et al., 2006). Mack and Szulanski (2017) discuss one such (rare) example of an organization, where the open practice of inclusion deployed in the strategy process took the form of large-scale workshops that included a widely representative group of 80 employees and other stakeholders. It has been shown that a broader inclusion of stakeholders (e.g., employees, middle managers, customers, suppliers) leads to positive effects as regards the interpersonal relationships between the participants (Healey et al., 2015), which, in turn, leads to more cohesion and related positive effects in implementation. When compared to small group workshops, involving larger groups seems also to be more effective for communicating strategies, achieving buy-in, accessing the knowledge and skills of more participants, and improving implementation (Hodgkinson et al., 2006). However, it has also been shown that large-scale participation in idea generation workshops is not necessarily related to participants’ subsequent inclusion in selection activities (Mack & Szulanski, 2017), which, in turn, can lead to frustration, demotivation, and diverging expectations among participants (Hautz et al., 2017). World Café is another analog form that involves a larger group of actors in strategy processes (Chang & Chen, 2015). It is a special form of workshop that involves a large number (up to 1,200) of participants (Schieffer et al., 2004). Focusing on group discussion and rotation to promote brainstorming, it facilitates knowledge exchange in large groups and collective meaning

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Practices of Inclusion in Open Strategy 89 Table 5.1 Analog and Digital Forms of Inclusive Practices Analog strategy process

Digital strategy process

Examples

Workshops, town hall meetings, World Cafés, interviews, surveys

Wikis, collaborative platforms, online idea contests, prediction markets

Centered on

Outcomes and artifacts

Participation and consultation

Time

Synchronous

Asynchronous

Location

Centralized

Dispersed

Scope

Richness or reach

Richness and reach

Inclusion

Small groups

Large crowds

Influence of the “crowd”

Small

Potentially large

Process

Sequential

Iterative and dynamic

Access to collective intelligence

Limited

Extensive

Participation

Exclusive, invited

Invited or self-selected

making (Vana, 2011). World Cafés have been used in many different settings (Bertotti et al., 2012; Fullarton & Palermo, 2008; Latham, 2008). In the context of strategic planning, they have been found to be an effective vehicle to enhance understanding, encourage interaction among group members, and utilize diverse knowledge (Chang & Chen, 2015). Other techniques, such as face-to-face interviews or surveys, have been used to involve larger groups in strategy processes (Stieger et al., 2012). While inclusion and participation in strategy predated new information and communication technologies, social software technologies play an important enabling role in the enactment of open practices (Whittington, 2014). The term “social software” denotes technologies that support group interaction, communication, and collaboration (Haefliger et al., 2011). Until recently, the inclusion of a large group of diverse individuals in the strategy process or in strategic decision making has been difficult and costly to realize in terms of time and effort. By using social software technologies, organizations can open up strategizing to a larger number and variety of previously excluded actors at lower cost and with less effort (Haefliger et al., 2011; Baptista et al., 2017). While garnering information and knowledge input is not entirely new to organizations, social software technologies enable organizations to tap into external knowledge on a greater scale than was previously possible (Bonabeau, 2009).

It has been observed that social software is increasingly being used to engage employees in organizational activities and decision making (Razmerita et al., 2014). Traditional forms that involve larger groups of individuals in strategy processes (e.g., workshops, town halls, face-to-face interviews, surveys) are being replaced by open practices enacted through social software technologies (Baptista et al., 2017) such as, for example, blogging (Gegenhuber & Dobusch, 2017), wikis (Dobusch et al., 2018; Dobusch & Kapeller, 2018), ideation contests and communities (Hutter et al., 2017; Malhotra et al., 2017), crowdsourcing (Matzler et al., 2016a; Stieger et al., 2012), or prediction markets (Borison & Hamm, 2010), all of which entail the inclusion of a larger number and variety of actors. As summarized in Table 5.1, these digital approaches shift the focus from outcomes and artifacts to participation and consultation, as the approach is more based on conversation, dialogue, connectedness, and engagement (Baptista et al., 2017). Social software further facilitates community building and offers a platform for community interaction with an organization (Hutter et al., 2017; Malhotra et al., 2017). As a result, social software challenges traditional strategy thinking by empowering a larger group of independent individuals to support, oppose, and contribute to management’s original thinking and to take part in and actively shape strategies (Haefliger et al., 2011). With new technologies, resource limitations can be overcome

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and external appeals for help become more productive. Factors like time and location become irrelevant, as people are able to access information and are free to take part in the strategy process at any time and independent of their geographic location (Bafoutsou & Mentzas, 2002). Social software technologies comprise both information richness and outreach through which communication becomes easier, faster, and permeates through several hierarchical layers (Stieger et al., 2012). In analog forms, participation is typically restricted to a smaller, more exclusive, and invited group, which often involves carefully managed and controlled selection processes (Seidl & Werle, 2018). In digital approaches (e.g., collaborative platforms), by contrast, participation is open to a large (invited) crowd, and participants who wish to contribute very often self-select themselves into the process (Felin & Zenger, 2014). Social software–based inclusion makes communication across hierarchies, departments, and firm boundaries easier. No matter what their location, background, or hierarchical position is, they can contribute their ideas or opinions. Social technologies give voice to more people independent of their position, and through more participatory modes of strategizing they potentially have more influence on the process and the outcomes. Inclusion of a broader set of actors through digital technologies enhances the diversity of those participating and provides a platform for the exchange of knowledge between diverse professions and perspectives from inside and outside the organization (Stieger et al., 2012). These technologies also support more efficient and more timely decision making and enable the effective fulfillment of strategic tasks (von Krogh, 2012). In analog processes, interactions tend to be sequential, with one individual talking or contributing at a time. Social software–based processes provide the means for parallel discussions to take place that can be more iterative and dynamic. As inputs are stored, they can be retrieved, revisited, and reread at any time; it is easier for participants to follow and participate in parallel discussions. As social software–based strategy processes allow for the integration of larger numbers of participants, for more diversity, for more independent contributions from individuals (free from group pressure or hierarchical position),

and for more effective aggregation of information, it is easier to tap into the collective intelligence of an organization (Stieger et al., 2012).

5.3 Motivations for Applying Practices of Inclusion Research has suggested that companies enable increased inclusiveness in strategy making for various reasons: for example, to tap into the collective wisdom of larger crowds to generate a greater number and diversity of strategic ideas; to get access to external expertise and unconventional ideas and improve idea quality (Stieger et al., 2012); to achieve increased understanding and commitment and joint sensemaking (Doz & Kosonen, 2008; Hutter et al., 2017; Ketokivi & Castaner, 2004); to allow for more effectiveness in implementation (Gast & Zanini, 2012; Sterling, 2003); and for favorable impression management (Gegenhuber & Dobusch, 2017; Yakis-Douglas et al., 2017). These different motivations lead to different inclusion practices. For instance, to get access to broader knowledge and a fresh perspective, a high degree of diversity of participants (Surowiecki, 2004), including externals, is needed. To increase “buyin,” those who implement the strategy should be involved, and specific techniques (e.g., prediction markets) are necessary to improve decision making. Our review in Table 5.2 shows that organizations applying open practices of inclusion expect one or more of the following: (1) to generate and crowdsource ideas concerning a firm’s strategic direction, (2) to improve a strategy, (3) to foster inclusion and collaboration among the participants, (4) to increase transparency and offer additional insights and understanding of an organization’s strategy, (5) to support strategic decisions, and (6) finally, to transform an organization’s strategy process. The choice of inclusion practices applied depends heavily on the stated objectives. Companies that primarily seek novel and unconventional strategy ideas and solutions need practices that allow for social and technical marginality. Research into problem-solving effectiveness in a broadcast search has found that the likelihood of a winning solution increases with the

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1

medical equip. & pharma

HealthCo2 IBM

software & hardware

electronic comp. & systems

public institution

telecomm. & networking equip.

consumer goods

food & beverages

software

consumer goods

electronic comp. & systems

financial services

public institution

Dell

Siemens

Land NRW Nokia

Unilever

Starbucks

Emergency 2.0

P&G Bachmann

Hypo

Austrian Gover LandCare Research

MobCo1

software

educational services

industrial machinery & equip.

software

software

software

financial services

chemical products

chemical products

software & internet services

financial services

retail

telecomm. & networking equip.

software

Hobsons

Zeppelin Rental

GitLab Buffer

Mite

Aegon

Henkel

Syngenta Google

J.P. Morgan

Best Buy

Dt. Telekom

Red Hat 3M

x

x

x

x x

Anonymized, see Seidl & Werle (2018); 2Anonymized, see Mack & Szulanski (2017)

industrial machinery & equip.

telecomm. & networking equip.

Microsoft

public institution

x

IT & internet services

x

x

x

x x

x

x x

x

Improve understanding

x

x

x x

x

x

x

x

x

x x

Strategy refinement

Motivation

x x

x x

x

x

x

x x

x x

Collaboration

x

x x

x

x x

x

x

x

x x

x

x

x

x x

x x

Crowdsourcing ideas

several

City of Vienna Virgin Media

EnerCo, Min Co, WatenCo1 Wikimedia

food & beverages several

IT & internet services

public institution

software

Rite-Solutions

HCL Techne. Premium Cola

automotive

food & beverages

FoodCo2 Volkswagen

IT & internet services

Industry

Organization

Table 5.2 Motivations and Phases of the Strategy Process

x

x

x

x x

x

x

x

x

x

x

Decision support

x x

x

Reshape process

x x

x

x

x x

x

x x

x

x

x

x

x x

x

x x

x

x

x

x x

x

x

x

x x

x x

Idea generation

x

x

x

x x

x

x

x

x

x

x x

x

x

x x

x

Development/ selection

x

x

x

x x

x

x

Strategic integration

Strategy Process Stage

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“increasing distance between the solver’s field of technical expertise and the focal field of the problem” (Jeppesen & Lakhani, 2010: 1016). This marginality effect (social attributes and technical fields) is explained by the access of marginal problem solvers to different knowledge and perspectives. Hence, if the objective is to create novel and unconventional ideas, involving more distant externals will be the right approach. Companies that want to pool knowledge and tap into the wisdom of crowds to improve decision making need approaches that allow them to access collective intelligence. Under certain conditions, large groups can be smarter in problem solving than experts (Surowiecki, 2004; Page, 2008). To access the wisdom of larger crowds, inclusive practices are needed that (1) allow for more cognitive diversity of the participants (diversity in perspectives, interpretations, heuristics, and predictions; see Page, 2008), (2) encourage independence of opinions, (3) give access to decentralized knowledge, and (4) enable effective knowledge aggregation (Surowiecki, 2004). The participants in this case will be organizational members from all hierarchies, departments, and units of a company. Deutsche Telekom opened its initiative development stage and applied prediction markets to gather and aggregate valuable knowledge from its employees to be better able to decide on the appropriate strategic moves concerning sales, pricing, new products, and markets (Telekom-CrowdWorx). Similarly, Syngenta and Henkel, two German chemical companies, involved their employees using prediction markets in order to aggregate their insights and knowledge via market mechanisms to support the accuracy and efficiency of their strategic decisions (Syngenta-CrowdWorx, Henkel-CrowdWorx). A different group of people may be involved in an Open Strategy initiative when improved implementation is the objective. Many strategy initiatives fail (Cândido & Santos, 2015), and poor implementation is very often attributed to the fact that “implementors do not own the strategy” (Giles, 1991). Strategy is a process of social interactions and it is based on the beliefs and on the shared understanding of an organization’s members (Mintzberg, 2009). Sufficient buy-in,

a shared understanding, stronger commitment, and a more effective implementation can be achieved when those who have to implement the strategy are involved in the process of developing it (Sterling, 2003). Hence, opening strategy processes to involve the implementers is an important means of improving implementation. In this case, internal implementers are targeted. At Aegon, an insurance company, increased inclusion is expected to improve strategy implementation, with employees gathering in communities of practice on a social networking platform and sharing ideas on how to make the strategy work (Gast & Zanini, 2012). Red Hat, an Open Source Software company, applies broad inclusion across multiple stages in order to reshape and improve the entire strategy process. Jackie Yeaney (2011), Executive Vice President, Strategy and Corporate Marketing, states: “. . . the traditional corporate strategy development process would simply not work in an open source company where transparency, meritocracy and collaboration were prized elements of the culture . . . So we have built, tested and executed on a very different model for corporate strategy . . . From the beginning, we put engaging with our associates ahead of communicating to them. The entire company needed to own the strategy if we wanted to see it implemented. Associates needed to be an integral part of developing and implementing it.” Some organizations state that by including a broader set of actors, they first of all intend to make the strategy formation process more transparent and comprehensible to the general public, as in the case of Buffer and Mite (Gegenhuber & Dobusch, 2017). These two companies discussed their strategic moves transparently on corporate blogs and enabled their external communities to submit comments and suggestions (Gegenhuber & Dobusch, 2017). Unilever and GitLab, an Open Source Software initiative, point out that by opening up the strategy process to a broader set of participants they intend to create an understanding of their strategic moves and increase awareness of their organizations’ strategy. GitLab explicitly stated: “Having our Strategy document in the open will help users understand why we make certain choices at GitLab, Inc. We can be held accountable

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Practices of Inclusion in Open Strategy 93

to these choices as well . . . Our prime objective is to ensure that everyone can contribute . . . We want to share this with the entire GitLab community so you know how and why important decisions are being made . . . Often users are left wondering and speculating why companies do certain things. We feel you have every right to know” (Sijbrandij, 2016). Red Hat also intends to be more transparent, in particular to their employees during strategy development in order to enable them to be involved. Jeff Whitehurst, CEO of Red Hat, points out: “Empowering your workers . . . requires that they have the knowledge and context of the strategy . . .” (Whitehurst, 2015: 62–63). The benefits of applying open practices at Red Hat show: “Since we started this process in 2008, Red Hat has been executing more efficiently on its best opportunities, and it shows. Red Hat has grown from a $400 million revenue company to an almost $1 billion company and the stock price has more than doubled” (Yeaney, 2011).

5.4 Phases of the Strategy Process The form and the degree of inclusion also depend on the specific strategic tasks or the specific phase of the strategy process that is opened up (Hautz, 2017). The strategy process can be roughly divided into three phases: idea generation, initiative development, and strategic integration (Pappas & Wooldridge, 2007; Floyd & Wooldridge, 1999). The first phase concerns the generation of new strategic ideas on how to approach old problems in novel ways or to seize newly identified opportunities (Floyd & Lane, 2000). It involves substantial creativity and requires the systematic combination and recombination of diverse perspectives, knowledge, and information for the creation of new, radical, and “good” ideas (Burt, 2004; Hautz, 2017). Newly involved individuals, not necessarily affiliated with a respective organizational or industrial field, are not burdened by prior assumptions, beliefs, and heuristics and are free from social and political pressures, which results in new, effective solutions (Jeppesen & Lakhani, 2010; Perry-Smith & Shalley, 2003). The initiative development phase involves the selection and transformation of strategic ideas into

initiatives with the potential to significantly affect organizational capability (Floyd & Lane, 2000; Pappas & Wooldridge, 2007). Also in this phase, a diversity of perspectives from a broader set of actors might be helpful, as the process is exposed to evaluation biases in favor of conformity and group consensus if it is dominated by small groups, e.g., top management teams (Reitzig & Sorenson, 2013). However, the inclusion of too diverse a group of individuals might result in a lack of shared language and heuristics, which are crucial to the development and evaluation of ideas and their fit with current organizational capabilities (Pappas & Wooldridge, 2007). In the strategic reintegration phase, strategic initiatives that are extended beyond trial need to be diffused and integrated into the organizational knowledge base (Floyd & Lane, 2000; Pappas & Wooldridge, 2007). Inclusion practices in this phase need to enable shared beliefs and the mutual ability to understand and comply with norms to allow broad acceptance, commitment, and buy-in (Obstfeld, 2005). Hence, depending on the particular phase concerned, organizations might choose different inclusive practices (Hautz et al., 2017). Inclusion can take the form of sharing information and knowledge and providing new strategic ideas (Gast & Zanini, 2012; Morton et al., 2015), but can also concern the deeper synthesis, discussion, development, and evaluation of strategic initiatives or the collective focus on the realization and implementation of strategic initiatives (Mack et al., 2017). Our review shows that the majority of organizations apply inclusive practices in the first stage of the strategy process of idea generation (see Table 5.2). Fewer organizations apply inclusive practices in the initiative development phase and even fewer in the reintegration phase. As outlined in more detail as follows, a number of organizations use the practice of prediction markets to open up the initiative development phase of the strategy process and involve additional actors in the strategic decision-making process. Very few open up more than one strategy phase. HypoVereinsbank (HVB), a German bank, for example, increased inclusiveness in the idea generation phase and implementation phase of the strategy process

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(Matzler et al., 2014; Berger-Baader-Hermes, 2012; Koch, 2013). In a first step, more than 8,000 employees and managers from all hierarchical levels were invited to generate and submit ideas on future service and consulting standards. Second, a follow up initiative was launched with the goal to successfully implement the jointly developed and predefined service and consulting guidelines in all branches in the country by again including employees and asking for their input on how the new standards could be implemented in their daily work routine (Berger-BaaderHermes, 2012). Nokia involved employees via its so-called “Booster Programme” in the idea generation and strategic reintegration phases. Ideas concerning strategic change were collected via an online community. “It was then possible for the community of employees to decide how best to implement these ideas . . . employee discussions quickly moved on the strategic direction to more practical ideas on how to make operational changes” (Gratton & Casse, 2010). Even fewer organizations allow inclusiveness across all three stages of the strategy process. The German-based Premium Cola collective is one of these rare exceptions, as it continuously allows all of its almost 1,650 members to set strategy agendas, to participate in strategy deliberations, and to contribute to decision making via a mailing list (Luedicke et al., 2017). Red Hat has also implemented an inclusive approach, which spreads across all three stages of the strategy process. Jackie Yeaney at Red Hat states: “From the beginning, we put engaging with our associates ahead of communicating to them. The entire company needed to own the strategy if we wanted to see it implemented. Associates needed to be an integral part of developing and implementing it” (Yeaney, 2011). In this process, the idea generation phase was first opened, enabling employees at all levels within the company to contribute comments and suggestions about strategy. The outcomes were subsequently condensed and synthesized into nine strategic priorities to facilitate selection and further development. Also in the selection and development phase, open practices were applied: “By involving the larger open source community, we were able to gauge the reaction and study the

ramifications of particular strategies, thus minimizing unintended consequences of those decisions” (Yeaney, 2011). Each of the nine areas was then explored and developed by a mixed team of employees. The team worked out the most important strategy options and was empowered to implement the plans. Continuous interaction with management ensured accountability for developing strategic priorities and making them actionable (Gast & Zanini, 2012), with positive consequences in the implementation phase:“. . . putting the responsibility for developing the details of the strategy in the hands of the people charged with implementing it – rather than handing down a fully cooked plan – generated more creativity, accountability, and more commitment” (Yeaney, 2011). Accordingly, at Red Hat, a diversified group of employees and externals was included in the strategy process throughout all stages (Gast & Zanini, 2012; Whitehurst, 2015).

5.5 Breadth of Inclusion Scope Forms and degrees of inclusion scope involve: (1) the mechanisms through which participating actors are selected, (2) the number of participating actors, and (3) whether these actors come from within or outside organizational boundaries (Whittington et al., 2011; Matzler et al., 2014; Hautz, 2017). These three characteristics are closely interrelated to each other and to whether analog or digitally mediated forms of inclusion are chosen. When deciding to open up their strategy process to a broader set of stakeholders, organizations face a fundamental choice concerning how to govern this process of selecting these newly included actors. Research on open organizational processes has highlighted that increased inclusion can be either centrally identified and selected or selfnominated and self-selected (Felin & Zenger, 2014). This also has implications for the number of actors involved. While controlled selection processes are often targeted to a smaller number of actors, self-selection processes are often chosen when targeting a larger unrestricted crowd. Managers can choose to centrally identify actors with knowledge potentially relevant to a strategic

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issue or problem and then hire or invite them to participate (Felin & Zenger, 2014). Seidl and Werle (2018), for example, highlight that when selecting participants and collaborators for their interorganizational strategy workshops, organizations sometimes turned away potential partners whose knowledge and frame repertoire was already available in the group or was not seen as relevant in order to avoid redundant perspectives and information. Such a purposeful selection process very often results in a smaller number of participants, often involved via analog forms of inclusion (Mack & Szulanski, 2017; Seidl & Werle, 2018). Alternatively to this carefully managed selection process, organizations can choose to broadcast a strategic problem, question, or issue to a larger, more or less undefined crowd and induce a process of self-selection by inviting those with relevant knowledge to self-identify and provide comments, proposals, or ideas (Felin & Zenger, 2014). In this case, actors self-select and choose to contribute time and effort because they privately benefit from being included in this process. Social software technologies in particular have lowered the cost of communication and interaction so that firms can very easily broadcast their problems to a very wide set of constituents, who then self-select to participate based on these expected benefits (Felin & Zenger, 2014; Stieger et al., 2012). However, organizations might also choose a combination of both approaches by increasing inclusion to a limited degree and predefining or restricting the crowd they target, by, for example, only including internal actors in Open Strategy initiatives (Morton et al., 2015; Matzler et al., 2014). This greater involvement of internal actors involves a shift from small top management teams and middle management to a broad base of employees within organizations (Denyer et al., 2011; Hautz, 2017). When including internal actors, however, organizations very rarely include their entire workforce but restrict invitation to participate to a particularly selected and predefined set of internal actors. Sarah Etherton, Senior Internal Digital Channel Manager at Unilever, who was responsible for the BitesizeCLC initiative, where Unilever leaders chat with employees about

strategy, explains: “Initially, we wanted to include all employees but we opted for a smaller audience. This was our first comms project of this kind and we wanted to test how it would work with a smaller group of 16,000 rather than opening it up to Unilever’s entire population of 95,000. We did not know how it might be received – or if plans needed to change during the event. We wanted to make sure that the team would be able to respond, react and deliver” (Lombardi, 2016). Inclusion scope, in terms of the number of participants, typically reduces for the phases of initiative development and strategic integration and the set of included employees becomes more selective. For example, at J.P. Morgan, only mid-level managers are included in development and selection; at Unilever, line managers complement senior managers in idea development; and at Volkswagen, only sales employees are invited to participate. Siemens, in contrast, engaged in an unrestricted, company-wide online Open Strategy initiative and invited its entire workforce to submit and discuss ideas for sustainable value creation and capitalefficient growth (Hutter et al., 2017). Out of the entire pool of employees from all corporate businesses, 812 self-selected to actively contribute by submitting ideas or engaging in discussions (Hutter et al., 2017). In the case of Premium Cola collective, where all members are constantly invited to contribute by raising strategic issues, only 14 members out of 1,650 members self-selected to do so. 1,636 members never made use of the opportunity to be actively involved in types of strategizing (Luedicke et al., 2017). This very selective participation has resulted in the acceptance of “silent participation,” assuming that members silently approve decisions (Luedicke et al., 2017). Hence, to achieve increased inclusiveness through crowdsourcing and self-selection mechanisms, it is essential to ensure that actors are motivated and willing to participate and make a contribution. Birkinshaw (2017) has also suggested that distinctive inclusive practices need to be applied when either addressing internal audiences or crossing organizational boundaries to target external audiences. While relationships between organizations and employees are determined by hierarchical control and monetary compensation,

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relationships with external stakeholders are based on joint interest and the motivation and willingness to contribute. These differences suggest that different practices of inclusion need to be considered contingent on inclusion within or across organizational boundaries (Matzler et al., 2014; Whittington et al., 2011). Intranet-based applications such as internal wikis, blogs, or community platforms are used to enable employees across departments and hierarchies (Hutter et al., 2017; Matzler et al., 2016a; Stieger et al., 2012). Although they may provide an increased diversity of knowledge, views, and perspectives when compared to exclusive management teams, internal actors are still characterized by a shared mutual understanding of organizational settings, shared values, and a common language (Obstfeld, 2005). These three elements may indeed be necessary in order to interpret and assess the value of strategic ideas in relation to existing organizational capabilities (Reitzig & Sorenson, 2013). As discussed in the previous examples, and as shown in Table 5.3, practices fostering the inclusion of internal actors are particularly relevant in the initiative development and reintegration phases. External actors, in contrast, might provide valuable knowledge, diversity, and marginality to the field (Jeppesen & Lakhani, 2010), and are more independent from established organizational patterns, mindsets, beliefs, and political and social pressures and expectations (Perry-Smith, 2006; Perry-Smith & Shalley, 2003). This might enable external individuals to come up with more diverse, radical new strategic ideas (Perry-Smith, 2006; Perry-Smith & Shalley, 2003). However, externals may be characterized by a lack of mutual language, understanding, and interests. In addition, an overly diverse group of individuals from different backgrounds may not be able to jointly build on the knowledge available and may have difficulties in further developing ideas or in appropriately assessing their organizational fit (Hautz, 2017). The inclusion of external stakeholders from outside organizational boundaries, such as customers, suppliers, scientists, experts, independent authorities, or students, is often enabled through online crowdsourcing initiatives, jamming sessions, or online contests (Aten & Thomas, 2016; Malhotra

et al., 2017). The scope of inclusion ranges from a small number of experts or selected customers to the general public. Individuals from outside organizations’ boundaries are mostly involved in idea generation, but some organizations also integrate external actors in the initiative development and/or strategic reintegration phase. Very often, this calls for strategic ideas to be broadcast to an unlimited crowd of actors. For example, Wikimedia, the nonprofit umbrella organization behind Wikipedia, launched a special wiki dedicated to the organization’s future strategy and invited everybody who was interested to contribute. More than 1,000 individuals discussed nearly 900 proposals for the company’s future direction and then categorized, rationalized, and elaborated on them. This “open” strategy process ultimately resulted in a coherent strategic plan detailing a set of beliefs and priorities (Dobusch et al., 2018; Newstead & Lanzerotti, 2010). GitLab also opened up its idea generation and development phases to the entire public community (Sijbrandij, 2016). Similarly, Emergency 2.0, a wiki-based emergency initiative, invited the public community to contribute to the development of their strategic direction: “It takes a global community to maintain the Emergency 2.0 Wiki, so we are looking forward to your ideas” (Culleton, 2013). The same was true in the case of the public institution Land Care Research, which included the entire public in idea generation through a crowdsourcing initiative (Malhotra et al., 2017). Malhotra et al. (2017) emphasize that when broadcasting a strategic challenge to an unrestricted external crowd, it is crucially important to be precise in framing the specific strategic question in order to ensure that the right members with relevant knowledge decide to join and participate in the challenge. Our results display a clear distinction between inclusion of internal and external participants, with some exceptions. IBM and Microsoft simultaneously included actors from inside and outside the organization in the strategy process. At Microsoft, internal developers work together with external stakeholders to inform idea selection (Mack & Szulanski, 2017). At IBM, a mixed group of employees, experts, and external stakeholders collaborate at the idea generation stage (Bjelland &

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Wood, 2008). Red Hat involves not only a broad range of employees from different levels across all stages of the strategy process but even includes the input of external actors in the initiative development stage: “By giving members of the external community an opportunity to weigh in, we not only were able to identify new and next generation technologies very early, we allowed an extremely important set of people into our process, increasing their understanding and appreciation of our direction” (Yeaney, 2011).

5.6 Methods of Inclusion Finally, we consider the specific method of inclusion. While we have already distinguished between analog and digital forms of inclusion (Mack & Szulanski, 2017), in this the section we acknowledge the important role of social technologies in the enactment of increased inclusiveness (Haefliger et al., 2011; Whittington, 2014). We consider how different types of social technologies offer distinctive functionalities in order to involve additional actors in the strategy process, such as enabling the sharing of information and ideas with a large number of individuals in real time, or allowing remote and synchronous collaboration and interaction (Stieger et al., 2012). As regards applied social technology, Table 5.3 shows that most organizations rely on idea crowdsourcing practices – jams, contests, or communities – to open up the idea generation phase of the strategy process, both for external and internal inclusion. Land Care Research, for example, collected ideas via a crowdsourcing initiative that was integrated into an online contest platform (Malhotra et al., 2017). Siemens also enabled its employees to participate in strategy formation and idea generation through providing ideas and suggestions in an online crowdsourcing initiative via a community platform (Hutter et al., 2017). These community platforms not only allow a large number of individuals to submit ideas, but their additional community functionality also enables participants to discuss and comment on ideas, to provide their insights, to communicate, interact, and build social relationships, and to develop a shared sense of

community (Hutter et al., 2017). This joint sense of community results in increased collective commitment and positively influences implementation attempts. This was also the case with the Booster community platform used by Nokia in the idea generation and implementation phase. The platform was highlighted as a crucial factor: “Nokia remains as committed as ever to deep employee involvement in strategy. . . What has changed in those intervening years is the development of technological platforms capable of bringing together thousands of people from across the world with speed and ease” (Gratton & Casse, 2010). Other practices for external inclusion vary from blogs to wikis, social forums, and feedback tools. In order to make their strategy formation process more transparent to the general public, most organizations use a corporate blog or an open social forum, such as Buffer and Mite (Gegenhuber & Dobusch, 2017). At GitLab and Emergency 2.0, online feedback tools – such as an open Google Doc entailing a draft strategic plan, as in the case of Emergency 2.0 (Culleton, 2013) – enabled volunteers to contribute feedback to the strategic direction of the organization. Unilever set up and integrated a social collaboration tool to digitally open up the company’s two-day Change Leader Conference (CLC), where 400 senior managers meet face-to-face to share and discuss strategy (Lombardi, 2016). Neil Atkinson, Unilever’s Head of Global Digital Engagement, pointed out that the use of the social forum tool “was a big step forward in integrating social with our traditional broadcast communications. It was a heavy resource investment to create and curate content during the event, but made a very positive impression of openness and transparency, helping employees feel involved – and equipping them with the tools to comment on and share content across their own networks” (Lombardi, 2016). Involved employees felt that the technology helped to “provide real time information” and was “a big step in democratization of information in Unilever” (Lombardi, 2016). In terms of external inclusion in the idea generation phase, Emergency 2.0 comprises a diverse mix of open practices of inclusion. In addition to a feedback tool where participants can comment on the current strategy draft, it relies on a Google

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1

x x x x mid-level x x x x

x x x x

x

x

External experts

x

x

x x

x

x

x

x

x x

x

x

x

x

x x x

x

x

x

External stake- Customers Public holders

Inclusion Scope

Anonymized, see Seidl & Werle (2018); 2Anonymized, see Mack & Szulanski (2017)

FoodCo Volkswagen Rite-Solutions Dell Siemens Land NRW Nokia Unilever Starbucks Emergency 2.0 P&G Bachmann Hypo Austrian Gover LandCare Research HCL Techne. Premium Cola MobCo EnerCo, Min Co, WatenCo Wikimedia City of Vienna Virgin Media Microsoft Hobsons Zeppelin Rental GitLab Buffer Mite Aegon Henkel Syngenta Google J.P. Morgan Best Buy Dt. Telekom Red Hat 3M

IT & internet services public institution telecomm. & networking equip. software educational services industrial machinery & equip. software software software financial services chemical products chemical products software & internet services financial services retail telecomm. & networking equip. software industrial machinery & equip.

x medical equip. & pharma x IT & internet services x food & beverages sales automotive x software software & hardware x electronic comp. & systems public institution x telecomm. & networking equip. senior & line consumer goods food & beverages software consumer goods x electronic comp. & systems x financial services x public institution x public institution x IT & internet services x food & beverages mid & senior level several mid & senior level several

2

HealthCo2 IBM

Employees

Industry

Organization

Table 5.3 Breadth of Inclusion Scope and Technology

x

x

x

x x

x

Mailing Blog list

x x

x

x

x

x x x x

x

x

x x x x

x

x

x x

x

x

x

x

x

x

Social forum/ network

x

x

x

Feedback tool

Method/Technology Crowdsourcing platform

x x x x x x

x

x x

Prediction market/ voting

x

x

x x

x

x

x

Interviews/ workshop

Practices of Inclusion in Open Strategy 99 Table 5.4 Areas for Future Research on Increased Inclusion in Strategy Processes Objectives and motivations

Which phases of a strategy process should be opened to more stakeholders, which inclusive practices should be applied, and who should be included to reach intended outcomes of inclusion along the strategy process?

Consequences

What are the intended and unintended consequences of inclusion along the strategy process? What are potential “side effects”?

Decision rights and control

What is the right balance of “inclusion” and “exclusion” in the strategy process?

Barriers

What are the barriers for more inclusiveness and how can they be overcome?

Diversity versus cohesiveness

How can companies combine the need for more diversity to arrive at more and better strategy ideas and options in the formulation stage with the need for more cohesion and buy-in in the execution?

Social technologies of inclusion

How do new social technologies of inclusion change social structures, roles, cultures, etc. of an organization?

Doc, much like an open wiki, which allows participants to constantly develop strategic ideas (Culleton, 2013). Organizations opening up their development and selection phase to a broader set of participants often apply either voting and evaluation mechanisms, which are usually embedded in idea crowdsourcing platforms, or prediction markets, which typically foster the inclusion of internal actors only. Rite-Solutions launched a tool for decision support, where employees can invest in a virtual idea market. Ideas with a certain amount of support are then implemented (Gast & Zanini, 2012). In order to include their employees, J.P. Morgan handed out electronic devices that incorporated a voting technology to chosen employee participants (Whittington et al., 2011). Syngenta, Henkel, Deutsche Telekom, and Zeppelin Rental all relied on an intranet-based prediction market (CrowdWorx, 2007–2013a, CrowdWorx, 2007– 2013b, CrowdWorx, 2007–2013c, CrowdWorx, 2007–2013d). These prediction platforms allow organizations to use market mechanisms to efficiently aggregate their employees’ individual predictions and forecasts from all over the world concerning strategic decisions on strategic moves, pricing, competitors, sales markets, new product introductions, etc. Compared to traditional methods, such as surveys, these prediction markets have proved to provide greater accuracy in less time with a lower number of required participants (Borison & Hamm, 2010; Teck-Hua & Kay-Yut, 2007). In addition to traditional prediction markets,

social technology–based prediction platforms also allow for the gathering of qualitative comments by participants, explaining and giving additional insights on their decisions. Dr. Thomas Bungartz of Deutsche Telekom, responsible for the identification of new growth markets, explains: “Next to [a] good quantitative results, . . . we also got more than 2000 comments through integration of the commenting function. This way we could follow very well, why prediction results were the way as presented” (Bungartz, 2011). Of all the organizations surveyed, Red Hat applied the greatest variety of open practices across all stages of the strategy process. Online chats and customized mailing lists are used to exchange knowledge, and blogs and wikis further enrich communication and involvement of employees (Whitehurst, 2015).

5.7 Implications for Research on Increased Inclusiveness Our chapter has specifically highlighted the variability and contingencies of inclusive practices. We have shown that companies have many different motivations and are experimenting with a variety of practices/technologies. They have different options for inclusiveness in relation to the phases of the strategy process, of whom to include in the strategy process, and which practices and technologies they use to involve individuals and groups (von Hippel & von Krogh, 2003). In Table 5.4 we identify several avenues for future

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research on increased inclusiveness, which are discussed in detail as follows. While it seems obvious that the what (strategic process stage), the who (included participants), and the how (technology, practice) of increased inclusiveness depend on the intended outcome, there is, in fact, very little research that gives clear guidelines on how to answer these questions. There is some research in adjacent disciplines on, for example, the wisdom of the crowd (e.g., Surowiecki, 2004; Page, 2008), marginality in problem solving (e.g., Jeppesen & Lakhani, 2010), or Open Source (e.g., von Hippel & von Krogh, 2003) that may serve to provide some recommendations for the design of initiatives facilitating increased inclusion, but there is clearly substantial research needed to understand which practices are suited for which purpose and context. A major avenue for future research could also be generating deeper insights into unintended consequences of inclusion. Hautz et al. (2017) suggest different dilemmas of openness that may result in additional costs, resulting in inefficiencies of increased inclusiveness. The involved “crowd” may come up with controversial ideas or solutions (Stieger et al., 2012), leading to unpredictable issues, employees taking sides in debates, and identifying with and committing to those controversial issues (Stieger et al., 2012; Malhotra et al., 2017). Hence, instead of creating shared understanding, buy-in, and improving implementation, debates and disputes that persist for a longer time may lead to divided and polarized, incompatible groups (Smith, 1999; Denyer et al., 2011; Baptista et al., 2017), whereby members become disengaged and alienated (Mortensen & Hinds, 2001). Providing more nuanced insights into whether and how specific objectives of increased inclusiveness can be achieved and what the potential negative “side effects” (Whittington et al., 2011) are should be another priority of future research. In addition, the use of inclusive practices might be contingent on strategy content. Organizations choose different practices to include new actors, depending on the particular strategic issue concerned. To date, the majority of inclusive practices are applied at the idea generation stage; hence, the

number of inclusive practices directed at later stages of the strategy process declines. There seems to be a greater reluctance to open up to the inclusion of a broader audience in these later phases, where top management would be forced to accept a greater loss of control and decision-making power when compared to the idea generation stage. Even if increased inclusion is successfully enabled in the idea generation phase, top management often still retains the decision rights concerning the evaluation and selection of strategic ideas and the coordination of implementation. The selection and implementation phases are still mostly based on traditional approaches characterized by control and exclusivity, with actions mainly performed by top and middle management (Pappas & Wooldridge, 2007). Despite high failure rates during strategy implementation, a very small number of organizations involve more individuals in the strategic integration stage. Only a limited number of organizations enable increased inclusion in more than one or even all three stages of the strategy process. Future research could focus on investigating barriers and factors that might hinder organizations to apply inclusive practices in later stages of the strategy processes and how such barriers could be overcome. The major motivations for involving a broader set of actors are (1) arriving at more and better strategy options and decisions, and (2) increasing buy-in and commitment in execution (Matzler et al., 2016b; Stieger et al., 2012; Whittington et al., 2011). These two motivations require different things. While the first objective requires more diversity and social and technical marginality (Jeppesen & Lakhani, 2010), commitment in execution needs shared understanding, acceptance, and shared mental models. Hence, future research is needed examining how companies can combine diversity with cohesion or how they can manage the conflicting demands in the individual phases of a strategy process. Distinctive practices of inclusion are required when addressing actors internal to organizations and when targeting external stakeholders. External actors may provide valuable knowledge diversity, marginality to the field, and freedom from organizational routines and pressures, and

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therefore they are more often addressed when it comes to knowledge sourcing and idea generation in the idea generation phase. Later in the strategy process, when strategic ideas are being developed and selection decisions are taken, the scope of inclusion is very often reduced to internal participants only, or may even focus on specific groups of employees. The inclusion of a larger audience beyond organizational boundaries increases complexity and makes it more difficult for an organization to remain in control of contributions (Matzler et al., 2014). These are, however, only observations and it remains to be studied how much inclusion in individual strategy phases (idea generation, initiative development, strategic integration) is beneficial. Is increased inclusiveness in the early phases recommended, and should strategy processes be still more exclusive during strategic integration? Is the inclusion of external stakeholders more beneficial in the idea generation phase, and should the initiative development and strategic integration phase involve employees? Which strategy issues are suitable for increased inclusion? Innovation literature clearly found that not all problems are appropriate for crowdsourcing (Boudreau & Lakhani, 2013). The most suitable are tasks of a modular, self-contained, closed-solution type (Afuah & Tucci, 2012). Strategies, however, are wicked problems (Camillus, 2008); they have multiple causes, they are very tough to describe, and there is no one correct answer. Is increased inclusion only suitable for smaller, clearly defined issues, or is the “capacity to think creatively about strategy . . . distributed widely in an enterprise,” as Gary Hamel (1996) wrote. Finally, this chapter provides additional insights into the role of social technologies as enablers of inclusive practices (Hautz et al., 2017; Whittington, 2014). As suggested by Hautz (2017), we could show that different social technologies are involved in the enactment of different practices of inclusion. Most organizations rely on crowdsourcing practices in the form of jams, contests, or community platforms. Although most of these technologies not only enable the submission of ideas but also crowdsource feedback and evaluations, in many cases the final decision making and selection of

crowdsourced content is restricted to top management (Prpić et al., 2015). A reliance on social technologies in the enactment of inclusive practices also requires that involved individuals have the necessary skills to be able to participate in technologically moderated processes (Hutter et al., 2017). Users might be more familiar with crowdsourcing technologies and platforms from their private life than with the use of specialized voting systems or prediction markets (von Krogh, 2012). Thus, the use of the former might decrease the risk of implementing complex tools requiring the additional training of participants. However, if organizations are focusing on increased involvement in the initiative development stage, they will need to rely on specialized technologies specifically targeting selection and evaluation processes, mostly in the form of prediction markets. As companies are experimenting with these different technologies important questions that should be targeted by future research include to investigate for which specific task these technologies are used and are most useful (Morton et al., 2017), and how they should be designed and used. It also remains to be understood how the use of social software changes social structures in organizations and roles in strategy processes. Does it contribute to a sense of community as observed in online community research (Hutter et al., 2017; Abfalter et al., 2012) and do these involved communities develop a shared language, a joint history, and, over time, possibly common values and beliefs (von Krogh et al., 2003)? Another worthwhile research question is whether and how the use of social software elicits dysfunctional behavior (Da Cunha & Orlikowski, 2008; Denyer et al., 2011). It has also been argued that social technologies might create a kind of “parallel world,” which might also lead to the exclusion of certain individuals (e.g., digital natives versus elder cohorts) (Hauptmann & Steger, 2013). For example, employees might feel excluded because they do not have sufficient access (e.g., in production plants), or because they lack the skills, have a fear of exposure, or do not have enough time (Neeley & Leonardi, 2018; Matzler et al.,

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2016a). Future research could further explore this inclusion-exclusion problem. Increased participation and inclusion in strategy making is a promising and exciting new research field. In this chapter, we have considered why organizations open their strategy processes to a broader set of actors, which practices are used in different phases of the process, whom organizations choose to involve, and the role of social software technologies. Our intention has been to give an overview of emerging practices of inclusion during the strategy process and to identify some important research avenues for future research. We hope it will contribute to a better understanding and stimulate researchers to tackle some of the issues addressed. Acknowledgment: This work was supported by the Austrian Science Fund (FWF), project “Crowdsourcing Strategy,” project number P 27445. References Abfalter, D., Zaglia, M. E., & Mueller, J. (2012). Sense of virtual community: A follow up on its measurement. Computers in Human Behavior, 28(2), 400–404. Afuah, A., & Tucci, C. L. (2012). Crowdsourcing as a Solution to Distant Search. Academy of Management Review, 37, 355–375. Aten, K., & Thomas, G. F. (2016). Crowdsourcing strategizing: Communication technology affordances and the communicative constitution of organizational strategy. International Journal of Business Communication, 53(2), 148–180. Bafoutsou, G., & Mentzas, G. (2002). Review and functional classification of collaborative systems. International Journal of Information Management, 22, 281–305. Baptista, J., Wilson, A. D., Galliers, R. D., & Bynghall, S. (2017). Social media and the emergence of reflexiveness as a new capability for open strategy. Long Range Planning, 50, 322–336. Berger-Baader-Hermes. (2012). Hypovereinsbank – Wenn ich mein Kunde wär [Online]. Available: www.bergerbaaderhermes.de/Cases [Accessed 19.12.2012.] Bertotti, M., Adams-Eaton, F., Sheridan, K., & Renton, A. (2012). Key barriers to community cohesion: Views from residents of 20 London

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CHAPTER

6

Interorganizational Strategizing VINCENT DE G OOYERT, ETIËNNE ROUWETTE, a nd HA N S V A N K RA N E N B U R G

6.1 Introduction Increasingly, organizations choose to develop their strategy collaboratively with other organizations, which is known as “interorganizational strategizing.” These new forms of collaboration are quite remarkable not least because they seem to go against much of the traditional strategy research (Barney, 2001), which puts a premium on inimitability. Interorganizational strategizing can be formally defined as engaging in a strategy process jointly with other organizations. This definition distinguishes interorganizational strategizing from other forms of collaboration that do not involve autonomous organizations. Interorganizational strategizing may be asymmetrical, with one organization explicitly taking the lead and asking other organizations to join its strategy process (e.g., Aten & Thomas, 2016), or symmetrical, with several organizations joining forces on a more or less equal basis (e.g., Teulier & Rouleau, 2013). Interorganizational strategizing also varies in its degree of formality. On the one end of the spectrum we have collaborations in the form of official workshops and meetings. On the other end we have informal discussions on strategy among strategists that meet for instance at a conference. Although many studies discuss instances of interorganizational strategizing, few do so explicitly under this label. Indeed, there are numerous labels that describe broader or narrower phenomena related to interorganizational strategizing. For instance, “open foresight” (Schmidthuber & Wiener, 2018) and “networked foresight” (van der Duin et al., 2014) refer to interorganizational discussions and analyses of future developments. These can be seen as more specific instances of the type of interorganizational strategizing that focuses

on the exploration of strategic issues. However, interorganizational strategizing is much broader and can involve more than mere foresight – for example, joint decision making. Another related term is “stakeholder engagement,” which refers to organizations collaborating with external stakeholders (de Gooyert et al., 2017). Stakeholder engagement, however, is a broader phenomenon than interorganizational strategizing, as it is often about informing external stakeholders, rather than including them in the process of forming a strategy, and can be operational and tactical as well as strategic (Green & Hunton-Clarke, 2003). Another difference between stakeholder engagement and interorganizational strategizing is that the former can refer to collaborative strategy processes between otherwise unrelated organizations that are not necessarily stakeholders. Similar to stakeholder engagement, “coopetition” and “alliances” do not always represent cases of interorganizational strategizing, but may describe short-term collaboration on tactical issues (Bengtsson & Kock, 2014). In this chapter we provide an overview of the existing research on interorganizational strategizing. We start by introducing the different theoretical perspectives from which interorganizational strategizing is examined in the literature and then we discuss why firms engage in interorganizational strategizing at all, and what forms this phenomenon may take. We conclude this chapter with a discussion of potential avenues for future research.

6.2 Theoretical Perspectives on Interorganizational Strategizing In this section we present the main strands of the literature on interorganizational strategizing (see

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Interorganizational Strategizing 107 Table 6.1 Empirical Studies on Interorganizational Strategizing Reference

Setting/topics

Main function

Main form

Perspective

Abrahamsen et al. (2016)

Norwegian food industry

Strengthening relationships

Face-to-face

Industrial networking

Aten and Thomas (2016)

US Navy and stakeholders

Exploration

Online

Business communication

Bowman (2016)

Public planning by UK Exploration, legitimacy Face-to-face local council and building partners

Sensemaking

Brabham (2009)

Hypothetical participatory planning

Learning, legitimacy building

Business communication

de Gooyert et al. (2016)

Dutch energy industry

Exploration, legitimacy Face-to-face building

Operational research

Deken et al. (2018)

Architecture industry

Exploration

Face-to-face

Dynamic capabilities

Franco (2008)

UK construction industry

Strengthening relationships

Face-to-face

Operational research

Hardy et al. (2006)

Canadian HIV/AIDS domain

Exploration

Face-to-face

Sensemaking

Heger and Boman (2015)

EIT ICT Labs and partners’ innovation radar

Exploration

Face-to-face and online Dynamic capabilities

Öberg et al. (2016)

Taiwanese optical recording media industry

Strengthening relationships

Face-to-face

Industrial networking

Rouwette et al. (2016) Public policy in a Dutch problem neighborhood

Learning, legitimacy building

Face-to-face

Operational research

Seidl and Werle (2018)

1) Water as a resource and 2) flexible production

Exploration, learning

Face-to-face

Sensemaking

Teulier and Rouleau (2013)

3D design software in the civil engineering sector

Learning, exploration

Face-to-face

Sensemaking

Wilkinson and Mangalagiu (2012)

World Business Exploration Council for Sustainable Development

Face-to-face

Dynamic capabilities

Wilkinson (2003)

Exploration of broad changes in society

Face-to-face

Dynamic capabilities

Exploration

Table 6.1 for an overview of all empirical studies). Several different approaches inform the study of interorganizational strategizing: sensemaking, dynamic capabilities, operational research, industrial networking, and business communication. In the following, we examine each in turn and look at how the findings from the respective strands of the literature contribute to interorganizational strategizing research.

Online

Sensemaking Sensemaking is the process through which people give meaning to experiences and observations (Weick, 1995). Several studies have adopted sensemaking and related approaches as a framework for studying how interorganizational strategizing affects the meanings that strategists give to their experiences and observations. Seidl and Werle

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(2018) use the main aspects of sensemaking that Weick (1995) defined – namely, cues, frames, and relations – to investigate the effect of the involved participants on the interorganizational sensemaking process. In addition, they emphasize that the sensemaking process depends on how participants will bracket and label cues and how significant these cues are for them. The authors draw on observations, interviews, and documents from two longitudinal case studies on interorganizational groups that got together to make sense of strategic meta-problems collectively and show that the success of interorganizational strategizing also depends on the selection of participants. Their work investigates how the participants in a process of interorganizational sensemaking were selected and how the selected participants influenced the sensemaking dynamics of that process. The authors found that the set of initial cues the initiators of the collaboration provided determined which frame repertoires the participants consider important and relevant and what type of partner they seek. The conclusion they draw is that when the cues change, the frame repertoire and the constellation of participants may also change. Hardy et al. (2006) have shown that the success of interorganizational collaborations depends on the conversations between the participants, who may represent a variety of organizations, on a particular issue. This research is based on a case study of the Canadian Treatment Advocates Council, a multisector collaboration set up to address treatment issues associated with HIV/ AIDS. Hardy et al. (2006) show that whether these conversations are successful depends on four factors: identification, interest, coherence, and contribution. More specifically, the authors found that the participants must be interested in engaging in conversation with each other and able to identify with the conversation, to achieve coherence in meaning, and to contribute without eradicating or ignoring the competing tensions between constituency and collaboration. Teulier and Rouleau (2013) build on the study of Hardy et al. (2006). They focus on middle managers’ sensemaking and sensegiving activities in a cross-sector study group. They investigate the Communic Group, a French interorganizational

collaboration project set up to examine the challenges and benefits that adopting a 3D-design software platform entailed for organizations in the public works and civil engineering sector. In their study, the authors adopted the so-called “translation perspective” to show how middle managers make sense of change at the interorganizational level. The translation perspective focuses on how ideas travel from one context to a different context and are “translated” from one language into another on the basis of specific editing rules (e.g., Sahlin & Wedlin, 2008). They found multiple translation spaces at the interorganizational level. Each of these “translation spaces” has its own logic; at the same time, however, all translation spaces in the same broader context are interdependent. The translation spaces characterized by specific communication activities are intensive working sessions, industrial visits, writing sessions, and organizational meetings and talks. The middle managers of the studied organizations act as translators by transforming meaning from one context to the other. In each space, middle managers employed specific editing or translating practices, such as reframing and rationalizing the change. In another study, Bowman (2016) demonstrated the flow of practices and artifacts used in sensemaking in the context of inter- and intraorganizational strategizing. Bowman examined the practice of scenario planning in interorganizational planning cycles through the so-called “simplexity” lens. “Simplexity” is understood as the interconnectedness between sensemaking, organizing, and storytelling (Colville et al., 2012: 5). Bowman (2016) based his analysis on a longitudinal case study of Northshire Partnership (a pseudonym), consisting of a local council, health services, policing, education, voluntary sector, etc., to carry out a community planning project for their region. His findings show that although scenario planning shaped the strategy process at the interorganizational level, it did not influence the strategy process at the intraorganizational level. This particular study also demonstrates how strategy tools interact with and shape strategy processes in interorganizational collaborations.

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Interorganizational Strategizing 109

Dynamic Capabilities Studies based on the “dynamic capabilities” approach investigate the ability of organizations to adapt effectively to their changing environment (Teece et al., 1997). In this body of literature there are several works that focus on the impact of interorganizational strategizing on an organization’s ability to adapt to its environment, although not all explicitly use the label “dynamic capabilities.” Heger and Boman (2015) used data from the European Institute of Innovation and Technology ICT Labs on the “networked foresight tool” to examine its impact on the basic aspects of dynamic capabilities (i.e., sensing, seizing, recombination, and reconfiguration) in interorganizational innovation networks. This tool consists of a set of practices that facilitate scanning, sensing, interpreting, and utilizing internal and external signals of change. Partnerships often use this tool to develop jointly preparatory strategies that will enable the partners to meet the challenges they are facing or to influence their environment. Heger and Boman (2015) found that the partners who form a network use this tool primarily for sensing activities and that developing a shared vision is particularly valuable for the entire network. Deken et al. (2018) explain how managers establish resource complementarity in order to achieve interorganizational collaboration. The authors base their analysis on a longitudinal field study of an automotive company and show that resource complementarity is jointly established in the course of interacting with multiple potential partners and through recursive cycles of what the authors refer to as “prospective resourcing” (Deken et al., 2018). Prospective resourcing mediates the interplay of strategizing and collaboration, thereby reversing the prevailing logic that strategy precedes and determines collaboration. The findings of this study offer new insights into resourcing as a mechanism for developing strategic initiatives and show how external actors may influence strategizing. Wilkinson and Mangalagiu (2012) studied the interorganizational strategizing process by the World Business Council for Sustainable Development, which used scenario-based methods and visioning. This process involved a total of 29

companies whose representatives formed project groups that organized face-to-face workshops, carried out research, and engaged in decision making over a period of 18 months. The participants reported that the benefits of this collaborative process included individual learning, achieving systemic insights, and establishing and improving relationships among them.

Operational Research Operational research focuses on increasing knowledge about the tools and methods that organizations can use to improve the quality of decision making. These tools and methods are increasingly used in interorganizational processes to arrive at strategic decisions (de Gooyert et al., 2017). One example is “facilitated modeling.” This practice involves working closely with stakeholders to construct a qualitative map or formal model of an issue of interest (Franco & Montibeller, 2010). Depending on the specific approach to facilitated modeling, the participants in this process can start by mapping the situation at hand, the desired outcome, or the strategic actions they could take. Rouwette et al. (2016) and de Gooyert et al. (2016) studied facilitated modeling in the context of interorganizational strategizing processes. Rouwette et al. (2016) studied a Dutch municipality that partnered with external stakeholders (police officers, education officials, citizens) to address structural disturbances of public order in a problematic neighborhood. The study revealed that although facilitated modeling allowed the participants to exchange adequate amounts of taskrelevant information, sensitive issues that might have caused tension between some of the participants were not raised at all. In another study, de Gooyert et al. (2016) studied a Dutch distribution system operator (DSO) that involved 96 stakeholders in a facilitated modeling process in order to manage the transition of the energy system toward a more sustainable system. For that purpose, the Dutch DSO organized eight workshops with the stakeholders. The study showed that through facilitated modeling the partners developed a shared view of the energy system

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and of how its subsystems interrelated; however, the findings also revealed that the diversity of viewpoints among the participating strategists limited the extent to which a common view can indeed be shared by all.

Business Communication Research on business communication in the context of interorganizational strategizing represents a more recent strand of the literature. This body of research focuses on the use of social media, including practices such as social networking and crowdsourcing, in interorganizational strategizing. Social media have radically changed the way people interact (Leonardi et al., 2013; Whittington et al., 2011). Business communication scholars emphasize the potential of making use of the interactive features of social media in organizational strategizing (Brummans et al., 2014). In general, these scholars focus on the role of communication in organizational social processes (Cooren et al., 2011). Crowdsourcing, which enables potentially large numbers of external stakeholders to solve problems collaboratively in a common digital space (Brabham, 2009), is of particular interest in this context. More specifically, organizations can use crowdsourcing to implement an Open Strategy approach (Cardon & Marshall, 2015; Stieger et al., 2012). Aten and Thomas (2016) analyzed how crowdsourcing influences strategizing in interorganizational collaborations. The authors gathered data from the Massively Multiplayer Online War Game (Aten & Thomas, 2016: 153), which includes a crowdsourcing website featuring online games, a blog, and various videos. Their findings show that crowdsourcing platforms increase participation in the strategizing process, stimulate strategic conversation between internal and external stakeholders, and encourage users to contribute innovative ideas (Aten & Thomas, 2016: 175).

Industrial Network The industrial network perspective has also been applied to the study of interorganizational strategizing processes. The industrial network

perspective focuses on how organizations relate their activities to those of other firms in order to enhance performance (Gadde et al., 2003: 357). Strategizing in the industrial network perspective means that firms operate in the context of interconnected business relationships. These firms identify the scope of actions, interests, and frames from existing and potential relationships rather than from the focal firm’s point of view (Hákansson & Ford, 2002). In this perspective, the resources of each member of the network are tied to the resources of other members of the same network. Mattsson (1987) points out that strategizing within an industrial network involves making choices that influence how an organization relates to other members. Gadde et al. (2003) compiled an overview of the implications of strategizing in the context of an industrial network. Their study indicates that researchers need to consider the heterogeneity of resources available to the members of such networks, the interdependencies between the members’ activities across firm boundaries, and the form of interorganizational collaboration. Abrahamsen et al. (2016) incorporated the concept of “network pictures” in the interorganizational strategizing process. They use the concept of “network pictures” to analyze the interplay between cognition and action, in particular with regard to how managers perceive the environment and what they do. “Network pictures” is the term the authors used to describe the situational cognitive representation of the network as a context. Network pictures indicate how actors view their surroundings and the logic underlying their actions (Henneberg et al., 2006). The authors follow a novel research approach, combining the methodologies of process research and action research to analyze a longitudinal case study of one of the leaders in the Norwegian food industry. Many studies based on the industrial network perspective focus on the strategizing activities of firms in business networks. Few studies, however, examine how an organization develops different strategies. One of these exceptions is the study by Öberg et al. (2016), who developed a typology of network strategies and their effects on the other organizations. Their study focuses on how a Taiwanese manufacturer of optical recording

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media developed its strategies through its interaction with its business customers and suppliers. Öberg et al. (2016) identified “complementary,” “shared,” “copying,” “company-rooted,” and “challenging strategies” and provide evidence that each has different effects.

6.3 The Main Functions of Interorganizational Strategizing Organizations deploy interorganizational strategizing for four main purposes, which we will discuss in depth as follows: exploration, learning, legitimacy building, and strengthening relationships. Interorganizational strategizing can also serve these different functions simultaneously, including functions different from those that the strategists originally planned (see also Table 6.1 on the different functions reported in the literature).

Exploration Interorganizational strategizing is often used in the early phases of decision making to explore strategic issues before deciding which strategic direction to take. Exploration, or “environmental scanning,” helps organizations adapt to the changing circumstances in their environment in a timely manner (Aguilar, 1967). Environmental scanning is influenced by an organization’s current and past strategies (Hambrick, 1982). Within an organization, different perceptions of the environment tend to converge over time. This convergence leads to a high degree of shared cognition within the boundaries of the organization (Sutcliffe & Huber, 1998). Collaborating with other organizations, in contrast, increases the diversity of viewpoints that strategists may consider in their efforts to understand their organization’s environment (Doz & Kosonen, 2008; Pina e Cunha & Chia, 2007). Research has shown that being able to perceive the environment accurately is an important condition for successful organizational performance (Cornelissen & Werner, 2014; Kaplan, 2011; Narayanan et al., 2011). Erroneous perceptions of the environment have been linked to decision debacles and organizational downturns (Barr et al.,

1992; Hodgkinson, 1997; Porac et al., 1989; Reger & Palmer, 1996). Well-known examples include Shell’s decision to dispose of the Brent Spar in the North Sea (Nutt, 2004) and Polaroid’s decision to hold on to their traditional business model despite the overwhelming dominance of digital imaging (Tripsas & Gavetti, 2000). Studies on the antecedents of such decision debacles often suggest that if the organizations in question had explored the strategic issues in question more openly, those debacles could have been averted. Nutt (2004) analyzed more than 400 decisions and concluded that networking with other organizations constitutes best practice for avoiding decision blunders, because it allows individual organizations to become aware of concerns and considerations that may not be visible from their particular angle. Similarly, Pina e Cunha and Chia call on strategists to team up with other strategists beyond the borders of their own organizations “in order to obtain unusual perspectives and points of view” (Pina e Cunha & Chia, 2007: 565). In their book on “strategic agility,” Doz and Kosonen (2008) state that what they describe as “external sensing” becomes crucial in complex environments: “being exposed, being in touch, being connected” (Doz & Kosonen, 2008: 20). Recent empirical studies on interorganizational strategizing describe very similar practices under different labels, including “joint sensemaking” (Seidl & Werle, 2018), “crowdsourced strategizing” (Aten & Thomas, 2016), and “networked foresight” (Heger & Boman, 2015).

Learning Learning refers to gathering and developing actionable knowledge (Argyris, 1976: 365). It is similar to exploration, which also involves exchanging views from different angles, but the two are very different in the nature of the information that is exchanged. Exploration is forward-looking and involves exchanging interpretations about developments in the future, while learning is backwardlooking and involves exchanging interpretations about experiences in the past and the lessons learned from those experiences. Especially in the case of highly complex strategic issues, or so-

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called “wicked” problems (Camillus, 2008), knowledge, in the sense of information on past experiences, often resides outside an organization’s boundaries. Hart and Sharma point out that it “has now become essential to proactively seek out the voices from the fringe that had previously been ignored,” because “the knowledge that is required for competing successfully . . . often lies outside the organization” (Hart & Sharma, 2004: 8). While exploration refers to scanning the environment for developments that have yet to become relevant, learning is about using past experiences to assess which strategies are successful and which are not. Some studies use the term “learning” in the context of exploring issues that may arise in the future (e.g., Wilkinson & Mangalagiu, 2012). In this chapter, however, we adopt a narrower definition of learning in order to distinguish it from exploration. Interorganizational strategizing aimed at learning allows organizations to share knowledge and build on the experiences of other organizations. In other words, it allows them to “pool their expertise” (Hardy et al., 2006: 98) and compare the “available data” (Rouwette et al., 2016: 64). An example of learning through interorganizational strategizing is presented by Teulier and Rouleau (2013). The authors studied how engineers discussed the potential of a piece of 3Ddesign software by comparing their experiences of similar software in different settings. Another example is the study by Brabham (2009), who showed how interorganizational strategizing in the form of crowdsourcing allows the participants to learn by drawing on “local knowledge” (Brabham, 2009: 244); that is, “knowledge of specific characteristics, circumstances, events, and relationships, as well as important understandings of their meaning, in local contexts or settings.”

organization convinces internal or external stakeholders of the legitimacy of the decisions taken, even actors who are not directly involved or do not agree may be motivated to support the smooth implementation of the new strategy (Korsgaard et al., 1995). For example, de Gooyert et al. (2016) examined how organizations in the Dutch energy industry collaboratively explore strategies that will facilitate their transition to more sustainable energy systems. The authors found that interorganizational strategizing “increases commitment” toward the agreed upon strategic actions (de Gooyert et al., 2016: 136). One aspect of strategic decision making that has been shown to influence perceptions of legitimacy is the extent to which the decision has been preceded by open dialogue (Kim & Mauborgne, 1995). Engaging in dialogue on strategy with other organizations can be seen as a way of building legitimacy. Especially in business ecosystems, the strategic direction of one organization may increase or limit substantially the possible directions that other organizations in the same ecosystem can take. In such cases, interorganizational strategizing can increase and maintain commitment to a collective strategy that the ecosystem as a whole will adopt. Bowman argues that interorganizational strategizing fosters justification, because producing a collective strategic narrative fosters the “legitimacy of strategic action” (Bowman, 2016: 81). Rouwette et al. (2016) have also stressed that interorganizational strategizing increases commitment and prevents counterproductive responses from stakeholders. Similarly, Brabham (2009: 247) points out that interorganizational strategizing has a positive effect on the “sense of ownership” that stakeholders develop with regard to the agreed strategies.

Legitimacy Building

Interorganizational strategizing may also be regarded as investing in building and maintaining good relationships with external stakeholders, either with or without concrete expectations about how these investments may eventually pay off. According to stakeholder theory, relationships with stakeholders are crucial for an organization

Many organizations experience difficulties when they try to follow a new strategic direction. The main problem is to convince stakeholders that the procedure of changing strategic direction is legitimate (Cropanzano et al., 2007). If an

Strengthening Relationships

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(Freeman, 1984; Parmar et al., 2010). Securing a good relationship with stakeholders can improve dealings with suppliers as well as the organization’s image in the community and, as a result, increase the organization’s performance (Bosse et al., 2009; Choi & Wang, 2009). Moreover, maintaining a good relationship with stakeholders can help minimize costly conflicts and reduce pressure on the organization to change its strategy (Hillman & Keim, 2001). To achieve this, organizations need to use interorganizational strategizing to open up the strategic decision-making process, which is traditionally secretive and exclusive, and make it more transparent and inclusive, without necessarily granting to external stakeholders any decision-making rights. The literature supports this idea. Abrahamsen et al. (2016) have stressed that relationships with stakeholders play a key role in strategizing and can prove crucial to the success or failure of companies. The authors explain that strategizing “concerns choices about how to interact with, and mobilize as well as influence, other actors through connected business relationships” (Abrahamsen et al., 2016: 107). Öberg et al. (2016) have shown that interorganizational strategizing can help organizations within an industry map a shared course. In the example the authors provide, companies decided to invest in Blu-ray rather than HD technology and thus helped set common industry standards. Similarly, Franco (2008) demonstrated that firms engage in interorganizational strategizing to increase trust and that they regard committing time and resources to this form of strategizing as investing in their relationships with the other organizations.

6.4 Forms of Interorganizational Strategizing: Face-to-Face versus Online Interorganizational strategizing can take different forms. Most importantly, we can distinguish between face-to-face processes (e.g., strategy workshops) and online processes (e.g., interactions mediated by crowdsourcing platforms). In the literature, the former is the most common form, with

only two studies reporting on the latter (Aten & Thomas, 2016; Brabham, 2009) or a combination of both (Heger & Boman, 2015) (see also Table 6.1). In the following we compare face-to-face and online forms with regard to number of participants; time and place of interaction; topic and stage of analysis; and process structure.

Number of Participants Online interaction can include large numbers of participants. For example, Heger and Boman (2015) mention 100 participants, while Aten and Thomas (2016) mention 646. Brabham discusses an example of municipalities that allow all of its inhabitants to contribute to online interactions, but because of its nature participation will be limited by internet access and computer skills (Brabham, 2009: 255). In contrast, face-to-face workshops typically involve only between 5 and 12 participants (Rouwette et al., 2002). Depending on the strategic initiative, the number of participants involved can change over time because of the shift in strategic topics, and complementarity of resources that the participants bring to the table (Deken et al., 2018; Seidl & Werle, 2018).

Place and Time Which format of interaction organizations choose for the purposes of interorganizational strategizing influences in important ways how the participants communicate. Online interaction enables a dispersed group to work together. It also offers its members the opportunity to contribute their input at different times (Brabham, 2009; Nunamaker et al., 1991). There is some evidence that while online interaction facilitates the exchange of information, it is not a suitable format for carrying out negotiations (Daft & Lengel, 1986). At a face-to-face meeting the participants may convey and receive both verbal and nonverbal information while communicating with each other, whereas communicating only through texts is limited to verbal exchanges. Telephone conferences (Seidl & Werle, 2018) take a middle position in between face-to-face and online communication. Telephone

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conferences allow the participants to use intonation and pitch, but not facial expressions, as cues. According to Daft and Lengel (1986), actors need to make use of a broad range of cues to conduct negotiations, instead of being limited to verbal cues.

Topic and Stage of Analysis In face-to-face meetings all participants are typically working on the same topic and at the same stage of information analysis. This is not the case in several versions of online interaction. In chatrooms, for instance, individual participants propose topics and initiate sequences of questions and answers. Organizations find it challenging to keep this type of online interaction sufficiently focused to achieve intended aims (Sutanto et al., 2011). At present there are several platforms available that attempt to harvest the power of social media networks for collaboration and team communication (Anderson, 2016). A recently launched platform that is quickly gaining popularity is Slack. Slack centers around teams and supports collaboration by organizing communication into different channels. Messages are shown in a newsfeed format, making it easy to follow a conversation. A version of online interaction that has been in use since the 1980s is known as Electronic Meeting Systems (EMS) (Nunamaker et al., 1991). In the same place/same time mode, an EMS supports a face-to-face group with software tools that offer additional communication channels. Using an electronic brainstorm, for instance, participants individually type in ideas that are then shown on the central screen. This allows for simultaneous information input whereas in a traditional brainstorm only one person can speak at a time.

Process Structure Online interaction can influence the structure of the collaborative process among the participants (Dennis et al., 2001). Whereas in workshops the participants have ample opportunity to debate the proposed agenda, go off on a tangent, air emotions, or explain their input to the discussion, online interaction offers fewer degrees of freedom. Online forms such as EMS offer a highly structured

process: meetings follow an agenda and for each agenda item specific tools are available (e.g., electronic brainstorming for idea generation), ensuring that the group follows the agenda. In the online multiplayer game used by Aten and Thomas (2016), the participants were only allowed to take very specific actions. The game was developed by the US Naval Air Warfare Center Aircraft Division (NAWCAD) to provide a platform on which large and diverse groups could work together toward generating ideas and planning joint action. As the following description shows, the participants were limited to posting very brief comments: “After registering to play, a participant may view a ‘call to action’ video that introduces the focal problem or objective of a particular instance of the game. Participants play by posting comments on cards. Each post or card is limited to 140 characters, and the cards are organized in threads” (Aten & Thomas, 2016: 159). Players click on a card to add an idea, forming chains of ideas, and receive points when they click on another player’s card or someone responds to theirs. Posts that increase discussion are therefore rewarded. What is of interest here with regard to collaborative strategizing is that the participants produce action plans through threads of interaction. At the end of the game, the players assess the proposed action plans by giving them one, two, or three thumbs-up. Likewise, the crowdsourcing platform that Brabham (2009) discusses restricts the ways in which the participants are allowed to contribute. Brabham described a hypothetical example inviting the public to participate in a city-planning project through crowdsourcing. In this example, the municipal authorities would set out the problem, publish relevant data, and invite the public to submit solutions. “Finally, the call for solutions would clearly stipulate the format for uploading solutions. A specific set of guidelines for written comments . . . or a specific template for solvers to work within . . . would be ideal” (Brabham, 2009: 253). Another tool that is available in online interaction, but not in face-to-face meetings, is anonymity. Anonymity is expected to be helpful, especially

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in sensitive strategic issues. Aten and Thomas (2016) for instance use anonymous contributions for strategy development on strategic military planning. In summary, online technology changes information exchange and collaboration in a number of ways (Dennis et al., 2001). Online technology allows more participants to engage in conversation and information analysis. The free format of some online technologies poses difficulties in keeping the discussion sufficiently focused, particularly in dispersed and asynchronous meetings. Same time same place applications, for instance using EMS, stick to a traditional meeting agenda and a facilitator. On the other hand, different place different time applications such as Slack introduce threads to structure information. Online technology also changes process structure by limiting participants’ contributions to specific formats (e.g., short posts) or allowing anonymous contributions.

6.5 Research Agenda on Interorganizational Strategizing In this section we present opportunities for future research in the area of interorganizational strategizing. A first topic that deserves further investigation is how and to what extent the results of interorganizational strategizing processes become incorporated into the strategizing processes of the organizations that participate in joint strategizing projects. As we explained earlier in this chapter, interorganizational strategizing may fail, because within individual organizations the interorganizational strategy process competes with a number of other strategy processes that are seen as more legitimate (Bowman, 2016; Heger & Boman, 2015). In contrast to this view, Seidl and Werle found that the studied interorganizational strategizing project did have an impact on strategic thinking within the participating organizations but did not study the mechanisms that brought this about (Seidl & Werle, 2018: 26). Heger and Boman (2015: 161) identified “[the] development of a shared vision – relatable to organizational learning and reconfiguration capabilities – . . . as particularly valuable for the network.” The authors

conclude that how collaborating organizations exploit, absorb, and adopt networked foresight data deserves further investigation. A second question that deserves further investigation is, when do organizations decide to abandon interorganizational strategizing projects? In the studies discussed in this chapter interorganizational strategizing typically consisted in one-off, often precarious, projects. We characterize these projects as “precarious” because the participating strategists repeatedly questioned whether continuing the collaboration was worth the investment (Seidl & Werle, 2018: 21) and carried out continuous cost–benefit analyses to decide whether their organizations should remain committed to the interorganizational strategizing project or not. Comparing interorganizational strategizing projects that have been abandoned with projects that have been completed may shed more light on the mechanisms that determine the outcome. The answer to this question has considerable practical relevance, as it may help organizations avoid projects that are likely to be abandoned. Seidl and Werle (2018) emphasize that the initiators of an interorganizational strategizing project need to ensure that relevant frame repertoires (or “knowledge structures”) are adequately represented among the partners and that they are sufficiently diverse without being divergent. The interplay between frame repertoires, interests, and cues largely determines how the participants interact. When these three elements are aligned, cooperation becomes the driver of interaction among the participants; when they are misaligned, however, interaction is driven by narrow interests. Hardy et al. (2006: 96) point out that “participants must successfully juggle their dual roles of collaborative partner and organizational representatives” if the collaboration is to succeed. Rouwette et al. (2016) identify a related type of tension that arises from the difficulty of striking a balance between openly addressing differences of opinion and avoiding overt conflict. Indeed, conflict needs to be kept at a manageable level, otherwise it may destroy the joint enterprise. Nevertheless, conflicting

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interests or overt conflict over other matters is likely to arise when the participants have a high stake in the issue at hand. In the case studies that Aten and Thomas (2016), de Gooyert et al. (2016), and Heger and Bowman (2015) analyzed, the participants were invited to join the collaborative endeavor on the basis of their content-related expertise but had no decision-making power. Therefore, it is important to increase the insights in the interplay between frame repertoires, interests, and cues as they largely determine how the participants interact. A third question that future studies could investigate is, how can differences in the outcomes of various interorganizational strategizing processes be explained? As we explained earlier in this chapter, skilful sensemaking on the part of the participating strategists (Hardy et al., 2006; Seidl & Werle, 2018; Teulier & Rouleau, 2013) and the choice of supporting tools and artifacts (Bowman, 2016; de Gooyert et al., 2016; Rouwette et al., 2016) both have a large impact on the outcome of a collaborative project. Future research could look at how these factors jointly determine the outcomes of interorganizational strategizing processes (see also Jarzabkowski & Kaplan, 2015). For instance, models and related tools can help create a shared understanding among the collaborating organizations, but they may not be sufficient when it comes to implementing the conclusions that the partners derive: “Policy makers may have a flawless understanding of the system they want to intervene in, but if individual stakes prevent them from coming to an agreement on implementing high leverage policies, such an understanding will not lead to improvements” (de Gooyert et al., 2016: 144). A fourth question that deserves further attention concerns the different roles of the participants. The roles that participating organizations play and the insights that they share also have a significant impact on the outcome of joint strategizing. Heger and Boman (2015) have found that the participants use the results of interorganizational strategizing primarily for sensing activities (i.e., data collection) and that these results do not have a direct impact on the process of learning. Thus, the benefits are more at the level of the cooperation than at

the level of contributing organizations: collectively new insights were gained, but these did not lead to changes in strategies of the participating organizations. These roles of the participating organizations in the interorganizational strategizing can be very different and may be symmetrical or, conversely, asymmetrical, if one organization takes the lead. So far, the roles that participating organizations play in interorganizational strategizing received little attention in research. Given that the roles of the participants influence the dynamics of the process, research on this topic can help explain how the behavior of the participating organizations affects the outcome of the collaborative strategizing project. A fifth question concerns the measurement of outcomes. Measuring sensemaking and learning in interorganizational strategizing is inherently difficult because of the nature of the cognitive processes each involves. Simply put, the participants filter certain cues and give meaning to the cues they retain on the basis of the mental models they already possess (Daft & Weick, 1984). The studies that have sought to assess whether interorganizational strategizing did help the participants achieve sensemaking and learning mainly rely on self-reported data collected through interviews. In order to limit the subjectivity of selfassessments, future studies should aim to measure outcomes also with the aid of external instruments. It should be noted, however, that using external instruments is not without difficulties, because the very act of measuring mental models can alter those models and thus distort the construct that these instruments are meant to measure (this is referred to as the “mental model uncertainty principle”; see Richardson et al., 1994: 191). The study of interorganizational strategizing also creates new methodological opportunities. Most studies on this topic to date are based on a single case or a few cases at most. This approach allows researchers to discuss in detail instances of interorganizational strategizing and is typical of the explorative stage of theory building. However, as the body of knowledge on this phenomenon is growing, future works could combine the model of the detailed case study with quantitative research. Judging from

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the recent literature we can conclude that interorganizational strategizing is gaining popularity among organizations. Quantitative approaches based on, e.g., large-scale surveys could reveal to what extent interorganizational strategizing is adopted by organizations, what goals they aim to achieve, and what practices they use for that purpose. For example, Hodgkinson et al. (2006) used a large-scale survey to study the experiences of managers who took part in strategy workshops and how frequently organizations rely on what types of workshops. Future studies could adapt this approach to the context of interorganizational strategizing. We conclude this chapter with the hope that our overview of interorganizational strategizing and of the literature on this topic to date provides a coherent picture of recent and current research in the field that will form a basis for the further exploration of this important topic. References Abrahamsen, M. H., Henneberg, S. C., Huemer, L., & Naudé, P. (2016). Network picturing: An action research study of strategizing in business networks. Industrial Marketing Management, 59, 107–119. Aguilar, F. (1967). Scanning the business environment. New York: Macmillan. Anderson, K. E. (2016). Getting acquainted with social networks and apps: Picking up the slack in communication and collaboration. Library Hi Tech News, 9, 6–9. Argyris, C. (1976). Single-loop and double-loop models in research on decision making. Administrative Science Quarterly, 21(3), 363. Aten, K., & Thomas, G. F. (2016). Crowdsourcing strategizing. International Journal of Business Communication, 53(2), 148–180. Barney, J. B. (2001). Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view. Journal of Management, 27(6), 643–650. Barr, P. S., Stimpert, J. L., & Huff, A. S. (1992). Cognitive change, strategic action, and organizational renewal. Strategic Management Journal, 13(S1), 15–36. Bengtsson, M., & Kock, S. (2014). Coopetition – Quo vadis? Past accomplishments and future

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CHAPTER

7

Crowdsourcing in Open Strategy: What Can Open Strategy Learn from Open Innovation? ARVIND MALHOTRA and A NN MAJCHRZAK

7.1 Introduction Organizational, economic, and technology forces are encouraging organizations to experiment with new ways to develop their strategic priorities (Chesbrough & Appleyard, 2007). One such new approach is Open Strategy (OS), an approach that increasingly relies on the use of online digital platforms. OS refers to the process by which an organization’s strategy for the future is developed in a planned or inadvertent manner with more transparency for all stakeholders and/or inclusion of different stakeholders compared to conventional strategy-making processes (Hautz et al., 2017; Mack & Szulanski, 2017; Whittington et al., 2011). Rather than limiting strategy to an exclusive group of “elite” strategy planners, OS engages a broader set of stakeholders in the process (Dobusch & Kapeller, 2013; Palmisano, 2004; Steiger et al., 2012). Among those included in OS are external stakeholders, defined as individuals not currently employed by the organization, including current or future potential customers, investors, general public, suppliers, universities, or other as-yet unaffiliated institutions and individuals. Web-based approaches make the possibility of including these external stakeholders into new knowledge creation even more feasible (Feller et al., 2012). The use of social media–based information systems in organizations has been argued to lead to increases in reach and richness in communication, and simultaneous consumption and coproduction of knowledge (Huang et al., 2013; von Krogh, 2012). One such web-based approach is collaborative crowdsourcing (Malhotra & Majchrzak, 2014).

The nascent research on digitally mediated Open Strategy process is growing. Researchers have studied the degree of openness in Open Strategy making process (Baptista et al., 2017; Dobusch et al., 2017), the role of digitally mediated dialogue in Open Strategy process (Heracleous et al., 2017), and the affordances of technology in enabling the Open Strategy process (Aten & Thomas, 2016). In this chapter, we build on this work to expound on the benefits of crowdsourcing for OS, how digitally enabled Open Strategy differs from Open Innovation, the inherent risk of crowdsourcing for OS, and measurement of OS crowdsourcing process to ensure successful outcomes. Finally, we derive a future research agenda related to OS, based on our initial research and we do so while addressing the central question: How can the sociotechnical practices of crowdsourcing for Open Innovation be applied to crowdsourcing for Open Strategy?

7.2 Crowdsourcing for Open Strategy vs. Open Innovation: The Key Differences Crowdsourcing in general is defined as “act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call” (Howe, 2006). The crowd, i.e., participants, is asked to post their knowledge via a web-based platform explicitly created for the crowdsourcing event. There are many different forms of crowdsourcing (Afuah & Tucci, 2012; Geiger et al., 2011; Majchrzak & Malhotra, 2016; Prpic et al., 2015). 121

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Arvind Malhotra and Ann Majchrzak URCING FOR OPEN S WDSO TRA TEG CRO Y

ACROSS ALL SECTORS (HIGH VS. LOW TECH, PUBLIC VS. PRIVATE)

TRANSPARENCY INTO AND/OR INCLUSION IN STRATEGY MAKING

CONSUMER INTENSIVE SECTORS

DIVERSITY OF IDEAS

NOVELTY OF IDEAS CR

OW

DS

O UR

CIN G F O R O P E N

O I NN

VA

N TIO

COMMITMENT TO AND UNDERSTANDING OF STRATEGY IMPLEMENTATION

Figure 7.1. Crowdsourcing for Open Strategy (OS) vs. Open Innovation (OI) Collaborative crowdsourcing is one such form. In collaborative crowdsourcing, the crowd is encouraged to contribute ideas, engage in dialogue, and incorporate ideas into solutions using mostly web-based platforms (Jeppesen & Lakhani, 2010; Leimeister et al., 2009; Majchrzak & Malhotra, 2013; Steiger et al., 2012). Much of the research has examined the use of crowdsourcing for Open Innovation (OI), oftentimes for the purpose of designing new innovative products and services (Bayus, 2013; Huang et al., 2013). Research on OI crowdsourcing for new products and services has suggested important design suggestions to foster successful crowdsourcing events (Huberman et al., 2009; Malhotra & Majchrzak, 2014; Leimeister et al., 2009). These design suggestions include incorporating voting into the crowdsourcing event, ensuring that the question or problem that the crowd is being asked to address is clear and expecting most participants to make only a few contributions. The design criteria for crowdsourcing also include establishing clear, preferably quantitative, criteria for evaluating winners, having multiple incentives to meet the crowd’s different motivational

needs, and minimal moderation by the sponsoring organization. Although useful, these design suggestions do not explicitly address the context of crowdsourcing for OS. Based on the pioneering work of Whittington et al. (2011), Figure 7.1 suggests and delineates the overarching differences between crowdsourcing for OS versus crowdsourcing for OI. Whittington et al. (2011) propose that among other things, Open Strategy involves casting a wider net for strategy ideas. Open Strategy is not just restricted to getting strategy ideas; it also strives to improve the understanding and implementation of those ideas by all stakeholders – internal or external. Open Strategy differs from conventional strategy in two critical ways (Whittington et al., 2011). First, it may be (and should be) more inclusive, to the extent of engaging external stakeholders in the process, rather than being the domain of an exclusive group of “elite” strategy planners. And even more importantly, rather than viewing strategy as a “secret” to protect, Open Strategy may play out in the public view and is transparent rather than opaque. In a nutshell, crowdsourcing for OS is less of

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Crowdsourcing in Open Strategy 123

a coherent “bloc”; rather, it’s a set of and/or elements. We first describe the differences between crowdsourcing Open Strategy versus Open Product Innovation in Table 7.1. These differences are based on three perspectives: (a) desired outcomes from crowdsourcing, (b) the nature of the task involved, and (c) individual motivations that need to be considered. In this section, we also use these differences to establish specific risks associated with OS crowdsourcing. We use these differences then to delineate the characteristics of collaborative open challenges that can be used for crowdsourcing for OS.

7.2.1 The Inherent Risks Related to Use of Crowdsourcing for OS: Contrasting Crowdsourcing for OS versus Crowdsourcing for OI Crowdsourcing for OS as well as crowdsourcing for OI can lead to several risks in terms of desired objectives, assignment of tasks to the crowd, and motivation of individuals in the crowd to perform the task. In this section we elaborate on specific risks stemming from the differences between crowdsourcing for OS versus OI. Specifically, we outline three risks: risk of nonnovel recommendations, risk of oversimplifying a strategic problem, and risk of withholding knowledge. In a nutshell, the crucial difference between OS and OI crowdsourcing is that that crowdsourcing for OS is more likely to involve risks (and advantages) for people’s jobs. OI is about the launch of new investments and new products, typically without cannibalization of existing ones. On the other hand, a legitimate idea from crowdsourcing for OS would be to reallocate investment from business A to business B, or even to sell X, close Y, and outsource Z. You could even imagine an OS idea as “use OI instead of our useless, sleepy ivory tower of an R&D department”; therefore, crowdsourcing for OS is potentially more political. This is likely to distort or lead to selfcensoring of contributions of the OS crowd and the use of these contributions by the organization deploying the contributions.

7.2.1.1 Risks Related to Differences in Desired Outcomes from Crowdsourcing for OS versus OI The first difference between OS versus OI crowdsourcing concerns the objectives that an organization may have for crowdsourcing. Crowdsourcing can be viewed as a distant search mechanism, i.e., a search for ideas from those who are nonexperts and outside an organization (Afuah & Tucci, 2012). With OI crowdsourcing, the organization’s objective is to obtain high quality ideas for new products that are desired (i.e., voted up) by the crowd (Bayus, 2013; Huang et al., 2013). Crowdsourcing may serve a similar purpose for OS by providing a number of high quality ideas for the organization’s strategy. However, strategy setting requires creativity, novelty, and foresight in addition to high quality ideas (Abraham, 2005). This leads to identification of innovative business models that differentiate one organization from another (Teece, 2010). Therefore, in OS crowdsourcing, the purpose is not simply to obtain high quality recommendations, but recommendations that are sufficiently novel to cause top managers to think in new ways. The risk for OS crowdsourcing, then, is that the top managers do not consider the recommendations as novel enough to alter their mental models. Risk of Nonnovel Recommendations. The risk of the lack of novelty in strategy setting is evident in piecemeal and incremental changes that characterize many organizations’ strategies (Miller & Friesen, 1982; Tushman, 1997). Novelty can provide several benefits to strategy setting. Novel recommendations can inspire managers to think in new ways (Kuratko et al., 2001). Novel recommendations can create options as metaphors or analogies that foster the creation of new options. Finally, novelty in strategy setting can help managers discard constraints-based thinking, especially constraints that are based on incorrect or invalid assumptions (O’Connor & Rice, 2001). However, receiving novel input from OS can be difficult for several reasons. Some stakeholders’ suggestions are driven by their immediate needs and thus they do not offer novel recommendations with a long-term view (Huff & Huff, 2001). Stakeholders beyond senior managers are also

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Table 7.1 Differentiating Dimensions of Challenges for Open Strategy (OS) vs. Open Product Innovation (OI) Crowdsourcing for Open Innovation

Outcome Perspective

Crowdsourcing for Open Strategy

• Generate as many ideas as possible for • Formulation of a strategy that offers new features for products and services

management novel perspectives to stimulate new strategic thinking • Strategy that can be pursued and that can be incorporated immediately • Entirely new product lines or services implemented by an organization that can be introduced as soon as in the long-term possible

• New features for products and services

Task Perspective

• Different participants can suggest ideas • Strategy making is an inherently without regard to others’ ideas

• The problem can be decomposed into modular components that can be resolved independently and sequentially

Individual Motivation Perspective

complex task with many interdependent elements that operate in unpredictable ways • Formulation of a comprehensive strategy requires simultaneous consideration of multiple perspectives

• Participants compete in order to win • The value of individual suggestions financial prizes

inherent in meshing with others’ suggestions when integrated into from other participants or clearly alloa comprehensive strategy. Incentives cated to “idea owner” have to be offered for integration of individual suggestions • Not everyone’s perspective will be integrated into final strategy, causing a different form of competition than with NPI • Dialogue among stakeholders can be as useful to management as the final strategy recommendation

• Contributed ideas may either be shielded

unlikely to have thought of the organization’s strategy as deeply as senior managers themselves. Therefore, a recommendation by a stakeholder may not be as novel for senior managers who have thought deep and hard about strategic options (Floyd & Wooldridge, 2000). The assumption in most crowdsourcing is that broad and distant search leads to identification of the one individual who will provide a novel recommendation (Afuah &Tucci, 2012). However, this assumption may not hold true for OS crowdsourcing. An alternative approach, more appropriate for OS crowdsourcing, would be to enable novel recommendations to evolve from the dialogue among diverse participants (Majchrzak & Malhotra, 2013). In teams, innovative solutions are more likely to surface for ill-defined problems when individuals express their different perspectives about a problem as

small chunks (Tsoukas, 2009). When individuals share their knowledge as digestible chunks, collaborators are better able to match their own relevant knowledge with each other. Sharing knowledge bits pertaining to the problem helps the individual to convert knowledge from tacit to explicit knowledge (Nambisan, 2002). Consequently, the integration of explicated knowledge in innovative ways becomes easier. The sharing of a variety of knowledge for integration into solutions has also been found to be a key ingredient for radical product innovations (Majchrzak et al., 2004; Wallin & von Krogh, 2010). Therefore, it may be possible to overcome the risk of nonnovel recommendations with a different design of crowdsourcing, one that stresses sharing of variety and then integration of variety of knowledge shared.

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7.2.1.2 Risks Related to Differences in Tasks Assigned to Crowds in Crowdsourcing for OS versus OI

7.2.1.3 Risks Related to Differences in Individual Motivations of the Crowds When Crowdsourcing for OS versus OI

A second difference between crowdsourcing for OI and OS crowdsourcing focuses on the nature of the task (or problem) that is assigned to the stakeholders to solve. OI tasks are less complex in terms of the number of different interdependent elements and the unpredictability in dynamics of the elements (Afuah &Tucci, 2012). In many cases, especially software OI, the task can even be modularized to further reduce complexity of the tasks (Lakhani et al., 2013). However, strategy formulation is a more complex and a less modularizable task (Hart & Banbury, 1994), especially in OS. Strategy making has been referred to as a “wicked” problem because of the lack of clarity around criteria for evaluating the recommendations, the causes of the problem, and the consequences of the problem (Weber & Khademian, 2008). The lack of clarity requires that problem solvers understand as many different aspects of the problem as possible (Bartunek et al., 1983). Thus, participants in OS need to consider not a subset of the problem or an independent part of the problem, but the entire problem, its antecedents as well as consequences. In development of complex products in globally distributed settings, focusing in on a narrow part of the complex problem has been show to lead to suboptimal results due to difficulty in problem specification and information exchange (Damian & Zowghi, 2002).

A final difference between OI crowdsourcing and OS crowdsourcing is that, while both forms of crowdsourcing involve competing stakeholders, the nature of the competition is different. In OI crowdsourcing, stakeholders are competing to offer a product idea that is voted upon by the crowd and selected by the organization (Doan et al., 2011). In OS crowdsourcing, stakeholders are competing for the organization’s attention for inclusion of their recommendations in the finalized strategy. Each stakeholder has their own interests that they are expecting the organization to serve. As these divergent interests utilize valuable organization resources, the organization cannot meet all the interests. The scarcity of resources can lead to competitive behavior among individuals in the crowd. As a consequence, individuals become more concerned with getting the organization’s attention than engaging in a collaborative problemsolving process. Individuals in the crowd may also resort to withholding useful knowledge to avoid losing their unique competitive or political advantage.

Risk of Oversimplifying a Strategic Problem. With OS crowdsourcing, it can become difficult to ensure that the strategic recommendations formulated are broadly constructed to solve all aspects of the challenge rather than narrowly developed to solve one aspect of the challenge. In web-based environments, spontaneous discussion is often curtailed and it becomes hard to exchange complex and ambiguous information, specifically information related to human and social topics (Yamauchi et al., 2000).

Risk that Competition Becomes More Important Than Collaboration. Past research has demonstrated that incentives for the crowds involved in OI are critical to obtaining a large number of ideas from a crowd (Boudreau et al., 2011; Bullinger et al., 2010; Liu et al., 2014; Terweisch & Xu, 2008). Most crowdsourcing events, especially as they relate to OI, are structured as a competition for the best ideas (Ebner et al., 2009; Schweitzer et al., 2012; Wagner, 2011). However, in OS crowdsourcing, where the objective is to develop integrative strategic recommendations, competition for the best idea could harm the collaborative integration process required to integrate ideas into recommendations. Incentivizing the crowd for best ideas can lead to “post and run” behaviors, whereby individuals in the crowd merely post their ideas for the purpose of winning the award (Malhotra & Majchrzak, 2014) and level of contribution is driven by the size of the reward (DiPalantino & Vojnovic, 2009). Incentives such as prizes for the

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best ideas lead to individuals in the crowd focusing on showcasing their contribution rather than collaborating with others (Hutter et al., 2011). In OI contexts, incentives and software features have been used to encourage collaborative behaviors in addition to competition (Hutter et al., 2011). However, these collaborative behaviors have been observed primarily in communities that are repeatedly asked to participate in OI crowdsourcing challenges. In such contexts, some sense of generalized reciprocity exists (Wasko & Faraj, 2005) such that if one collaborates on a challenge by helping someone to win, in the subsequent challenge the behavior will be reciprocated. In OS crowdsourcing, where the stakeholders are not repeatedly engaged with each other in crowdsourcing, the collaborative reciprocity may not be present. Even when incentives are not the main motivating mechanism, the difference in organizational stature or experience can lead to competitive spirit. Individuals in the crowd may desire to showcase their ideas in order to prove their superiority to an organization based on their knowledge and experience. “Experts” in Open Strategy making can deter nonexperts from participating in the process by drowning them out with technical knowledge (Brabham, 2009). Risk of Withholding Useful Knowledge. Extraorganizational structures established for learning and innovation often suffer from knowledge withholding risks (Larsson et al., 1998). It cannot be assumed that once such knowledge sharing and creation structures are established knowledge sharing would occur seamlessly (Marabelli & Newell, 2012). Without the “community based” shared identity and trust, knowledge sharing, transfer, and flow may not occur in digitally mediated network environments (Swan et al., 1999). Actors in extraorganizational structures face the risk that, by sharing knowledge as good citizens, they can be exploited by others who may appropriate their knowledge for their own purposes (Lewicki et al., 1998). Research on knowledge withholding in collaborations indicates that knowledge is often withheld if the knowledge expected to be shared is comprehensive and

strategic in nature (Jarvenpaa & Majchrzak, 2016). Further, in crowdsourcing, due to competitive incentives, participants may delay the submission of their ideas so as to craft the best possible winning idea or to not allow others to build off their idea (Yang et al., 2008). This phenomenon can be quite counterproductive in OS crowdsourcing where it is imperative that participants contribute as early as they can so as to enable integration of considerations into comprehensive strategic recommendations. The opportunistic risk of others stealing one’s ideas to meet an organization’s needs may not be overcome as there are no enforcement mechanisms, community social capital, and shadow of the future to deter opportunistic behaviors. Consequently, to play it safe, stakeholders may only offer knowledge already known to all. Further, participants in OS crowdsourcing may feel that they can be subject to ridicule if others do not like their contribution. This phenomenon labeled as “flaming wars” has been observed in web-based knowledge sharing systems (Lee, 2005). However, nonexperts can contribute ideas that are more novel and have greater value to an organization than ideas contributed by so called “experts” (Poetz & Schreier, 2012). Therefore, in OS crowdsourcing, trust has to be engendered in all participants so as to encourage them to contribute (Sun et al., 2012). Social capital in online networks and communities has been shown to influence the likelihood of open information sharing (Baldwin & von Hippel, 2011; Wasko & Faraj, 2005). However, in OS crowdsourcing, stakeholders who are likely to be unfamiliar with each other and only contribute to a common web platform at different times during the crowdsourcing event may not have the necessary social capital (Puranam et al., 2014). In summary, the differences in OS and OI crowdsourcing make the risks associated with OS crowdsourcing more salient and these risks may have significant impact on the success of the OS crowdsourcing event. Next, based on our action research and postevent analysis of three organizations, we describe in detail the design action steps that can be undertaken to mitigate the risks. The success of the OS crowdsourcing is presented in perceptions of

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PRIORITIZE EXISTING STRATEGIC INITIATIVES NO

Organization Knows Which Strategic Initiatives Should Be Pursued

YES

UNCOVER STRATEGIC BLIND SPOTS

Open Strategy helps prioritize initiatives that are already underway in the organization

Open Strategy helps organization uncover stakeholder aspects that need to be addressed in the future

VALIDATE EXISTING INITIATIVES

DISCOVERY OF NEW INITIATIVES

Open Strategy helps organization confirm whether stakeholders agree with the issues and how the issues are addressed

Open Strategy helps organization undertake initiatives suggested by crowds that address the issues raised by crowd

YES

NO

Knowledge for Strategic Initiative Possessed by Organization

Figure 7.2. Benefits of Open Strategy Formulation

management that the crowdsourcing had successfully mitigated the risks and provided important stakeholder input into their OS crowdsourcing process. Finally, in the discussion section, we incorporate the risk mitigation actions into a proposed research framework. We use the framework to generate several areas for future research.

7.3 The Benefits of Crowdsourcing for OS in Contrast to Benefits of Crowdsourcing for OI In order to derive our findings detailed in this chapter, we conducted research at three different organizations (see Appendix A for more details). The first study was a detailed post-hoc case analysis of a global retail services and logistics provider (Malhotra et al., 2017). The second study used an action research methodology to explore crowdsourcing at a major R&D organization (Malhotra et al., 2017). The third company we studied, again using action research methodology, was a global healthcare provider. Based on our study of outcomes from collaborative crowdsourcing OS events, crowdsourcing for OS can have four potential benefits for strategy formulators in an organization (see

Figure 7.2). Crowdsourcing for OI is primarily focused on novel ideas (ideas that may not have occurred to the organization and/or can be a source of competitive advantage). In some cases, engaging crowds for OI may not yield novel solutions, but it serves the purpose of building a “marketing buzz.” In crowdsourcing for OS, executives are looking for knowledge from the crowd that not only surfaces novel strategic initiatives, but also helps in validating existing strategic initiatives, prioritizing the existing and novel initiatives, and uncovering what other areas need to be strategically addressed (that the organization is not currently addressing).

7.3.1 Validate Existing Initiatives Many times, the ideas and solutions being suggested by the crowd may be something that the organization is already considering. However, this external validation helps the organization confirm that they are working on the right initiatives. Further, such external validation might help in buyin and successful implementation too. As one of the managers remarked during our interview: “It (Open Strategy Challenge) confirmed some of our priorities which was really valuable. One of

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the recommendations was support for [STRATEGIC SOLUTION]. Two years ago we started on [SOLUTION]. This was confirmed during the Open Challenge.” Strategy making can be seen as a process of filling knowledge gaps of an organization and leveraging the existing knowledge assets of an organization. Open Strategy challenges can be useful in managing the knowledge assets and gaps of an organization in the following way.

issue. As an executive we interviewed remarked: “If we make a push to highlight these topics [as a focus of future implementation], I now know that we won’t get push back from the public.” Another comment from an executive we interviewed illustrates this point: “One issue was [X]. There was overall support for HOW THE STRATEGIC PROBLEM NEEDED TO BE BROADENED, that we didn’t realize the public would support . . . This showed that people shared concerns about [Y] as a major issue.”

7.3.2 Prioritize Existing Novel Initiatives As the participants in an OS challenge for strategy solutions suggest initiatives, others in the crowd vote on these suggested solutions. The votes on these solutions (many of which may already be known to the organization) can help the organization prioritize the initiatives. The voice of the external stakeholder may be expressed in terms of the votes on a solution and also any accompanying comments that suggest whether the solution should be high priority or not. Strategic objectives can emerge as a high priority through discussion among the challenge participants. In the case of the R&D organization we studied, some of the high priority recommendations that received the most number of votes and generated the most discussion were: establishing stakeholder monitoring and control programs, education programs for school children so as to implement initiatives early, and starting to implement initiatives in less risky areas (impacting a few stakeholders) and then showcasing the initiatives to sell the stakeholders to allow for implementation of initiatives in areas that would impact a broader base of stakeholders. Many times initiatives (solutions) may be known to the organization beforehand. However, they may be hesitant to prioritize and implement them for fear of backlash from external stakeholders. This overestimation of backlash may cause them to deemphasize or discard strategic options that otherwise might be high priority. When suggested by the crowd in the innovation challenges, it becomes clear that the external stakeholders value the solution and do not think that the downside of obstacles facing the solution is an

7.3.3 Discovery of New Initiatives As the OS challenge participants generate ideas and integrative solutions, new initiatives may emerge that the organization may have disregarded as not possible previously due to internal biases. However, when the crowd suggests these strategic solutions it is received by the organization as something plausible. As the executive we interviewed remarked: “I’ve looked at 100’s of ideas in the challenge that would have had something that is different from what we would have done. An example of such an idea is using unmanned vehicles and various techniques to identify targets. The other one was to look at genetic changes to see if they could be used to address the key issue.”

7.3.4 Uncovering Strategic Blind Spots It may be the case that no new initiatives are generated by the crowds; rather, they bring to the surface areas in which new initiatives are needed. These may be initiatives that the organization conducting crowdsourcing may not have even considered as critical for stakeholders. In the words of the executive: “I thought it (OS) was a good mechanism to get a wider community discussion. If we hadn’t crowdsourced, we wouldn’t know how we would have discovered what we did. There was a lot of diversity; about 10–80 agencies were involved, with people being anonymous allowing them to express their thoughts and ideas in a non-adversarial role and environment. Often when these people are in the room with 10–80 agencies, you can’t have a reasonable conversation with them. This

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was a forum to have a well-balanced discussion that surfaced a large range of issues, some of which we had not even thought of.” In summary, OS crowdsourcing is not just merely for engaging diverse stakeholders to confirm existing initiatives and have their indirect buyin related to initiatives that an organization might have already been pursuing. There are higher order benefits of OS crowdsourcing for eliciting possible strategic initiatives from the stakeholders and more importantly discovering the strategic blind spots the organization has missed. However, in order to achieve these benefits organizations will need to rethink the sociotechnical processes that have been used for conventional OI crowdsourcing. In the next section we delve on how the sociotechnical processes of crowdsourcing will need to be designed to leverage the higher order benefits of OS crowdsourcing.

7.4 Rethinking Crowdsourcing for Open Strategy In order to achieve the benefits of crowdsourcing for OS, it is important for managers to rethink how Open Innovation challenges have been executed conventionally for product innovation. In the earlier section, we have outlined the key differences between crowdsourcing for OS and crowdsourcing for OI. In this section, we identify and summarize how incentives, process, and the composition of crowds may have to be rethought (vis-à-vis crowdsourcing for OI). This section also addresses the five dilemmas raised by Hautz et al. (2017): dilemma of process, dilemma of commitment, dilemma of disclosure, dilemma of empowerment, and dilemma of escalation. Our hope is to summarize the findings from our research into a succinct prescriptive framework for managing the dilemmas for those intending to use crowdsourcing for OS, by adapting crowdsourcing for OI.

7.4.1 Rethinking Motivation for Crowds in OS Crowdsourcing Most Open Innovation challenges that leverage crowds for OI have been traditionally run as

a competitive situation. Whereby, individuals are asked to either post their best ideas or send the ideas (without others seeing them) to the organization directly. Top winning ideas and solutions are then given monetary awards. Instead, for OS formulation to be effective, we suggest that some gamification (competitive incentives) has to occur in balance with appeal to collaborative instincts of the crowd. In order for comprehensive strategic initiatives to emerge, the crowd of stakeholders must be competitively stimulated to contribute partially crafted initiatives (that may satisfy their need); subsequently the crowd must also be incentivized to collaboratively put together diverse initiatives that satisfy diverse stakeholders’ particular needs into comprehensive initiatives. Therefore, unlike crowdsourcing for OI, in crowdsourcing for OS, the best (most) comprehensive initiatives that integrate diverse perspectives as well as individuals in the crowd who do the work of integrating the initiatives must be recognized (and perhaps rewarded). Such individuals should be determined based not just on number of ideas (strategic initiatives) submitted, but also on their comments on others’ posts to integrate strategic viewpoints, and voting on others’ contributions to highlight partially formed strategic initiatives that could be integrated into more comprehensive strategic initiatives.

7.4.2 Rethinking Process for Engaging Crowds for OS Crowdsourcing Usually in Open Innovation challenges that leverage crowds for OI, members of the crowd tend to engage largely in a “post and run” behavior, rarely engaging with others beyond just posting their contributions for others to read. The crowd is asked to post their ideas for products, which in many cases are wild but innovative ideas with little consideration of comprehensiveness and implementability. Given that the incentives offered by organizations leveraging crowdsourcing for OI encourage competition, there is very little incentive to collaboratively develop others’ ideas into comprehensive solutions through an engaged discussion. Instead, we suggest that the crowdsourcing for OS through Open Innovation challenges be

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thought of as a process that continually engages the crowd by drawing out a range of diverse knowledge (issues and partially formed initiatives that may satisfy a subset of stakeholders) from the crowd and then incentivizes the crowd to integrate the shared knowledge through a discursive process. Our research suggests that for crowdsourcing for OS, innovation challenge should be conducted in two phases. In phase 1, the crowd is asked to share the issues and partially formed initiatives that may satisfy a subset of stakeholders. Then, in phase 2, the crowd is asked to integrate the knowledge from the first phase to generate comprehensive strategic initiatives. Clearly the process suggested is extensive and requires high knowledge integration. As such the ad hoc temporary crowds used by organizations for crowdsourcing for OI may not be the ideal for crowdsourcing for OS, which may require rethinking of the process of engaging a select crowd of diverse stakeholders over a long-term continual basis. Therefore, an alternative to creating a temporary crowd is to create or use a longer-term community, such as that which has been developed by the organizations itself through an offline and online process of eliciting key stakeholders or in some cases through crowdsourcing intermediary companies such as InnoCentive. The advantage of such an option is a “prearranged” crowd with a diverse range of expertise. Such a crowd may over time become attuned to the process, rhythm, and knowledge intensiveness of crowdsourcing for OS. Another advantage of building and sustaining such a crowd for OS is that it decreases the chances of interpersonal conflict over time and increases the focus on the destiny of the organization using crowdsourcing for OS. Building a long-term community that is then leveraged for innovation challenges related to OS on an episodic basis may have the desired effect of a sustained crowd of external stakeholders having increased investment in an organization’s strategic directions (like it would be for internal employees) and affinity with strategy making for the organization. In such an alternative approach, companies can build an external facing platform that they own and manage themselves (vis-à-vis using a third platform). An example of this is P&G’s VocalPoint (www.vocalpoint.com/) community

of women designed to encourage community members to share ideas with each other as well as for P&G to share information with the members. Such communities are built by tapping into passion groups on the web (pet owners, mothers, etc.).

7.4.3 Rethinking the Crowd (Composition) for OS Crowdsourcing Most crowdsourcing for OI events is seen as engagement of key external constituents (such as suppliers, customers, partners, external freelance experts, etc.). In some cases, crowdsourcing for OI also engages internal stakeholders for the purpose of OI. There are distinct benefits of engaging inside only (internal employees): the solutions are more contextualized, more easily implementable, and most importantly, the intellectual property is owned by the firm. However, solutions generated through an Open Innovation challenge that leverages internal crowds (of employees) may not generate the range of knowledge that may be possessed by crowds external to the firm. However, crowds of internal employees used for OI may make intellectual property issues more manageable and provide a semblance of secrecy when it comes to innovative product ideas (Malhotra et al., 2017). Based on the considerations of trade-off between the range of knowledge accessible and the need for intellectual property considerations, initial proclivity may be to conduct crowdsourcing for OS with a few limited (and exclusively invited) stakeholders. However, based on the benefits of crowdsourcing for OS we have outlined in the earlier section (specifically confirmation and prioritization of existing initiatives, and discovery of potential blind spots), crowds for OS may be better when comprised of internal (employees) and external stakeholders (business partners, customers, and freelance experts). This allows for combination of practical concerns (many times echoed by internal constituents) and differentiating novel ideas (many times contributed by external stakeholders). As such, a creative conflict emerges that when resolved yields a more differentiating yet practical strategy. The more the range of stakeholders engaged in crowdsourcing for OS, the better are

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the outcomes of confirmation and prioritization, and discovery. All these benefits do not require extreme sensitivity to intellectual property issues, but do require a diverse set of inputs to be effective. As for the benefit of sharing of partial initiatives that can be integrated into a comprehensive set of strategic initiatives, organizations may be wary of competition having access to this knowledge (through participation in the crowdsourcing event). However, as several senior executives remarked to us during interviews, it is not the strategic initiatives being pursued that are key; rather, it is the speed and effectiveness of execution that is the differentiator. However, if the IP concern is intensive and of utmost competitive advantage, and an organization still wants to employ the traditional secretive process, a “quasi-open” limited crowd approach can be leveraged. Building an exclusive community or using an Open Innovation broker such as InnoCentive can help in maintaining somewhat of an exclusivity of solutions and initiatives suggested by the crowd. The benefit of engaging both inside and outside simultaneously is the sparking of strategic initiatives through a requisite creative friction. Further, participation of internal constituents can bring a tinge of implementability and feasibility thinking to the creative thinking of external constituents. At the same time, the external constituents push the envelope of acceptability of externally generated ideas for problems initiated by internal constituents. Internal constituents of the crowd during the process of crowdsourcing for OS may play the role of moderators. This is another aspect that differentiates crowdsourcing for OS versus crowdsourcing for OI. When crowdsourcing for OI, organizations desire ideas that they may not have thought about, so the more “out there” they are the better it may be. In crowdsourcing for OS, internal moderators play the role of background information providers and sharers of feasibility considerations related to suggested strategic initiatives. Our action research with the R&D organization studied showed that when internal employees (as part of the crowd) moderate that crowd:

• It’s important that external participants know that the internal employees of the organization are involved, and are receptive to what external stakeholders are saying. Visible status of moderators is a must. • The internal moderators are bestowed a sense of authority because they have the company experience and influence behind them. However, the moderators have to be mindful about not being overbearing and stymying issues and initiatives Also, if companies try to invisibly moderate, it can backfire, making the crowd feel that the company is snooping rather than guiding.

7.5 Future Research Agenda While we have provided a prescriptive framework for how online media and technology platforms can be leveraged for crowdsourcing for OS, it should be recognized that there are also other forms of “OS” that do not require online platforms, e.g., interorganizational strategizing (e.g., Seidl & Werle, 2018). This raises an interesting research question as to how to cross leverage and integrate offline and online OS mechanisms to have a better comprehensive process for multimedia, multichannel OS. Researchers have also pointed out the need for moderators in OS (Bjelland & Wood, 2008) and open organizational processes (Collison et al., 2001). Moderators are not generally central actors in OI crowdsourcing as the intent is to encourage the crowd to generate wild and innovative ideas. However, as suggested earlier, when using crowdsourcing for OS, moderators (generally internal stakeholders) may have a critical role. When organizations use their employees to moderate the crowd, the crowd can feel manipulated or stifled and consequently stop participating (Charalabidis et al., 2012). As crowdsourcing usually occurs for such a short burst of time (Majchrzak & Malhotra, 2016), moderators cannot be drawn from the crowd itself as is done with longer term communities such as Threadless. Therefore, there are no moderators ensuring that all aspects of the problem are discussed. The lack of moderation is coupled with the lean text media of web-based platforms, making it

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even more challenging to adequately share the many aspects of the problem. From time to time moderators may have to intervene to keep the strategic initiatives generation fruitful. A company previously studied for its OI crowdsourcing process (Malhotra et al., 2017) used the creative questioning approach to direct conversations and idea development in fruitful ways. In the second phase of their two-phased crowdsourced development, when 12 strategic ideas were returned to the crowd for collaborative development, facilitators from the company employ an extensive facilitation mode. This is another benefit of and a way of engaging a crowd that has both internal (to the company) and external constituents as part of the crowd. Moderators in the OI process may ask questions of the nature: might this product be consistent with this play use; could it be used in new ways? Questions intended for more creativity. Have would you make yours different from these other ways of doing it? What if you tried to adapt this to a different target audience? More research is needed in how moderation can be done in crowdsourcing for OS, and the pros and cons of moderation of crowdsourcing for OS. It may be possible to overcome the risk of nonnovel recommendations in crowdsourcing for OI with a different design of crowdsourcing, one that stresses sharing of variety and then integration of variety of knowledge shared (Majchrzak & Malhotra, 2016). Similarly, the risk of lack of new strategic initiatives from crowdsourcing for OS needs to be addressed. And, ways to formulate incentives and processes to increase the fourth benefit identified earlier, i.e., new strategic initiative suggestions, need to be studied in a more detailed and wide-scale manner. Even if crowdsourcing for OS may yield several new strategic initiatives, they may not be implemented by the organization. This can lead to casting a doubt on crowdsourcing for OS and create a doubt in the minds of the external stakeholders whether the organization is really interested in their strategic initiatives. This can in itself lead to a backlash risk whereby the external stakeholders have a worse view of an organization than before the crowdsourcing for OS. Research is needed to

determine how to balance the need for new initiatives and the ability to implement new initiatives when using crowdsourcing for OS. Mechanisms for holding and developing initiatives not immediately implemented will need to be developed and studied.

Appendix A About the Research: How Data Was Collected and Observations Derived For the global retail services and logistics provider, we were given complete access to all the ideas, documents, and design thinking process behind the design of the OS event. It took 90 days from initial communication to full launch of the OS event. We were also given access to the output of the OS event as well as survey results from those who actively participated in the OS event. For the action research study, over a four-anda-half-month period we worked with the four senior managers at the R&D organization as they planned and implemented the OS crowdsourcing event. Our action research was limited to the implementation of the software platform to support the crowd in the OS event. The authors were participant-observers in the OS event planning, conduct, and post-analysis. We followed a rigorous five-stage process of diagnosing, action planning, action taking, evaluation, and specifying learning. We also collected extensive documents (including memos, emails, and design decisions) throughout the planning process. Finally, we conducted follow-up interviews with three senior executives. In addition, we analyzed log files of the contributions made by the stakeholders involved in the strategy formulation. We also conducted a similar action research study with a global healthcare organization, implementing and running an OS event with 1000 front line employees dispersed over 20 geographically based areas. The Chief Medical Officer (CMO) at this organization (who worked extensively with the authors) was tasked with engaging the front line employees in the in-sourcing process. He relied on the two authors of this study to observe, offer guidance, and execute throughout the 18-month

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period. After the execution of the OS event, the authors engaged in intensive discussions with the senior executive and also conducted formal interviews with several executives responsible for the OS event. We also had access to the log file of the contributions made by the employees who participated in the event. In total, over the five and a half months of our action research, we obtained over a thousand pages of notes. The researchers collaboratively conducted an analysis of this qualitative data to evaluate the impact of risk mitigation. Finally, we conducted a survey of employees to assess their perceptions and sentiments related to the OS event. References Abraham, S. (2005). Stretching strategic thinking. Strategy & Leadership, 33(5), 5–12. Afuah, A., & Tucci, C. L. (2012). Crowdsourcing as a solution to distant search. Academy of Management Review, 37(3), 355–375. Aten, K., & Thomas, G. F. (2016). Crowdsourcing strategizing: Communication technology affordances and the communicative constitution of organizational strategy. International Journal of Business Communication, 53(2), 148–180. Baldwin, C., & von Hippel, E. (2011). Modeling a paradigm shift: From producer innovation to user and open collaborative innovation. Organization Science, 22(6), 1399–1417. Baptista, J., Wilson, A. D., Galliers, R. D., & Bynghall, S. (2017). Social media and the emergence of reflexiveness as a new capability for open strategy. Long Range Planning, 50(3), 322–336. Bartunek, J. M., Gordon, J. R., & Weathersby, R. P. (1983). Developing “complicated” understanding in administrators. Academy of Management Review, 8(2), 273–284. Bayus, B. L. (2013). Crowdsourcing new product ideas over time: An analysis of the Dell IdeaStorm community. Management Science, 59(1), 226–244. Bjelland, O. M., & Wood, R. C. (2008). An inside view of IBM’s “Innovation Jam.” MIT Sloan Management Review, 50(1), 32. Boudreau, K. J., Lacetera, N., & Lakhani, K. R. (2011). Incentives and problem uncertainty in innovation contests: An empirical analysis. Management Science, 57(5), 843–863.

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CHAPTER

8

Practices of Transparency in Open Strategy: Beyond the Dichotomy of Voluntary and Mandatory Disclosure TANJA O HLSON and BASAK YAKIS-DOUGLAS

8.1 Introduction Openness is in vogue for a small but growing camp of governance reformers (Tihanyi et al., 2014; McGahan, 2015; Almirall et al., 2014; Kube et al., 2015; Mergel, 2015), and innovation scholars (Dahlander & Gann, 2010; Chesbrough & Bogers, 2014; Randhawa et al., 2016). Achieved through transparency and/or inclusion (Whittington et al., 2011), openness has recently become a recognizable theme in strategy literature (Birkinshaw, 2017; Alexy et al., 2018; Matzler et al., 2014a) and is implemented by strategy practitioners in profit-based (i.e., IBM) and nonprofit organizations (i.e., Wikimedia and Creative Commons). Of the two aspects of openness, namely, transparency and inclusion, practices that enable greater transparency are increasingly on the agendas of public and private organizations, governments, and civil society. Especially after high-profile scandals in the 2000s, the response for restoring trust was to take a leap in corporate transparency through adopting regulatory acts or incorporating voluntary practices that dictated increased openness. Some examples of mandatory practices that enabled greater corporate transparency involve regulations such as the Sarbanes-Oxley Act in the United States, the Guidance on the Strategic Report issued by the Financial Reporting Council in the United Kingdom, the Cromme Code in Germany, the Provisional Code of Corporate Governance for Securities Companies in China, and the

Recomendaç õ es sobre Governanç a Corporativa in Brazil. In addition to the mandatory practices, the prominent examples of voluntary forms of corporate transparency involve public initiatives such as the Open Government Partnership launched by Barack Obama in 2011 and new accounting practices such as integrated reporting (Cheng et al., 2014; Doshi et al., 2013; Eccles et al., 2014; Eccles et al., 2011). This trend of organizational reforms toward increased transparency has expanded to the field of strategy. The intuitive idea underlying this enthusiasm is that information empowers stakeholders to evaluate strategic moves and hold strategic decision makers accountable. More specifically, disclosure of information about organizations and their strategies gives organizational constituents a chance to overcome information asymmetry and hold decision makers responsible for the direction of and spending within the firm, thereby reducing mismanagement of resources and leading, ultimately, to superior performance (Cowen & Marcel, 2011; Shipilov et al., 2010; Greve et al., 2013; Zhang & Wiersema, 2009). There is evidence of transparency in strategy leading to improvements in coordination (Mack & Szulanski, 2017), helping external audiences make sense of organizational activities (especially when organizations are involved in socially beneficial practices) (Baptista et al., 2017), and assisting organizations in fighting the negative consequences of uncertainty and information asymmetry (Whittington et al., 2016; Yakis-Douglas et al., 2017).

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The organizational practices that enable transparency in strategy, however, go beyond what Open Strategy scholars have so far described as mandatory or voluntary, and are targeted toward internal or external stakeholders (see Hautz et al., 2017 for a detailed review). Indeed, there are certain drivers of transparency within organizations that can be described neither as neither mandatory nor voluntary. Our chapter’s main focus is to challenge this dichotomy by providing vignettes of organizational circumstances that may be drivers of transparency in strategy that are neither voluntary nor mandatory. The variations of Open Strategy we convey in our chapter aim to illustrate that openness might not be mandated by law but can still be undertaken for reasons that are not entirely voluntary. Our purpose is not to add to a potentially long list of reasons why organizations engage in transparency in strategy such as greenwashing, PR, building or sustaining reputation, lobbying, managing shareholder expectations, meeting standards in certain markets, applying self-regulation in order to avoid formal regulation, and so on. While we acknowledge that all of these may be drivers of transparency, our objective is to build on Hautz et al. (2017) and Baptista et al. (2017) in highlighting the notion of transparency as a continuum. In doing so, we illustrate the continuum of transparency in practice by providing three vignettes: active or activist investors, works councils, and advisory boards or other stakeholders providing guidance to management. In the examples we provide, we highlight that even in the absence of regulatory forces, transparency may not be subject to managerial choice but rather be the outcome of disruptive tactics, push and pull communications, and invitations to share strategy. We begin this chapter by outlining the existing Open Strategy research on transparency. In our outline, we assess recognizable gaps or unique characteristics in the literature and issue recommendations by providing vignettes and identifying potential theories that may be useful in filling these gaps. Given the nascent subject area of Open Strategy, our review of articles on transparency in Open Strategy research is limited to 16 articles. While these articles are contextually very

different from each other, they carry striking similarities in ways that researchers have identified the drivers (voluntary or mandatory) and dimensions (internal or external) of transparency in Open Strategy. We use this literature review as a backdrop to challenge the dichotomy of voluntary and mandatory drivers. Our final section focuses on how we can discuss these neglected drivers of transparency theoretically.

8.2 What Is Transparency in Strategy? Transparency refers to the degree of visibility of the inputs to, outputs from, and the activities within the strategy process (Hautz et al., 2017) and furthermore comprises a crucial part of how organizational strategy comes to be described as “Open Strategy” (Amrollahi et al., 2014; Dobusch & Müller-Seitz, 2015; Tackx & Verdin, 2014; Whittington et al., 2011). Consistent with Chapter 11 in this handbook by Rottner, Bovenberg, and Leonardi, and other scholars’ assertions before them (Schilling, 2010; Whittington et al., 2011), transparency in Open Strategy can take different forms. On a tenuous level of Open Strategy, it involves issuing statements of strategic intent or vision statements, but transparency in Open Strategy becomes much more meaningful when used in forms other than mere statements. That’s because despite being publicly available, these statements tend to be significantly truncated or edited. This is evidence that the dimensions of transparency in Open Strategy lie on a continuum, rather than exist as dichotomies. In reviewing the existing articles published on transparency in Open Strategy research, we find wide-ranging differences and acute similarities. In terms of the differences, we observe that researchers have studied transparency in multiple forms: transparency may involve increased visibility in inputs and outputs of strategy such as the choice and details of strategic analyses (Matzler et al., 2014a; Tackx & Verdin, 2014) or the way strategy is described in statements and why these statements are constructed the way they are (Tackx & Verdin, 2014). Transparency can also

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apply to different stages of the strategy process including idea generation for future strategic direction (Tackx & Verdin, 2014; Dobusch & Müller-Seitz, 2015) or strategy implementation (Matzler et al., 2014a; Matzler et al., 2014b). Other researchers have identified that organizations achieve transparency in strategy through access to results of strategic projects by outside stakeholders (Appleyard & Chesbrough, 2017), wider access to strategic content and information (Baptista et al., 2017), broadcasting relevant strategic information (Gegenhuber & Dobusch, 2017), creating open dialogues about strategy (Heracleous et al., 2018), sharing strategy through an open mailing list and through skype calls (Luedicke et al., 2017), increased visibility of the strategy formulation process (Mack & Szulanski, 2017), communicating through social media which and how strategy initiatives are implemented (Newstead & Lanzerotti, 2010), through strategy presentations aimed at analysts, specialist media, and investors (Whittington et al., 2016), and public announcements during M&A deals (Yakis-Douglas et al., 2017) (see Table 8.1). Another area in which these articles show wide variations is the theoretical frameworks that they employ. In addition to several papers employing practice theory (Luedicke et al., 2017; Mack & Szulanski, 2017; Plesner & Gulbrandsen, 2015) and impression management (Gegenhuber & Dobusch, 2017; Whittington et al., 2016), researchers have also made use of a range of other theories to study transparency. Among these are industrial economics (Appleyard & Chesbrough, 2017), social theory and reflexivity (Baptista et al., 2017), a relational lens of inclusion and exclusion (Dobusch & Müller-Seitz, 2015), dialogic theory (Heracleous et al., 2018), and information asymmetry (Whittington et al., 2016). The richness of theoretical frameworks that can be applied to studying transparency is evident in the use of theories such as crowdsourcing theory that have benefited existing Open Innovation researchers (Stieger et al., 2012) to theories such as social justice theory that are unfamiliar not only to Open Strategy

researchers but also to mainstream strategy researchers (Tackx & Verdin, 2014). Regarding the similarities, the articles that we have reviewed portray transparency as a voluntary target, achieved through deliberate and discretionary activities carried out by organizational actors. This may be due to the fact that our sample consists of articles that undertook research on transparency explicitly in an Open Strategy context. Drawing on the empirical studies published so far regarding transparency in strategy, our main objective is to: add nuance to the drivers of transparency identified in existing studies as voluntary disclosure or mandated reporting. We do this by drawing attention to the fact that although not legally enforced or mandated by regulatory institutions, transparency may not be subject to managerial choice. In discussing these variations, we extend our discussion to include recommendations about theoretical approaches to studying these.

8.3 Drivers of Transparency So far, research on the drivers of transparency in Open Strategy has either focused on disclosures that are usually mandated by regulation or treated transparency as the outcome of voluntary practices. The vignettes and concepts we describe in this section aim to illustrate that transparency in Open Strategy can be the outcome of stakeholder pressure, the result of a collaborative and bidirectional exchange of strategic information, or the product of a request for increased guidance. Thus, we aim to show that increased transparency in the practices of strategy making can be driven by motivations that are neither entirely voluntary nor purely mandatory but rather lie on a continuum in between. In line with this purpose, we focus on three drivers of transparency in strategy in addition to the strictly voluntary and regulated: these are disruptive tactics, push and pull communication, and invitation to share. First, transparency can be driven by disruptive tactics toward the management team. These

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Practices of Transparency in Open Strategy 139 Table 8.1 Literature on Transparency in Strategy Publications

Means of transparency

Appleyard & Chesbrough (2017)

Drivers of transparency

Theoretical framework

Access to project results by outside External constituents

Voluntary

Industrial economics

Baptista, Wilson, Galliers, & Bynghall (2017)

Widened access to content and information

External

Voluntary

Social theory & reflexivity

Dobusch & MullerSeitz (2015)

Making explicit the details underlying idea generation for future strategic direction

External

Voluntary

Relational lens of inclusion and exclusion

Gegenhuber & Dobusch (2017)

Broadcasting (communicating relevant information)

External

Voluntary

Impression management

Heracleous, Gößwein, Dialogue about strategy through & Beaudette (2018) wiki

External

Voluntary

Dialogic theory

Luedicke, Husemann, Discussing strategic matters Furnari, & Ladstaetter through shared mailing lists and (2017) open skype calls

Internal and External

Voluntary, but built Practice theory into corporate culture

Mack & Szulanski (2017)

Visibility of the strategy formulation process; combining participatory and inclusive practices

Internal

Voluntary

Practice theory

Matzler, Fü ller, Hutter, Hautz, & Stieger (2014a)

Increased visibility in inputs and outputs of strategy

Internal

Voluntary

Strategy and information systems

Matzler, Füller, Koch, Making the strategy Hautz, & Hutter implementation process more (2014b) explicit

Dimensions of transparency

Authors discuss Voluntary the “inclusion scope” as internal versus external

Own framework of “strategization”

Plesner & Gulbrandsen (2015)

Challenging organizational control External over strategy process and related communication through social media

Voluntary

Stieger, Matzler, Chatterjee, & LadstaetterFussenegger (2012)

Sharing the results of Open Strategy Internal initiative through letters written by top management

Voluntary, but Crowdsourcing questions emerged theory that management was not prepared to answer yet had to deal with

Tackx & Verdin (2014)

Details of strategic analyses; Internal explanations of why strategy statements are constructed the way they are

Voluntary

Procedural justice theory

External

Voluntary

Information asymmetry

External

Voluntary

Impression management

Whittington, YakisStrategy presentations Douglas, & Ahn (2016) Yakis-Douglas, Angwin, Ahn, & Meadows (2017)

Interim news events during M&A deals

tactics aim to uncover more information than originally intended and are often implemented by active or activist investors. As an example of these

Practice theory

disruptive tactics, activists may publish information about a firm and force management or boards to disclose specific types of information.

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Conflictive communication

Disruptive tactics Vignette: Activist investors

Vignette: Works councils Push and pull communication Vignette: Advisory boards Invitation to share Cooperative communication

Less public communication

More public communication

Figure 8.1. Drivers of Transparency Second, transparency in strategy may be the outcome of a bidirectional flow of strategic information between management and employees that we refer to as “push and pull communication” (Sauder, 2018). Here, information about ongoing, informal strategic initiatives on a middle and lower level of the firm is communicated upwards, often to inform strategic decision makers. At the same time, a reciprocal flow of strategic information is communicated to the lower levels of the organizational hierarchy. We use the example of works councils to illustrate this process. Our concept of push and pull communication is not focused on the mandatory flow of information from management to works councils, but on the bidirectional communication of strategic information between different levels of the hierarchy enabled by works councils. The third driver of transparency we want to highlight is “invitation to share.” In these cases, management may receive demands or requests from influential organizational actors or stakeholders to reveal more information than originally planned. These requests are made based on already presented information and those demanding the information may be doing so in order to advise management. An example of a group of organizational constituents that pose these demands is an advisory board.

In discussing these three drivers, we argue that they are not independent, but rather at different points on a continuum (see Figure 8.1). We therefore add to Whittington et al. (2011)’s categories by highlighting that an opening of strategy is not only “more” or “less” inclusive or transparent, but rather more nuanced. Transparency in an Open Strategy process can be more or less publicly visible, thus internal or external to the disclosing company. In addition to this, the means through which transparency comes about can cause conflict between the disclosing company and those driving management toward increased disclosure; thus, drivers can be consequential to the relationships between organizational actors and their stakeholders. Even though Whittington et al. (2011) consider Open Strategy as an activity that can be imposed or done voluntarily, Hautz et al. (2017) later point out that the majority of Open Strategy research considers inclusion and transparency as an outcome of managerial choice. The underlying assumption here is that most of the opening of communication is top-down, with a deliberate and discretionary information flow from management to different stakeholders. The three drivers of transparency in strategy we discuss as follows add nuance to assertions made by Whittington et al. (2011) and Hautz et al. (2017) regarding discretionary versus mandatory transparency.

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Practices of Transparency in Open Strategy 141

Disruptive Tactics Organizations disclose not only because of mandatory requirements, but also because they are pressurized to do so through nonlegal or nonregulatory forces. Indeed, transparency can be the outcome of demanding stakeholders that customarily have little or no involvement in the strategy-making process. This could be the case because stakeholders may employ tactics that oblige management to reveal more information about a strategic decision than was originally intended. More so, these stakeholders can exercise influence over managers to undertake these disclosures publicly. Disruptive tactics are defined as tactics that can cause “material or reputational cost” to the targeted organization (Briscoe & Gupta, 2016: 675). These tactics are likely to affect an organization’s or management team’s reputation by shining light on an issue that shareholders consider a mistake or oversight. To illustrate our point, we present examples of disruptive tactics employed by active or activist shareholders. Active or activist shareholders invest with the purpose to then engage in communication with management in order to achieve change. These change attempts are targeted at improving firm performance and are often of strategic importance. This includes examples such as demands for a merger or divestiture, a board seat for the activist to influence strategy, long-term environmentally and socially sustainable business planning, or demand for improved strategic communication. While the investments can be significant in monetary terms, often the stakes for active shareholders range between less than 2% and 10% of the firm they engage with (Klein & Zur, 2009). Yet, the investors’ connections within the stakeholder community and among other managers allow activists to acquire strategic information and then make use of that information to put pressure on the engaged company. Activist shareholders employ various tactics to pressure organizations into disclosing their strategy. In order to do this, they personally carry out research regarding the company and provide information to the board, the other shareholders, and the

wider public. In doing so, activists disseminate strategically relevant information about the firm. One of the most public ways that this communication unveils itself is through a “letter to the chairman” or a “poison pen” (Partnoy & Davidoff Solomon, 2017). Activists often send a public letter to the management or board of the targeted company in which they detail what they think is wrong with the current strategy and then lay out their demands. The poison pen letter is often disclosed in the early stages of the engagement between two parties or when public communication between the shareholder and the firm reaches a conflictive stage. This letter is usually backed by relevant data collected by the activist about the industry as well as the strategy of the targeted firm. The data used to draft these letters could be collected through various means such as publicly available resources or even through personal conversations, but not through insider information. The information disclosed by active or activist shareholders, while backed by reliable data, is considered informative or provocative because it is often not weighted or disclosed in the same way by other shareholders or the firm. Partnoy and Davidoff Solomon (2017) confirm that activists often target the most opaque companies. By shining a light on the dark corners of a business, active shareholders can uncover problems – financial or strategic – that demand fixing. Thus, activists bring transparency to issues that were not intended to be disclosed by management. Second, activist shareholders employ disruptive tactics through letters to the chairman or poison pen letters. These are means of revealing strategic information because activists make public the responses drafted by the board or managers that were intended for private exchange (Partnoy & Davidoff Solomon, 2017; Gramm, 2016). As these letters are often intended to discuss the strategy of the firm, the replies engage with strategic topics and thus increase transparency about strategic decisions and the decision-making process. Examples of these include providing indepth explanations regarding why a certain strategy was chosen or coming up with justifications of why a suggestion by the activist was dismissed. In both cases, the firm discloses information

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about their strategy that they had originally not intended to. A third disruptive tactic that encourages transparency in strategy and the strategy-making process is “talk” among shareholders. This is especially relevant in proxy fights before Annual General Meetings (AGMs). Shareholders – especially large institutional investors and hedge funds – rely on proxy advisors for their voting behavior at AGMs (Aggarwal et al., 2015; Ertimur et al., 2013; Iliev & Lowry, 2014). These advisors recommend how large-scale investors should vote on an issue and thus have substantial influence on strategic matters discussed during AGMs. However, the influence of proxy advisors is reigned in through public opinion and information in the media (Aggarwal et al., 2015). Thus, if an active investor such as the Norwegian Sovereign Fund declares their intent for the vote ahead of time and the media reports on it, this works almost as an alternative recommendation to that by the proxy advisors (Sandbu, 2017). At the same time, both the recommendation as well as the intended vote disclosed by a major shareholder can convince management to advertise for their own favored outcome of a vote. This often requires the disclosure of more information on an issue that would otherwise not have been communicated and thus can be considered as disruptive to the planned communication. One example of this would be a concern by a proxy voter or active investor about too many affiliations of a board member. If investors or proxy advisors threaten to vote against management on this, it is not uncommon for the company to reveal that the board member has plans to end one or some other board memberships during the voting period. In terms of the drivers that enable increased transparency, disruptive tactics are one extreme as they are driven by conflict and involve public disclosures that tend to be aggressive in nature. Yet, while active or activist shareholders can engage in disruptive tactics, their engagement with companies often carry the goal of providing help or advice on an under-considered issue by management. Thus, activists’ efforts that lead to increased transparency can be placed on a continuum (illustrated in Figure 8.1), ranging

from “disruptive tactics” on one extreme to the more collaborative “invitation to share” on the other. Indeed, while the examples that we provide in this section portray activists as playing an aggressive role in increased transparency, activist investors engage with target firms in nonaggressive ways at least 30% of the time (Goranova & Ryan, 2014; Becht et al., 2010) and they use their voice for collaborative engagement over exit strategies to achieve desired change (Goodman et al., 2014).

Push and Pull Communication The second driver of transparency in Open Strategy is that of push and pull communication. This includes a bidirectional flow of information that increases transparency of strategic matters and influences the strategy-making process both from the top down and from the bottom up. As an illustration of our point, we describe the role of works councils (Betriebsräte) in strategy. Works councils are known especially in the German-speaking parts of the world and in France. In Germany and Austria, they are heavily regulated by special works council laws. The purposes of these councils, according to German law, are a representation toward the management of the organization, and an increase in democracy between workers and management as well as a way to foster socially responsible decisions (Page, 2009). The decisions that organizations discuss with these employee representatives include, among other things, those associated with major investments, mergers and acquisitions, layoffs, and working conditions. German law requires Betriebsräte to represent employee interests on two levels in the organization: (i) the higher level where the employee representatives sit on the supervisory board (Berger & Vaccarino, 2016), and (ii) the lower level where works councils act as representatives of workers on the shop floor toward executive management. Our focus here is not transparency that may come about as an outcome of a governance structure. Rather, we are interested in how the bidirectional flow of information between management and works councils enables transparency in strategy. When councils work well, they provide

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workers with information about managerial and strategic decisions (i.e., “push” information downward) and do the same for management regarding employee sentiment (i.e., “pull” information upward) (Fauver & Fuerst, 2006). As we illustrate in the following example, if works councils and management work harmoniously, both sides can easily attract information that they need. In a recent study, researchers have found a positive relationship between a healthy flow of information between works councils and management and superior performance (Wigboldus et al., 2016). Accordingly, Wigboldus et al. (2016) suggest that works councils help close the information gap that exists between management and employees about everyday realization of strategic issues by enabling a bidirectional flow of information. If strategists have a better understanding of the issues at the factory level for instance, strategic plans can be adjusted accordingly. We consider this a form of transparency of strategy that significantly varies from previous conceptions of transparency in Open Strategy in Whittington et al. (2011) and Hautz et al. (2017). We illustrate this with an example from Primark in Germany. There, the councillors realized that a lot of the communication from management of the Irish headquarters of the group to its workers included words in English, even though the primary language of employees is German. This linguistic issue led to confusion, conflictive translations, and misunderstandings regarding corporate strategy (Primark, 2018). When the issue was brought to the attention of management by the works council, management took the decision to meet with employee representatives once a week to talk exclusively about strategy, and, if necessary, elevate strategic issues raised by workers to top management. The councillors stress that they have the common goal with managers to create and foster a healthy, prospering business. Management now has a better idea about how and why certain information was executed differently than intended. This increase in transparency, both from the top down and from the bottom up, manifested itself as alterations in strategic expansion, mid- to long-term strategic planning of employee careers in accordance with these expansion plans,

and discussions between the two parties regarding strategic opportunities within the fashion retail chain. This example also shows that in addition to the improved upward information flow, works councils can also improve the downward flow because they have a right to access certain types of information. This information includes the right to be consulted on strategic matters (Berger & Vaccarino, 2016). Since many of the employees who are elected onto works councils are also part of unions, they are able to mobilize a fairly powerful voice (Addison, 2005). Therefore, works councils not only “push” transparency from the bottom up, they can also “pull” information down. As a result of this “push and pull communication,” the works council members can advise management on decisions and inform them about ongoing strategic practices. In doing so, they are likely to be able to exert significant influence because they can rely on the support of unions and workers in cases where there is a dispute (Addison, 2005). Whittington et al. (2011) as well as Hautz et al. (2017) considered transparency as a process of openness either about the strategy-making process or about strategic decisions. The illustration we provide here is a type of transparency that comes about due to demands from the lower levels of the hierarchy and leads to a different kind of inclusion: that of management getting more involved in the ongoing development of strategic practices on the shop floor. The bidirectional flow of information connects the workers with executive managers and leads to strategic decision making that includes input from both sides instead of decision-making rights being reserved exclusively to top-level managers.

Invitation to Share A third driver we highlight is based on the fact that transparency can be the outcome of an invitation from stakeholders to the organization to disclose strategic information. In contrast to the disruptive tactics that can use aggressive and very public means to increase transparency, the aim here is to provide and – on the side of management, receive – the best possible guidance. This means that

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transparency might be the outcome of a request by a small group of actors not involved in strategy making. These acts of issuing invitations seldom find their way onto the public media because they do not include conflict. Instead, they are of a consultative nature: Under certain circumstances, management may require additional information from shareholders, customers, or key suppliers. These stakeholders bring a different perspective on a strategic issue, and despite not being experts in their field, their experiences and opinions may carry great significance. Furthermore, these stakeholders can exercise more freedom regarding the depth and breadth of information that they share because unlike lawyers, consultants, and accountants, they are not bound by confidentiality clauses. Therefore, we consider this a process of Open Strategy that helps increase transparency. Here, transparency does not happen entirely voluntarily, yet it is not coerced either, and the stakeholders can be actors that are internal or external to the organization. As an example of this, we point to recent research that illustrates how boards of external directors can be influential drivers of transparency in strategy (Schwartz-Ziv & Weisbach, 2013). Using board meeting minutes as sources of data, Schwartz-Ziv & Weisbach (2013) discovered that in nearly a third of the meetings in which strategic issues were discussed, the board asked for more information. This makes “strategic issues” the most prominent topic for which more information was requested. According to the authors, these requests were generally made because boards felt they did not have enough or the right kind of information. The outcomes of the research reveal that contrary to common assumptions about the role of boards, these boards were found to act as advisors to management, took on roles such as monitoring managers, and took action on a topic soon after they had requested an information update (Schwartz-Ziv & Weisbach, 2013). We acknowledge that there is an element of power imbalance that could differentiate boards from governments, customers, or suppliers. However, if a supplier or a customer has significant market power and invites a company to share more information (or vice versa), we believe their

request for information is just as influential. In fact, congregating knowledge from a consortium, as in the case of Intel and SEMATECH, is another example where information was absorbed into the strategy-making process through a relatively open process (Müller-Seitz & Güttel, 2014). The authors describe Intel as having significant power despite not being the biggest player in the consortium and argue that it was therefore in a position to invite others to share. Thus, in cases where a powerful member of a network, a primary customer, or an influential supplier requests strategic information, the means through which transparency comes about may not be classified as entirely voluntary nor is it the outcome of regulatory laws. On the continuum of drivers toward more transparency, the invitation to share is at the opposite end compared to disruptive tactics (see Figure 8.1). Yet, this nonconfrontational and nonpublic exchange of information results in increased transparency in strategic matters, valuable insights into the strategy-making process, and in-depth information about the strategic direction of the organization. As with disruptive tactics, we want to stress that we are describing an extreme version of invitation to share strategic information. We describe invitations to share as circumstances in which strategic planners instigate and welcome guidance from boards, suppliers, key customers, or other stakeholders regarding a strategic decision. Yet, under certain circumstances where there is little choice to turn down an invitation, these invitations may be economically compulsory. Once again, we emphasize that this is another example of transparency that may be the outcome of activities that are neither mandatory nor – under certain circumstances – entirely voluntary. We acknowledge that some of the vignettes we present and research we reference in this section are regionally specific: For instance, Betriebsräte is specific to Germany and the research we cite on the role of boards of directors is based on data collected in Israel. Yet, we view these examples as invitations for further consideration into intra- and extra-organizational factors that drive transparency in strategy.

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8.4 Potential Theoretical Approaches for Studying Transparency in Open Strategy Researchers have mobilized a wide range of theories to examine transparency such as industrial/ organizational economics (Appleyard & Chesbrough, 2017), social theory and reflexivity (Baptista et al., 2017), impression management (Gegenhuber & Dobusch, 2017; Whittington et al., 2011), practice theory (Mack & Szulanski, 2017), and information asymmetry (YakisDouglas et al., 2017) (see Table 8.1 for a more detailed list). In addition to these, researchers have employed theories that help explore the role of openness in strategy toward external stakeholders as sources of increased understanding of and support for strategy (Rindova & Fombrun, 1999; Benner & Zenger, 2016; Whittington et al., 2016), and the role of new information technology as enabling visibility and traceability of internal and external conversations (Haefliger et al., 2011; Gast & Zanini, 2012; Neeley & Leonardi, 2018). In this section, we make recommendations about potential theoretical approaches that may be employed for studying the nuanced drivers of transparency that we discuss in the previous section. Our focus therefore is on theoretical frameworks that are helpful in studying the neglected actors, institutions, and concepts in Open Strategy such as influential drivers of transparency. In line with this purpose, we believe that future research into neglected drivers of transparency can benefit from concepts and metrics in stakeholder theory and classical cognitive studies. The former, stakeholder theory, allows researchers to delve into questions regarding the relationship of a firm with different stakeholder groups. Given that transparency either is always driven by or targets one or more stakeholder groups, stakeholder theory can be useful in understanding the association between transparency and competitive advantage, whom to direct transparency toward, and how to do it. For example (Henisz et al., 2014), who employ stakeholder theory, illustrate that transparency can be a response to demands by unions and when targeted toward internal as well as external actors, it can lead to cooperation with stakeholders,

improved reputation, and ultimately to enhanced financial performance. The latter, cognitive theories, assist studying the management of perceptions of stakeholder groups. Similarly, cognitive studies can be beneficial to research on the neglected drivers of transparency by providing means of examining stakeholder sensemaking and organizational learning through a bidirectional knowledge exchange. We elaborate on these in the following paragraphs.

Stakeholder Theory Stakeholder theory, broadly, is a lens that views an organization as a set of interdependent relationships among stakeholders (Chakravarthy, 1986; Donaldson & Preston, 1995; Evan & Freeman, 1988). Research into the so far neglected drivers of transparency could benefit from widening the theoretical focus to include all stakeholders such as activists, works councils, and boards of directors that play influential roles in driving transparency in strategy. Instrumental stakeholder theory (Clarkson, 1995; Donaldson & Preston, 1995; Jones, 1995) can help provide a theoretical foundation regarding which stakeholders are more influential in terms of political and social capital (Henisz et al., 2014). Transparency, in this context, could potentially enhance the probability that the organization’s strategy and plans announced under this strategy can proceed on schedule and on budget and, ultimately, generate sustainable shareholder value or offer benefits for other stakeholders. Instrumental stakeholder theory therefore can help answer questions around the consequences of preferential stakeholder treatment, if they are able to enforce increased transparency or can provide advice. Similarly, stakeholder theory can help researchers understand the consequences of neglecting or purposefully disregarding certain stakeholder groups as not influential or not material to strategy when making decisions regarding, for instance, invitations to share strategic information. The second specific area that stakeholder theory could benefit future research on the neglected drivers of transparency is stakeholder management (Hillman & Keim, 2001), which argues that

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relational, rather than transactional, interactions offer potential for sustained competitive advantage because they cannot be easily duplicated. This view of stakeholder management is directly applicable to the notion that we discussed earlier regarding transparency as being driven by various stakeholder groups: Value can be created between firms and stakeholders through transparency because interactions in Open Strategy are relational rather than transactional. More specifically, stakeholder management is helpful to study the overlooked stakeholders that are highly influential in driving transparency in strategy through providing an opportunity to draw from already existing notions of “primary” and “public” stakeholders under this field of research (both concepts are reviewed in detail in Hillman and Keim (2001)). Relational stakeholder theory can also assist studies on transparency in establishing boundary conditions of the circumstances under which firms are open to cooperative communication or when they are pressurized into disclosure. Identifying a set of boundary conditions could allow researchers to explore potential associations between organizational performance and stakeholder groups that have access to strategy (i.e., external versus internal; primary versus secondary).

Socio-cognitive Theories in Strategy Research into the nuanced drivers of transparency can also benefit from socio-cognitive theories in strategy. These theories are rooted in bounded rationality and help unravel the core underlying phenomena of why firms behave the way they do and why stakeholders respond to these behaviors in ways that they do (Hodgkinson et al., 2006; Walsh, 1995). These socio-cognitive theories have contributed to the field of strategy in two main streams of research: decision-making processes and cognitive structures of managers (Gioia & Chittipeddi, 1991; Porac & Thomas, 2002; Starbuck & Milliken, 1988), and the processes of collective sensemaking by stakeholders and various organizational actors (Hargadon & Douglas, 2001; Hoffman & Ocasio, 2001; Rindova & Fombrun,

1999). The latter category of this stream of research is more relevant to research into the drivers of transparency because it helps us unravel (i) how stakeholders make sense of strategy and (ii) how organizations can influence stakeholders through strategy. Understanding how stakeholders make sense of strategy is likely to be one of the main concerns for research on transparency in Open Strategy (see Bencherki, Basque, & Rouleau in Chapter 14), including the stakeholders that escape the radar as influential to driving transparency. In an attempt to understand how sensemaking is shaped, future research into transparency can draw from existing articles on cognitive categories (Beunza & Garud, 2007; Zuckerman, 1999; Zuckerman, 2000). In doing so, by employing cognitive categories, researchers that explore transparency more broadly can shed light into the potential downsides of transparency: for instance, there is convincing evidence that hard-to-evaluate strategies are associated with negative share price reactions (Litov et al., 2012). These theories can therefore help researchers provide advice to organizational leaders in selling novel strategies in a market restricted in its ability to make assessments (Benner & Zenger, 2016). More importantly, socio-cognitive theory is useful to research on the more nuanced view of drivers of transparency because it can help identify means that influence analysts’ or investors’ cognitive mindsets so that the discount applied by markets to unique strategies is reduced (Zenger, 2013; Zuckerman, 1999). For example, a socio-cognitive lens can help recognize circumstances under which transparency and Open Strategy might not be useful. If analysts put a discount on complex or unique strategies, managers or other decision makers in an Open Strategy process might also dismiss difficult-to-understand strategies and miss out on opportunities. Given the nature of the Open Strategy process, selling strategy may become a concern for managers with respect to grasping the best, but unique, opportunities.

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8.5 Conclusion There is increasing demand for organizations to be more transparent both in the public and private sectors. In this chapter, we argued that transparency about the strategy of an organization and the way this strategy came about is not necessarily a voluntary act, nor does it have to be mandated by regulators in order for organizations to feel obliged to provide the information. Instead, transparency is driven by internal and external stakeholders in cooperative or conflictive ways. Using vignettes, we illustrated that stakeholders can use disruptive tactics to pressure a firm to be more open than intended, establish a bidirectional flow of strategic information, or invite firms to provide more information in order to advise and guide them on strategic matters. These drivers of transparency in strategy exist on a continuum where each of them, according to the circumstances and context, could lead to increased transparency through means that are not entirely voluntary or mandatory. In practice, therefore, our chapter reveals new and nuanced drivers of transparency in strategy that fall outside the traditional dichotomy of voluntary versus mandatory. Open Strategy could benefit from the study of drivers of transparency that comprise midpoints on a continuum. Exploring these drivers and recognizing the fluid nature of categories is not only useful to practitioners for understanding how to manage transparency, but also helpful to researchers in painting a more complete picture about the processes and practices involved in Open Strategy. We recommend stakeholder theory and sociocognitive theories as useful theoretical lenses to study the neglected actors and institutions that are influential in driving transparency and how their sensemaking is shaped, altered, or sustained in ways that benefit organizations. References Addison, J. T. (2005). The determinants of firm performance: Unions, works councils, and employee involvement. Scottish Journal of Political Economy, 52, 406–450. Aggarwal, R., Erel, I., & Starks, L. T. (2015). Influence of public opinion on investor voting

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CHAPTER

9

Orientations of Open Strategy: From Resistance to Transformation STEFAN HAEFLIGER

9.1 Introduction Strategy is a complex field and discipline undergoing a change process that leaves it precarious in structure (Whittington et al., 2011) but wealthy in purpose. Purpose refers to how thought, artifacts, and action are being perceived as strategic (Gond et al., 2018; Laasch, 2018) and to the alignment of the values at the core of the organization with the wider community (Moore, 2012: 309). It is this wider community that shares values, knowledge, and direction with the organization that is embedded and integrated not only in a market but also in multiple networks of practice, expertise, and preferences. Orientations are the strategic intentions manifest in choices of business model, technology, and regulation. With this chapter, I attempt to achieve the following: first, I derive orientations within Open Strategy that are not only transparent to but also inclusive of outsiders by building upon works in innovation studies that theorize about participation and Open Strategy avant la lettre. Second, I argue and illustrate that the most exciting cases of Open Strategy are driven, long-term, by insiders as well as outsiders to the organization and, third, I attend to the idea of orientations by formulating an agenda for strategy research taking account of the practices of business model design, technology-in-use, and organizational regulation. Business models are not only descriptions of economic linkages between value creation and value capture but also cognitive devices (Baden-Fuller & Haefliger, 2013), technology-inuse refers to the tools and systems that support and influence strategizing (Jazrabowski & Kaplan, 2015; Neeley & Leonardi, 2018), and organizational regulation covers practices of

rule setting and rule following or breaking within organizations (deVaujany et al., 2018). Open Strategy at the intersection of multiple networks may pose an immediate challenge to the organizational purpose and inclusiveness, and in particular, may impact what practices are considered good and acceptable (Tsoukas, 2018). The idea of Open Strategy breaks with the fixture that top management is in control of the process and content of strategy by tearing down, conceptually, the boundaries of the firm following insights from innovation studies (von Hippel, 1976; Arora et al., 2001; Chesbrough, 2003). Neither the process nor, by implication, the content of Open Strategy is exclusively controlled by top management (Chesbrough & Appleyard, 2007). Yet, the discipline of strategy research almost always speaks to top management more or less explicitly. As a rule, implications of findings in strategy research point to levers and opportunities for management. However, given the premise of Open Strategy, who holds these levers and who is running the strategy process? Openness can prevent management from exerting power over content, possibly even over process. In the extreme, the process involves external networks and the content is decided by actors not formally involved with the organization. Admittedly extreme, however, such a scenario is rewarding to study more closely because of the evolutionary implications for change and the complexity and ambiguity of objectives involved. The extreme scenario may even lead to radical novelty in organizational forms (Padgett & Powell, 2012) because multiple networks co-create templates for collective action that might, just might, lead the way out of some of the worst and pressing environmental and social disasters.1

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This chapter explores orientations not as levers for top management but as evolutionary forces to move the organizations forward: the orientation is a collective action that represents the evolutionary variance growing from the meeting of diverse networks (internal and external) and co-creating knowledge flows across the boundaries of our focal organization. While the possible complexity might be staggering, I distinguish just three such orientations as ideal types of Open Strategy by separating the notions of transparency from inclusiveness, following recent work in Open Strategy (Hautz et al., 2017; Mack & Szulanski, 2017; Keinz et al., 2012). This distinction yields three strategic orientations that can be called open: the first one is the intention to join (inclusive but not transparent), the second one the intention to share (transparent but not inclusive), and the third one is the intention to transform (both transparent and inclusive of outsiders). An organizational vignette each provides illustration: three London-based organizations embody the three orientations. An architecture and engineering practice that is inclusive but not transparent, a business school that is transparent yet not inclusive, and a space curator and social enterprise that is both inclusive and transparent. The vignettes demonstrate a range of purposes, from education to social enterprise to profit seeking and the strategic choices vary widely yet include elements of Open Strategy that require further research to understand the first contingency that all these organizations share: to survive they need to sustain economically. Hence, the first lens for a research agenda is the business model, its design and implementation. A second lens of strategizing is the use of technology, that is, how tools act alongside human actors in determining the possibilities and promises of change. While actors access and shape networks, networks shape the actors. The way in which networks interact and models of strategizing are enacted shape the possible outcomes. For many, control is the elephant in the room: regulation describes the setting and adhering to rules in organizations represents the third lens to study Open Strategy going forward. With a broader involvement of outsiders comes a broader mandate to perform and serve the

networks involved in making strategy, which is why the notion of the organizational purpose dramatically gains importance. The implicit claim that comes with laying out strategic orientations that are anywhere from slightly to radically open is that the discipline of strategy research needs to ask questions adapted to the multiple objectives and practices connecting interlinking networks. This marks a departure from a focus on managerial implications geared to support top management yet remaining largely silent on policy or community implications. The implications for management science, discussed below, attempt to take this bigger role of strategy into account. The chapter proceeds as follows: after introducing the two dimensions of Open Strategy, transparency in terms of knowledge flows and inclusiveness of actors, the orientations are introduced and illustrated by three vignettes. In the third section, I propose a research agenda that builds on the notion of orientations to study business model design, practices of technology-in-use, and organizational regulation.

9.2 Participation in Open Innovation and Open Strategy Openness as a label for strategy has been adopted from a specific area of strategic action within the organization: Open Innovation. There, openness refers to the purposive flows of knowledge crossing organizational boundaries in both directions (West et al., 2014; Bogers et al., 2017), a practice that has been documented for many decades in innovation studies (von Hippel, 1976; Arora et al., 2001) and has given rise to significant insights about organizations built as communities that organize economic activities in novel ways (O’Mahony & Ferraro, 2007). Arguably, the growth and sustained success of Free and Open Source Software communities and their impact on software markets triggered scholarly interest beyond innovation because some of these communities mobilized resources and self-governance to achieve a level of organization beyond what seemed necessary to just share knowledge among hobbyists (Lakhani & von Hippel, 2003). Complex

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organization of community routines around joining and specialization (von Krogh et al., 2003) serves innovative activity at the core yet displays collective action with wide participation and specialized roles: this is Open Strategy avant la lettre. Participation has always been central if not definitive of collective action (McCarthy & Zald, 1977; Klandermans, 1984) and the participants tend to be not only individuals but also organizations or their representatives. A separate debate in collective action concerns the logic or purpose of the wider community or boundary organization (O’Mahony & Bechky, 2008). Open Innovation or Open Strategy, however, theorize first about the focal organization that interacts with a wider community (Dahlander & Wallin, 2006) and ask about shared ownership of the process and an emergent content that straddles networks inside and outside the organization. This interaction and mutual participation in strategizing is important because what is at stake is the direction of the organization. Innovation deals with products and services, platforms and technological agendas yet much less with the purpose and direction of the organizations behind the development efforts. Innovation scholars care for novelty first of all and deal with the organization of innovation from the perspective of the resulting novelty. Strategy scholars care for the survival of the organization first of all, which includes crucially the sustainable economic activity or, as we will argue, the business model (Baden-Fuller & Haefliger, 2013). If we apply a lens of open strategy to the organizations that have led open innovation for decades, successfully and through growth in membership and economic impact we quickly learn how important participation is for their success. Consider Debian (O’Mahony & Ferraro, 2007) or Apache (Franke & von Hippel, 2003; Roberts et al., 2006) or Mozilla (MacCormack et al., 2006) as examples of carefully managed organizations that are usually a combination of social enterprise, nonprofit foundation, and business (see also O’Mahony, 2003). Fundamentally, however, participation results from a self-selection into tasks and community membership is fragile and noncontractual (Yamauchi et al., 2000; Bonaccorsi & Rossi-

Lamastra, 2003). In innovation communities, such as Free and Open Source Software development projects, participation means relating to a code base under development, a technology that forms the substrate and base of most if not all interactions: the technology mediates participation and works as a platform and central actor in a community that congeals and develops around it (Rullani & Haefliger, 2013). In this view, the technology is much more than output or the innovative product of an organization geared to running a software project. The code is the nonhuman actor in a network formed with and through the code as mediator, translator, and standard of excellence for what participation means and should be. Studies in Open Innovation have pioneered and advanced an understanding of collective action in the domain of technology, often software (von Hippel & von Krogh, 2003; Shah, 2006), and can inform Open Strategy more broadly if we can marry the organization of innovation with sustainable economic activity. The observation that innovation communities can thrive on being open does not necessarily mean that Open Strategy should follow their templates but it’s a start. First of all, a clearer definition of participation may advance and differentiate various ways to include outsiders in strategizing. Second, technology may remain an indispensable element in bridging the inside with the outside of an organization and we retain from this discussion of Open Innovation that participation benefits from a material enabler such as communication platforms or boundary objects. A business organization faces a number of challenges when opening up strategy making to participants outside its boundaries: outsiders may be in rivalrous competition to the focal organization and undermine its source of business or legitimacy; outsiders may hijack the top management’s agenda; outsiders may steal intellectual property and appropriate it for their purposes; outsiders’ interests may conflict on multiple levels with top management or insiders more generally. These challenges suggest caution when opening up. The phase of opening up is critical but only a starting point. Strategizing is a process and, once open, no longer in the hands of a select few

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and no longer a guarded secret. In this long-term perspective, the strategic orientation needs to be shared by many and carried by both insiders and outsiders. This orientation rests on continued support and an enabling context, as I will argue. Proceeding, I first build on the analytical distinction between transparency and inclusiveness (Hautz et al., 2017) and, then, lead with three examples and a shopping list for future research in open strategizing.

9.3 A Strategic Orientation for Inclusiveness The perspective on strategy as a practice suggests a focus on who is making strategy and on the doing, the strategizing, as a practice (Whittington, 1996). Strategizing is an ongoing effort of balancing stability and change (Jarzabkowski, 2004) and routinely involving organizational outsiders may be hard to reverse. Relevant outsiders may include any stakeholders, vocal customers, suppliers, investors, or anyone who donates their time and effort as volunteers. The extent to which these participants are being listened to and engaged defines Open Strategy and holds potential for an overall direction that reflects a broader voice than that of top management. Prior work has recognized the voice and creativity of consumers, particularly when they organize into communities (e.g., Füller et al., 2008), the contribution of ideas by crowds (Bayus, 2013), structural changes to organizational design (Keinz et al., 2012; Franke & Piller, 2004), and more. When strategizing routinely involves outsiders a more fine-grained view of participation helps distinguish what participation really means. The recent work of Mack and Szulanski (2017) clarifies that inclusiveness refers to a higher level of involvement: This view suggests that inclusion not only stretches beyond the concept of participation as a practice for gathering participants’ content input for a particular strategy but also describes the greater connection among participants at a higher level of involvement in the process of

strategy formulation and implementation. (Mack & Szulanski, 2017: 387)

Adapting from Quick and Feldman (2011: 272), who wrote about public engagement, the notion of inclusiveness refers to a form of Open Strategy that continuously creates and maintains communities engaged in the coproduction of processes, policies, and programs. The implications of inclusiveness in Open Strategy are radical as shown by Luedicke and colleagues (2017) because organizational outsiders are given power in determining outcomes of critical importance to the organization. Sustaining inclusiveness in strategizing corresponds to a strategic orientation to co-create networks and shape the business environment by joining forces with a wider community or inviting transformation of the organization (see Figure 9.1). Transparency is an orthogonal dimension to inclusiveness because the co-creation of strategy can but does not have to coincide with knowledge flows across organizational boundaries. Transparency refers to the give and take of knowledge, for free or in exchange for money. Strategy consultants, by definition, allow for the flow of ideas and insights across boundaries because sharing programs and policies is the service they sell yet they are hardly inclusive when it comes to their own strategizing. As far as innovation touches upon matters of strategic relevance, as it often does, organizations involved in Open Innovation also practice Open Strategy. This is essentially the definition of Open Strategy as worked out by Appleyard and Chesbrough (2017) where top management is firmly in control of strategizing and may close the sharing of knowledge at any time. This is true whenever inclusiveness is low as on the left side of Figure 9.1. Strategizing that is inclusive of outside participants dislodges the fundamental assumption about strategy being driven from the top of one organization. On the short term this may amount to an exception, an experiment, or a gesture to important stakeholders. On the long term, however, it signifies a shift toward a form of strategy making that no longer leaves exclusive control over the direction of the organization with its management

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Orientations of Open Strategy Transformation 155 Transparency

Share Learning and sharing influence, Open Innovation e.g., consultants, med tech, automotive industry

Transform Evolving organizational purpose Shared control over process and content (innovation) e.g., social enterprises, start-ups Inclusiveness

Resist Closed strategy Traditional top-down control Guarded IP and internal dev. e.g., banks, low tech

Join Inclusive decision making Powerful outside community Selective of knowledge flows e.g., design agency, political party

Figure 9.1. Dimensions of Open Strategy or its employees. What Padgett and Powell (2012) describe as co-creation between multiple networks can be described as an orientation or impulse for evolutionary variation because it departs from the idea that owners and their agents control or dominate strategy making for the organization. I define the templates of Open Strategy making in Figure 9.1 as strategic orientations enacted by multiple networks of individuals inside and outside the organization: this is particularly true where inclusiveness is high in the two right quadrants. An orientation implies an ongoing strategic intention to change given new direction or new knowledge or both. Open Strategy does not leave the organization unaffected. Change in process or content of strategizing can transform the organization and, depending on the level of openness, can hardly be controlled from a single point of departure. Let’s look at three examples that illustrate three cases of Open Strategy. The three vignettes are adapted from three real, London-based organizations: an architecture and engineering practice we call Bridge&Shed, a business school called Publish&Flourish, and a social enterprise that curates pseudo public and community spaces called Art&Space; see Figure 9.2. Bridge&Shed exemplifies a join orientation. They have been in business for over 12 years and

employ 40 individuals of which most are architects and a few are engineers. To critical acclaim they’ve built pedestrian bridges in highly visible city center locations and their business model is built on projects of various profitability yet always involving outside partners who develop large-scale real estate projects or urban redevelopments. Bridge&Shed is strategizing along a highly inclusive path yet without being transparent because their core intellectual property includes designs and novel engineering solutions that are both structurally innovative and aesthetically appealing. In the absence of Open Innovation and a limited exchange with outsiders about designs, they routinely involve outsiders in strategic decisions that include market entry (e.g., partnering with offices abroad for joint submissions), partner network selection (guided by trusted partners and past collaborators), and product and service offerings (renovations, redevelopments, extensions, service contracts). Fundamental strategic decisions are coordinated and jointly made with outsiders who hold no equity in the company and develop and grow via personal and professional networks over many years. Publish&Flourish exemplifies a share orientation. They are a mid-sized and very international business school with a strong research focus: their programs range from undergraduate to PhD and

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Publish&Flourish Not for profit public university International orientation Strong research culture Open knowledge exchange Strategizing formally internal Competition seen as rivalrous

Art&Space Social enterprise Experimenting with new online platforms and customer groups Community leads service design Purpose community-driven Competition seen as collaborative Inclusiveness

Bridge&Shed Architecture and engineering practice Project-based organization Strong outside partners involved in strategizing Guarded intellectual property Competition seen as rivalrous

Figure 9.2. Three Organizations with an Open Strategy

a number of their faculty members are thought leaders in their fields. The management team regularly reads and writes not only research insights in strategy and management but also public opinions and best practice manuals for higher education. While transparent, their strategizing is not inclusive. Since they view their competitive landscape as highly rivalrous they do not let outsiders in on their plans and keep program launches and hiring initiatives a secret until late in the process. In contrast to the other two vignettes, the management of Publish&Flourish retain a high level of control over their strategizing and limit outsiders’ voice to consulting and learning in terms of expert meetings and high-level personal contacts. Art&Space is an example of the orientation to transform. They view themselves as curators of space for artists and of large real estate developments, old and new. They run multiple online platforms reaching tens of thousands of unique visitors per month offering artists work spaces and educational offers and market opportunities. Their strategizing is both transparent and inclusive in that they share ideas for next ventures with network partners such as real estate developers and artists

and include online communities and network partners in decisions that shape their strategic possibilities. A new development in East London comprised of 350 apartments houses a large ground floor area yet awaits convenient commuter connections to commercial areas. The space requires animation on multiple levels lest it remains unused and unattractive to residents. Mixing artistic use with commercial and educational facilities has become Art&Space’s core capability, and each new site and each new online platform transforms not only their business model but also their mission: past developments have seen stronger emphasis on education and monetization via state schools and art teaching whereas current real estate price surges in London and smart curation of space have led to sustainable commercial and public spaces that enable monetization from long-term leases and in keeping with the social mission of supporting the arts. Inclusiveness means that the broad mission can be shaped and supported by various and fundamentally different business models: services offered to real estate developers versus multisided matching in online marketplaces for art studio space.

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Orientations of Open Strategy Transformation 157 Table 9.1 Variations Across the Orientations of Open Strategy Resist

Share

Join

Transform

Business model design Know your customer

Learn from your customer

Co-create with your customer

Become your customer

Technology-in-use

Apply the tools correctly

Apply the correct tool

Relate via the tool

Experiment with tools

Organizational regulation

Central and top down

Decentral regulation

Joint regulation

Joint regulation

It is important to remember that the strategic orientation does not capture a stable state but a dynamic and long-term intention and practice. The orientation to “Resist” describes organizations that prefer to keep both their knowledge and involvement in strategizing internal. The orientation to “Share” is a form of Open Strategy that engages with knowledgeable actors outside organization boundaries and engages in learning that informs strategizing without directly involving outsiders in the process: the business school is an example here and so are many consulting firms and high-tech companies engaged in Open Innovation. The orientation to “Join” is a form of Open Strategy that seeks to diffuse ideas and knowledge generated internally combined with a willingness to involve outsiders in strategizing: acting in coordination with network partners, allowing outside networks to shape important decisions and diffuse their own designs in multiple ways that may expand and change the business model. The orientation to “Transform” combines both forms of Open Strategy in that both content and process are fundamentally open to outsiders and the organization learns and integrates into bigger networks in ever changing ways often in support and sharing risks of new experiments that come with new business models. The design of business models is a cognitive activity that interprets and argues using the model (Baden-Fuller & Morgan, 2010) before and during practice, which consists of using and working with tools and artifacts. A holistic view on practice comprised of cognition, artifacts, and activities (Laasch, 2018) helps guide an agenda for research into the orientations of Open Strategy using further

examples from the vignettes. We turn to this emerging agenda for management science next.

9.4 Issues for Management Science Co-creating strategy with networks inside and outside organizational boundaries brings with it not only higher complexity but also higher responsibility: for communities and for stakeholders beyond the direct reach of the organization. Breaking this challenge down into a more precise agenda yields questions that have started to attract research (Baptista et al., 2017; Haefliger et al., 2011). The three strategic orientations of Open Strategy should be analyzed in more detail through lenses that can capture practices and dynamics of organizing involved in business model design (first of all cognition), technology-in-use (as an example for the artifacts), and organizational regulation (an ongoing activity). Table 9.1 summarizes the issues at stake, which we introduce briefly before discussing in more detail how the orientations shift emphasis and sharpen responsibility both of and for external stakeholders in Open Strategy. First and foremost, Open Strategy applies to economic activity that requires a mechanism of monetization in order to sustain. The business model research agenda has over the last 10 years and more attracted growing interest from strategy scholars, not least because it models the customer interface explicitly while integrating the traditional supply side view of strategy with its resources and capabilities (Chesbrough & Rosenbloom, 2002; Afuah & Tucci, 2002; Baden-Fuller & Morgan, 2010). Strategizing includes designing and

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implementing business models and more research is needed to integrate open strategizing with business model thinking both in terms of fit and appropriate models given each strategic orientation described here. Second, strategizing in a transparent and inclusive way implies practices of learning, expanding, and possibly changing course. What are these practices and the tools in use? Technology mediates much of the practices that connect organizations with outsiders in communication and boundary objects such as documents, software code, communication protocols and, more generally, a material environment that can support learning (Engeström, 2014). What are the tools and appropriate practices that enable open strategizing in inclusive networks? Important issues not only revolve around the types of tools but specifically the tools in use (Jarzabkowski & Kaplan, 2015). Baptista and colleagues (2017) refer to a necessary capability they call reflexiveness that enables receiving and making sense of discourses involving outsiders and managing emerging tensions in Open Strategy. Third, control is an issue. Not only has recent research on Open Strategy probably overstated the ability to control openness and its reversion (Appleyard & Chesbrough, 2017), there is also a dearth of research on a sustainable state of low control over strategy. Technology plays a key role in mediating organizational regulation (de Vaujany et al., 2018) and the making and breaking of rules depends on practices and the materialization of rules in code and other devices. Open strategizing has only just begun to consider systems that support open designs (von Krogh & Haefliger, 2010) and a lot more research needs to take the strategic orientation as a given intention that is here to stay in order to carry out research into regulatory episodes and systems of organizational regulation. Business models. In extension to a supply side perspective in strategic management that tends to privilege resources and value chains, the more recent work on business models takes a closer look at the demand side: the customer (BadenFuller & Mangematin, 2013). Such work models the customer interaction explicitly (Aversa et al., 2015) and follows a tradition of work that takes learning from customers seriously (von Hippel,

1978; Füller et al., 2008), both as a source of innovation and, ultimately, new monetization and engagement with the brand and so forth. The customer relationship is not only one of value creation but, critically, must include monetization if the model is to be about business. A sustainable economic activity can be characterized by a business model that serves as an intermediary device between the actors’ thinking and their doing (Baden-Fuller & Morgan, 2010). By consequence, any social enterprise has a business model and so does a university, a think tank, a social movement when it involves economic activity and, of course, a for-profit company. The orientation distinguishes between learning from customers and co-creating with customers. In Open Strategy, learning involves a mutual sharing of insights including product prototypes, communication, branding, and customer behavior in general. Co-creating with customers starts with mass customization, toolboxes, and all the way to deep integration of customers in product development and innovation strategy (Piller & Walcher, 2006). Learning from customers, the orientation to share, implies transparency yet not joint decision making. Learning can mean segmentation of customers into lead users or experts to identify and observe (Poetz & Prügl, 2010) and it implies an openness in strategizing for the unexpected. In terms of business model design, this can mean that some customers pay for services or products whereas others receive them for free. Triadic business models have been identified across industries as types of business models that engage with more than one customer group for any given transaction. Historically, these include businesses such as newspapers where subscribers pay for a copy, advertisers pay per placement, and some groups of readers, for example at universities, receive free copies. More recently, digital production and consumption technologies have made it easier to connect customer groups in triadic models, be it as match makers such as Airbnb or as multisided models such as Snapchat. Co-strategizing with customers occurs in services where fundamental decisions about product offering and long-term interactions are carried out by both the focal firm and its customers (see

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Gegenhuber & Dobusch, 2017). The orientation we call Join is frequent in networks of service professionals that collaborate on the basis of specific projects and build trust in the relationships to last for many years, sometimes entire professional careers. Architects and engineers, expert contractors, creative agencies, and many other professionals operate product or service business models that include organizational outsiders involved in strategizing. This is not only true when firms are small. Joint decision making about project acquisitions, market entry, key client relationships, and more is made under Open Strategy: inclusive of outsiders yet not necessarily transparent in terms of knowledge sharing. Consider the business model of Bridge&Shed. Traditionally, their service model implies charging clients by the hour or by achievement of specific objectives, and agreements about competing for larger projects are made in conjunction with longterm outside partners who, informally, may grant each other preferential inclusions in bids based on mutual respect and trust. Alternatively, they attempt to create platforms that connect industry partners and forge new relationships by offering different but complementary services to, say, quality assurance subcontractors and developers: this multisided business model explains why Bridge&Shed combines engineering and architecture under one roof. The strategic orientation to transform points to both essential knowledge as well as decision making occurring outside firm boundaries. This radical form of Open Strategy is driven by renewal through stakeholders including customers who, by majority or meritocratic decision making, influence the firm to enter new markets or even redefine its purpose. Open strategizing, here, includes the possibility of transformation to adapt the organization to new demands, new values, and new goals. Yet, this orientation is rare not least because the ownership of firms usually adheres to traditional capitalist structures where the decision-making power lies with the owners and their agents, the top management. Technology-in-use. Tools in strategizing include frameworks and models as well as artifacts such as communication technologies, social software,

boundary objects, and more (Jarzabkowski & Kaplan, 2015; Haefliger et al., 2011). Importantly, tools play an important role in strategizing in that users of tools apply tools and tools, in turn, shape users in reciprocal relationships. In the long run, this relationship shapes evolutionary cocreation (Padget & Powell, 2012) and is well known as structuration theory (Giddens, 1984) and has influenced technology scholarship significantly over the decades. Consider how Publish&Flourish applies technology in higher education to offer learning experiences to students via distant learning or via experiences in the field. Simple recordings of lectures made available online might have a negative impact on learning (Edwards & Clinton, 2018) whereas high quality and interactive materials may attract additional students to enroll. The orientation to share may prevent Publish&Flourish from collaborating with one institution when offering online learning programs in order to retain autonomy over offerings yet partner with another where the technology platform appears aligned with the identity, brand, and so forth. Choosing the correct tool becomes a matter of choosing what kind of higher education institution one wants to become. Beyond a long-term influence, technology shapes the daily interactions and strategizing in organizations (Neeley & Leonardi, 2018) and leads to the insight that structure is inseparable from agency (Jones & Karsten, 2008). Hence, for the strategic orientation it matters which tools are applied, for example, to share knowledge with stakeholders outside the organizational boundaries and, for the orientation to join, relating via the tools is likely to be inseparable from the structure of decision making in the network. Thus, the provisional intention for an orientation can be a choice of the tool-in-use and the experimentation with that technology. Take the example of an architectural model as a boundary object with which external network partners are implied, enticed, incited, and, ultimately, engaged in joint action to implement. Experimenting with new technologies and ways to interact with outside stakeholders can lead to transformation in strategizing, as Art&Space demonstrates when opening new platforms to connect previously

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underserved communities who identify ways to mobilize via the platform created and to the benefit of Art&Space: the platform connects artists with real estate owners to share working and living space linked to a social network. From a strategy perspective, the tool that is a website in this case not only creates opportunities that can be monetized, but it also represents a multisided business model in that it connects at least two distinct customer groups. More research is needed to document the process by which major business model changes can and are being introduced by outside stakeholders. Organizational regulation. The making and breaking of rules changes when technology mediates between the rules and the practice (deVaujany et al., 2018). Organizational regulation captures the dynamics of rules (such as the policies and processes of corporate governance) as they play out in strategy-as-practice: materially, cognitively, and in action. The dynamics include the negotiations of meaning among stakeholders inside or outside the organization (Reynaud, 1988). Open Strategy is, therefore, fraught not only with the challenge of losing control in top management but also with the use of technology embedding the rules and attempts at control made by the focal organization. Subject to more research, it appears that organizational regulation may be decentralized and centralized as top management sees fit and depending on their ability to effectively lead a dynamic technology landscape through innovation (Appleyard & Chesbrough, 2017): this includes the orientation to share. However, a reversal or two-way choice appears less likely in the case of the orientations to join or transform. With joint regulation the outcome in practice is determined by both insiders and outsiders in Open Strategy (Reynaud, 1988). An online learning collaboration between Publish&Flourish and a publishing house entails the benefit of reaching broader audiences and the risks of misinterpreting mutual intentions and norms when it comes to disseminating content or advertising the educational offer. Equally strategic, consider the price point of the online education offer: publishing content under Creative Commons could bring education to audiences who could otherwise not afford education while

cannibalizing expensive executive education modules building on similar content. Pricing the module is a matter of business model design (monetizing from the audience or not), technologyin-use (how teaching is delivered), and organizational regulation (licensing, paywall, distribution rules). Open strategizing that is inclusive of outsiders in decision making and relies on technology for interaction with outside stakeholders (as in online communities or multisided business models relying on online platforms) faces multiple and dynamic effects of the rules set and materialized in the technology-in-use (Jarvenpaa & Lang, 2011; Aten & Thomas, 2016). In other words, the meaning of rules in practice is a function of sensemaking by actors and of the materialization of the rules in technology (Lanzara et al., 2016). By consequence, there is no longer one single point of control even if the orientation is to share only. To take the previous example, online learning platforms can be hacked or outside partners violate distribution agreements with implications for pricing, market entry, and future partnerships. Organizational regulation is an important and somewhat overlooked topic in strategy not least because participation in strategizing is beneficial already internally (Ketokivi & Castaner, 2004) and may inform the strategy discipline about the locus and nature of control as well as the sources of legitimacy when strategizing is inclusive of outsiders. Consider the challenges of design and architecture practices, such as Bridge&Shed, that strategize inclusive of outsiders and face technology that makes sharing intellectual property cost free: a snapshot of a model or drawing can be sufficient to replicate a structure half a world away. Networks of collaborators must jointly regulate their conduct because often, and by default, the ability to access and share sensitive content is available. Norms become crucial (Fauchart & von Hippel, 2008) and professionals who collaborate for years and build trust also build boundaries of competencies and deep understanding of each other’s abilities to monetize and compete with rival networks.

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9.5 A Research Agenda for Open Strategy The orientations of Open Strategy outlined previously imply many strategic options (Fig. 9.1) and open more research questions than could be answered. Open Strategy inherits much from research in Open Innovation and, yet, remains shy to declare what knowledge openness brings to strategy that is qualitatively different from innovation. While innovation studies focus on novelty and the creation and launch of products, strategy as a discipline focuses on the survival or performance of the organization: the first may support the latter and may be more than a necessary condition for survival. At the same time, strategy is relational in essence and survival, in most industries, depends on others: an insight that is often cut short under the umbrella idea of competition. We learn from recent work on relational competing that competition is more than rivalrous behavior toward another actor in that it includes both different types of relations (such as rivalrous and collaborative) and action and arenas of relational behavior (Jarzabkowski & Bednarek, 2017). This complexity is welcome because it opens a gateway toward studying the knowledge needed to understand the firm’s relationship to others. In a more complex competitive landscape, how does strategizing unfold and lead to smart behavior conducive to long-term success in terms of the means and the ends envisioned? To unpack this question, we can distinguish both the cognitive side of business model design and the implementation in a real-world setting using tools and technologies to advance collective goals. Both the means and the ends are open to change, and the locus of control may not always rest inside the organization, which calls for organizational regulation as a distinct lens in Open Strategy. Competition also matters for inclusiveness simply because a strong focus on rivalry prevents management from even considering outsiders to influence the strategy content, possibly also the process. Moving along the strategic orientation to join or transform we need to ask how decision making and monetization are linked. Business models sharply distinguish between customer groups and beyond the traditional one-product firm we’ve become accustomed

to the idea that some customers pay whereas others receive a service for free. Models are tools to inquire into as much as to argue with (Morgan, 2012) and business models that imply Open Strategy offer many options of monetization and fine lines that separate customers from other stakeholders including investors, suppliers, and competitors. Strategizing is also modeling one way to apply tools (Jarzabkowski & Kaplan, 2015) and much more work is needed to understand collective (business) modeling in Open Strategy. If business models work as tools then certainly so do many other technologies and not least information technologies. Many important tools may not be readily available and their design itself follows use and remains open to users’ adaptations and co-creations (von Krogh & Haefliger, 2010). Asking what are the appropriate tools to use should include a perspective on identifying and enacting technologies in order to enable open strategizing. Technology-in-use may determine the nature of competition because technologies play a role in how actors are linked, how they are able to relate, and what type of vision of the joint future they can develop (Santos & Eisenhardt, 2009). Inclusiveness itself is tied up with technology-in-use if we accept the premise that structure is inseparable from agency. Inclusiveness in decision making is a form of integration that requires not only communication but, more strongly, the mediation of technology between firm insiders and outsiders (Frey et al., 2011). An example is the use of social software and social networks by companies and emergent leadership and governance structures in such networks (Sutanto et al., 2011; Haefliger et al., 2011). Organizational regulation describes the emergence and state of the system of rules in place (Reynaud, 1988). Setting and implementing rules within organizations implies sensemaking and sensegiving, materialization of rules into systems and artifacts, as well as compliant or deviant action in time and space (deVaujany et al., 2018). Rules are designed to regulate the behavior of employees in their internal and external conduct as well as bind all members of the organization to agreements when operating the day-to-day business. Importantly, rules interact with practice in that

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Table 9.2 Research Questions

Business model design

Share

Join

• How can customers and

• What are limits to

users inspire strategizing beyond innovation? • How can learning from customers become part of the business model? • When does selective revealing apply to Open Strategy? Technology-in-use

Transform

• What are models of profit inclusiveness in customer sharing in Open Strategy? • When is transformation relationships? • What are the links between sustainable in economic decision making and terms? • What is the role of top monetization? • How do business models management in the absence change, when they do, due of control? to inclusive strategizing?

• What are the learning tools • What are the networking • What are the tools appropriate for Open tools appropriate for appropriate to connect Strategy? inclusive strategizing? learning and inclusive • Is openness technically • How does technology-in- decision making in Open reversible in IP strategies use influence the locus of Strategy? • When does technologyand sharing? decision making? • How does the locus of • How does technology in-use accelerate or defer agency change, if it does, as impact the customer transformation? • How does technology learning becomes open? relationship? mediate an orientation to transform?

Organizational regulation

• How are impulses from the • Is joint regulation outside materialized into rules?

• What are the links between planning and implementation ex post?

they can be followed or broken, and rules are often contradictory internally and over time (Alter, 2003). Interpretations of rules matter in practice and, crucially, rules may become invisible due to their materialization into artifacts including code. Artifacts that materialize rules include speed bumps on roads and password protections in information systems. According to rules, management exerts control or relinquishes control to outsiders, and employees may or may not be allowed to exchange views with outsiders and share knowledge (Alexy et al., 2013). Much research is needed into the dynamics of organizational regulation given rule obsolescence, disobedience, multiple competing information systems, and more. Fundamentally, however, organizational regulation can support research in Open Strategy as a framework for studying the devolution of control from top management to more open forms of strategizing, either open or inclusive or both.

a necessary consequence of inclusive strategizing?

• How does joint regulation become legitimate and materialized?

• What is the legitimacy of co-creation of strategy and organizational transformation? • Where is the locus of control in Open Strategy at any given time?

A framework that integrates technology-in-use appears consistent with a practice-based perspective because it no longer evacuates the link between rules and practice from the context of practice: the material base for adhering to rules and negotiating the gray zone of organizational regulation (deVaujany et al., 2018). Table 9.2 cannot capture a comprehensive list of relevant topics and some of those left out yet implied in an Open Strategy orientation might prove more pertinent than the questions articulated here. One precious piece that needs more thought and research is the ethical dimension to opening up. The joint monetization, creation, and regulation with outside stakeholders via inclusion and transparency shines light on the moral and ethical dimension of practice. A famous claim in Open Source Software development called Linus’s Law states that “given enough eyeballs, all bugs are shallow” (Raymond, 1999). By analogy, we could

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expect more eyes on organizational processes and decisions with the consequence of more debate or, at least, awareness. Given openness, outside stakeholders may learn about the skills and motivation of organizational actors. They may question the strategy by becoming more or less involved, addressing issues, or correcting mistakes: from bugs all the way to the skeletons that can no longer hide. When does Open Strategy also mean shared responsibility? Product liability, investor protection, and other compliance laws all point to top management as the agents of the owners who are, in last resort, responsible for all corporate conduct. Open Strategy may devolve control without distributing responsibility, a scenario that may prevent management from sharing decision making with outsiders. How can Open Strategy envision a practice of shared responsibility that follows a shared purpose? Abstracting from the law, well known to follow practice very slowly, how can the strategy discipline update its sometimes narrow and historically individualistic thinking on ethics in collective action? If we discharge the heroic leader as the dinosaur in the boardroom, conveniently impersonating the individual agency and responsibility we’ve come to take for granted, what are other models of good open strategizing we can study and build on? One possible way forward is Aristotelian ethics in a more contemporary form (MacIntyre, 1995: 10; Tsoukas, 2018) because it allows for the social practice to define its appropriate and definitive standards of excellence and makes their pursuit a strategic orientation. In this definition of orientation, the direction of Open Strategy approximates what Moore (2012; 2017) calls organizational purpose and organizational insiders as well as outsiders may rally around the standards of excellence because they define what the social practice is really about: building better sheds and bridges, publishing great business research, and serving artists in London. Not forgetting why companies do what they do may be the most promising of avenues for future research and the most powerful driver of Open Strategy.

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PART III

Technological Assemblages for Open Strategy

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CHAPTER

10

Open Strategy and Information Technology JOSH MORTON, ALEX WILSON, ROBERT D. G ALLIERS, and MARCO MARABELLI

10.1 Introduction Open Strategy has drawn increasing attention in recent years. A growing number of studies have captured greater transparency and heightened inclusion in the strategic practices of contemporary organizations (e.g., Whittington et al., 2011; Hautz et al., 2017). It is often Information Technology (IT) that can facilitate involvement of a wider range of stakeholders in the generation of strategic content and knowledge (Chesbrough & Appleyard, 2007; Wulf & Butel, 2016), and in the practice of strategy (Whittington et al., 2011; Whittington, 2014). However, despite the widely recognized role of such technology as online platforms (Malhotra et al., 2017) and social media (Huang et al., 2013; Baptista et al., 2017) in enabling openness in strategy, literature with an explicit focus on IT has been surprisingly sparse to date (Tavakoli et al., 2015; 2017). Thus far, most papers have been published in Management and Strategic Management outlets (e.g., Whittington et al., 2011; Stieger et al., 2012; Seidl & Werle, 2017), including a special issue on Open Strategy in Long Range Planning (e.g., Hautz et al., 2017). Additionally, much of the research to-date has focused on such dimensions of openness as inclusion and transparency to enhance our understanding of Open Strategy. In consequence, IT is an often present, yet silent, partner in studies of Open Strategy. Although Whittington et al. (2011) identify technology as a potential driver for openness in strategic practice, there is only limited reference throughout the literature on the nature of the important role played by IT in opening strategy. In particular, the intricacies of how IT enables

Open Strategy remain ambiguous and underdeveloped. Promise has been shown in recent work, however, outlining a clear link between open strategizing and the organizational use of IT (e.g., Amrollahi et al., 2014; Tavakoli et al., 2017). Tavakoli et al. (2015; 2017) provide an important step in positioning IT as a core enabler for openness in strategy by integrating “IT-enabledness” with the dimensions of inclusion and transparency in an attempt to provide a “consolidated definition” of Open Strategy. However, while this places IT as essential in much Open Strategy work, it does so by considering Open Strategy cases utilizing different perspectives on strategic thought. The authors establish Open Strategy as a practice and invite closer inspection of how the sociomaterial ensemble of IT and open strategic practices interact. Future research must go further to craft a more comprehensive and explicit research agenda by clarifying the types of IT and how they are used in Open Strategy. This chapter addresses these important contributions by invoking established concepts and theories in Strategy and Information Systems (IS) in line with Whittington’s (2014) call to draw these fields closer together. In this vein, this chapter examines and reviews how various types of information technologies are employed to support strategic practice with the intention of elevating IT from the position of silent partner in Open Strategy. This culminates in a research agenda that can help further explicate the role and significance of IT in open strategizing. First, the chapter highlights the growing presence of IT in the strategy literature, highlighting the ever-increasing strategic significance of IT and how this has evolved in strategy and IS work. Second, we identify the 169

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Josh Morton, Alex Wilson, Robert D. Galliers, Marco Marabelli Prospective

Goal-seeking (Strategy formulation) Future effectiveness

Issue-based (Problem solving)

Proactive Competitiveness

Reactive

Isolated

Current effectiveness

Efficiency

Top-down, business-driven

Bottom-up, technology driven

Figure 10.1. Developments of Information Systems Strategizing (adapted from Galliers, 1987)

types of IT used for Open Strategy, arguing that these are yet to be unpacked in any depth in the literature to date, remaining “blackboxed.” Third, the chapter builds on this foundation to uncover four themes: scope, scale, suitability, and structure, which connect the aforementioned IT types with IT in use for Open Strategy. We review these themes in line with existing literature as a means of emphasizing inherent gaps in Open Strategy research relating to IT and its use in strategizing. The chapter concludes by proposing a future research agenda, further drawing on themes we have identified to emphasize potential research directions consistent with calls for a “synergy” between strategy practice and IS research (Peppard et al., 2014; Whittington, 2014).

10.2 The Strategic Significance of IT IT and strategy have long been intertwined. Indeed, the associated literature has seen an increasing appreciation by strategy practitioners and researchers regarding the pivotal role of IT (Porter & Millar, 1985; Galliers, 1991; 2006; 2011; Powell & Dent-Micallef, 1997; Haefliger et al., 2011). We capture the journey to social software (von Krogh, 2012) and social media (Leonardi et al., 2013) becoming strategic tools from the pioneering period of computing in organizations as a series of epochs. This presents a chronology broadly of how both information technologies and the

conceptualization of IT and strategy have developed over time. With over 30 years of applying IT to organizational tasks, by the 1980s, IT in organizations had reached a level of maturity (Somogyi & Galliers, 1987). However, while many organizations possessed some level of IT resources, the precise application to organizational tasks – specifically their role in relation to business strategy – was highly varied and only just emerging. Galliers (1987) identified four phases in the development of IS strategizing that illustrate different approaches determined by whether the plan is driven by specific technologies or the needs of the business, and whether the strategic objective is to explore new directions or to identify and improve organizational issues (exploit efficiencies) – foregrounding more recent work on organizational ambidexterity (e.g., Tushman & O’Reilly, 1996). The IS planning phases, (i) isolated, (ii) reactive, (iii) prospective, and (iv) proactive, are shown in Figure 10.1. Galliers (1987) gives a full account of these phases, but pertinent to our framing of IT as a strategic concern is that information systems strategizing has evolved from stand-alone or “isolated” systems directed at efficiency gains to much more highly sophisticated ensembles of technologies that aim to harness and shape proactively the direction of the organization. It is these developments that launched IT into the domain of strategic management. Thus, this proactive phase cemented IT as a mainstay of business strategy with, for

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Open Strategy and Information Technology Table 10.1 A Typology of IS Resources (based on Wade & Hulland, 2004) Outside-in

Spanning

Inside-out

• External

• IS-business

• IS infrastructure • IS technical

relationship management • Market responsiveness

partnerships

• IS planning and change management

skills

• IS development • Cost-effective IS operations

example, Porter and Millar (1985) placing information and IT center stage in providing competitive advantage to firms. They argue that IT encompasses information, its management, and its strategic potential, rather than just hardware. Additionally, they point to its impacts on the rules of competition and the advantage that can be gained from the astute use of information, as well as its impacts on the everyday operations of organizations (ibid.). Guided by the strategic significance of IT, many organizations have seized the initiative in the competitive environment by fundamentally changing approaches to strategy development, as informed by the rapid and oftentimes unpredictable advances in technology (Berman & Hagan, 2006). Indeed, by the late 1980s and early 1990s, IT was widely recognized as fundamental to developing core capabilities of a firm (Itami & Numagami, 1992), and IT executives were gaining prominence in top management teams for their knowledge and influence on strategy making (Ives, 1992). The prominence and speed of technological developments, and the associated impact and challenges of the “information revolution” on developed economies, organizations, and general managers, was at the forefront of strategic planning and strategic positioning of organizations. In essence, firms that introduced IT aligned to the business strategy would outmaneuver competitors through better coordination within, and between, value chains unlocking superior industry positioning (typically through first-mover advantages enabled by IT) and higher levels of performance (e.g., Dos Santos & Peffers, 1995).

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However, doubts grew as to whether IT was indeed unlocking competitive advantage or was in fact a competitive burden (e.g., Warner, 1987). The development of the Resource-Based View (RBV) within the strategy discipline (Barney, 1991; Mata et al., 1995) invited closer inspection of IT as a strategy resource, along with the uniqueness of capabilities and competencies that underpin competitive advantage (Santhanam & Hartono, 2003). Wade and Hulland’s (2004) comprehensive review of the RBV and IS research reveals that the latter can constitute different types of strategic resources in organizations. These are shown in Table 10.1. The type of IS resource is linked expressly to strategic thinking (outside-in, inside-out) and how such resources are intended to deliver competitive advantage. The increased focus on the internal dynamics of firms has invited much closer investigation of the linkage between the role of IT in strategy form(ul)ation, implementation, and performance: A number of different sectors and industries, such as banking (e.g., Jarvenpaa & Ives, 1990), tourism (e.g., Buhalis, 1998), marketing (e.g., Kotabe et al., 1996), retail (e.g., Powell & Dent-Micallef, 1997), manufacturing (e.g., Berman & Hagan, 2006), and engineering (e.g., Smith, 2013) have been studied. Early areas of focus included exploration of network technologies and the Internet in commons-based production (e.g., Wikipedia) and knowledge sharing capabilities (Benkler, 2006). More recently, the focus has moved to an expatiation of the interconnections of people and material features in social networks, “smart” devices, and social software (CecezKecmanovic et al., 2014; Haefliger et al., 2011), such as social media (Majchrzak, 2009; Marabelli et al., 2016), creating new, and far-reaching, implications for the relationship between (social) IT and strategic management. As well as the theoretical debate that surrounds whether competitive positioning or uniqueness of resources and capabilities drives competitive advantage, the field has seen growing interest in precisely how strategy and strategic work is undertaken in firms. In endeavoring to perceive the impact of IT advancements on strategic management, much research and emergent theory has

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divided between important epistemological differences in strategic management and organization studies, and IS work (Orlikowski & Barley, 2001). There have been, for example, those exploring how strategy and IT interact with each other in organizations over time (Itami & Numagami, 1992), and those who have positioned studies toward how firms strategically manage IT and the inherent opportunities and threats ubiquitous technologies present (Leonardi & Barley, 2010). With considerations of such distinctions and traditions in scholarly work, Orlikowski and Barley (2001) were among the first to more explicitly outline areas in which strategy and organization studies and IS scholars should begin to interplay and collaborate. In particular, it has been suggested that this should be through potential hybrid approaches that breach epistemological boundaries in both fields to balance substantive expertise in the social dynamics of organizing, and the role of human agency and technology (Galliers et al., 1997). More recent are the aforementioned, specific calls for practice-based transdisciplinary research involving strategy and IS (Orlikowski, 2010; Vaara & Whittington, 2012; Whittington, 2014). For strategy scholars, the explication of materiality helps begin to emphasize a shift where IT is viewed as being an instrumental part of strategy (Vaara & Whittington, 2012; Whittington, 2014). This emphasis on materiality is particularly relevant as technology has become central in contemporary strategy work, even in mundane and near ubiquitous strategizing practices such as the use of PowerPoint (Kaplan, 2011), enterprise systems (Leonard & Higson, 2014), and stand-alone software packages (Arnaud et al., 2016). Moreover, scholars have stressed that strategy scholarship still fails to widely explicate the business implications of certain emerging technologies, too seldom considering distinct types of IT and their varying properties in its theorizing (Haefliger et al., 2011). For IS scholars, there have been calls to step out of the comfort zones of traditional and established methodological approaches, and to seek out innovative approaches to research (Ives, 1992: xii). Such calls can be of help in positioning practice as a phenomenon with a view to advancing the inherent understanding of the doing of strategy

work with IS (cf., Orlikowski, 2010). Following the example of strategy practice work, the focus might be on the technê and phronêsis of IS professionals, managers, executives, and consultants (Peppard et al., 2014), and in the intricate activities of IS strategizing in organizations (Henfridsson & Lind, 2014; Leonard & Higson, 2014). Ultimately, the strategic significance of modern IT has changed some of the fundamental assumptions about organizations in conventional strategy theory (Porter & Millar, 1985; Itami & Numagami, 1992; von Krogh, 2012) and has had several theoretical ramifications. In the context of Open Strategy, modern IT has, for example, made knowledge increasingly costly to protect and validate with potential impact on competition and competitive advantage (Porter & Millar, 1985). For the core concept of openness in strategy, it also raises many issues for conventional strategy theory and thinking, and for strategy as a profession, such as by empowering creative independent individuals and implying uncertain reactions and creations in support of, or indeed in opposition to, the strategy making of top management teams (Haefliger et al., 2011; Whittington et al., 2011). It must also be acknowledged that IT does not exclusively follow an intended strategy to become open. Indeed, there are instances where – already highly collaborative – organizations develop Open Strategies from collective, online ways of working (e.g., the case of Wikimedia’s strategy process in Dobusch & Kapeller, 2017; Dobusch et al., 2017). To parallel a central debate in strategy, it is possible that IT can follow Open Strategy or Open Strategy can follow IT. We argue therefore that there is clear potential for coaction between strategy and IS research (Whittington, 2014), particularly as academic journals in the fields of strategy and organization studies continue to focus on IT and its impacts (Jarvenpaa & Leidner, 1998; Orlikowski, 2007; Dobusch & Kapeller, 2017), and similarly IS scholars now routinely produce work heavily influenced by concepts and theories grounded more traditionally in strategy and organization studies (e.g., Sambamurthy et al., 2003; Henfridsson & Lind, 2014). In this chapter, our intention is to

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not only add to this overarching conversation, but to focus more specifically on collaboration that is particularly relevant to the evolution of Open Strategy scholarship in relation to the central role of IT.

10.3 Types of IT and Their Significance in Open Strategy Consistent with the strategic management literature (Haefliger et al., 2011), and as already noted, the majority of Open Strategy work still tends to “blackbox” the types of IT in use in Open Strategy activities. Common epithets include “online platforms” (Malhotra et al., 2017), “web 2.0 technologies” (Matzler et al., 2014a), and “social networks and collaboration software” (Stieger et al., 2012: 45). These have been identified as key to enabling actors to participate in open discussions, contribute ideas, and thus collectively contribute to and develop new strategies (Matzler et al., 2014b). Open Strategy has also been equated with crowdsourcing or open sourcing (e.g., Newstead & Lanzerotti, 2010; Amrollahi et al., 2014; Matzler et al., 2014a; Aten & Thomas, 2016) due to similarities in being an inclusive and adaptable process involving clearly defined initiators, contributors, and goals (Estellés-Arolas & González-Ladrón-deGuevara, 2012). Studies have shown promise in positioning the role of IT more centrally in relation to enabling open strategic inclusion and transparency, going beyond the aforementioned broader examination of IT in relation to crowd- and open-sourcing. For example, the inclusive use of Wikis in strategy has been studied (Baptista et al., 2017; Dobusch & Kapeller, 2017), while IBM’s “jamming” events to shape strategy have also been explored (Whittington et al., 2011; Morton et al., 2016a; Tavakoli et al., 2017). Others have identified the many types of social media used for open strategizing (Baptista et al., 2017), while research has also focused on specific examples of IT used to enable openness in strategy such as blogging platforms (Whittington et al., 2011; Gegenhuber & Dobusch, 2017), particularly as a means of being transparent about strategy, and sharing strategic

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content. Online surveys and email have also been studied as a means of collecting strategy ideas and opinions and discussing strategy over time (Dobusch & Kapeller, 2017; Luedicke et al., 2017). Studies on idea contest platforms (Matzler et al., 2014b; Hutter et al., 2017), as used for strategic inclusion, stress the potential importance of incentivization in Open Strategy activities (e.g., Piller & Walcher, 2006; Bullinger et al., 2010). Less commonly mentioned forms of IT include employee listening programs that are used to conduct electronic interactive interviews with stakeholders, as a means of demonstrating openness by listening to the strategic views of employees (Morton et al., 2015; Baptista et al., 2017). Table 10.2 provides an illustration of the broad and varied nature of types of IT used in Open Strategy and examples of studies from the Open Strategy literature. While we recognize that the Open Strategy literature is already rich with meaningful theoretical and practical insights in relation to the potential role of technology in strategizing, this review and organizing of IT types emphasizes the varying treatment of IT in extant studies in considerably more detail. In doing so, this chapter not only furthers our understanding as to the positioning of IT in enabling strategic inclusion and transparency, but also provides a useful first step in expanding the meaning of IT use more specifically in relation to Open Strategy.

10.4 Thematic Areas and IT In-Use for Open Strategy: Open Strategy Scope, Scale, Suitability, and Structure We now outline four themes that further connect Open Strategy and IT types with IT in-use. The first area explores the “scope” of Open Strategy activities in relation to IT. Second, “scale” considers the role of IT in relation to participation in open strategizing. Third, “suitability” examines why particular types of IT might be used to enable Open Strategy, and last, “structure” links Open Strategy and IT with notions of organizational structure and strategy content, particularly in relation to

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Table 10.2 Types of IT Used for Open Strategy Type of IT

IT used for Open Strategy

Blogging and microblogging platforms

Used by top management to communicate Whittington et al. (2011); Morton et al. with and include stakeholders in strategic (2016b); Gegenhuber and Dobusch discussions (2017)

Crowdsourcing platforms

IT specifically identified as following a crowdsourcing or open sourcing model/ process/design

Email/mailing lists

Used as a means of discussing strategy Dobusch and Kapeller (2017); Luedicke with stakeholders, and collecting strategic et al. (2017) ideas

Employee listening programs

Used by managers to electronically capture and record employee thoughts on strategic issues

Morton et al. (2015); Baptista et al. (2017)

Idea contest/competition platforms

Designed to incentivize participation in strategic idea generation

Amrollahi and Rowlands (2017); Hutter et al. (2017)

Innovation Jams/strategy jams

Specific use of IBM jamming processes and associated IT

Whittington et al. (2011); Matzler et al. (2014a); Whittington (2014); Morton et al. (2016a); Tavakoli et al. (2017)

Online surveys

Used as a means of collecting strategic ideas and opinions of stakeholders

Morton et al. (2016b); Dobusch and Kapeller (2017)

Social software/social media and online platforms

IT identified as social software platforms, Matzler et al. (2014b); Baptista et al. social media, or online platforms generally (2017); Tavakoli et al. (2017)

Web 2.0 platforms

IT identified as Web 2.0 platforms and used specifically for strategic interaction and ideation

Matzler et al. (2014a); Amrollahi and Ghapnchi (2016)

Wiki platforms

Used specifically for strategic idea generation, and publishing of strategic outputs (e.g., final strategic plans)

Baptista et al. (2017); Dobusch and Kapeller (2017); Heracleous et al. (2017)

ownership and control in open forms of strategizing. Ultimately, we propose that these four areas of concern – as summarized in Table 10.3 – warrant deeper exploration and serve as a platform to develop further research at the intersection of strategic openness and the enabling role of technology. We develop these areas to review and identify latent gaps as the second important stage toward crafting a comprehensive research agenda for Open Strategy and IT.

(Theme i) Scope – IT and Internal and External Forms of Openness in Strategy The “scope” of Open Strategy warrants attention so as to further understand the relationship between

Example studies

Newstead and Lanzerotti (2010); Stieger et al. (2012); Amrollahi et al. (2014); Amrollahi and Ghapnchi (2016); Aten and Thomas (2016); Amrollahi and Rowlands (2017); Malhotra et al. (2017)

IT and the different forms of internal and external openness that it enables. This builds on more general trends in the strategy literature regarding the way in which IT is changing organizational strategy work in many ways (Powell & Dent-Micallef, 1997; Haefliger et al., 2011). Core concepts of inclusion and transparency in the Open Strategy literature emphasize internal and external organizational boundaries, and whether IT is deployed to enable openness across internal or external boundaries is indeed a central consideration (Chesbrough & Appleyard, 2007; Whittington et al., 2011). Birkinshaw (2017), for example, presents a framework as a useful device to highlight aspects of strategy that can become open. Both within and across these aspects, there are choices to be made concerning how particular IT-driven Open

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Table 10.3 Themes in Open Strategy and IT

IT-based factors affecting open strategy

Themes in Open Strategy and IT

Central tenets of each theme

Scope – IT and internal and external forms of openness in strategy

Further understanding the relationship between IT and the different forms of internal and external openness that it enables. Significant here is positioning why and how particular ITdriven Open Strategy practices might operate in relation to such boundaries, and whether they cover part of an organization, the whole organization, or operate between multiple organizations.

Scale – IT and participation in Open Strategy

Exploring the scale of participation and how and why this varies. Table 10.2 shows there is variation in terms of how many people across different organizational functions participate in Open Strategy practice. The role of IT in delimiting the scale of Open Strategy is also a pivotal theme.

Suitability – IT and analog tools for enabling openness in strategy

Explicating why organizations might adopt particular technologies, and thus central here is the propriety of different IT tools for enabling openness in strategy, and understanding why certain strategizing tools are used to enable openness in different situations or contexts. This might also include how IT is coupled with more traditional, analog forms of strategizing, in contrast to suggestions that IT is always the central enabler for open strategizing activity.

Structure – Open Strategy, IT, and organizational structure

The significance of structure in relation to Open Strategy and IT can help to unpack concepts of ownership in Open Strategy in relation to strategizing and the generation of strategy contents through IT. Thus, important here are notions of IT, Open Strategy, and strategy content; specifically, who holds influence and control of strategy when strategic content is open and changeable via IT.

Strategy practices might operate and whether they cover part of an organization, the whole organization, or operate between multiple organizations. The scope of Open Strategy practice and IT is also important because types of IT are used in different ways in relation to organizational boundaries. This has been emphasized, for example, in terms of commons-based production (Chesbrough & Appleyard, 2007), and radical agenda setting and decision making by voluntary contributors (Lueducke et al., 2017). Others have examined how IT is used to provide input to decision making within, and beyond, organizational boundaries (Morton et al., 2016a; Baptista et al., 2017). The scope of Open Strategy practice matters therefore as to how different types of IT might enable

internal and/or external openness. This is consistent with theoretical contributions in the literature that have explored how such types of openness might emerge (both voluntarily and involuntarily) through the adoption of social IT (Haefliger et al., 2011; von Krogh, 2012). Accounting for these forms of openness remains rudimentary in the extant literature, and could be translated into more specific modes of Open Strategy enabled by IT (Gegenhuber & Dobusch, 2017), thereby potentially extending notions of inclusion and transparency along a continuum of openness (Hautz et al., 2017). Considering the array of IT used for Open Strategy, as we have detailed in Table 10.2, questions of how IT enables certain directional forms of

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communication and collaboration between strategic actors are also a potentially central means of further unpacking the concept of IT use of Open Strategy. Indeed, this is important as particular types of IT might enable different dynamics of activity to occur in the pursuit of distinct strategic goals as mediated by IT (Henfridsson & Lind, 2014; Jarzabkowski & Wolf, 2015).

(Theme ii) Scale – IT and Participation in Open Strategy Strategic management studies have long focused on strategy as being the province of senior executives and managers (Hambrick, 1981; Carpenter, 2002), including macro-environmental considerations of how technological advancements might help enable new opportunities (Itami & Numagami, 1992) and facilitate competitive advantage (Porter & Millar, 1985). In contrast, aspects of “scale” of strategy praxis and practice in (and/or between) organizations are often at the very heart of the motivation to develop Open Strategy. Put simply, this involves the inclusion of different (i.e., non-elite) and more stakeholders in aspects of strategizing and/or rendering these aspects visible to many more organizational stakeholders (Whittington et al., 2011). While various types of participation have been portrayed in Open Strategy work to date (e.g., Hutter et al., 2017; Seidl & Werle, 2017), we suggest that it is pertinent to not only explore who is involved in open strategizing, but to also understand what role differing types of IT have in enabling participation (Tavakoli et al., 2015; Hutter et al., 2017). As such, participation in Open Strategy might be understood in terms of diversity in the scale of user participation (Surowieki, 2004; Koch et al., 2013). Examples in the Open Strategy literature, such as focus on strategy “jams,” have documented situations where there have been tens of thousands of participants involved in strategizing (e.g., Whittington et al., 2011; Matzler et al., 2014a), while other examples such as in the public and third sectors have considered much smaller scale involvement (e.g., Amrollahi & Ghapnchi, 2016; Morton et al., 2016b). This focus might yield insight into intricacies of how IT is used to enable different levels of participation and across different aspects of open strategizing. There is also

the potential to explore how different types of IT enable strategic inclusion and transparency of varying scale. Indeed, the role of strategic actors external to the organization requires increasingly more attention, including, for example, how external actors might provide Open Strategy services (Whittington et al., 2011), or how types of IT for Open Strategy are delivered by facilitators of Open Strategy (Morton et al., 2016b; Tavakoli et al., 2017). Such a focus on (an increasingly diverse set of) external stakeholders has a long tradition in innovation management, and studies of Open Innovation (Chesbrough, 2006; Gassmann et al., 2010). Examples in the nascent Open Strategy literature have included organizations working with consultancy firms to create online strategy platforms (Newstead & Lanzerotti, 2010; Tavakoli et al., 2017), and the facilitation of strategic discussions hosted by volunteer interest groups (Morton et al., 2016b). Not only will exploring differences in IT use according to scale of participation aid our understanding of the field, but it will also provide insight as to how IT might be adapted to enable, or indeed rely upon, the participation of different practitioners and groups.

(Theme iii) Suitability – IT and Analog Tools for Enabling Openness in Strategy Strategic management scholarship has a longstanding reputation of developing applicable frameworks and tools, driven by different traditions and the practice of strategy (Hoskisson et al., 1999). Classic examples include the Balanced Scorecard (Kaplan & Norton, 1992), Five Forces framework (Porter, 1979), and PEST (Political, Economic, Socio-cultural, and Technological) analysis (Aguilar, 1967). Similarly, the IS literature has streams focused on assessing the suitability of technology developments and their development and design for use in certain situations (Nunamaker et al., 1990; Martinsons et al., 1999). Here, we argue that such themes of “suitability” in relation to Open Strategy and IT also warrant closer attention. Current literature has done little to explore why certain types of IT are used, and why organizations might adopt particular

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technologies through which open strategizing activity can be driven. While the themes of scope and scale imply the possibility for managers to make decisions about the design or nature of openness, the theme of suitability addresses why organizations might adopt particular types of IT in certain situations based on the scale of participation and scope of activities involved. Within the theme of suitability, we argue that there should be deeper interrogation of the propriety of different IT tools for enabling openness in strategy, and also efforts to build a deeper understanding of why certain IT-based strategizing practices are used to enable openness in different situations or contexts (Tavakoli et al., 2017). In theory, it should be that openness stems from the use of more traditional, analog forms of strategizing (such as aforementioned strategy frameworks and tools, away days, board meetings, or presentations) incumbent within organizations (Whittington et al., 2016; Baptista et al., 2017), or indeed a combination of IT and analog tools. Therefore, more research is required to explore potential combinations of the IT and analog tools being used for Open Strategy, such as through face-to-face and roundtable discussions (Friis, 2015; Dobusch & Kapeller, 2017), and strategy workshops (Santalainen & Baliga, 2014; Mack & Szulanski, 2017). Given the well-documented importance of IT in Open Strategy, furthering theoretical knowledge about particular choices of IT and analog means of strategizing and their bundled features (Demir, 2015; Jarzabkowski & Kaplan, 2015) is significant. It must be acknowledged that Open Strategy is not exclusively based in the digital realm. Researchers must also address the deficit in attention being paid to the potential importance of analog tools in open strategizing activity (Baptista et al., 2017). Closer examination of analog-digital ensembles is an important counterbalance and could be harnessed in order to provide a more substantiated understanding of the doing of Open Strategy, and their combination in strategy praxis comprises choices made by the organization. This is, perhaps, more conscious and intended across different cases of Open Strategy and warrants further study.

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(Theme iv) Structure – Open Strategy, IT, and Organizational Structure The final theme we outline here, that of “structure,” interplays with the long-standing narrative in strategic management studies that concerns the challenges of IT and its potential impact on organizational strategy. Considering the focus of this work, we follow examples in strategy and stress that Open Strategy and the centrality and enabling features of IT present vividly different, and potentially problematic, approaches to strategizing. We use the term structure to address the interplay between established, expected, and designed structures that pervade organizations and the variety of efforts we have seen to produce Open Strategies. More specifically, this area can help to unpack concepts of structure that might be blurred by openness in strategy, including notions of ownership and generation of strategic content or knowledge transfer in relation to open strategizing through the use of IT (Whittington et al., 2011; Luedicke et al., 2017). For example, Mack and Szulanski’s (2017) study shows that the nature of open strategizing both affects and is affected by an organization’s structural characteristics. They show contrasting approaches in terms of stakeholder inclusion compared to participation in centralized versus decentralized structures. Further, the literature to date has highlighted varied dynamics for how strategy is open in relation to emerging strategic content (Appleyard & Chesbrough, 2017; Tavakoli et al., 2017). Some authors have indicated that openness through IT lies primarily in stages of ideation in Open Strategy (Whittington et al., 2011; Matzler et al., 2014a). Others have emphasized openness expanding to the potential ownership in decision-making processes (Mount & Pandza, 2016; Luedicke et al., 2017) and the impact IT might have in guiding or indeed hindering competitiveness and organizational legitimacy (Appleyard & Chesbrough, 2017; Gegenhuber & Dobusch, 2017). Strategy content has also been shown as an area that requires further attention in Open Strategy studies, particularly by going beyond particularities of open strategizing activities and toward a focus on the way in which openness affects

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the content of strategy (Hautz et al., 2017). Thus, in considering the significance of structure, future endeavors might examine more closely the salient organizational structures with regard to who holds influence and control of strategy when strategic content is open and changeable via IT (von Krogh, 2012; Marabelli & Galliers, 2017). Additionally, there has been recognition of different “branches” of Open Strategy research, including one that is concerned with content that is interested in how organizations might sustain themselves economically through open approaches to strategy and innovation (Chesbrough & Appleyard, 2007; Appleyard & Chesbrough, 2017). Within this distinction, there also remains conjecture as to whether the relationships of Open Strategy initiatives with strategy are passive or active (Hutter et al., 2017). We suggest that further research should be more specifically guided toward whether the aim of strategizing relates directly to organizational or operational levels, and whether contents are directly strategic (Whittington et al., 2011; Luedicke et al., 2017) or relate more indirectly to innovation and business model renewal, for example (Chesbrough & Appleyard, 2007; Stieger et al., 2012; Matzler et al., 2014a). While such dualities present issues in defining and understanding the core purpose of Open Strategy, they also enable distinct paths through which the phenomenon can be developed. The role of IT in enabling different types of strategy content through strategizing is also underrepresented, and thus the question of how IT-driven Open Strategy unlocks types of content relating to different structures and levels of strategy in organizations remains nascent, as does the question of how and why this might affect firms and their structure. In sum, the four themes of scope, scale, suitability, and structure offer a platform from which to add breadth and depth of research that can help to more definitively unpack the significance of IT in Open Strategy. In the following sections, we review the possible contribution from strategic management and IS in outlining a more specific and guided agenda for Open Strategy and IT research.

10.5 Considerations for Future Research: Social and Material Perspectives on Issues in IT Use and Open Strategy – A Practice-Based Research Agenda In outlining an explicit program for future work emerging from understanding of IT in use for Open Strategy, we are able to organize some of our reflections on and criticisms of the current literature into a structured guide for scholars. To do so we present analytical devices that can assist in addressing the themes outlined in the previous sections. Tavakoli et al. (2017: 5) establish Open Strategy as a practice-based phenomenon; that is, a phenomenon that is constituted “less on the deterministic functional properties of IT than on how IT artifacts are used (enacted) differently within different practices.” As such, and in consideration of existing calls for coaction between strategy and IS scholars, we craft a research agenda that places practice center stage, with the doings of practitioners forming the very nature of Open Strategy in organizations. As has been explored in the preceding sections of this chapter, Open Strategy research has gained much attention in the past decade. Furthermore, a nuanced understanding of the dynamics and dimensions of Open Strategy work in particular has been brought to fruition through scholarly research efforts, from across different disciplines. While IT has been highlighted as being an imperative driver of openness in strategy, there has been a lack of systematic examination of the significance of different IT types in enabling the doings of open strategizing. For this research agenda, practice is key to uncovering particular features of the Open Strategy and IT dynamic, consistent with practice-based work in strategy and IS (Peppard et al., 2014; Whittington, 2014). In more specific terms, we turn to recent advancements where IS strategizing scholars have brought to the surface the key role of everyday practices (e.g., Arvidsson et al., 2014; Peppard et al., 2014; Whittington, 2014). Such research builds on the strategy-as-practice literature (e.g., Jarzabkowski, 2004; Vaara & Whittington, 2012) and suggests that to more fully understand how strategy unfolds in practice it is relevant to look at micro-level

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aspects (Johnson et al., 2003). To analyze IT use in Open Strategy at a granular level, the uptake of this joint agenda (Whittington, 2014; Peppard et al., 2014) would elevate IT from silent partner to a pivotal enabler in open strategizing activity. The practice-based view stems from ANT (Actor-Network Theory) and post-feminist theories (e.g., Butler, 1988; Barad, 2003) and was brought to sociology and management fields first (Schatzi, 2001), before being widely adopted by strategy and IS scholars due to the pioneering work of Whittington (1996; 2006), Orlikowski (2007; 2008), and Iacono (Orlikowski & Iacono, 2001) where “sociomateriality” was first conceptualized as a theoretical perspective (Cecez-Kecmanovic et al., 2014). This perspective (and theorizing) accounts for people and “objects” as being equally important and pertinent. It can be adopted, in line with the IS literature, to unpack the significance of IT artifacts in (Open) Strategy praxis. IT artifacts are viewed as actively involved in organizational processes and practices rather than tools that actors employ (or exploit) to achieve objectives in Open Strategy work. Further, the notion of sociomateriality can be a means by which the “social” (people) and the “material” (objects) in Open Strategy are viewed as interwoven rather than merely interacting, and are thus imbued in practices (Orlikowski, 2006). One of the most relevant contributions in this literature attributes agency to both social and material actors (Orlikowski, 2007). This implies that both human and material agency have the ability to reconfigure organizational practices in the accomplishment of Open Strategy activity (Leonardi, 2012). Drawing on Foucault (1977; 1980) and Latour (1986), and also relevant to our practice-based agenda, are notions that sociomaterial theorizing acknowledges the relevant role of power, here conceived as a relational construct (Hardy & Thomas, 2014; 2015) that is produced through discursive and material aspects of practices (Nicolini, 2009). Therefore, sociomaterial practices (entanglement between people and objects) are interwoven with power dynamics. For instance, technology adoption and exploitation for open strategizing can be seen as a practical accomplishment (performed through various actions/interactions where the protagonists are

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human and material agency). Power is imbued in these sociomaterial practices as people adopt and exploit technologies (e.g., an enterprise system) to achieve organizational goals (Marabelli & Galliers, 2017), and this understanding can be extended to explicating how managers enact IT in their experimenting with open approaches to strategy. With the rationale for a practice-based research agenda considered, we order the agenda in line with our earlier outlined themes for Open Strategy and IT. The first area we propose for future research thus focuses on the scope of IT and Open Strategy. Here, researchers might wish to capture more exacting practices of IT for opening particular dynamics in strategy praxis. For example, future work might usefully explore how IT enables openness in strategy to occur within and between different organizational boundaries (Chesbrough & Appleyard, 2007), and how IT and associated practices enable certain directional forms of communication and collaboration between strategy practitioners (Henfridsson & Lind, 2014). Further, future studies might position the ways in which IT-enabled open strategizing practice contradicts traditional theories of strategy and the firm (Powell & Dent-Micallef, 1997), and why the scope of strategizing might be relevant in such conjecture. Theoretical notions of power in strategy work might also inform research endeavors, particularly by explicating the differences in the role of power in dealing with top-down, planned, and bottom-up, emergent strategizing practices. In outlining a second step in this agenda, we consider the significance of scale in our review, emphasizing work at the nexus of IT and participation. The potential to explore the scale of participation and how and why this varies is important (Hutter et al., 2017). Questioning how the number of people participating in the practice of Open Strategy varies across different organizational functions is one notable route to understanding scale. Further, and complementary to this, is interrogation of the role of IT in delimiting the scale of Open Strategy praxis. In addition, scholars might extend existing research to focus on practitioners of strategy, particularly by following the example of Open Innovation scholars and exploring what role external facilitators might have as intermediaries in

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enabling Open Strategy through IT (Whittington et al., 2011; Morton et al., 2016b). Different contextual settings will be key to understanding when Open Strategy requires scale to reach beyond internal boundaries to bring those outside of the firm into everyday practices (Johnson et al., 2003). It is also notable that the practice lens, as demonstrated in strategy and IS work, will be central to focus attention on what people do with particular technologies in their ongoing and situated activity (Orlikowski, 2007; Whittington, 2014), and future work exploring scale in open strategizing might study IT in a tightly defined stream of praxis over time (Jarzabkowski & Wolf, 2015) to understand participation at key stages in the continuum from closed to Open Strategy (Hautz et al., 2017; Tavakoli et al., 2017). Third, our discussions regarding suitability highlight an area of considerable importance, which at present remains devoid of extensive and meaningful work in the growing Open Strategy domain. Here, we encourage and aim to inspire and guide future research toward more direct questions relating to types of IT in Open Strategy. For example, we echo calls for closer attention to be paid to the material in strategy praxis (Peppard et al., 2014; Whittington, 2014; Tavakoli et al., 2017) with empirical studies usefully examining the material features of IT and how these are inherently interwoven with strategy practitioners in the unfolding of openness in strategy. The significance of analog tools in Open Strategy work to date means future endeavors might also explore what differences exist between use of IT and analog tools for open strategizing, with a view to understanding more clearly why particular tools are chosen for Open Strategy activity in different contexts. Again, this might involve paying more precise attention to those practitioners who initiate and drive Open Strategy in organizations, while unpacking the complexities of how IT is used in streams of open strategizing praxis. Ultimately, suggestions that there exists a clear opportunity for IS researchers to help strategy-as-practice scholars to better understand the role of material technologies in strategy are particularly pertinent to extending this area of Open Strategy research (Whittington, 2014). As we emphasized through our earlier discussions of structure, the final theme in this proposed agenda raises several important directions for

research. Key here might be improved understanding of how IT mediates activity between organizational actors in the generation of new strategy contents (Jarzabkowski & Wolf, 2015), and the broader effects openness, as enabled by IT, might have on organizations and their environments (cf., Porter & Millar, 1985). Research might also explore how IT-driven openness alters power dynamics in strategy and those groups involved in strategizing (Henfridsson & Lind, 2014), consistent with research in IS work and sociomaterial theorizing involving people and “things” (Marabelli & Galliers, 2017). The question of who holds influence and control of strategy when strategic content is open and changeable as a result of IT use is similarly relevant here, resonating with much research that has sought to understand the dynamics of open strategizing and its potential effects on the structure of organizations over time (Morton et al., 2016a; Gegenhuber & Dobusch, 2017; Tavakoli et al., 2015; 2017). Other relevant ventures might pose what types of strategy content emerge from IT-driven open strategizing, and how IT unlocks different forms of strategizing between strategy content and strategy process, including whether openness and associated practices and outcomes apply to organizational or operational strategies, or to innovation more broadly. In addition, the significance that future empirical work might have toward understanding how IT enables increased access to strategy for erstwhile nonstrategists, consistent with studies that have more explicitly focused on dynamics of transparency (Gegenhuber & Dobusch, 2017; Malhotra et al., 2017), is also noteworthy. In concluding our agenda, we bring together some final points from across the relevant literatures examining Open Strategy. We echo calls for more comparative case studies of Open Strategy (Hautz et al., 2017) and stress the need for longitudinal approaches to explore research at the intersection of Open Strategy and technology work (Vaara & Whittington, 2012). In order to further interrogate the relevance of IT for Open Strategy, we argue that research needs to go beyond focusing on single contexts, as this limits the potential for understanding the significance of IT in-use. Indeed, research ventures might instead seek to

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understand Open Strategy in different contexts by placing IT as the principal point of interest. For managers and executives, this would yield a variety of exemplary cases of IT and Open Strategy, providing greater clarification of which aspects of strategic work can be made open (or remain closed) in organizations. By expanding the number of studies, incorporating different contextual settings, managers can engage more fully with the numerous options provided by IT in Open Strategy. The differences in the use and effect of particular open practices through types of IT in distinct cultural and organizational contexts are also key, as is the significance of their mediating effect on (open) strategizing (Jarzabkowski & Wolf, 2015). We argue that longitudinal approaches to researching Open Strategy are needed to show that not only can IT open up strategic activities in organizations, but to show how IT is changing strategic work in organizations long-term. In this vein, Open Strategy might be studied over time to observe and capture ongoing dynamics where relationships between IT and people are constantly reconfigured (Orlikowski, 2007). This complements further a foundation for deeper understanding by managers in terms of how strategic work might change, what resources and capabilities are required (and how they should be orchestrated), as well as reinforcing the need for crafting coherent IS strategies in conjunction with business strategies. While the state of research in the field is some distance from being able to prescribe specific performance outcomes from Open Strategy and IT, the review and agenda presented here offers an array of options for managers to consider before developing more open approaches to strategy. Specifically, we surface various types of IT and how they are used differently in Open Strategy (Table 10.2) and we connect IT to the central themes of scope, scale, suitability, and structure in Open Strategy. Indeed, we hope that our agenda, and the other considerations outlined in this chapter, might also help unpack the evolution of Open Strategy tools used in strategizing activity over time, and help to emphasize how managers dictate the dynamics of openness, along the continuum between being open and closed (Hautz et al., 2017).

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11

Social Media in Open Strategy: A Five-Flows Model of Strategy Making and Enactment RENEE R OTTNER, DANIELLE BOVENBERG, and PAUL M. LEONARDI

11.1 Introduction Many organizations – large and small – have begun to implement enterprise social media for use among employees and senior leadership. According to Leonardi, Huysman, and Steinfield (2013: 2), enterprise social media allow workers to: (1) communicate messages with specific coworkers or broadcast messages to everyone in the organization; (2) explicitly indicate or implicitly reveal particular coworkers as communication partners; (3) post, edit, and sort text and files linked to themselves or others; and (4) view the messages, connections, text, and files communicated, posted, edited, and sorted by anyone else in the organization at any time of their choosing. The broad family of social media technologies used in organizations today includes social networking sites, blog platforms, microblogging tools, wikis, and social tagging tools (Leonardi & Vaast, 2017). Today’s popular examples include Slack, Yammer, Workplace, Chatter, and Jive – with new entrants sure to displace some of those in the future. What do these new tools, which have traditionally been thought of as platforms for employees’ social interaction, have to do with strategy? In the last several years, strategy scholars have begun paying attention to information technology’s ability to host “strategy conversations” – explicit and bounded episodes of dialogue between employees and senior management (Baptista et al., 2017; Denyer et al., 2011; Stieger et al., 2012). Moving strategy out of the executive suite and onto information technologies that give access to employees across the organization has led to the

opening of strategy making (Hautz et al., 2017; Whittington et al., 2011). Today, the idea of Open Strategy encompasses the belief that executives who develop strategy may do well to have conversations about that strategy with employees, rather than keep it secret. By opening the strategy-making process, scholars argue that employees will be more committed to the values of the organization and more likely to buy in to new strategic initiatives (Luedicke et al., 2017; Mack & Szulanski, 2017). The arrival of enterprise social media within companies brings the potential to take openness to new levels. Unlike traditional information technologies that simply provide channels for dyadic interaction and databases in which to store documents and other reference materials, enterprise social media create new platforms for interaction upon which senior leadership can watch and communicate with employees from across the organization in real-time, naturally occurring work environments. This emerging link between practice and knowledge (Brown & Duguid, 2001), when coupled with the visible and persistent qualities of social media interactions, allows for novel types of visibilities within the firm. When traces of knowledge developed in practice persist over time, this offers possibilities for senior leadership to engage with the organization’s knowledge assets in ways that have hitherto remained impossible. The visibilities afforded by enterprise social media have implications for the making and sharing of appropriate strategies. In this chapter we consider these different implications and discuss ways in which research on enterprise social media

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may enrich our current picture of internal openness in the firm. Our thesis in this chapter is that discussions of Open Strategy have predominantly been limited to the interaction that happens between senior leaders and employees after those senior leaders have developed a strategy and wish to discuss it with their workforce. A few studies have begun to consider the role of employees in strategy-making processes (e.g., Dobusch & Kapeller, 2018; Luedicke et al., 2017), but this stream has not come together in a unified way about how to use enterprise social media tools, or the affordances of these tools to open up strategy conversations across the organization. We consider these unique capabilities of enterprise social media and put forward a model of organizational visibility for strategy making that expands theorizing about what Open Strategy can be. We develop a 5-Flows Model of Open Strategy that illustrates how knowledge flows relevant to strategy making may benefit organizations by increasing their strategy-making capacity and deepening their employees’ knowledge, skills, and other strategic resources. By drawing on a practice perspective of organizational knowledge and strategy (Brown & Duguid, 2001; Orlikowski, 2002; Vaara & Whittington, 2012), our model goes beyond the episodic and explicit “strategy conversations” that have dominated existing discussions of Open Strategy to date. To develop this 5-Flows Model, we begin by reviewing the literature on how social media informs knowledge-based strategies and facilitates knowledge sharing practices. We then draw on existing literature to develop each of the five flows in the model and we discuss how the overarching model can change the way we think about doing strategy within organizations. We conclude by considering new methodological approaches to studying the five flows of Open Strategy.

11.2 Knowledge-Based Strategies and Social Media In many firms, strategy is viewed solely as the province of the senior-most management. After being asked about whether the change he was

making to the structure of his division aligned with the firm’s strategy, a mid-level manager in a large, and very successful, financial services firm remarked, “I don’t know. Strategy is something the executive team worries about. I just need to make sure my people get their work done.” Similarly, the leader of the ethics and compliance division of a major healthcare device manufacturer observed that, “Our strategy is sort of held as a secret by the executives because it’s our source of differentiation. What it is is pretty much closed off to most of us here, which is fine because that’s their job. The job of us regular people is to keep the company going.” But the movement toward Open Strategy suggests that such beliefs about strategy – that it is something only senior management does, that it should be secret, and that strategy formulation and implementation are separate from the work that “regular people” do inside organizations – need revisiting. One of the pillars in the foundation of the Open Strategy movement is that individuals at all levels and in all areas of the firm have the potential to contribute in meaningful ways to corporate strategy (Baptista et al., 2017; Hautz et al., 2017; Whittington et al., 2011). A key motivation behind such a belief is that good strategy should be tied closely to a firm’s knowledge assets. If firms possess unique and inimitable knowledge and design their strategy around that knowledge, they will be more likely to outperform their competitors (Eisenhardt & Santos, 2002; Felin & Hesterly, 2007; Liebeskind, 1996; Zack, 2002). Although this knowledge-based view has become widely accepted, scholars often fail to recognize that knowledge is not the province of organizations, writ large; rather it is produced, documented, shared, and used by people who work across various business units and departments (Brown & Duguid, 2001). Consequently, the knowledge that is produced and shared among employees outside of senior management about routine work tasks is critical to an effective knowledge-based strategy. To put it more bluntly, the knowledge that senior managers – those we typically think of as the firm’s “strategists” – need is not just knowledge about strategy, but also knowledge about what knowledge the firm actually possesses.

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A quick example illustrates the point. We observed members of the senior leadership team at a large plumbing fixture company develop a new strategy for the company over a number of sessions. They called the strategy “the first mover strategy.” The idea was to beat competitors to market in the launch of new products. The senior leadership team kept the new strategy a secret for several months and publicized it with a lavish “launch party.” But after several months of senior leadership telling middle-managers to change the key performance indicators of their employees to motivate them to do faster product development, it became apparent that the firm did not possess knowledge in customer discovery, design, and prototyping to produce products at the quality and speed necessary to beat competitors to market. What the senior leadership team eventually did learn was that the firm did have tremendous knowledge about how to copy. Employees at many levels were adept at executing routines that would dissect current products already on the market and figuring out how to design alternatives that were equally as pleasing but built with cheaper materials, as well as how to manufacture those parts for less money than competitors. The senior leadership team reconvened and decided, instead, that it would embark on a “fast follower strategy” by which they would aim to be second to market on new products and compete on cost. As one senior executive remarked at the meeting in which the change in strategy was made: “I wish we had knowledge about what kinds of knowledge we had as a company. We might have arrived at this decision much faster that way.” A core problem in this company, and many others like it, was that senior management did not have visibility into the knowledge and practices of employees. Moreover, employees themselves did not share knowledge frequently with each other. Yet to develop and implement a strategy based on the unique knowledge produced and used by a firm requires that people share what they know with each other and with senior management. Research has documented a number of reasons why it is difficult to share knowledge in organizations, including a lack of absorptive capacity (Szulanski, 1996), causal ambiguity (Edmondson et al., 2001), problems associated with search

(Katila & Chen, 2008), inappropriate network structure (Reagans & McEvily, 2003), lack of common ground (Carlile, 2002), insufficient tie strength for type of knowledge sought (Hansen, 1999), and not-invented-here type syndromes (Singh et al., 2010). What causes these problems? A strategy-as-practice approach would suggest that these problems arise because knowledge is embedded in practice (Fenton & Langley, 2011; Golsorkhi et al., 2010; Jarzabkowski & Spee, 2009; Whittington, 1996). A practice perspective on strategy posits “that strategy work (‘strategizing’) relies on organizational and other practices that significantly affect both the process and the outcome of resulting strategies” (Vaara & Whittington, 2012: 286). Strategy depends on the integration of knowledge produced and used by people who work in different practice domains across the organization. Knowledge and practice are intimately connected in local communities. If knowledge is enacted in practice, and people from different parts of an organization engage in different kinds of practices, how might they come to effectively share knowledge with one another and with senior management? One popular approach advocated by both scholars and practitioners is to implement new information and communication technologies that codify knowledge so it can be easily disseminated or enable people working in different communities across the organization to visualize their differences and achieve common ground (for a detailed review, see Chapter 10 in this volume). But from a practice perspective, the use of information and communication technologies typically makes knowledge sharing within organizations worse, rather than better, because technologies attempt to extract knowledge from practice, thereby making its interpretation and use difficult in new contexts in which practice is unique (Bailey et al., 2012; Pentland, 1995; Vaast, 2007). One relatively new genre of communication technologies offers the possibility of aiding knowledge sharing (as a waypoint on the journey toward integration) without severing the link between knowledge and practice. Enterprise social media have begun to proliferate across many organizations1 (Schadler & Karcher, 2011).

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As Leonardi et al. (2013: 2) describe, “rather than functioning as a channel through which communication travels, enterprise social media operate as a platform upon which social interaction occurs.” In other words, enterprise social media extend the space of practice into communications technologies such that the technologies themselves become a site in which practice unfolds. Importantly, “because this platform is digital, in contrast to the physical platforms of offices, conference rooms, and hallways that have traditionally been the stages on which most workplace communication is played out, anyone in the organization can participate at any time from any place” (Leonardi et al., 2013: 2). If enterprise social media expand the field of practice to allow people from different parts of the organization, who would otherwise have little occasion or opportunity, to be co-joined in practice, the possibility exists that organizational knowledge sharing can grow more common. As Majchrzak and her colleagues aptly put it, “the use of social media creates the opportunity to turn organization-wide knowledge sharing in the workplace from an intermittent, centralized knowledge management process to a continuous online knowledge conversation of strangers, unexpected interpretations and re-uses, and dynamic emergence” (Majchrzak et al., 2013: 38). Yet we know from studies of technology use in practice that just because technologies provide capabilities for certain actions, there is no guarantee that people will use them as expected, if at all (Edmondson et al., 2001; Orlikowski, 2000; Volkoff & Strong, 2013). More specifically, in the emerging literature on strategy tools, scholars who adopt a practice-based approach have convincingly argued that new technologies implemented to help execute strategy will be appropriated by employees in ways that align with their practice at work (Jarzabkowski & Kaplan, 2015). Consequently, in this chapter we provide a framework for understanding how enterprise social media might help to facilitate Open Strategy. We do so by considering that the foundation for good strategy comes from the knowledge that employees produce in their everyday work practice. We contend that social networking technologies can help employees share this knowledge

with one another in ways that make it visible to senior managers, who are typically the firms’ “strategists.” By paying attention to this visible knowledge, senior leadership can begin crafting prototype strategies that are shared with employees for comment, consideration, and amendment by employees at all levels of the organization. The senior leadership can use these insights to revise the emerging strategy and use the knowledge of employee jobs and needs made visible by social media to assure that the strategy is implemented successfully. We consider this cycle of visibility as an important foundation for Open Strategy and we discuss the role that enterprise social media can play in catalyzing this cycle.

11.3 Using Social Media to Facilitate Knowledge Sharing in Practice From a practice perspective, the problems that plague organizational knowledge sharing, such as lack of absorptive capacity or common ground, are symptomatic of a larger issue observed by Brown and Duguid (2001: 204) that “distinct practices create distinct embedding circumstances.” Because knowledge and practice are coconstituted (Brown & Duguid, 2001; Kuhn & Jackson, 2008; Nicolini, 2012; Orlikowski, 2002), individuals working in different communities of practice within an organization develop distinct knowledge. Over time, the re-production and application of knowledge shapes practice such that it becomes difficult to separate knowledge from practice. Learning to engage in practice requires individuals to develop kinds of knowledge such that people develop, find, and share knowledge through practice (Nicolini et al., 2003). Because knowledge is enacted in practice, problems with knowledge sharing arise when knowledge developed and used in one community needs to be shared with another community that conducts their practice differently (Barley et al., 2012; Metiu & Rothbard, 2013; Nicolini et al., 2012). For this reason, Bechky (2003: 314) argues that it is more fruitful to talk about knowledge sharing as a process of “transformation” rather than “transfer.” Carlile (2004) similarly argues that the

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obstacles inherent with sharing knowledge across organizations amount to problems of translation across the various boundaries that separate communities of practice. The recommended solution to knowledge sharing problems suggested by both of these studies, and by many other studies that adopt a practice perspective (e.g., Levina & Vaast, 2005; Wenger et al., 2002), is to create a new space of practice that can be jointly shared by members of different communities. In Bechky’s (2003) study of assemblers, technicians, and engineers in a semiconductor manufacturing facility, physical prototypes helped to create this kind of shared space of practice in which knowledge could be translated. In Carlile’s (2002) study of design engineers in an automotive manufacturing firm, 3-D simulations allowed engineers from different communities of practice to create a shared space in which they could integrate their knowledge to produce vehicle designs that optimized multiple performance targets simultaneously. By creating this new space of practice, employees in both the semiconductor manufacturing facility and the automotive engineering firm were able to translate knowledge because they, at least temporarily, performed their knowledge in practice for others to see, learn from, and apply to their own domains once the interaction was complete. Interestingly, the technologies that create common spaces for practice that enable knowledge sharing tend to be artifacts that can be pointed to, discussed, and critiqued in face-to-face contexts (Ewenstein & Whyte, 2009). A major problem with relying on technologies used in face-to-face encounters is that knowledge sharing in person is not easily scalable. Research shows that attempting to co-orient to artifacts in mediated contexts, rather than in face-to-face contexts, produces fewer successful instances of knowledge sharing because most communication channels neither provide enough richness to convey the subtleties of practice happening on their end of the communication, nor do they create a space for the joint enactment of practice (Bailey et al., 2012). For these reasons, technological solutions that require people to codify knowledge and store it in a knowledge management system or other databases are largely unsuccessful for sharing

knowledge across communities of practice (Wenger, 2000). An organization-wide knowledge strategy cannot be employed with the expectation that people will be able to have frequent face-toface encounters. A more realistic scenario is that people must be able to share knowledge across differences in time and geography. Such a scenario requires individuals to be able to create and engage in a joint space of practice from their respective locations – a scenario that is not typically possible given the current suite of technologies available in most organizations (Treem & Leonardi, 2012). Enterprise social media represent one class of tools that provide a common space for people to engage jointly in practice despite geographic distance and, consequently, share knowledge. According to Leonardi et al. (2013: 2), enterprise social media allow workers to: (1) communicate messages with specific coworkers or broadcast messages to everyone in the organization; (2) explicitly indicate or implicitly reveal particular coworkers as communication partners; (3) post, edit, and sort text and files linked to themselves or others; and (4) view the messages, connections, text, and files communicated, posted, edited, and sorted by anyone else in the organization at any time of their choosing. As these characteristics indicate, enterprise social media are platforms on which people interact instead of channels through which they simply communicate. What is important about these technologies, in the context of knowledge and practice, is that the interaction that occurs on them is both visible to third parties and persists over time (Majchrzak et al., 2013; Treem & Leonardi, 2012). When people exchange messages and files on enterprise social media, their actions are visible to all others in the network. Visibility is an important feature of practice. Lave and Wenger (1991) argued that people often learn on the periphery of a social system not only by participating experientially in practice, but also by observing from the sidelines and learning vicariously. For example, Lave (1996) showed how apprentice tailors in West Africa learned who among their potential teachers were knowledgeable about particular tasks and, often, how to do the tasks themselves

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simply by experiencing work in practice vicariously through observation. Brown and Duguid (2000: 136) have characterized such vicarious learning derived from practice as “stolen knowledge.” As they argue, being immersed in practice and watching others engage in practice helps observers to understand the nuances of work and the contours of knowledge. Observation of others in practice, as well as the ability to see how other people respond to one’s own practices, creates the conditions for joint practice (Brown & Duguid, 2001; Wenger, 2000). Because communications and behaviors are made visible on enterprise social media, it may become possible to develop the kind of situated awareness that emerges from practice and enables the production of a common ground through which knowledge can be translated (Treem & Leonardi, 2012). Communication, behavior, and interaction that occur on enterprise social media persist over time in discussion threads and forums that individuals can return to at any point (Ellison et al., 2015). This persistence is an important feature because neither the production nor the sharing of knowledge are discrete events. Rather, they require people to engage in ongoing communication about a subject, and related nuances can emerge through an iterative process (Kuhn & Jackson, 2008). Enterprise social media provide users the ability to edit, post, review, and even engage additional actors in a discussion around text, photos, and other digital objects. These practices rely on a system that is not bound in time and can record interactions among people indefinitely in a way that contributes to the practice of knowledge sharing (Treem & Leonardi, 2012). Thus, persistence – which is enabled by enterprise social media – may make room for individuals to jointly engage in the development and sharing of knowledge. As we have discussed so far, social media used within organizations may overcome many of the obstacles that have previously hindered employees from sharing knowledge with each other, which is a first important step to building strategy based on a firm’s knowledge. In the next section of this chapter, we introduce a model detailing how the sharing of knowledge between employees in the practice of their work can become visible to senior

managers, and how this enhanced visibility can potentially open up the strategy process in new and exciting ways.

11.4 Opening Up Strategy with Enterprise Social Media Scholars who have focused their attention on the process of Open Strategy have tended to consider ways in which senior leadership can communicate their ideas about the firm’s possible strategic direction to rank-and-file employees and receive ideas and feedback from them (Baptista et al., 2017; Denyer et al., 2011; Stieger et al., 2012). In this way, the Open Strategy process has been largely conceptualized as a process that begins when senior leadership has already begun to think about (and in many cases has already begun to form) new strategy. It also conceptualizes senior leadership in a powerful position through which they are seeking comment on their ideas from others across (usually below them) in the organization. Although it is clearly the case that members of the senior leadership are in charge of strategy formulation and that they should be in a role to aggregate and consider feedback from employees, when viewed from the vantage point of the affordances of social media, the Open Strategy process can be usefully expanded. For senior leadership to engage organizational members in the creation and execution of strategy, they need to know what employees know. As we described previously, enterprise social media act as platforms upon which employees can engage in the joint practice necessary to share knowledge. Because the platform qualities of social media make this knowledge sharing visible and enable it to persist over time, senior leadership can engage with that knowledge in ways that have been hitherto nearly impossible. For this reason, we propose a cyclical 5-Flows model of Open Strategy in the context of enterprise social media use. This model (depicted in Figure 11.1) contains five flows. The first flow represents a new awareness by the senior leadership of the firm about what employees know. Once senior leadership understands what knowledge exists within the organization, they can

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Flow 3: Receiving

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ow

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Fl

Flow 2: Soliciting

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Enacting strategy

Flow 5: Developing

Figure 11.1. The 5-Flows Model of Open Strategy. A model of strategy making that incorporates openness throughout the organization. Arrows 2 and 3 indicate a view of internal Open Strategy as internal inclusion (Hautz et al., 2017), consisting mainly of dialogue between intentionally strategizing management and commenting employees. The practice of deliberate strategizing by executive managers is preceded by visibility of the knowledge resources placed at their disposal in part by the firm’s social technologies as they are used by employees (arrow 1) and by the enactments of employees (arrows 4 and 5).

begin to craft strategy that places that knowledge at its center in ways that give the firm competitive advantage. Senior leadership can then share these “proto strategies” with members of the organization (second flow) for reflection and comment (third flow). It is these second and third flows that have dominated the early scholarship on Open Strategy. After considering the feedback and insights from employees, senior management can decide on a strategic direction for the firm and gather data on how to best implement that strategy internally based on the culture, knowledge, and working practices of employees (fourth flow). As employees begin to work under the mantle of the new strategy they will likely change their practices, routines, and consequently, what they know (fifth flow). Enterprise social media enable each of these five flows. In the sections that follow, we review literature that explains how and to what consequence.

11.5 Flow 1 – Observing: How Senior Leadership Comes to Know What the Firm Knows Given that good strategy is closely tied to the knowledge that employees enact in their work

practices, it is key that senior management stays up-to-date on areas of expertise that emerge across the firm. Enterprise social media offer managers different ways to engage with the knowledge assets that help their firms run. These sites create visibility of collegial requests for advice and assistance and the interactions that ensue (Leonardi et al., 2013; Neeley & Leonardi, 2018). Since these traces are persistent (Ellison et al., 2015), they allow for aggregation across time and departments. Knowing what employees are asking about and whom they are asking can reveal useful information about the firm’s environment and its internal functioning. Neeley and Leonardi (2018) describe how employees of two large firms used enterprise social media to post targeted requests for assistance or advice from coworkers from outside their department. Records of past interactions served as cues to other employees who at other times found themselves searching for similar information. They would “lurk” in digital spaces where the topic had been discussed to judge the appropriateness of their question and the trustworthiness of a potential consulting colleague. This practice was enabled by the record kept of help-seeking interactions on the firms’ social media. This same record offers

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opportunities for managers: such interactions bear witness to recurrent problems and the routines and artifacts developed to deal with them. In this way, managers may develop a more accurate sense of the capabilities being developed in the course of a firm’s collective accomplishments. Moreover, the traces of these interactions might indicate problems that need to be addressed at a strategic level. Lastly, changing needs voiced at one portion of the organization (e.g., the outward-facing side) may herald changes in a firm’s environment that can be met with strategic adaptations (Denyer et al., 2011; Yanow, 2004). By the content of interactions on enterprise social media, internal problems can be spotted and challenges emerging from contact with the environment can be surfaced and potentially addressed at a strategic level (Haefliger et al., 2011). As employee queries are being addressed on these platforms, the connections that are forged over common practice are made visible. Since much innovation occurs where knowledge is shared across boundaries (Burt, 2004; Hargadon, 2002; Reagans & McEvily, 2003), such connections are especially fruitful places to look for the development of potentially valuable knowledge. These network-related insights may have applications for the content of strategy, such as when resources can be allocated to strengthen a fledgling collaboration that generates novel ideas or promises to solve persistent, high-value problems encountered within the organization or at the market interface (Malhotra et al., 2017). Network views of social media activity can help visualize connections forged between distant coworkers over common problems (Leonardi, 2015a). While social media do not give management a full view of all interactions, they offer useful data from which to initiate a line of inquiry. Sites are not the only places where collaborative work takes place, but they are places rich with the traces of problems encountered and addressed. These traces are linked to people, teams and departments, establishing records of what they are good at and what assistance they require. Redundant problems can be spotted, as well as potentials for innovative collaboration and emerging capabilities (Leonardi, 2014). As social media sites enable these new

visibilities, companies must decide how to employ this new knowledge in strategically relevant ways. However, senior leadership must also be able to incorporate such knowledge into strategy-making practices. Baptista et al. (2017) recently argued that senior leadership often experiences tensions between the open and collaborative nature of social media and the closed, hierarchical nature of management practice. They suggest that firms need to develop new capabilities for reflexiveness to take feedback obtained from social media, integrate this knowledge into the organization, and turn it into material useful for strategizing.

11.6 Flow 2 – Soliciting: How Senior Leadership Seeks Input from Employees, While Excluding Them from Strategy Making After senior leadership has enhanced its awareness of the knowledge assets enacted in the organization, the time comes for management to form “proto strategy” and offer it to employees for feedback. A “proto strategy” refers to senior leadership’s broad and preliminary idea for the strategic direction of the firm. So far, empirical investigations of Open Strategy have mainly documented this aspect of management practice (Hautz et al., 2017). Initiatives such as idea contests, employee listening programs (Baptista et al., 2017), and periods of internal crowdsourcing (Denyer et al., 2011; Stieger et al., 2012) take place in virtual spaces to realize “the virtual inclusion of a wider range of actors in strategy making” (Hutter et al., 2017: 357). The promise of this internal dialogue is to arrive at better quality decisions, because more actors’ knowledge formerly distributed across the organization is brought to bear on strategic issues (Liebeskind, 1999; Tsoukas, 1996; von Krogh et al., 2001). Literature on Open Strategy dialogue seeks to describe the practices involved in managing the dialogue and participating in it, pointing out the subtle inclusions and exclusions that these practices entail, and how tensions inherent in Open Strategy give rise to practices to address them. Heracleous (see Chapter 15 in this volume) pushes

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this idea further to argue that Open Strategy may lead to not only greater inclusiveness, but also the capacity to critically examine the assumptions and frames being used to develop and implement those strategies. A number of authors comment on the management practices involved in internal inclusion. A point that many of them make is that Open Strategy efforts can be split into those aimed at information gathering and those aimed at distributing decision-making rights more broadly (Denyer et al., 2011; Gegenhuber & Dobusch, 2017; Mack & Szulanski, 2017; Stieger et al., 2012). For Mack and Szulanski (2017) this represents a distinction between participation and inclusion. Participation involves mainly the communication of information: management might aim to aggregate the preferences of employees or the unique information they possess about the firm’s environment. Inclusion connotes some degree of joint control over the decision-making process, requiring “participants’ active contribution and deliberation of the content” (Mack & Szulanski, 2017: 390). The authors argue that this second form of employee involvement may be at odds with company structure and routines in highly centralized companies. Therefore, these companies may limit participation to the phase of the generation of alternatives, with inclusion being curtailed sharply once it is time for ideas to be evaluated, filtered, and presented to executive management. In a study of a large multinational telecommunications company, Denyer et al. (2011) found mainly informational benefits were experienced by organizational members, who “thought the technology was helpful in terms of broadcasting messages throughout the organization and for making financial savings, mainly in terms of travel costs” (p. 381) but viewed the technology as “a form of propaganda or self-promotion on the part of leaders” (p. 393) reproducing the existing distribution of power. Stieger et al. (2012) describe how the management of an Austrian technology firm supported the formation of an internal crowdsourcing platform, and proposed four questions that they felt employees should discuss during the two-week period of online dialogue. Hutter et al. (2017) followed a “sustainable strategy dialogue” at

Siemens, organized as a competitive challenge to source the best ideas for sustainable business. What several of these studies found is that while the informational mechanism of crowdsourcing and dialogue are easy to implement, there is more variation in the extent that open initiatives altered democratic processes. This difficulty is ascribed to the tension that open principles create with established routines and hierarchies (Baptista et al., 2017). These tensions are also present in companies committed to a more radical, democratic variation of Open Strategy, as argued by Luedicke et al. (2017). In their study – which is a good example of how social media can engage employees and open up the strategy-making process to employees – they used netnographic observations of a German beverage collective’s online strategy conversation. They describe how the collective embraced a strong ideology of openness and strove to Open Strategy making in three areas: agenda setting, participation, and governance. The strategy is brought out into the open by an email exchange allowing all members of the collective to propose issues for discussion, inviting all members to weigh in on issues thus proposed, and giving all members voting rights. According to the authors, practices of “radical” openness encounter obstacles that call for practices of closure. These are called “counterbalancing practices” (p. 372) and they enable open practices to persist. This emergent literature on internal strategic dialogue vividly describes the activities involved in implementing “open” principles in complex contexts.

11.7 Flow 3 – Reviewing: How Employees Provide Direct (but Often Strategically Misaligned) Feedback to Senior Managers Literature on strategy dialogue also describes practices that workers engage in when asked to contribute through “Open Strategy platforms” designed for that purpose (Hutter et al., 2017; Stieger et al., 2012) or email correspondences (Luedicke et al., 2017). Hutter et al. (2017) argue that involvement is not one activity, but rather

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involves workers submitting ideas, commenting on ideas (by providing feedback, clarification, support, and understanding), and evaluating ideas. Each of these has different effects on the sense of community that organizational members feel when they engage in the activity, some of which don’t seem to create the desired effect of sense of inclusion among employees: “the mere submission of ideas without any interaction with other participants actually leads to the feeling of not being part of the OS community” (p. 366). Similarly, such open practices may miss the mark because they offer platforms upon which to “let off steam without necessarily demonstrating interest or engagement in the strategy making . . . [and to] (mis-)use the OS platform as an idea dump without generating interest toward understanding the other users’ perspectives or grasping the big picture” (p. 356). In Luedicke et al.’s (2017) study of the beverage collective it was the limits to users’ knowledge (access to information) and their willingness to participate due to information overload that necessitated at times centralized agenda setting, limited inclusion, and authoritative decision making, in order to maintain the possibility of the “radical inclusion” to which the collective was committed. Stieger et al. (2012) found that managers were disappointed by the input that they got from their internal crowdsourcing initiative: suggestions were often local in nature (e.g., the quality of the cafeteria food). Similarly, managers complained of irrelevant content such as input about “the showers not working,” and a significant portion of critical content, which one manager typified as “whinge and moan” (Denyer et al., 2011: p. 382, 387) These examples suggest that employee practices surrounding the Open Strategy platforms are varied, deviating from the topics management wants to discuss. Many of these “strategic episodes” (Hutter et al., 2017) remain distinct from the context of collaborative work practices that take place on enterprise social media platforms (Denyer et al., 2011; Ellison et al., 2015). As enterprise social media become spheres of practice in their own right (Carlile, 2004; Levina & Vaast, 2005), they present an opportunity for strategy dialogue to become more closely tied to the work itself.

While studies have shown full participation to be problematic, they have also remarked how management’s invitation to dialogue is limited in several respects. The agenda for a strategy dialogue is bounded, where management “partially predefines the limits to what can become, or not become, a strategic issue” (Luedicke et al., 2017: 372). Authors also note that within the long process of strategy making, workers are only involved for the small episode running from invitation up until final decision making. In their review of inclusion practices, Luedicke et al. note how “none of these organizations seem to have invited stakeholders to raise issues outside of the bounded episodes, to allow participants to challenge the decisions that the management derived from such open discussions, or to turn the aims and procedures of an open strategizing episode itself into an issue” (p. 372). Similarly, the limits of inclusive deliberation are often set by management in meetings that themselves take place in non-virtual spaces. Mantere and Vaara (2008) found that less democratic decision-making processes were naturalized in discourses that presented strategy by way of “mystification” (speaking in abstract, almost religious terms about an organization’s future, the meaning of which is only open to privileged actors), “disciplining” (speaking in military terms such as “troop deployment” and “central command” or classroom terms such as “timetables” and “teachers”), and “technologization” (emphasizing managerial measurement instruments as an unquestioned form of control). These discourses were used to legitimize lower participation of organizational members. In short, the technology-mediated dialogue between managers and employees has received attention from the Open Strategy literature. This literature suggests that it makes sense to think of inclusion and exclusion not as mutually exclusive but rather coexisting, forming a tension with established hierarchies and routines. These tensions give rise to practices that mitigate them. This leads Luedicke et al. (2017: 381) to typify Open Strategy “as a particular configuration of principles, practices, barriers, and outcomes.” This interaction between strategizing and commenting is pictured in arrows 2 and 3 in Figure 11.1.

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11.8 Flow 4 – Directing: How Senior Managers Implement Strategy Once the senior managers have settled upon a strategic direction for their organization, they generally inscribe this in a plan or other document that can then be shared with the rest of the organization. As with any type of communication, the transmission of the message may be incomplete or misunderstood. Designed well, a strategic plan can serve as a useful guide for activities throughout the organization (Argenti et al., 2005; Clampitt et al., 2000). However, all plans have strengths and weaknesses, both of which are amplified by social media. Such tools can provide ready and repeat access to the strategic plan, across multiple channels. In this way, employees have many opportunities to both receive the message and recall it, and as we suggest as follows, remedy many of the shortcomings contained within it. In a positive way, the strategic plan is an important means by which the knowledge of the senior managers is communicated to other parts of the organization. Executives typically have a broader view than employees do, both of the organization’s capabilities as a whole and of the external competitive landscape. The strategic plan often will reflect these unique insights, and in turn, give employees access to a broader perspective. Social media tools are an efficient and powerful means by which to distribute such strategic knowledge throughout the organization in a way that is integrated with the everyday routines of employees. Those same tools also enable the managers to have finer control over the dissemination of such content, whether their goal is to maintain secrecy or wider sharing of the strategy. According to onetime Dell CEO Kevin Rollins, “The job of a senior manager is to determine which elements of the overall strategy you want to communicate to each constituency” (Argenti et al., 2005: 86). In the years since this quote was taken, it is not difficult to imagine how the capabilities of enterprise social media platforms have expanded to allow for increasingly targeted communication with relevant audiences. Argenti and colleagues also describe how firms use features of social media within a communication approach that uses different

media. For example, in order to create a common message among its business units, conglomerate Textron combines an annual leader summit, where the strategy is developed into a message and phrased for each business unit, with monthly internet teleconference opportunities. Their stated goal is “to develop one message and incorporate that message into the business units.” Especially in large, complex organizations, such sites can aid senior management in its imperative to “communicate to a diverse and rapidly expanding array of constituents while remaining relevant to all” (Argenti et al., 2005: 86). In a negative way, the strategic plan also can be a source of misunderstandings. This may happen in several ways. First, the plan will reflect the misunderstandings senior managers may have about the organization’s capabilities. Errors may be the result of a poor feedback process in which crucial employee comments are discarded by managers, who deem them unrealistic because they are not grounded in strategic realities, or worse, their strategic importance is overlooked because they are not stated in a language the executives readily understand. Social media tools can help somewhat to ensure that management “hears” the message by providing a bigger pipe for feedback (such as via email, electronic forums, online surveys), thereby allowing for employee suggestions to be stated multiple times in multiple ways. Even so, the plan is typically silent on the strategic options or suggestions that were not considered. Social media tools could be used to preserve these traces, for example in an internal forum or team collaboration site, so that they can be revisited or restated in a future planning process by managers and employees alike. These traces may retain important information but are lost as the plan is a synthesis and summary of the strategic options that have been explicitly considered. What is lost from view are the details on the strategic options or suggestions that were discarded. Indeed, managers (and scholars) rarely ask what is missing from the plan and why. Yet, knowing what was discarded can help employees understand the full set of opportunities that were considered, as well the reasons for not pursuing some of them. Having such information can give employees greater

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insight into the planning process, as well as help them anticipate dead ends in their own work. The strategic plan gives employees either little visibility into the process or ability to see what has been omitted and why. Unless these traces are preserved, such as with social media tools, the employees receive a highly edited strategic plan that is incomplete and erroneous in important ways.

11.9 Flow 5 – Developing: How the Organization Increases Its StrategyMaking Capabilities Strategic plans generally describe what to do, not how to do it. Implementation details are generally left out, as the assumption is that lower-level employees will necessarily fill in the blanks by drawing on their own, local expertise (Morgan et al., 2008). This sets up the possibility for misunderstandings or mistakes. However, the ambiguity around implementation can be adaptive. Social media tools can capture the learning that surrounds such adaptations (Leonardi, 2015b). Consider the case of when an otherwise sound strategic plan is poorly implemented. It would be useful for the organization as a whole to learn from its mistakes. Tools may be used to capture the process by which employees interpret the strategic plan and can uncover the mechanisms (e.g., heuristics, logics, cognitive biases) that lead to such errors. Enterprise social media can also be used to track the missteps employees take to put the strategy into action. Learning what not to do can be just as important as knowing what to do. Having such data available can enable employees and managers to identify common pitfalls and serve as a means for training employees in the future (Kaplan & Haenlein, 2010). Consider also the case where the plan is poor, but significant strategic outcomes are met nonetheless. Employees faced with an unrealistic or mistaken strategy will often compensate by workarounds. For example, Chuck House, an engineer at Hewlett–Packard, ignored the direct command by the company founders to drop his development of a display monitor. House persisted, built a prototype, and confirmed market demand,

resulting in a product that generated $35 million in sales. Packard himself chose to celebrate this deviation from his strategy by presenting House with a medal for his “extraordinary contempt and defiance beyond the normal call of engineering duty” (Packard, 1995: 108). Over the years, this award was given to other innovators. As a result of valorizing employees’ initiatives rather than rejecting them, the company encouraged strategically deviant projects. From these efforts, the company learned to leverage strategically important innovations that did not originate within the executive suite. Social media not only capture the experiences and experiments of employees in implementing a strategic plan, but also serve as a repository for emergent knowledge and practices (Jarrahi & Sawyer, 2013). The strategy-as-practice literature has brought welcome attention to the role of managers (Jarzabkowski & Spee, 2009; Jarzabkowski & Kaplan, 2015; Vaara & Whittington, 2012), but we point to the value that employees bring to the strategy process. In an important way, the organization’s strategic capabilities are developed and embedded in its employees – as they work through implementation of a strategy, employees can improve their skills at strategically important tasks, such as innovation, detecting market trends, and cost-saving process improvements. At the same time as they pursue their daily work, employees become better able to situate their local understanding in the context of the strategic goals of the organization. While not strictly a type of social media, agile software platforms reflect the possibility of a learning system (Lee & Xia, 2010; Schmidt, 2016). In agile methods, such as Scrum and Extreme Programming, developers make their implementation process visible through online repositories, code change tracking and testing tools, face-to-face interaction (programming in pairs), and making their design choices explicit by breaking the project down into steps (i.e., “stories” and “tasks”). Enterprise social media that provide similar features may also have the ability to increase the visibility of strategy implementation and, in turn, the rate and level of strategically relevant learning by employees.

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Table 11.1 Types of Social Media and Their Use in Open Strategy Social media forms

Classic use

Open Strategy use

Revealed by social media in Open Strategy

Calendar

Coordination/ availability

Learn about which activities/ Comprehensive picture of meetings are happening, and who is organizational activities participating

Databases

Repositories of organizational knowledge

Identify experts and their expertise Locating expertise by viewing name of posting author or administrator

Key words/tags

Archiving and search

Signals of work priorities and Prediction topical interests, as well as detecting trends over time

Analytical tools

Customer tracking, page views

Create and share understanding of crucial metrics

Virtual meetings (WebEx, Zoom, GoToMeeting)

Platform for distributed Facilitate flexible groups that are but synchronous work temporary or fluid; increase crossgroup sessions functional or interdisciplinary interactions

Texts/emails

Record of communication

Online forums

Q&A, public or private Juxtaposition of novel ideas (surfing), egalitarian contributions can be independent of networks/ status (strangers)

Team collaboration (Slack, version tracking)

Platform for distributed Preserve history of decisions, Traces of strategic decision making and asynchronous work including ideas that were considered group but were rejected and reasons why

Responsive and relevant metrics Adaptive work groups

Reveals networks of organizational Understanding of informal members (who is cc’d and who is structure not)

11.10 Unpacking the Process of Open Strategy The movement toward Open Strategy can not only bring in fresh ideas from employees but also democratize the strategy-making process. By bringing employees into the strategizing process, senior managers and the organizations they lead will be better able to respond to strategic opportunities and threats. In this chapter, we have outlined how open strategizing is enabled by social media tools, from increasing communication between managers and employees, increasing visibility into the strategymaking process, and ultimately producing strategies that are aligned with the capabilities of the firm. As a result of Open Strategy, organizations stand to gain strategy-making capacity for meaningful and actionable feedback (from workers) for aligning the strategic resources with the external environment (by strategy makers), as well as

Innovation, diversity, voice

strategic resources such as organizational capabilities and employee skills for developing and implementing that strategy. We have offered the 5-Flows model of Open Strategy as an illustration of the process by which managers and employees can construct a shared understanding of strategy through the use of enterprise social media. In particular, we have highlighted the role of social media in making work (both routine low-level work and novel high-level strategy formulation work) more visible in both directions (Table 11.1). Increased awareness afforded by social media in organizations enables not only feedback (Flows 2 & 3) but creates the possibility of strategic alignment and learning. Because of their accessibility, these enterprise social media enable employees to more readily consider the stated strategy and integrate it into their work. Each time that a strategic planning exercise is done in an open manner, the employees

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will cumulatively become better at: communicating their capabilities to each other and to managers (Flow 1); providing feedback that is more relevant and realistic (Flows 2 & 3); interpreting strategic directives from management, as these are now aligned with the employee’s actual capabilities (Flow 4); and ultimately, implementing strategies and diffusing their learnings. As a result, the organization’s strategic planning becomes more integrated with implementing it, and the plan becomes more aligned with the organization’s actual capabilities and resources. Additionally, the model discusses how a proto strategy can turn into a stabilized strategy as it moves through the five flows. Proto strategies become solidified once they are submitted to conversation with employees and refined in ways that make them actionable and applicable to the way work is done in the organization. The idea of a proto strategy emerges in the context of Open Strategy. In the context of closed and secretive strategy making, it makes little sense to discuss a proto strategy because strategies are not presented to employees from across the organization until they are stabilized. When taking advantage of the capabilities of social media to make strategy ideas visible, however, the concept of a proto strategy becomes useful. Sharing early versions of a strategy that are based on the visible understandings of employee knowledge and work practice can help to solidify and stabilize strategies in ways that align them with the organization’s knowledge. This, of course, is exactly what all strategy makers hope for.

11.11 Challenges Open Strategy is still a young domain, both in practice and in research. We offer some ideas and advice for pursuing research in Open Strategy–making processes. We urge scholars to look beyond the feedback loop between employees and senior managers, which has received a fair amount of attention (Denyer et al., 2011; Hutter et al., 2017; Luedicke et al., 2017; Mack & Szulanski, 2017; Malhotra et al., 2017). Our

model draws attention to some additional paths by which organizations develop strategy. This includes questions of how managers learn from employees (Flow 1), how managers convey the strategy (Flow 4), and how employees interpret and transform the strategy as they work to implement it (Flow 5). Over time, we propose that organizations – managers and employees alike – will become better able to pursue realistic yet valuable strategies. Research is needed to unpack these flows, as well as their ability to improve performance over time. Inasmuch as our model points to research possibilities within the organization, it would also be worthwhile to consider the impact of opening the strategy-making process to external audiences (Malhotra et al., 2017; Piskorski, 2014). How does increasing visibility help attract stakeholders and integrate their ideas into the organization’s planning process? What are the social media tools and practices that are best suited, and how are they different from opening the process internally to employees? There is also the question of how much openness is desirable (Gibbs et al., 2013). Senior leadership in most firms is unlikely to make the entire strategy-making process visible, whether to internal or external audiences. The effort alone to develop and communicate a “closed” strategy is already quite timeconsuming. It may be too burdensome to add more social media channels to the mix and increase the requirements to track and document what the employees are doing, such as during implementation. In addition, employees may feel that the increased visibility is simply another form of surveillance. They may resist efforts to track their activities and capabilities. Research is needed on the conditions under which employees thwart Open Strategy practices and tools. How is resistance enacted, and at what stage in the process? What are their concerns and can increased visibility ever resolve them? To study these unfolding processes, we advocate a mixed methods approach. Quantitative data can provide an accurate picture of the actual flows of information, frequency of tool use, as well as

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performance and process outcomes. Qualitative data can ground our understanding of how Open Strategy practices and new tools are implemented, how they are received by different stakeholders, and what obstacles and unintended consequences are present. Taking a cue from studies in communication and information systems, social network methods can reveal the transaction patterns between managers, employees, and outside stakeholders. Network methods increasingly allow scholars to trace changes in organizational interaction patterns, revealing how the flows between employees and managers are altered by social media tools, or whether strategic information is reaching the right people at the right time (Kane et al., 2014). Qualitative methods such as surveys and ethnographies can be useful for identifying how Open Strategy practices and tools are actually used throughout the organization, as well as what happens when they are first introduced to the organization. Fine-grained qualitative analyses are especially useful to track whether and how strategy-making practices become more visible over time. Social media are not only a source of data but are a site for study. As platforms for interaction, social media tools are themselves a research setting. Anthropologists have entered the field by becoming members of the digital worlds they are studying (Boellstorff, 2008; Coleman, 2014) and recently, Kozinets (2015) has articulated several principles of “netnography” or methods by which to study social interaction on social platforms that may be useful for scholars who wish to understand how knowledge dynamics play out, over time, on enterprise social media. Netnography, in particular, seems well suited to the study of Open Strategy via social media. Netnography focuses on textual conversation (and the images, videos, and documents that accompany it) as a site of meaning production. Therefore, the analyst watches the emerging and persistent conversation occurring within a community to chart the development and change of meaning over time. Kozinets (2015) outlines a number of methodological starting points for netnography and, importantly, discusses how analysts can begin to understand the emotional valence of topics of conversation, as well as how

and why certain types of interaction stabilize into shared meaning over time in these mediated formats. Such an understanding seems particularly useful for making sense of how the five flows we describe here stabilize into strategy at the firm level.

11.12 Conclusion There is considerable promise for social media, greater visibility, and the opening of strategy within organizations. There are also surely to be pitfalls and failures as new practices and tools are adopted. Openness enabled by digital platforms can be a double-edged sword, as Facebook’s 2018 breach of data showed. When Facebook shared the personal details of over 50 million users with Cambridge Analytica, many users and shareholders closed their accounts – even though those same users previously had been willing to sign up to share digital representations of their life. The shift of activity from organizations to online platforms is not only full of potential but also peril; we must pay attention to both. By keeping our eyes open, we may realize the benefits of strategic openness and visibility. By embracing an Open Strategy perspective, there are tremendous possibilities for increasing innovation, inclusion, and information flows. Our 5-Flows Model points to some of the ways in which managers can develop better informed and grounded strategies, employees can better implement and contribute to those strategies, and scholars can better understand how organizations strengthen their strategy-making capacity and leverage strategic resources. And while social enterprise tools will surely change over time, the need for collaborative and creative strategies will never become obsolete.

Note 1. According to a recent Forrester study of approximately 10,000 workers, 25% used their company’s enterprise social media regularly (Schadler & Karcher, 2011).

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CHAPTER

12

Visuals in Open Strategy SOTIRIOS P AROUTIS and E RIC K NIGHT

12.1 Introduction Examining Open Strategy through the role of visuals holds great promise. Visual artifacts are increasingly central to what organizational actors do inside and outside their firms, for example, with the growing use of visualization tools, big data analytics, presentations (e.g., PowerPoint), usercentered design approaches, visuals in social media, and videoconferencing dominating modern strategy analysis (Berinato, 2016; Boxenbaum et al., 2018; Kim & Mauborgne, 2002). Through the use of these visuals in their strategy process, firms can communicate their strategic direction to internal and external audiences and actively engage these audiences in particular aspects of their decision making, which could in turn, open new, yet unexplored, avenues for their strategy. As such, visuals open up the opportunity to communicate and engage with a much less strategically informed set of actors than is the norm in strategy, for example shop floor workers or stakeholders such as citizens in local communities. This is possible since visuals can reduce cognitive challenges (Täuscher & Abdelkafi, 2017; Hegarty, 2011) and make such challenges more widely accessible compared to more traditional strategy formats (such as memos or reports that often require familiarity with strategy terminology to be understood). In this chapter we show how the use of visuals relates to the two key dimensions of transparency and inclusion in Open Strategy (Hautz et al., 2017; Whittington et al., 2011). For example, the ability that readers of visuals have to modify contents of a visual instantaneously allows knowledge integration efforts to be easily reflected visually in the visual artifact’s content (transparency). It also allows disagreement and debate about what should be included or not visually in the artifact (inclusion). Furthermore, by translating their strategy

into a visually accessible format, firms are also able to show to a wider audience (e.g., shop floor employees who don’t normally form part of the firm’s strategy process) how a particular initiative or process at the business unit level is important for the overall corporate strategy, thus providing transparency to time-poor internal and external audiences, and inclusion, especially to middle- and lower-level managers and employees who are not experts in strategy. A firm, for example, could allow strategy visuals in their social media communications (Baptista et al., 2017) to be co-created by a wider audience of internal and external stakeholders by adjusting the editing rights and access to these visuals. Later in this chapter, we will explore in detail a visual study of PowerPoint slides, to demonstrate that slides are not an end product, but a visual tool that can stimulate engagement and wider discussion, and, as such, allow for both transparency and inclusion (Knight et al., 2018). Accordingly, in this chapter we argue that investigating the role of visuals can enrich our understanding of strategy and Open Strategy in particular, for example, around the interconnections strategy enables and the richness of reasons behind strategizing success and failure. The importance of visuals and the failure of strategic narratives, for instance, is highlighted by Barry and Elmes when they note: “Projected onto the screen, strategic titles and directions assume a larger-than-life presence, becoming unavoidably fixed in our gaze . . . There may be an unrecognized reason why strategic narratives sometimes fail: they have been unwittingly tailored in the wrong cloth” (1997: 435–436). Yet, in scholarly strategy research much of our research efforts tend to dissect organizational reality into researchable chunks where theoretical interpretations can then take place and focus on what actors say or read, with 205

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relatively scattered attention to the what, how, and why actors see (Bell & Davison, 2013; Bourgoin & Muniesa, 2016; Ray & Smith, 2012). This disjoint appreciation of visuals in management research is at odds with the integral role these elements play in shaping the empirical reality that actors shape and experience within and across firms. Unpacking how strategy is visually made and executed is an exciting new frontier in strategic management research. A number of recent studies showcase the efforts of scholars to capture the complex processes and outcomes enabled through the intersection of visuality with talk and text (Jarratt & Stiles, 2010; Gylfe et al., 2016; Kaplan, 2011; Knight & Paroutis, 2018; Liu & Maitlis, 2014). In viewing strategic decisions and actions as embedded in particular discourses, the discursive lens has yielded useful insights into organizational functioning and strategic practice (Heracleous & Barrett, 2001; Paroutis & Heracleous, 2013). In addition, studying the role of visuals in strategy can provide additional insights for scholars, including those interested in Open Strategy, for two reasons, one theoretical and one empirical. First, visuals are a type of discourse, a semiotic system that deserves at least as careful study as text-based systems. Second, visuals (e.g., PowerPoint presentations) are ubiquitous in strategy processes, and thus form a key area of interaction with talk. Given that the meaning of talk is shaped by its context, it seems that an important dimension could be lost if visual-based discourse is not considered. Visual images have the potential to be more effective for communication, comprehension, recall, and motivation compared to text or discourse alone, especially when text and visuals are presented in close connection (contiguity principle) and are aimed for audiences who have sufficient prior experience of such visuals (Avgerinou & Pettersson, 2016; Barry, 1997; Berger, 1998; Dondis, 1973; Moriarty, 1997; Moriarty & Kenney, 1995). Condensing the previous arguments together, our aim in this chapter is to demonstrate that visuality holds the potential to further enrich our understanding of Open Strategy processes and practices in organizational life. In other words, visuals are not merely aids to communicate the strategic

direction of the firm to a wider audience, but rather they have an important influence in shaping the direction, and success or failure, of the Open Strategy process. This chapter is structured in three sections, the first covering the ways visuals are used in management research, the second providing illustrative examples of the way visuals can relate to Open Strategy research, and the third providing a set of guiding principles for future research at the intersections of visuality and Open Strategy, namely: capturing, comparing and contrasting, and creating. Our aim is to showcase how visuals can be associated theoretically, methodologically, and empirically with Open Strategy. The first section outlines three areas of focus of current studies of visuals and how these can inform a visual view on Open Strategy and explains their core concepts. The chapter goes on to consider the application of visual-based approaches to Open Strategy research. The aim of this section is to demonstrate how particular concepts and models developed from visual studies can help us advance future studies on Open Strategy. The second section focuses on the methodological and empirical hurdles related to the study of Open Strategy through two illustrative examples: one from the study of the visuals in PowerPoint slides and one from a study of the visual affordances associated with the use of a strategy map in a workshop. The aim of this section is to motivate the reader to consider alternative methodological approaches to the study of visuality in strategy making that future Open Strategy research projects could employ. Finally, in the third section, we outline a set of guiding principles for future research that focuses on the role of visuals when studying Open Strategy phenomena.

12.2 Visual Focus in Strategy Research The study of visuality in strategic management studies builds on the “linguistic turn” in strategy, which treats strategy making as a process of interconnecting communication acts among strategy participants (Gylfe et al., 2016; Liu & Maitlis, 2014). Accordingly, we conceptualize “the visual

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Visuals in Open Strategy 207

as equivalent to linguistic structures of organizational life” (Bell & Davison, 2013: 180). In this section, we examine how strategic management scholars have studied visuality by way of three discrete conceptual approaches for conceptualizing, analyzing, and examining visual data. We define “visuals” broadly as the sensory information, objects, and artifacts accessible to organizational actors based on what they see, that is, their visual senses, as opposed to other senses such as what they hear, feel, or taste; and the associated “visual mode” is the specific way of creating, transferring, and expressing meaning through the use of visual objects and artifacts (Meyer et al., 2013). In humanities and social sciences, for example, anthropology, sociology, art history, social semiotics, communication and media studies, and psychology, there is an established and historically long tradition of studying the visual aspect of particular phenomena. In comparison, in organization and management research the study of visuals and their meanings is a recent, yet growing, phenomenon (Warren, 2009). Visual research in management studies is broadly defined as taking a variety of forms (pictures, graphs, film, web pages, and architecture) involving several subdisciplines (organization studies, marketing, accounting, human resources, tourism, and IT), and entails studies using either preexisting visual material or researcher-generated visual data (Bell & Davison, 2013). In their review of visual organization studies, Meyer et al. (2013) identify five ideal-typical approaches to the study of visuals: archaeological, practice, strategic, dialogical, and documenting. In the practice-oriented approach the visuals are “socially meaningful material objects that are created, employed, and manipulated in organizational contexts, making them a constitutive part of social practices” (ibid., p. 505). Within this approach, the emerging number of empirical studies that have been conducted show that visuals can enable organizational actors to: challenge dominant organizational narratives (Bell, 2012), create conditions of sensemaking (Heracleous & Jacobs, 2008), support the creation and sharing of strategic knowledge (Paroutis et al., 2015; Kaplan, 2011), and deal with the social and emotional aspects related to

strategy making (Eppler & Platts, 2009). Crucially each of these findings can be associated with the two key dimensions of transparency and inclusion in Open Strategy (Hautz et al., 2017; Whittington et al., 2011). In more detail, challenging dominant organizational narratives can be associated with transparency, creating conditions of sensemaking can be associated with transparency and inclusion, supporting the creation and sharing of strategic knowledge can be associated with both transparency and inclusion, while dealing with the social and emotional aspects related to strategy making relates to transparency. Despite the potential of visuals-based studies, studies in strategic management have mostly focused on the role of discourse in the strategy process (Balogun et al., 2014; Heracleous & Barrett, 2001; Mantere, 2013; Mantere & Vaara, 2008; Vaara et al., 2010) with awareness of, but limited attention to, the precise mechanisms through which visual modes of communication could result in varying strategic outcomes. These outcomes are of growing importance to strategic management scholarship due to growing sophistication in the use of tools (Jarratt & Stiles, 2010; Jarzabkowski & Kaplan, 2015), body language (Gylfe et al., 2016; Liu & Maitlis, 2014; Wenzel & Koch, 2018), and other visual artifacts, such as the cube employed by RetailCo to support their new strategy process (Whittington et al., 2016), as well as the recognition that interactions between different modes can have important effects that help determine which strategies are ultimately implemented (Spee & Jarzabkowski, 2011; Stigliani & Ravasi, 2012). Following the aim of our chapter to offer insight for Open Strategy debates, we have developed a broad categorization of this emerging group of visual strategy studies to then relate them to Open Strategy in the section that follows. More specifically, we identify three areas of focus in visual strategy studies. While we do recognize that there is some overlap, particularly between the multimodal and cognitive focus (particularly in studies examining embodied cognition), our aim here is to demonstrate the topic that is at the foreground in particular studies and recognize that the multimodal focus has now become more prominent in volume and identity among published work.

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Material focus: One way of treating visual data is as material artifacts, which are used by organizational actors as supportive props for their everyday activities. Giraeudeau (2008), for example, examined the planning documents/slides used in Renault’s investment strategy in Brazil in the mid-1990s to show how plans can enhance strategic imagination. Related examinations tend to focus on the discursive practices that arise from the use of visuals. Kaplan’s (2011) work, for example, showed that PowerPoint served as an “epistemic object” around which the discursive practices of collaboration and cartography were organized. This is consistent with examination of meaning through the talk accompanying visual materials (Samra-Fredericks, 2003; Vaara et al., 2010). Previous studies that focus on visuals as objects have also examined the links between visual objects and knowledge work by showing how such objects evolve during projects and are constantly in flux (Ewenstein & Whyte, 2009) and how they can help project teams step between exploration and exploitation within a project (Whyte et al., 2008). Cognitive focus: A second way to analyze visual materials is to focus on their role as cognitive stimulus (Hodgkinson et al., 1999; Hegarty, 2011). Here, the research focus is on the interpretations and sensemaking that are enabled through perceptions of visuals. Stigliani and Ravasi (2012) have shown how the configuration of objects, such as Post-it notes, thumbnail sketches, and brainstorming notes, can enable the transition between individual and collective sensemaking. The interpretation of these visuals may be steered by cognitive heuristics that enable individuals to select, process, and retain certain types of information (Bingham & Eisenhardt, 2011; Foss et al., 2016). For example, the clarity or simplicity of a visual representation may activate an availability heuristic, which makes certain artifacts easier to absorb and remember (e.g., Jarzabkowski & Kaplan, 2015). Other artifacts might be utilized to achieve particular goals or achieve specific functions in the strategy process. Comi and Whyte (2018) recently analyzed ethnographic data from an architectural studio designing a development

strategy for their client and show how visual artifacts become enrolled in practices of imagining, testing, stabilizing, and reifying, through which abstract imaginings of the future are turned into a realizable course of action. Related studies have focused on the cognitive meanings embodied in the visual stimulus itself. Liu and Maitlis (2014) conducted a study of facial expressions using video data. They showed how facial expressions embodied emotions that in turn, had different effects on the strategy process. Paroutis, Franco, and Papadopoulos (2015) extended this work using video data of workshops to identify three distinct patterns of visual interactions (shift, inertia, and assembly) in the use of artifacts, and the expectations these established for those interpreting the movements. Multimodal focus: In a third set of studies, scholars have treated visuality as a semiotic mode that is co-constituted through other communication modes such as talk and text (Spee & Jarzabkowski, 2011). Unlike studies that treat visuals as materials, a multimodal approach treats the visuals as an equal partner to talk and text (Meyer et al., 2013). In this respect, this extends strategy beyond its “linguistic turn” (Rorty, 1979) to a more engaged interest in visual semiotics. Early work here has considered the meaning of particular visual features. For example, studying prototypes and models used in strategy workshops, Heracleous and Jacobs (2008) showed how visual characteristics (e.g., proximity, elevation, centrality, connectedness) had particular meanings that complemented words in order to give rise to new strategic interpretations. More recently, Gylfe, Franck, LeBaron, and Mantere (2016) have shown how the body acts as a type of “embodied cognition.” Thus, interpretation arises as actors make sense of the gestures conveyed, for example, which draw links between concepts or materials become connected through body language that would otherwise be treated independently. As such, gestures serve as “linking pins” to ensure alignment or conformance, but also enable inclusion and participation. Furthermore, as video ethnographers have demonstrated (LeBaron & Streeck, 1997), the embodied interactions can be captured in visual form and analyzed (Wenzel &

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Visuals in Open Strategy 209 Table 12.1 Three Areas of Focus on Visual Strategy Research Issue of interest

Research focus

Related studies

Material (Visuals as material artifacts)

• Visuals are used by organizational • Focusing on the kinds of • Kaplan (2011), Eppler & actors as supportive instruments strategic information visual Platts (2009). in their daily strategic activities. artifacts hold.

Cognitive (Visuals as cognitive Stimuli)

• Visuals spark cognitive • Exposing the richness of and sensemaking reactions during cognitive and sensemaking strategy making and execution. practices and processes enabled by the use of visuals in the strategy process.

• Stigliani & Ravasi (2012); Liu & Maitlis (2014); Paroutis, Franco, & Papadopoulos (2015).

Multimodal • Visuals have multimodal and • Exploring the complexity in • Gylfe, Franck, LeBaron, & semiotic properties that allow the semiotic and Mantere (2016); Knight, (Visuals as multimodal them to be co-constituted together multimodal processes when Paroutis, & Heracleous carriers) with other communication modes visuals are involved in the (2018); Wenzel & Koch such as talk and text. strategy process. (2018).

Koch, 2018). Indicative of this is the study by Werle and Seidl (2015), who examined strategy workshops and showed how discursive practices were provoked as participants compared differences between partially completed documents. In their study, these differences emerged when representations of the overall strategy were placed next to more concrete, though provisional, representations of specific aspects of the strategy. Thus, the strategy discussion was guided through the side-by-side comparison of these artifacts, helping to explain how the constellation of material artifacts can lead to a shift of the strategic topic. Taken together, the previous studies show how, based on the treatment of visuality in strategy to date, researchers have acknowledged that strategy making and execution take place in a distributed and ongoing way as individuals interact with a constellation of objects endowed with meaning, such as bodies, artifacts, images, and texts (Balogun et al., 2014; Burgelman et al., 2018; Eppler & Platts, 2009). Table 12.1 summarizes the three areas of focus in visual research on strategy. We use these in the next section to make links with Open Strategy debates.

12.3 Visuality and Open Strategy: Connections and Illustration In this section, we examine in more detail the kinds of benefits visual-based examinations can offer to

Open Strategy researchers. In a related discussion on the role of theory when studying organizational phenomena, Tsoukas notes that theories “should become more complex to better cope with organizational complexity” (2017: 136). Following this approach, we argue that an understanding of the visuals in Open Strategy could be of significance because it enables scholars to understand in greater detail the direction, pace, and effects of the organizational changes stemming from Open Strategy initiatives (Knight et al., 2015). Organizational change is enabled as change agents and recipients wrestle over the meaning of change events (Balogun et al., 2015). Yet the speed and efficiency with which meaning is conveyed often depends on how it is communicated. In visual terms, this can include the ability to replicate identical slides to multiple levels of the firm (Mirabeau & Maguire, 2014), construction of visual representations that are particularly catchy and compelling (e.g., changes in color, etc., see Jarzabkowski & Kaplan, 2015), or drawing organizational actors’ attention to particular sensemaking cues that might otherwise appear invisible (Dutton & Dukerich, 1991; Knight & Paroutis, 2017). Following from the previous discussion, we pose the question: what are the insights to Open Strategy that visuals can offer? To address this question, we next examine how the two key dimensions of transparency and inclusion in Whittington et al.’s (2011) conceptualization of Open Strategy relate to the three areas of focus of visual strategy

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Table 12.2 Focus on Visuals and Their Relation to Dimensions of Transparency and Inclusion in Open Strategy Primary research question Relation to transparency in Open for Open Strategy Strategy

Material

Cognitive

Multimodal

Relation to inclusion in Open Strategy

• Examining how visuals • Visuals allow access of strategic • Visuals enable internal and external are used by content and information to audiences to engage in consultations organizational actors as internal and external audiences. related to a firm’s strategy. material artifacts in Open • Strategy information becomes • Strategy participation is enabled by Strategy. more readily available and visible engaging a community of stakeholders. than before. • Examining how visuals • Visuals allow for a more seamless • Using visuals, internal complex enable cognitive and and rich exchange of ideas strategic issues are simplified and sensemaking activities in and knowledge about a firm’s communicated widely, allowing multiOpen Strategy. strategy. ple stakeholders to engage with them. • Examining how the • Visuals allow access to a wider • Internal conversations become visible multimodal and semiotic array of strategy information to external audiences who become properties of visuals and processes to outsiders. empowered to engage with them. enable Open Strategy. • Visuals also allow for the wider • Collaborative processes involving internal and external broadcasting visuals allow the inclusion of multiple of a firm’s strategy. stakeholders in the strategy process.

studies we outlined in the previous section. The dimension of transparency refers to the internal or external visibility of information about an organization’s strategy, while the dimension of inclusion, to the involvement of internal and external stakeholders in the strategy process (Hautz et al., 2017). Table 12.2 summarizes our key arguments and insights offered for the two dimensions of transparency and inclusion. As Table 12.2 demonstrates, visuals are a more “open” way to communicate because, unlike grammar and words, the meaning of language is not as formulaically prescribed. This then “opens” the way for more nascent ideas, less developed strategies, as those found in brainstorming, whiteboarding, “PowerPointing,” etc. By taking a visual form, strategy information becomes more readily and widely available than, for example, if it was solely based on a textual form. For example, the use of an infographic about the principal market positions and market shares of a firm allows even non-strategy experts to appreciate the position of the firm in these markets. We also argue that visual features are an indispensable part of the Open Strategy process, as they are one component of a multimodal gestalt that includes visuals and conversations. As such, visual perspectives can expand on views of strategy as

discourse and offer complementary vantage points for the study of Open Strategy. Visuals are not merely aids to what has been framed as the dominant modality of strategic conversations, but rather are equal participants in performative debates that have an important influence in shaping the direction, and success or failure, of the Open Strategy process. This insight assigns further specificity to the role of visuals in Open Strategy, serving not only as a resource in interpersonal framing contests between strategists (Gylfe et al., 2016), but also as a way for strategists to project and scale their organizational influence by controlling what internal and external stakeholders see in the pursuit of a particular strategy and how they then subsequently engage with these visuals. For example, the use of infographics about the principal market positions and market shares a firm has in relation to its key competitors could serve as a trigger for further discussions with external stakeholders, especially if used in the context of social media initiatives (Baptista et al., 2017). Another dimension where visuals connect with Open Strategy is their ability to enable the exploration of alternative relationships, thus creating emotional engagement and persuasiveness with an audience. An example of this comes from infographics – the graphic representations of

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information, data, or knowledge that aim to present information quickly. Infographics are found to be effective and emotionally powerful as the reader can very quickly see the main relationship and then do some further exploring on their own, which creates a sense of engagement, surprise, and ownership (Meyer, 1997; Ovans, 2014). Similarly, an infographic summarizing the performance of particular strategic initiatives can enable employees who do not normally engage in the strategic process or discourse in their firm to respond to and explore particular dimensions of this infographic and how these relate to their own daily activities. These infographics can be utilized in either communication mediums, such as newsletters or intranets, or face to face engagements, for example workshops (Jarzabkowski & Seidl, 2008; Paroutis et al., 2015). Cummings and Angwin (2011) also argued that individualized drawings of strategy, which they term “stratography,” can enable the more effective conceptualization and communication of strategy. Employing a similar visual focus, Osterwalder and Pigneur (2010) also propose a wide array of models that can be used in the strategy process. An additional way of how studying the role of visuals in strategy can unveil new avenues for Open Strategy research is available in Paroutis, Franco, and Papadopoulos (2015). They examined the ways managers visually interact with strategy tools (a strategy map) to produce knowledge about strategic issues in workshops. Their study focuses attention on the importance of examining the affordances of strategy tools and the potential this has for Open Strategy debates. Affordances refer to the possibilities objects and artifacts offer for action to individuals and groups working within and across organizations (Gaver, 1996; Gibson, 1979; Hutchby, 2001). For example, a strategic visual, such as a SWOT matrix developed for a particular business unit in a multi-business firm, can make specialized knowledge tangible and offer opportunities for discussing strategic issues between representatives of different groups, departments, divisions, or organizations. Related to Open Strategy, there is then the potential to link particular affordances of strategic tools to the two key dimensions of transparency and inclusion (Hautz

et al., 2017; Whittington et al., 2011). For example, the ability that actors have to modify contents of a visual artifact instantaneously (editability) allows knowledge integration efforts to be easily reflected visually in the artifact’s content (transparency) and also allows disagreement and debate about what should or should not be included visually in the artifact to occur (inclusion). For future studies it would be interesting to gauge the impact from strategy-related visuals with particular affordances on the levels of transparency and inclusion in Open Strategy. We next provide a more detailed illustration to showcase further ways visuals can generate Open Strategy insight. Illustration – Visuals in PowerPoint Slides: In extant strategy studies on PowerPoint, the heavy work of meaning making in strategy falls largely to discourse (Kaplan, 2011; Mirabeau & Maguire, 2014), where we find that visual features play an auxiliary role to the meaning making arising from discourse and practice. Knight et al. (2018) recently examined the visual features of PowerPoint slides across two consulting engagements and the ways in which these opened up and stimulated engagement and discussion across disparate teams. The study reviewed PowerPoint presentations arising from consulting interventions of a strategy consulting firm at varying stages of their development. As the study progressed, we realized that this was also an appropriate Open Strategy research setting, with the visuals playing a role in engaging a wider set of actors and allowing for wider sharing of key strategic messages than was initially planned for the particular consulting interventions. Visual semiotic analysis, based on the theory that defines the relationship between signs and interpretations and the meanings arising out of this interaction, was used to understand the interplay between visuals used in slides and subsequent dialogues that ensued, and how issues were framed in these dialogues. A key finding is that visuality may provide the conceptual glue that creates meaningful intersections between strategy process and practice. The authors identified three visual mechanisms: i. Depiction visuals refer to pictorial representations of strategy.

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ii. Juxtaposition visuals provide new logical linkages between previously disconnected aspects of strategy. iii. Salience visuals offer nuanced ways to prioritize strategic agendas by adding weight to key pieces of information. Each visual mechanism influences the visibility of particular strategic ideas by prompting and framing these ideas through the conversations visuals simulate. As participants react to visuals, they exhibit interpretations of the strategy that both crystallizes what was shown on the slides and also uncovers important aspects that are not explicit in the visuals. This enables a better understanding of the emergent strategy, termed by the authors as strategic resonance. Strategists’ use of multiple visual mechanisms evolved with the successive development and design of slides over time, and shifting the emphasis of visual mechanisms influenced the evolving strategy formation (refer to Figure 12.1). These findings show how visual features are a mutually constitutive aspect of the strategy process rather than an elaboration of or addendum to the verbal text and talk. In their words, the visual features are connected with conversations but are in no way dependent on them, and vice versa. This relationship of mutual constitution is important, because focusing predominantly on discourse in strategy may overstate the consequentiality of talk to the overall strategy process. Much of what changes the conversation in strategy can come down to what is presented and how visually compelling it is. Visuals “speak” to participants differently than words (Nöth, 2011). They communicate by way of what is immediately accessible and holistically appreciated (Meyer et al., 2013), drawing out connections and relationships between visually displayed components that are only partially understood until they are laid out on the page or slide. If strategy is just about talk, then it might as well be conducted in the dark. Thus, even though visuals have been acknowledged, they have rarely been fully appreciated and studied in their minutiae. Related to Open Strategy debates, we argue that by using visuals such as PowerPoint slides their

S′

S 3. Strategic resonance

1. Visual mechanism

V

C 2. Strategic visibility

Figure 12.1. The Visual Semiotic Process Applied to the Construction of PowerPoint Slides (Source: Knight et al., 2018).

producers are able to engage and include (Hautz et al., 2017; Whittington et al., 2011) a wider set of managers, employees, consumers, and other industry- or society-level actors or institutions in the strategy process. As we argued earlier, this engagement of the wider audience is not only communications-based but can also trigger the exploration of alternative relationships, thus creating emotional engagement and persuasiveness with managers, employees, consumers, and actors outside the firm. As we saw in the introduction of this chapter, Barry and Elmes (1997) recognized that strategy narratives depend on the “cloth” from which they are tailored, but went on to anchor their theorizing in what is read, spoken, or heard. The purpose of the PowerPoint study by Knight et al. (2018) was to examine the visual components of this “cloth” by examining how strategists use visual information (specifically in PowerPoint slides) and its effects on the strategy process. The findings show that strategy conversations are influenced by the techniques strategists use to create slides, which in turn shape the kinds of follow-up actions taken. As such, PowerPoint slides can be designed to help tackle complex issues, for instance, when participants have divergent opinions or in politically sensitive situations, meaning they can also provide the basis to “open” particular strategic topics to a wider audience. Within the language-based perspective, organizations and their actors can be found to adopt a shared language (Knights & Morgan, 1991; Mantere, 2013). Similarly, when visuals are

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studied, actors can be found to agree on a shared set of visual features or visual objects. Understanding the visual presentation of strategy is particularly important for the study of Open Strategy initiatives, as PowerPoint slides are often utilized in results and strategy presentations (Whittington et al., 2016), so their masterful employment can enable or hinder the exchange of ideas and knowledge about a firm’s strategy. PowerPoint slides can also trigger reactions from a wider set of internal and external stakeholders (refer to Table 12.2). As such, the “power” in PowerPoint is not about the bullet points or other visuals managers use in their slides but about the strategic insights and discussions their slides generate with internal and external audiences. The Knight et al. (2018) study highlights how PowerPoint slides, as a critical strategic tool, are used and employed to create strategy. Slides are not an end product, but a tool to stimulate engagement and wider discussion; as such allowing for both transparency and inclusion dimensions in Open Strategy. Since the power is in the eye of the slide creator, practitioners should consider: by whom, for whom, and how these slides are created. Starting with a draft pack of slides and using a wider group of managers to coproduce and develop these would be a good approach for strategists designing a more Open Strategy process in their firms. Opening up discussions from the visuals in the slides is as important as the design of the visuals itself.

12.4 Visuality and Open Strategy: Three Guiding Principles This chapter aims to inform our understanding of the potential the study of visuals has to inform current Open Strategy debates and inspire promising novel future research efforts. We will use this final section to offer three principles that may help inform and shape future studies of visuality within Open Strategy. From what we have highlighted so far, we can consider firms as consisting of organizational actors to interact with themselves, other actors, and material objects (Tsoukas & Chia, 2002), in an effort to cope with the complexity

they operate in. An appreciation of the visuals and their effects these actors employ provides much needed detail in our understanding of the episodic interactive encounters, and has the potential to help us appreciate the unfolding nature of organizational reality (Bechky, 2011). The key question here is how to actually capture these visuals and their effect on organizational reality, and Open Strategy in particular. 1. Capturing: In order to address this key question and for those integrating visual approaches to their study of Open Strategy, we offer the first principle, which is about choosing research designs that allow them to “capture” in an efficient and effective way the situations and moments when these visuals are employed in the Open Strategy process. For example, when strategy visuals are used in annual reports or social media, one of the choices researchers have is to consider how many of these visuals need to be collected and how these relate to the Open Strategy process. One way to narrow down the scope of such investigation and make it more efficient in terms of the time and effort required for data collection and analysis would be to conduct a pilot study of the use of visuals within a single Open Strategy initiative or a particular chronological period. Insights generated from this pilot can then be developed into the main study of visuals across multiple Open Strategy initiatives or more extensive chronologies, which could then also enable comparisons of visuals development and use across initiatives and time periods. For researchers examining such issues, alongside the emerging perspectives in visual strategy studies we illustrated in Table 12.1, it is notable that the use of photography and videos to capture daily and business life is currently more widely established, accepted, and enabled through technologies such as mobile phones and media such as YouTube, Twitter, and Facebook. At the same time, there are a number of approaches scholars could consider when trying to study the role of visuals in Open Strategy, for instance, critical visual analysis of organizationally produced visuals, or drawings and participant-led photography (Warren, 2008, 2009). Another approach, visual semiotics, could be employed to collect

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data and study the visual features of artifacts employed in Open Strategy. Knight et al. (2018) used a semiotics approach for their study of PowerPoint slides. Visual semiotics is a branch of applied semiotics that provides a vocabulary and framework through which to analyze the “grammar” of visual features, drawing on formal concepts such as composition, vectors, and visual axes, just as linguistics draws on formal concepts of verbal tense, nouns, and articles. Images have their own syntax that draws from the iconic and aesthetic domains, and is expressed in terms of how signs are spatially arranged and interrelated in an image (Nöth, 2011). Emerging studies are now beginning to show the potential of semiotic analysis of static PowerPoint slides, for example, in educational settings (Zhao & van Leeuwen, 2014). The visual semiotic tradition views semiotics as a social process in which meaning is created in the context of culture, rather than generated by a specific semiotic mode divorced from its context (Halliday, 1978; van Leeuwen et al., 2013). This enables the researcher to shift away from focusing solely on either the verbal or visual text to examining both dimensions together in a multimodal context. As Nöth (2011: 300) noted: “language and pictures are complementary in their semiotic potential,” each having different and interacting potentialities. Studying Open Strategy projects through a visual semiotic approach could then involve the ongoing interrelation between these two modes, as actors shift between one and the other to create and enhance the meaning communicated (Kress & van Leeuwen, 1996). Returning to the Knight et al. (2018) study, the visual semiotics-based view of PowerPoint slides shows that visuals are particularly useful for generating diverse and enriched meanings around issues that are open-ended and poorly understood in strategizing. These openended issues are susceptible to multiple interpretations because they are conceptually ambiguous, analytically complex, or politically contentious and therefore engender divergent views about what the underlying strategy actually is. 2. Comparing and Contrasting: Another principle to enhance understanding of visuals in Open

Strategy relates to comparing and contrasting the effect of visuals in Open Strategy initiatives, to allow for more detailed understanding of why particular visuals are more appropriate and effective at conveying strategy information in particular Open Strategy initiatives compared to other Open Strategy situations. Using a related approach, future studies could examine the impact of using particular visuals in Open Strategy settings and contrast it with instances when no visuals are used. For instance, a study could gauge how particular visuals in PowerPoint slides are perceived by an audience compared to slides where few or no visuals are used. Another approach here could be to investigate which visuals are more effective at conveying particular strategic information (e.g. about competitive position of the firm, market share, or key strategic priorities the firm has for the future). Contrasting such visuals can also take a historical dimension, by examining, for example, how the visuals a firm is employing in their annual reports or strategic presentations have evolved over time in relation to industry and social changes, or as a result of an acquisition. Advancements in the domain of marketing can also assist researchers interested in exploring such avenues in strategic management research. For example, Wedel and Pieters (2007) provide a review of eye-tracking research in marketing that provides useful theoretical, and most importantly, methodological solutions for those seeking to explore the historical evolution of visuals in strategy-related contexts. 3. Creating: Our final principle motivates readers of this chapter who are interested in the role of visuals in Open Strategy to consider creating the research setting conditions where such visualoriented examination can take place. For example, in the business school classroom or the executive audience, the researcher could pose related questions and trigger the interest of participants on the impact of visuals in Open Strategy. In addition, data could be generated by asking participants to capture visually, either by taking photos on their smartphones or by drawing on a piece of paper, particular instances of Open Strategy in their firm, industry, or society in an ethnographic manner

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(Hassard et al., 2018). Alternatively, business simulations could be developed using visuals from historical archives of firms and business school participants could be asked to be immersed in the particular case study situations and give their reactions on these visuals. These reactions could then be associated with the backgrounds of participants to develop a deeper appreciation of how particular visuals are perceived from managers with specific backgrounds (e.g., long versus short experience). Another set of studies could focus on trying to understand the visual construction of organizations by external audiences and the impact of such visuals over time. For example, in a recent study, Halgin, Glynn, and Rockwell (2018) examined how external attributions of actorhood are made by the business media and how these attributions are associated with heightened environmental paradoxes confronting organizations by analyzing the visual depictions of organizations on 530 covers of Business Week magazine over a 30year period (1978–2007). They found that visual depiction of actorhood increased over time and that such visuals were more frequent in periods characterized by heightened paradoxical tensions in the business environment. Visuals are an integral part of the way strategies in organizations are created, communicated, and consumed. Visual strategy content can be found in a variety of mediums, from photos, videos, logos, newsletters, graphs, figures, infographics, visualization tools, big data analytics, user-centered design approaches, visuals in social media, videoconferencing, to PowerPoint presentations. In this chapter we have argued that by using visuals, firms have the potential to engage internal and external audiences in particular aspects of their decision making and their strategy-making process. Visuals also enable employees and external audiences to explore alternative relationships, thus creating emotional engagement and persuasiveness of particular aspects of the strategy process. By translating their strategy into a visually accessible format, for example through the use of infographics, firms are also able to show to a wider audience the relevance and importance of a particular initiative, thus providing transparency to time-poor internal and external audiences, and inclusion, especially to middle- and

lower-level managers and employees who are not experts in strategy. Advances in methodological designs and new technologies, such as eye tracking technology, provide researchers some exciting avenues for future research trying to understand how visuals relate to Open Strategy. Through this knowledge, we will then be better equipped to answer how visuals can assist firms in developing more agile Open Strategy initiatives.

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PART IV

Theoretical Perspectives

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CHAPTER

13

Practice-Theoretical Perspectives on Open Strategy: Implications of a Strong Programme VIOLETTA SPLITTER, DAVID SEIDL, and R ICHARD WHITTINGTON

13.1 Introduction Practice theories have an obvious appeal for Open Strategy research. The major trend towards more openness in strategy making gives rise to new strategy practices that afford internal and external actors greater strategic transparency and/or inclusion (Whittington et al., 2011). Committing to the primacy of practice in social life (Reckwitz, 2002; Schatzki et al., 2001), practice theories offer a particularly suitable perspective for studying both the emergence of these new Open Strategy practices and the complex dynamics of their application in real-life settings. Accordingly, many studies on Open Strategy already refer to practice theories to identify the new practices associated with Open Strategy, such as strategy jamming, strategy blogging, or interorganizational strategy making. However, despite the increasing reference in Open Strategy research to practice theories, most studies so far have not made full use of the theoretical apparatus offered by these approaches. Often, these studies draw on practice theories only to the extent that they claim that actors deploy certain practices in certain situations or that organizations ‘have’ a certain set of practices. Relying on practice theories to merely describe what people do constitutes what could be called a weak practice programme, treating practices descriptively and as self-explanatory (Nicolini, 2012). However, practice theory does more than just describe what people do. In a strong programme, practice theory explains as well as describes. Existing studies are already throwing up surprising and complex

aspects of Open Strategy that need explaining. For example, research is revealing that increased openness can generate resistance and resentment (Luedicke et al., 2017); that similar social technology platforms attract different levels of engagement between organizations and over time (Neeley & Leonardi, 2018); and that openness may sometimes need constraining in order to minimize individualistic self-promotion and undue contestation (Malhotra et al., 2017). Given these kinds of empirical surprises, we outline in this chapter a number of important insights to be gained from taking a strong programme approach to Open Strategy research. In particular, we examine Giddens’s structuration theory, which is helpful in explaining the change processes involved in opening up strategy; Bourdieu’s praxeology, explaining power effects that occur in Open Strategy contexts; Foucault’s discursive approach, explaining the subtleties of who gets included and who gets excluded as participating ‘strategists’; Schatzki’s theory of practice bundles, explaining how practice interdependencies may reinforce, limit, or undermine openness; and finally, Callon and Latour’s ActorNetwork Theory, explaining the complex role of material technologies, such as social media platforms, in Open Strategy. The chapter continues as follows. The next section outlines the central practice theories and explains their core concepts. The chapter goes on to consider the application of practice-theoretical approaches to Open Strategy research. Based on exemplary practice-based studies on Open Strategy, this section will also show how the 221

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application of particular practice theories allows us to take existing Open Strategy research a step further. A review of existing studies on Open Strategy will bring out some key themes, which are then elaborated further in the next section on the practice-theoretical research agenda: in particular, technology, knowledge, power, change, and practice interdependencies. The chapter concludes by reaffirming the value of practice-theoretical approaches to Open Strategy research, especially in their strong form.

13.2 Practice-Theoretical Approaches As the interest in practice is rooted in a variety of different traditions and theoretical approaches, ‘there is no unified practice approach’ (Schatzki et al., 2001: 2). Rather, the practice perspective constitutes a broad family of theoretical approaches that share some common elements. These ‘family resemblances’ (Nicolini, 2012) can be subsumed into three core concepts that cut across all practice theories and that provide a ‘consistent vocabulary for themes that, while central to the practice tradition, are often expressed in different ways’ (Whittington, 2006: 619). The first concept relates to practices, which are defined as configurations of actions that carry a specific meaning. The meaning of practices is shaped by different societal levels. For example, in the case of intraorganizational openness, the related practices are likely to be organizationspecific by being shaped by the organization’s distinctive procedures and culture. But practices might also be shaped by the larger social fields or ‘the more or less stable background of other practices’ (Rouse, 2007: 505) in which they are embedded, or even by society at large. In these cases, Open Strategy practices might be shaped by industry norms, technology changes such as social media, or societal shifts in expectations of transparency and inclusion. The second concept refers to practitioners, who are the actors on whose skills and initiatives the performance of practices depends. As ‘carriers of practices’, practitioners are the representatives of existing practices within organizations and potentially the

vehicles for bringing in new practices from outside. In the field of Open Strategy, strategy practitioners are those internal or external practitioners who make, shape, and execute strategies. It is important to note that strategy practitioners are not limited to the traditional subjects of strategy making, such as senior executives, middle managers, or strategy consultants, but could include any practitioner inside or outside an organization who shapes, deliberately or inadvertently, its strategic direction. The third concept is praxis, which refers to the actual activities of strategy practitioners in enacting their practices. As praxis involves all the activities of formulating and implementing strategy, ‘the domain of praxis is wide, embracing the routine and non-routine, the formal and the informal, activities at the corporate centre and activities at the organizational periphery’ (Whittington, 2006: 619). As enacting a practice always requires adapting to the idiosyncrasies of particular circumstances, all practice theories leave space for creativity and individual performance. In the case of Open Strategy, praxis denotes the enactment of practices of inclusion and transparency that are required for the making and execution of strategy. The three concepts of practices, practitioners, and praxis are not separate, ‘but interrelated parts of a whole’ (Whittington, 2006: 615 citing Giddens, 1984). Practitioners draw on practices in their praxis; practices define practitioners; praxis redefines these practices. However, even though practice theories all refer to the three elements in one form or another, their origins in different philosophical traditions introduce significant differences in emphasis. In the following section we will introduce the particular theoretical approaches of Anthony Giddens, Pierre Bourdieu, Michael Foucault, Theodore Schatzki, Michael Callon, and Bruno Latour, as the work of these seminal practice theorists proves particularly relevant for addressing central themes in Open Strategy research. To the extent that these approaches differ in their conceptualization of social practices, practitioners’ agency, as well as their assumptions about the way practices obtain their meaning, they also offer different opportunities for addressing particular aspects of Open Strategy. However, rather than going into detail about the individual

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Practice-Theoretical Perspectives on Open Strategy 223 Table 13.1 Overview of Practice-Based Approaches Practicetheoretical approach

Main source

Main concepts

Strengths

Weaknesses

Structuration Theory

Giddens (1984)

Structures (rules and resources), duality of structure, structuration

Room for agency, opportunity to explore micro-sociological details in their context, focus on change and dynamics of practices

Neglects unequal power distribution, the role of material objects, and the constraints to change

Praxeology

Bourdieu (1990)

Capital, habitus, structure/social positions

Opportunity to explore power relations and structures of domination, focus on reproduction

Potential determinism, neglects change of practices through other fields

Discourse and Power

Foucault (1982)

Discourse, power/ knowledge, resistance, control

Opportunity to explore empowering and identity-building effects of strategy, the relation between knowledge and power

Potential determinism, neglects change of practices

Site ontology

Schatzki (2005)

Intelligibility, practical and general understanding, rules, teleo-affective structure, practicebundles

Opportunity to explore the organization of practices (how actions are linked), attention to relation between practices

Difficult to demarcate practices from other practices, unclear driver and motivation for action

Actor-Network Theory

Latour (2005)

Actor-network, performance

Opportunity to explore agency of nonhumans, and the relation between humans and objects; focus on change

Neglects unequal power distribution, danger of endless regress in the analysis of meaning production

theories, which is impossible given the space constraints of a chapter, we will outline the key concepts of each theory and highlight its potential contribution to Open Strategy research in order to provide a broad orientation for Open Strategy scholars. Table 13.1 gives an overview of the strengths and weaknesses of the different practice theories for studying Open Strategy.

Giddens’s Structuration Theory In his seminal book entitled The Constitution of Society (1984), Giddens outlined his theory of structuration, which offers concepts of agency, structure, and duality of structure that have great potential for Open Strategy research. For Giddens, understanding people’s activities is the central purpose of social analysis: for him, social practice is ‘an ongoing series of practical activities’ (1979: 81). These activities are carried out in social systems of practices, which exist at various levels of aggregation, such as a whole society, an organization, or a strategy team. Participation in these systems accredits practitioners with agency:

practitioners have the capacity to follow or to refuse the practices of the systems in which they participate. With this explicit acknowledgement of agency, structuration theory grants practitioners a high degree of influence on social processes, even without formal decision-making rights. For example, even those practitioners who are charged with implementing a decided strategy have considerable scope for resistance and reinterpretation. Even though Giddens presents practitioners as powerful, in that they can both reproduce and change social systems through their enactment of practices, he stresses that activities are neither individual nor voluntary: activities are shaped by practitioners’ control over resources and the following or rejection of rules. Both rules and resources are the structural properties of social systems. In structuration theory, rules can be formal and informal routines, habits, procedures, or conventions – in other words, practices. Resources, on the other hand, can be allocative, i.e., they allow practitioners command over material resources, or authoritative, i.e., they allow command over people. In Open Strategy, formerly excluded

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practitioners might gain the authoritative and allocative resources that grant them decision-making power over those resources. The more resources practitioners possess, and the better they can negotiate rules, the more room these practitioners have for agency. Central to structuration theory, therefore, is the notion of the ‘duality of structure’ (Giddens, 1984). Instead of viewing structure and agency as opposing, duality means that they mutually constitute each other. On the one hand, the structural properties are essential to praxis; on the other hand, they are produced or reproduced by praxis. In this sense, structure constrains as well as enables action. The duality of structure also implies that larger structural principles, such as practices of openness, are expressed in the praxis of ordinary strategizing activities. Herein lies one of the attractive features of structuration theory: structuration explains micro-level phenomena by reference to meso- or macro-level structures (Seidl & Whittington, 2014). In this sense, ‘everyday decisions about the inclusion or exclusion of different employees in the strategy process either reinforce or amend established social and organizational hierarchies’ (Whittington, 2015: 150). The concept of ‘structuration’ explains how structure and agency are brought together. Structuration means that practices are shaped or structured by the resources that make them possible, and by the rules that guide them. In praxis, those structural properties can be either reproduced or adapted. Even though they do not fully account for their actions, practitioners knowledgeably adjust and monitor their practices to achieve their purposes. Hence, structuration theory acknowledges the capacity of all practitioners to meaningfully innovate and change their practices towards more openness. From a structuration theory perspective, the emerging practices of Open Strategy are the outcome of practitioners’ activities that are directed towards learning new skills, responding to new technological opportunities, or accepting new forms of accountability (Whittington, 2019). Thereby, the structural principles of Open Strategy are only stable to the extent that they are not amended by reflexive practitioners. In sum, because of its recognition of the scope for agency, a Giddensian perspective on Open Strategy is particularly insightful in circumstances

of change and distributed power. However, the theory of structuration also has limitations with regard to some of the main themes in Open Strategy research. First, as structures only exist through instantiation in action, critics argue that, from a Giddensian perspective, structures are immaterial (Archer, 1995). Thus, the particular role of material resources in Open Strategy – for example, social technologies – is not an inherently central concern to a Giddensian practice approach. Moreover, Giddens’s notion of structure has been accused of being negligent of past and habitualizing effects on social activities (Archer, 1995). This implies that using the theory of structuration to study the influence of former and taken-forgranted ways of doing strategy on new Open Strategy practices may be restricted in structuration theory, as there may be a tendency to overestimate the effectiveness of transparency and inclusion. In a similar vein, the pliability that Giddens attributes to structures (Parker, 2000; Whittington, 2015) restricts the analysis of the continuity of strategy practices (despite the putative trend towards openness).

Bourdieu’s Praxeology Similar to Giddens’s structuration theory, Bourdieu refers to practice as ‘concrete human activity’ (Bourdieu, 1990: 13), which is conditioned by the social world the practitioners live in. More than in Giddens’s theory, however, Bourdieu’s work is substantially concerned with the dynamics of power and the ways in which social order is maintained within society. The concepts of field, capital, illusio, and habitus found in Bourdieu’s praxeology are particularly helpful in advancing Open Strategy research. In common with Giddens’s notion of social systems, Bourdieu perceives the social world as composed of numerous social fields that exist on different levels, such as a society, an industry, an organization, or a group of strategists. More starkly than in Giddens’s social systems, these social fields are constituted of power relations among practitioners that are (largely) reproduced through their practices (Bourdieu, 1996). Because power is not distributed equally, practitioners continuously strive for social positions that afford them (more)

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Practice-Theoretical Perspectives on Open Strategy 225

power. Accordingly, Bourdieu distinguishes between dominating and dominated practitioners. In Open Strategy, the social field includes all practitioners who play a role in the practice of Open Strategy, which might extend beyond the organization’s formal boundary to include practitioners from outside the organization (e.g., partners, financial institutions, lobbyists, or customers). Analyzing Open Strategy as a social field would thus reveal the wide variety of potential agents engaged in the struggle for domination or influence over strategy (Bourdieu & Wacquant, 1992: 77). The influence of field is determined by the capital practitioners possess. Bourdieu distinguishes three main forms of capital: economic capital, which includes material and financial resources, cultural capital, which includes cultural goods, knowledge, and qualifications, and social capital, which comprises networks and social relations (Bourdieu, 1986). For example, control over financial resources, responsibilities and seniority, expertise or specific skills, and particular access to knowledge can be conceptualized as (different sorts of) capital. Strategy practitioners deploy these forms of capital in Open Strategy practices in order to maintain or enhance their power positions. In this sense, capital can be a resource or a stake that can be used to increase or maintain a social position. ‘The possession of capital not only ensures a dominant position in the field but also provides more opportunities for action and creates the conditions for increasing capital in the future’ (Gomez, 2015: 186). The value of the different forms of capital varies between different fields, as each field is relatively autonomous and ruled by different stakes and interests (Bourdieu, 1990; Oakes et al., 1998). Bourdieu, in this respect, also speaks of the ‘illusio’ that members of a social field unconsciously share; that is, a shared evaluation of the different forms of capital (Bourdieu, 2000). For example, in traditional strategy processes cultural capital in the form of strategic knowledge might be valued as the most prestigious form of capital, whereas in Open Strategy more operational knowledge might be favoured. Because practitioners unconsciously strive for the composition of capital that is of value (i.e., that enhances their power positions), they acknowledge

and reinforce the importance of specific forms of capital, which in turn reproduces the illusio. To the extent that dominant actors in a field possess the most valued composition of capital, illusio shapes the power relations of a given field in such a way that it favours those who already have the most established positions. In this sense, illusio serves the interests of the dominant practitioners. In turn, the dominant position held by these practitioners allows them to determine which composition of capital will be the most influential, thereby legitimizing certain practices, i.e., they can largely control which practices prevail for the acquisition of valuable capital that can enhance their own position in their respective field. Dominated practitioners will mostly defer to the dominant practitioners in order to enhance their position according to the field’s illusio. Thus, in contrast to Giddens’s structuration theory, which emphasizes the ability of practitioners to continuously change the context of their practices, practitioners, according to Bourdieu, unconsciously contribute to the reproduction of the power relations and thus limit the opportunities for resistance. As legitimacy is obtained through praxis that is in accordance with the illusio of the strategy field, which is controlled by dominant practitioners, newcomers entering the organizational field might struggle to establish the legitimacy of their practices. Bourdieu’s framework helps to explain why power and resources remain in the hands of a small group of dominant practitioners who determine the ‘legitimate way’ of doing Open Strategy. These higherstatus practitioners might also be able to influence the selection of participants in the Open Strategy process, thereby further contributing to the reproduction of (organizational) power structures. In this sense, Bourdieu’s framework is particularly fruitful for exploring power dynamics in Open Strategy. Moreover, Bourdieusian practice theory allows for the analysis of practitioners’ reactions to dominant forces: that is, their pressure to comply with these forces, but also their potential development of alternative practices. In this regard, the introduction of Open Strategy practices might affect the distribution of power and positions in the organizational field, but it is most unlikely that they will modify the value of capital.

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Another central concept in Bourdieu’s approach is the habitus, which is defined as a practitioner’s embodied ‘system of dispositions that are socially constituted’ (Bourdieu, 1977: 95). Practitioners acquire their habitus through individual experience and the embodiment of the rules and illusio of the fields in which they participate. Similar to Giddens’s concept of structuration, Bourdieu’s concept of habitus captures the recursive relation between structure and agency. As Bourdieu says, it is ‘structured and structuring’ (Bourdieu, 1990: 52). It is ‘structured’ because its dispositions are the product of past experiences and practising, which allows for the reproduction of practices, and it is ‘structuring’ because its dispositions allow for improvisation and invention in the context of new practices. Consequently, for Bourdieu, structure and agency permeate each other in a generative way. In this sense, Bourdieu’s praxeology allows us to examine the dynamic interplay between individual choices and the structural conditions of Open Strategy. However, Bourdieu (1990) rejects Giddens’s reliance on practitioner reflexivity and argues that structures are much more pervasive. For Giddens, social practitioners are reflexive and monitor the conditions in which their actions are embedded. By contrast, Bourdieu has a more deterministic view of structures. He affirms that practitioners’ positions are predictive of their actions. In this sense, Bourdieu’s work has been criticized for overestimating the determinism of social structures, leaving less space for human agency (Mutch, 2007). Hence, from a Bourdieusian perspective, the capacity for Open Strategy would largely be determined by the structures of the organizational field, and progress in that direction would be slow and hard. Even though Bourdieu generally acknowledges the potential for change, change is only possible within the structures of domination and is typically incremental in nature (Bourdieu, 1990). In this sense, Bourdieu’s praxeology is one of the most structuralist and deterministic of the practice-based approaches presented here.

Foucault’s Theory of Discursive Practice As with Bourdieu’s praxeology, Foucault is particularly interested in the role of power in social

conduct. However, in his seminal work Discipline and Punish (1977), he focuses in particular on the relation between power and knowledge and on how they are used as a form of social control through discourses. Foucault’s seminal work thus provides the concepts of power, knowledge, and discourse, as well as subjectivity, that together can enhance Open Strategy research. Discourses frame the ways in which we see the world and how we talk about the world. They are ‘material verbal traces left by history that determine a certain way of speaking’ (Foucault, 2012: 193). Discourses involve institutionalized rules of statements that can be culture, organization, or group-specific. Strategy, for example, can be defined as a discourse (Knights & Morgan, 1991), because it has particular rules that define which statements are possible and which can be considered as ‘strategic’. Discourses entail a set of practices, which actualize and reproduce them. To emphasize that practices are necessarily framed by a specific discourse, Foucault talks about ‘discursive practices’. Foucault defines discursive practices as a ‘historical and cultural set of rules for organizing and producing different kinds of knowledge’ (Cooper, 1989: 52). Practices, such as the grammar of a language, define more precisely which statements can be made and determine what is considered legitimate knowledge within a certain discourse. For example, strategists’ practices in the discourse of Open Strategy determine which content is discussed and which knowledge is considered strategic and legitimate to define future strategy. This also implies that practitioners’ use of the legitimate strategy language defines who is considered a legitimate practitioner in the Open Strategy discourse. Discursive practices not only determine what we say and do but also how we define ourselves. From a Foucauldian perspective, practitioners do not have an identity, but an identity is communicated to others in interactions with them. In other words, the practitioner’s subjectivity is constituted through the discursive practices that they enact. Practices embedded in a specific discourse frame practitioners’ assumptions, beliefs, and aspirations. In this sense, ‘discourses are . . . internal to the subject, providing the basis on which subjectivity itself is constructed’ (Knights & Morgan,

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1991: 254). In contrast to Bourdieu’s and Giddens’s practice approach, Foucauldian theory is particularly relevant for explaining how Open Strategy discourses inscribe practitioners with the subjectivity of being a strategist. Open Strategy practices that are in accordance with the rules and norms of this particular discourse impose a specific definition of who one is (and how one should act). Generally, practitioners have to follow the rules of the strategy discourse if they want to talk (and act) as strategists. Hence, from a Foucauldian perspective, practitioners are conceptualized as determined by specific discourses rather than being autonomous and free-willed. Even though discourses are not purely constraining but also enable ‘obedient will’ (Foucault, 1988: 87), Foucault’s theory has been accused of being structuralist – at least in his early writings (Reckwitz, 2002). In this sense, Alvesson und Kärreman (2011) argue that the ubiquitous power of discourses limits the room for agency. Thus, Foucault’s theory is limited in its capacity to explain the role of practitioners’ agency in the emergence and transformation of new Open Strategy practices. Like Bourdieu, Foucault views power as pervasive in social life. Power does not reside in humans or things but in a network of relationships among practitioners (Foucault, 1982). In particular, power is ‘invested in, transmitted by and reproduced through all human beings in their day-to-day existence’ (Clegg et al., 2006: 20). This implies that all practitioners can potentially exercise power in particular situations and that power is not held exclusively by powerful groups of people. In Open Strategy, IT officers’ unspoken and barely conscious assumptions about appropriate interactions as they carry over into the design of social media platforms might exercise influence over the nature of online discussions and information sharing. This example also shows that power requires and creates knowledge. Yet for Foucault, the definition and legitimization of knowledge also requires and creates power relations. Hence, he argues that power and knowledge are recursively linked and names this relation ‘power/knowledge’ (Foucault, 1980). The recursivity of power/knowledge is that knowledge provides a means of social power and control, which is used to define knowledge and through which further new knowledge can be

generated. The concept of power/knowledge can thus be of particular importance to Open Strategy scholars interested in the relation between (strategic) knowledge and power. Referring to the previous example, IT officers’ technical knowledge might grant them control over the strategic discussion on the social platform. In turn, this control might allow them to influence what are considered legitimate posts or types of content (a form of knowledge) and, hence, what kind of new strategic ideas can emerge. The knowledge gathered in this way might further reinforce the exercising of power. Additionally, Foucault argues that through the struggle over power, identities become posited and resisted (Foucault, 1977). Hence, ‘identity is always in process, always subject to reproduction or transformation through discursive practices that secure or refuse particular posited identities’ (Clegg, 1998: 30). For example, an Open Strategy discourse might change the identity of practitioners newly included in the strategy process, because they have internalized the responsibility and accountability that goes with their role as strategists (Knights & Morgan, 1991). Conversely, the Open Strategy discourse might create resistance from those who undertake formal roles as strategists (such as internal consultants), because this discourse undermines their responsibility and thus their identity.

Schatzki’s Theory of Practice Bundles For Schatzki, practices represent the basic component of social affairs and, as such, they constitute the basic object of social theory. This starting point for theorizing social reality seems similar to that of other practice-theoretical approaches presented in this chapter. However, Schatzki’s theory differs significantly from these approaches in that he rejects the notion of different levels of social reality, e.g., micro and macro levels. For Schatzki, there is only the level of social practices (Schatzki, 2011). This variant of practice theory is characterized by a ‘flat ontology’, i.e., the idea that all social phenomena stretch out horizontally on one level, instead of vertically along different hierarchical levels (Schatzki, 2011; Seidl & Whittington, 2014). Social phenomena that,

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from a Giddensian and Bourdieusian perspective, would be referred to as macro phenomena, are here defined as aspects of bundles of practices (Schatzki, 2011). Bundling implies intertangling rather than levels. Schatzki’s theory offers in particular the concepts of action intelligibility, the organization of practices, as well as social sites or bundles of practices that have great potential for Open Strategy research. Central to Schatzki’s theory is the concept of ‘action intelligibility’ (Schatzki, 1996). Building on the Heideggerian and Wittgensteinian tradition, Schatzki argues that people do whatever makes sense for them to do. They are thus neither rational decision makers nor dupes of culture or habitus. While action intelligibility is subject to constraints, these do not stem from the ‘mysterious force’ (Nicolini, 2012: 164) that norms and rules exercise, but from understanding and attunement. Understanding provides the logical, and attunement the affective component of the structuring of action (Schatzki, 1996). The centrality of intelligibility thus differentiates Schatzki’s notion of agency not only from that of Bourdieu, who believes that people respond rather blindly to structural conditions carried by the habitus, but also from that of Giddens and Foucault, who see activities as more or less structured by (discursive) rules and resources. In this sense, from Schatzki’s perspective, agency is at the centre of the analysis of Open Strategy practices. In particular, his concept of action intelligibility helps in distinguishing between logical and affective aspects of agency. At the same time, the lack of structural principles in Schatzki’s theory limits its capacity to explain general motivations for action. As practitioners just do whatever makes sense to them, there is no general principle that can explain what makes them do whatever makes sense to them. This implies that motivation for action, such as to maintain power, can only be explained in situ. Schatzki defines practices as ‘open-ended spatial-temporal manifolds of actions’ (Schatzki, 2005: 471). Open-ended here means that actions not only temporally reproduce but also continually extend practices. Thus, practices cannot be reduced to regularity and routine. Practices are sets of actions, i.e., of doings and sayings. Even though doings and

sayings are inseparable, focusing on language cannot fully capture bodily actions and thus the understanding that underlies practice. Doings and sayings are hierarchically organized in projects and tasks. Sets of sayings and bodily doings make up a task, such as setting up a strategy meeting. In turn, the same sayings and doings can be mobilized within different tasks, whereby setting up a strategy meeting can be part of the task of formulating a strategic plan or making a strategic decision. This is how doings and sayings obtain different meanings. Several tasks are involved in the accomplishment of a project (such as developing a new strategy). Thus, Schatzki’s organization of practices allows scholars to examine the meaning of specific Open Strategy practices by analyzing the organization of doings and sayings or, put differently, by analyzing how they are related in projects and tasks. As far as practices are concerned, doings, sayings, tasks, and projects are organized and linked to each other through four mechanisms. First, practical understanding refers to the knowing derived from enacting a practice. If two or more practitioners are involved in enacting a practice, the related actions are linked by the same practical understanding so that the action of one person would be intelligible to the other. Put differently, actions within a practice are linked by a practical understanding only if the practitioners can make sense of the actions and understand what is going on. Because practical understanding only ‘executes the actions that practical intelligibility singles out’ (Schatzki, 2002: 79), people do not decide what to do at the point of action nor are they governed by structural conditions. Rules and instructions are a second way in which actions are kept together within a practice: they are programmes of action that specify what to do. In this sense, they construct chains of actions and connect the arrangements of tasks and projects. By influencing which actions make sense, rules also orient future courses of action. Thirdly, actions are linked to practice through their teleo-affective structure. The term denotes that all practices entail ‘a set of ends that participants should or may pursue’ (Schatzki, 2002: 80). Every practice is thus shaped by the particular direction in which it should be carried

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out. The teleo-affective structure is subject to controversy because determining how a practice should be carried out is open-ended (Schatzki, 2002). It is through discussions, contestations, or conflicts that practices continually evolve in response to changes of circumstances. Lastly, the activities of a practice hang together through a general understanding, which is a reflexive understanding of the overall practice in which people are involved. Together, practical understanding, rules, teleo-affective structure, and a general understanding organize actions into a practice, which defines its distinctiveness: actions belong to a practice to the extent that they express aspects of its organization. The capacity to describe the organization of practices is a particular strength of Schatzki’s theory. The four mechanisms that link doings, sayings, tasks, and projects allow Open Strategy scholars to identify which actions (and sayings) constitute a particular strategy practice and how these actions are interlinked and organized to form a particular practice of Open Strategy. Several practices together constitute a field of ‘action intelligibility’ that informs participants about what makes sense for them to do (next). Schatzki calls these spaces of intelligibility ‘sites’ to emphasize that they are socially and historically determined but at the same time constituted by bundles of situated and local practices. Social phenomena therefore emerge through a bundle of interconnected practices and material arrangements (Schatzki, 2002). To say that practices bundle means that practices affect, use, give meaning to, and are inseparable from other practices. In bundles, practices can be related in five different ways.1 They are connected through either common organization (their organizations contain the same element) or orchestrated organization (one of the items of the practices’ organization hangs together), shared activities, chains of action, or intentionality. For example, strategy meetings are sites where practices of discussing, negotiating, and decision making are bundled through the shared activities of listening, talking, interfering, etc. Thereby the practice of discussing might affect and give meaning to the practice of negotiating. These two practices might be related by their

common chains of action or by their common organization (e.g., their organization shares the element of the same task, such as ‘including practitioners in the strategy process’). Schatzki’s theory is thus particularly fruitful for studying Open Strategy practices in relation to other (Open Strategy) practices in order to understand the ‘meaningful totality’ (Sandberg & Tsoukas, 2011) in which they are immersed. As some critics (Latour, 2005; Nicolini, 2012) argue, however, studying a web of practices does not necessarily help us to understand a particular practice. The boundaries of a focal practice can hardly be demarcated if practices are embedded in a nexus, bundle, or web of other (infinite) practices. Paradoxically, the capacity to explain the interrelation of practices – one of the main advantages of Schatzki’s theory – is at the same time a constraint, at least for empirical researchers.

Actor-Network Theory Actor-Network Theory (ANT) originated from the work of Bruno Latour and Michel Callon, who were interested in the social as a continuously generated effect of the networks of relations between humans and nonhumans. Even though ANT does not use the term ‘social practice’ explicitly, it is often treated as practice theory due to its debt to the founding works of practice theorists such as Heidegger and Wittgenstein (Nicolini, 2012). ANT offers the concepts of actor-network and performativity that can enhance Open Strategy research. ‘Actor-Network’ is the central concept in ANT. The actor, in the term ‘Actor-Network’, is ‘something that acts or to which activity is granted by others’ (Latour, 1996: 371). Actors are humans and nonhumans, and both have the capacity to act. Highlighting that intentionality is not a precondition for agency, ANT stresses that agency is not a purely human property, but that objects can possess agency as well (Latour, 1996). Based on that argument, ANT propagates the principle of ‘generalized symmetry’ in social analysis, according to which human and nonhuman action is considered equally. Objects must be given equal actorhood in the analysis of the social

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because they are necessary and active elements of the social world. Consequently ‘actor-networks’ are composed of relationships among human beings and interactions between human and nonhuman actors. All actions take place in such networks and involve a variety of human and nonhuman actors. For example, posting strategic ideas on a social platform implies that a practitioner enters a text that the software of the platform processes and makes available to search engines and other practitioners who are then able to comment on the initial post. ‘From this perspective, there are no distinct and separate social and technological elements that might shape, or be shaped by, each other’ (Orlikowski, 2009: 163). Rather, materiality is intrinsic to everyday activities. Generalized symmetry in this context implies that all networks or practices are sociomaterial, which means that ‘the social and material are jumbled together to form socio-technical networks’ (Chapman et al., 2015: 265). In contrast to social networks studies, which assume that social relations exist in a social world, ANT argues that social relations generate the social world. Similar to Schatzki’s theory, ANT is based on a ‘flat ontology’, which assumes that nothing has reality or form outside the enactment of practices or networks (Law, 2009). In this sense, ‘society, organizations, agents, and machines [are] effects generated in patterned networks’ (Law, 1992: 380). From an ANT perspective, Open Strategy can be conceptualized as (an effect of) the network of relations between human and nonhuman actors. There are several implications of thinking of Open Strategy in these networked terms. First, conceptualizing Open Strategy as an actornetwork enables an exploration of how material objects insert themselves in Open Strategy processes, how they exercise agency, and how they are constitutively entangled with other actors. Referring to the previous example, social platforms might interact with other organizational systems, such as intranets and strategy practitioners, to contribute to the creation of strategic ideas. In this sense, they are not tools that are ‘used’ by strategy practitioners, but necessary and active elements in the Open Strategy network or practice. Depending

on how humans and nonhumans interact, they might produce different strategic outcomes or effects. Thus, the concept of an actor-network can be helpful for describing the processes by which technological systems come into being or fail to materialize. Second, conceiving Open Strategy as an actor-network implies that the distinction between the inclusion of internal or external actors in the Open Strategy process can be overcome, because the relations of an Open Strategy network might spread both inside and outside an organization’s boundaries, even in the case of openness within organizational boundaries. Following this line of thought, an Open Strategy network that includes practitioners from outside an organization ‘is not bigger than another one, it is simply longer or more intensely connected’ (Latour, 1996: 5). The concept of an actor-network thus helps us to understand how Open Strategy emerges, and to think of it as a ‘global entity – a highly connected one – which remains nevertheless continuously local’ (Latour, 1996: 374). Another implication of thinking of Open Strategy in terms of an actornetwork is that ‘we get rid of the tyranny of distance and proximity’ (Latour, 1996: 372). As the actor-network does not presume geographical proximity between actors, the Open Strategy network can encompass dispersed and widely separated actors, such as the ‘outside public’ who contributes to strategy making. By contrast, actors such as the colleague next door may be socially distant because he or she has no, or only weak, ties to the Open Strategy network. Moreover, the notion of an Open Strategy network also implies that there is no fixed social order. In this sense, Open Strategy practitioners could be on any level of the organizational hierarchy. Another central concept in ANT is performativity or performance. The concept of performance captures the idea that actors have no absolute essence, but acquire their existence and meaning only by being performed or enacted, i.e., only in relation to other human or nonhuman actors with which they interact (Law, 1992). In this sense, objects, materials, and technology that constitute Open Strategy need to be studied in praxis and

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with reference to the practices of Open Strategy. For example, instead of assuming that a social technology has inherent qualities, such as the quality to filter, store, etc., and is predefined for a specific purpose, ANT argues that this social technology is fabricated in the praxis of Open Strategy, i.e., in relation to other actors in the Open Strategy network, which gives the social technology its specific meaning, characteristics, purposes, and uses. Generally, the capacity of objects to act thus depends on the praxis of which they are a part. Through performance, the actor-network recursively generates and reproduces itself through further interactions (Law, 1992). In other words, if relations are not repeatedly performed, the network will dissolve. Additionally, ‘this implies that no network or its constituent elements is permanently stable, complete or final’ (Chapman et al., 2015: 269); the network is therefore in a constant state of change. Thus, performance implies that actors and their relations are not pre-given or fixed, and this accounts for the multiple and dynamic ways in which the relations are created and recreated in everyday life (Orlikowski, 2009). In this sense, potentially any connection and form of network is possible because ANT sets ‘infinite pliability and absolute freedom’ (Latour, 1996: 379) to actors and their relations. This implies that ANT is particularly suited to explore the dynamics of and change in Open Strategy. From an ANT point of view, Open Strategy is not a network of fixed relations; rather, the relations between actors are continuously formed and re-created. In this way, the meaning of human and nonhuman actors can change during the strategy process. Despite offering some fruitful avenues for an exploration of Open Strategy research, ANT is less relevant when it comes to studying power relations. In fact, ANT has been criticized for dismissing and ignoring the basic social factor of power (Bloor, 1999; Restivo, 2010). Moreover, it has been argued that conceptualizing a social phenomenon as an actor-network might lead to an endless regress (Collins & Yearley, 1992). As actors are constituted by their relations to

other actors, one might need to go down to an atomic level to grasp the full meaning of strategy practitioners or technological objects in Open Strategy.

13.3 Existing Practice-Theoretical Studies on Open Strategy In this section, we focus on six important empirical studies on Open Strategy, which refer explicitly to practice theory. Reviewing these shows that all papers identify Open Strategy practices that vary according to the inclusion of internal or external actors and the context in which Open Strategy takes place. Baptista and colleagues (2017), for example, identify practices of participation that emerge through the use of social media. Dobusch and Müller-Seitz (2012) identify filtering practices that define which actors are included in or excluded from strategy work. Although not explicitly referring to the literature on Open Strategy, Neeley and Leonardi (2018) identify practices of knowledge sharing within social media usage. Luedicke and colleagues (2017) identify practices of radical Open Strategy as well as practices that counterbalance the negative consequences of radical openness. In their conceptual study, Mack and Szulanski (2017), in turn, discuss the practices of participation (increasing stakeholders’ input on decisions) and inclusion (creating a community of stakeholders engaged in the strategy process) in centralized versus decentralized organizations. Finally, Malhotra and colleagues (2017) identify practices that mitigate the risk of knowledge gaps that arise in Open Strategy formulation. While all of these studies refer to the practice perspective, very few of them cite the original practice theories themselves. Instead, most of them merely refer to the strategy-as-practice (SAP) literature (Golsorkhi et al., 2010; Jarzabkowski, 2004; Whittington, 1996). As the focus on social practices in strategy making is not radically new and might even have become taken for granted, existing practice-based studies on Open Strategy often use practice theory more as

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Table 13.2 Overview of Practice-Based Studies on Open Strategy Authors

Subject

Practice theory use

Methods

Baptista, Wilson, Galliers, Bynghall (2017)

Reflexiveness as organizational capability to open up strategy through social media

Identify practices of participation (SAP literature)

Multiple case study: Secondary data and interviews

Dobusch and MüllerSeitz (2012)

Inclusion of outside public to • Identify practices (SAP develop strategy literature) • Sociomateriality (Orlikowski, 2009) Role of social media in • Identify knowledge-sharing strategy execution practices (SAP literature) • Practice-based view on knowledge (Brown & Duguid, 1991)

Case study: Participant observation, interviews, and documents

Luedicke, Husemann, Furnari, Ladstaetter (2017)

Radically open strategizing

Netnography: Online sources and email list, interviews, and observation

Mack and Szulanski (2017)

Participation and inclusion in Identify participatory and inclusive centralized and decentralized practices (SAP literature) organizations

Vignettes based on interviews to illustrate theoretical arguments

Malhotra, Majchrzak, Niemiec (2017)

Risks of knowledge gaps in Open Strategy formulation

Action research: Participant observation, documents, interviews

Neeley and Leonardi (2018)

Identify radically open and counterbalancing practices (SAP literature)

Discuss practices of participation and inclusion

a source of inspiration than as a substantial theoretical lens. However, following the strong programme of our title, various practice theories in combination offer a rich theoretical apparatus for capturing the meaning of Open Strategy practices, what makes them possible, why they are linked in a particular manner, and how they contribute or interfere with traditional strategy making. In the following section, we will show how the studies presented in Table 13.2 could be extended by engaging more deeply with the different practice theories. We have structured this discussion around five central themes that are addressed in these studies: technology, knowledge, power, change, and practice interdependencies. The first theme is the role of social technologies in Open Strategy. The studies (Baptista et al., 2017; Dobusch & Müller-Seitz, 2012; Neeley & Leonardi, 2018; Malhotra et al., 2017) show how social technologies can enable and constrain transparency and inclusion, depending on how these technologies are used. However, all four studies could be fruitfully extended through a more thorough engagement with particular practice theories. In particular, using an ANT perspective, one could

Comparative case study: Interviews, documents, and observations

examine technology as an active participant in Open Strategy, shaping how Open Strategy is enacted. For example, Dobusch and Müller-Seitz (2012) focus specifically on the material aspect of practices. By drawing on the relationality of social and material aspects of practices (Orlikowski, 2009), they show that a wiki technology used by Wikimedia for large-scale open strategizing is used for different purposes during different phases of the strategy process, i.e., gathering strategic ideas and legitimizing. It is easy to imagine an extension of this study using ANT. Conceptualizing the wiki technology as an actor within the Open Strategy actor-network would allow for an analysis of how the technology inserts itself in the Open Strategy process and how it is constitutively entangled with other human actors (mainly the volunteers that contributed to strategy making in this case). Accordingly, the wiki would not be considered a tool that is used by Wikimedia but an active element in the Open Strategy process, as it collected suggestions, categorized proposals, and generally ‘created pressure for participation [as well as] the impression – if not the illusion – of ongoing participation’ (Dobusch & Müller-Seitz, 2012: 19).

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Thus, drawing on the concept of an actor-network and the performance of the wiki, it would be possible to explain how the qualities of a technology are fabricated in relation to other actors in the Open Strategy network. The relationship to other practices gives the technology its specific meaning, characteristics, and purpose. This also implies that the purpose of the design of social technologies cannot be determined ex-ante since the purpose depends on how the technology is enacted in praxis. As the concept of performance accounts for the multiple and dynamic ways in which the relations between actors are created and re-created, it helps to explain why and how the meaning of the technology changes during the Open Strategy process. A second theme found in the existing studies is the use and creation of strategic knowledge, as well as the risks associated with knowledge sharing in Open Strategy (Neeley & Leonardi, 2018; Malhotra et al., 2017). As Foucault focused on the role of knowledge in social conduct, his theory seems particularly suitable for reconceptualizing the relation between knowledge and Open Strategy practices and to further extend existing studies with an examination of the role of power in the use and creation of knowledge in Open Strategy. For example, Neeley and Leonardi (2018) focus on knowledge sharing in Open Strategy. They show that participating in nonwork-related content via an internal social media platform fosters knowledge sharing between organizational members, while the same content can become a source of tension within the organization. Their study could be reinterpreted in light of Foucault’s concept of discourse and power/knowledge, which would allow the question of why nonwork-related content can become a source of tension in this context to be addressed. Participation in knowledge sharing to execute strategy can be conceptualized as an Open Strategy discourse. This discourse defines which statements can be made and determines what is legitimate knowledge. Thus, when launching the social media platforms, the organization’s discourse was open regarding statements, allowing for work-related and nonwork-related content to be posted. The rules of discourse changed when management became worried about the liberalism of the discourse. The concept of power/knowledge might explain why this happened.

The concept of power/knowledge suggests that knowledge provides a means of social power and control, which is used to define knowledge and through which further new knowledge can be generated. In this sense, the knowledge that the management was able to gather about the private and professional activities of their employees allowed them to exert power by ‘monitoring activities on the site’ (Neeley & Leonardi, 2018: 27). In turn, this allowed them to define non-work-related content as illegitimate and, as a consequence, ‘control and monitoring of Yammer [the social platform] intensified thereafter’ (Neeley & Leonardi, 2018: 26). Consequently, the social platform provides the means to socially control Open Strategy by allowing ‘visibility into what other people talk about’ (Neeley & Leonardi, 2018: 32). A third theme that can be identified in five of the studies is the effect of Open Strategy on power relations (Baptista et al., 2017; Luedicke et al., 2017; Mack & Szulanski, 2017; Malhotra et al., 2017; Dobusch & Müller-Seitz, 2012). Typically, it is argued that openness in terms of inclusion empowers people to be part of the strategy process, which undermines management control over the strategy process and provokes interventions by managers, which might even lead to ‘the closing of an – at first sight – genuinely open strategy process’ (Dobusch & Müller-Seitz, 2012: 2). Because of their focus on power relations, Bourdieu’s and Foucault’s theories would be well suited to further elaborate the reproduction or change of power structures due to new open strategizing practices. However, their respective theories focus on different aspects. Whereas Foucault’s theory is particularly illuminating in cases of unequal power distribution due to knowledge asymmetry, Bourdieu’s theory can help explain the maintenance of power despite new Open Strategy practices. For example, referring to Bourdieu’s framework, by taking a more critical view on radically open strategizing, as described in the paper by Luedicke and colleagues (2017), the influence of powerful actors on the practices of open strategizing is revealed. Applying Bourdieu’s theory, Ulrich, the central organizer of the Premium company, is a dominant actor because he not only ‘accumulated by far the greatest

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amount of social capital’ (Luedicke et al., 2017: 9), but most likely also the greatest amount of economic capital (e.g., budget control) and cultural capital (direct access to relevant strategic information). Although other Premium employees can also be regarded as dominant actors because they too got access to relevant information about strategic issues, Ulrich raised the majority of strategic issues (‘71% of the issues of the full data set’, Luedicke et al., 2017: 7), directed the agenda-setting debate, and ‘sometimes forced his will upon the collective . . . to pursue new projects about which he is particularly passionate’ (Luedicke et al., 2017), all of which maintained his very powerful position. Bourdieu’s concept of illusio might explain why other members never criticized Ulrich’s ‘centralized agenda setting’ and ‘authoritative decision making’ in this radical Open Strategy process, and even legitimized his actions as ‘pragmatic ways of doing Open strategy’ (Luedicke et al., 2017: 2). As illusio describes the shared (unconscious) evaluation of capital, all actors involved in open strategizing compete for the same value that the most powerful actors already possess (in this case, access to relevant strategic information). In this sense, Ulrich’s access to the most valued capital allowed him to define the legitimate way of practising Open Strategy, i.e., to dominate the agenda setting and overturn collective decisions publicly and transparently. In turn, the legitimization of his actions contributed to maintaining his power position. Therefore, increased participation might be ‘beneficial not only for the quality of an organizational strategy’ (Luedicke et al., 2017), but also for those who strive to maintain a powerful position. The fourth theme that can be identified in the existing studies concerns change in Open Strategy practices (Neeley & Leonardi, 2018; Baptista et al., 2017). The studies show that Open Strategy practices change due to different social media uses (Neeley & Leonardi, 2018), and that the organizational context changes due to the implementation of social media associated with Open Strategy (Baptista et al., 2017). Giddens’s theory could help to extend these studies and explain how strategy practices change by considering the recursive relation between practices and the context or

structure in which they are embedded. For example, Baptista and colleagues (2017: 1) describe how the implementation of social media changed the ‘distribution of rhetorical resources and transformed the organizational [context] from a univocal into a multivocal [one]’. Using Giddens’s concept of structuration, this observation could be extended by explaining how the organizational context changed and how this, in turn, affected other organizational practices. The implementation of social media gave rise to new Open Strategy practices, such as ‘seamless sharing, commenting, responding, syndicating and interaction’ (Baptista et al., 2017: 4). The practitioners who used the social platform drew on their allocative and authoritative resources, such as the power obtained through formal positions, knowledge, and experience, and might develop rules for connecting and engaging on the social platform, which would allow them to enact the new Open Strategy practices. According to Giddens, the practitioners would be able to change the structures of their practices, i.e., the rules and resources that enable their practices, through the enactment of new practices. Therefore, through the enactment of Open Strategy practices, practitioners could change the structural properties of their practices, for example, by providing moderating of giving feedback, gaining broader access to others’ feedback, and incentivizing feedback, practices that were ‘increasingly embedded in formal structures of organizations’ (Baptista et al., 2017: 7). However, according to the concept of structuration, practices not only reproduce or change structures, but structures are also constitutive for practices. Consequently, by amending the structures of their practices, practitioners would find that the adopted structure might further affect other organizational practices, such as rewarding feedback and leading the organization in general. Instead of viewing structure and agency as opposing, Giddens’s notion of structuration explains that duality – they mutually constitute each other. Moreover, Giddens’s explicit acknowledgement of agency grants practitioners ‘an active role in the production, reproduction and transformation of their work contexts’ (Baptista et al., 2017: 5), even without formal decision-making rights.

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The fifth theme that can be identified in the studies concerns the interdependencies of combined practices in Open Strategy contexts. For example, Luedicke et al. (2017) show that radical Open Strategy practices are paired with counterbalancing practices to overcome practical barriers. Generally, the papers show that practitioners flexibly combine certain practices according to the situation in order to overcome the constraints posed by Open Strategy practices on other strategy practices. Schatzki’s theory offers a fruitful way of further examining the relation between Open Strategy practices and between these and other organizational practices. For example, in their study on Open Strategy in centralized versus decentralized organizations, Mack and Szulanski (2017) argue that in decentralized organizations practices of participation dominate, whereas centralized organizations favour ‘a greater mix’ of practices of participation and inclusion. This finding could be extended based on Schatzki’s concept of bundles of practices, which would allow for an explanation of how those practices are entangled, how their bundling affects their meanings (and those of other practices), and what effect this has on other practices. The practices of participation and inclusion might be linked by a common organization, such as common elements in their teleoaffective structures (e.g., to gather participants’ inputs) or shared activities, such as inviting contributions and setting up a platform to collect input. How the practices of participation and inclusion are bundled – through common organization, shared activities, chains of action, or intentionality – determines the meaning of practices within that bundle. As such, the practice of participation could entail the same sense of community as the practice of inclusion if they, for example, share most of the elements of the teleo-affective structure but still comprise different activities. Moreover, how the practices of participation and inclusion are bundled might also influence whether more centralized or decentralized practices of decision making are enacted. Thus, instead of taking decision-making practices as given, the bundle of participation and inclusion practices might affect how decisions in the organization are made. Schatzki’s theory therefore highlights that in order to explain

Open Strategy, practices cannot be studied in isolation but in relation to each other. As the studies identified reveal, there are a variety of empirical methods that can be used in studying Open Strategy from a practice-theoretical perspective. Most of the existing studies draw on ethnographic and observational methods (Dobusch & Müller-Seitz, 2012; Malhotra et al., 2017; Neeley & Leonardi, 2018). This ties in with their focus on uncovering the nature of social practices, as scholars need to get a detailed and contextual understanding of the different aspects of a particular practice or bundle of practices (Tavakoli et al., 2017; Miettinen et al., 2009; Nicolini, 2012). Through ethnographic observations, scholars obtain firsthand knowledge and experience ‘from the native’s point of view’ (Geertz, 1982: 55). In addition to that, most of these papers also rely on interviews to triangulate their observations. By contrast, relying solely on interviews as reported accounts of practices can ‘make it hard to understand and unravel the tacit and deeply embedded nature of practices’ (Rasche & Chia, 2009: 725) or to appreciate practices as they happen. Luedicke and colleagues (2017) are innovative in undertaking a netnography, an interpretive research technique to gather primary data on behavioural patterns in online contexts. They collected over 18,000 emails posted via an email list that served as a primary platform for the discussion of strategic issues. Malhotra and colleagues (2017), in turn, relied on action research, which helped them gain close access to the practices of planning and implementing crowdsourcing. Moreover, most studies collected data over an extended period of time, which allows the researcher to render finely grained, detailed accounts of practices and practitioners’ local understanding (Yanow, 2012). The commitment to local understanding is underlined by the typical focus of the selected papers on a single organization or a comparative study of two organizations (Dobusch & Müller-Seitz, 2012; Neeley & Leonardi, 2018; Luedicke et al., 2017). Baptista and colleagues (2017) are exceptional in spanning multiple organizations, but their concern is with social media use in general rather than the characteristics of particular organizations. Generally, all

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the studies used qualitative methods, which lend themselves particularly well to studying Open Strategy as they allow for the uncovering of previously unremarked issues in the emerging field of Open Strategy. The work of leading practice theorists suggests a number of additional methods. These include ethnomethodology (Latour, 2005), which allows for the capturing of the micro-interactions of practitioners; quantitative methods (Bourdieu & Passeron, 1977), which allow for an analysis of the prevalence of Open Strategy practices (and the capitals involved); network analysis (Bourdieu, 1996; Wacquant, 2004), which can capture the social networks of Open Strategy practitioners; historical methods (Foucault, 2012), which can trace shifts in Open Strategy practices; and narrative analysis (Bourdieu, 1977), which helps in identifying how Open Strategy practices affect the identities of different practitioners. Although we cannot discuss these methods at full length here, we would like to point to the extensive repertoire of methods for pursuing the Open Strategy research agenda.

13.4 An Agenda for Open Strategy Research from a Practice-Theoretical Perspective Having illustrated in the previous section how a deeper engagement with the different practice theories allows existing studies to be extended, and the methodological considerations this entails, we will now move on to outline an agenda for future research. The following section highlights four core themes that seem particularly consistent with a strong programme of practice theory research, aimed at explanation as well as description. The first area concerns the role of materiality and, in particular, technology in Open Strategy. Actor-Network Theory offers a particularly suitable perspective for this area. From an ANT perspective, Open Strategy practices can be treated as a network involving both human and nonhuman actors. Human actions and material objects are seen to interact in such a way as to form

a strategy network. Thus, future research could investigate how human and nonhuman agency, such as the ‘behaviour’ of wikis, blogs, and social technologies in general, is implicated in Open Strategy practices. Another potentially relevant perspective is offered by Schatzki, with his notion of practice bundles. In common with ANT, Schatzki affirms that material objects have agential power, but he stresses that only humans carry out practices. However, Schatzki focuses in particular on how material objects make practices durable and connect them across space and time (Schatzki, 2002). Therefore, based on Schatzki, future research could investigate how material objects bundle practices of Open Strategy and how they contribute to the production and enactment of particular Open Strategy practices. The second area of research concerns the effect of Open Strategy practices on power relations. This is a particularly prominent theme in the theories of Bourdieu and Foucault. Both assume that power relations are pervasive, which means that issues of power are not necessarily related to changes of practices. Drawing on a Bourdieusian perspective, future research could thus examine how Open Strategy practices allow strategy practitioners to maintain their social power positions. From a Bourdieusian perspective, empowering people to be part of the decision-making process (Sibony, 2012; Matzler et al., 2014; Luedicke et al., 2017) would allow them to gain social and cultural capital. These resources, in turn, would enable them to take a more powerful position and to influence ‘what is at stake’ in the strategy process. Conversely, the status of the formal strategists, such as internal consultants or members of the strategy department, might change as they are no longer considered to be the only ones in possession of relevant strategy knowledge, i.e., a particular form of cultural capital. Future research could thus investigate how Open Strategy practices affect the status and positions of organizational members and how, in turn, more or less powerful strategy practitioners influence the use of different Open Strategy practices through resistance. In addition, Foucault’s theory of discursive practice allows for an exploration of the linkages

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between power and knowledge. For example, the use of the new technologies associated with Open Strategy typically requires specific technological knowledge (Hutter et al., 2017) that can also be used to exert power over those who do not possess that knowledge. At the same time, the new Open Strategy technologies often make available new kinds of knowledge, such as personal information about bloggers, which can be used to gain some control over them. Thus, power in the strategy process might shift from formal strategists to IT officers who are able to manipulate the technological infrastructure (Whittington, 2019) and, conversely, reduce top management’s degree of control over the course of strategic discussions or the decision-making process more generally (Stieger et al., 2012). Future research could thus investigate how (specialized) knowledge affects control over the strategy process and how, in turn, power and control are exerted to obtain new strategic knowledge. The third area of research concerns the dynamics and change of Open Strategy practices. Hautz and colleagues (2016) have already identified the basic dynamics of Open Strategy along the dimensions of inclusion and transparency. In general, practice theories would help us to understand with which practices these dynamics play out over time and how the contexts in which practices are embedded (or which they constitute) affect these dynamics. From a Bourdieusian, Foucauldian, and Giddensian perspective, contexts (conceptualized as fields, discourses, or systems) determine which practices and how practices are carried out. Hence, these perspectives might be particularly suitable for analyzing how the structural properties of contexts (conceptualized as illusio, rules and resources, or rules of statements) change Open Strategy practices. Additionally, from a Bourdieusian and Foucauldian perspective, contexts are sites of power struggles, which implies that scholars could investigate how power struggles affect the change of practices towards more openness or closure. From a Foucauldian perspective, we might examine how actors use new instruments of control to exert their power and to reveal new knowledge (that they can use to monitor other participants) in order to change the rules of the

strategy discourse. Bourdieu’s and Foucault’s practice theories might thus be suitable for cases in which the dynamics of Open Strategy are related to power and control. Drawing on Giddens or Schatzki, who highlight the practitioner’s knowledgeability and reflexivity, future research could also investigate how practitioners adjust their existing strategy practices towards more openness, or how new bundles of practices are created by relating existing to new strategy practices. Moreover, from an ANT perspective, we could examine the interplay between the performances of practitioners and material objects in the change of strategy practices. The fourth area of research concerns the relations and interdependencies between Open Strategy practices. Schatzki and Actor-Network Theory both focus on the relation between practices in terms of bundles or networks. From their point of view, practices are not employed in isolation but in relation to other practices. Future research could therefore investigate how particular Open Strategy practices relate to other Open Strategy practices, or other organizational practices in general. For example, while studies have identified mitigation or counterbalancing practices in response to more openness (Malhotra et al., 2017; Luedicke et al., 2017), future research could explore how different Open Strategy practices are bundled to respond to the challenges and dilemmas of Open Strategy. This could lead onto an exploration of the bundling effects of different Open Strategy practices on existing power relations, the use and creation of knowledge, as well as on other organizational practices in general. Together, a strong practice programme offers a great range of avenues for future research into Open Strategy. As we have argued here, practice theories are particularly suited to an exploration of the complex and often surprising dynamics associated with the employment of Open Strategy practices. The practice perspective allows researchers to capture the meaning of the activities involved in Open Strategy, the different factors that make them possible, their linkages with other activities, and their impact on the strategy process in particular and on organizational life in general. We hope that this chapter will help researchers to unleash the full

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potential of practice theories for researching and explaining Open Strategy.

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CHAPTER

14

A Sensemaking Perspective on Open Strategy NICOLAS B ENCHERKI, JOËLLE B ASQUE, a nd LINDA ROULEAU

Open Strategy, both as a set of processes and practices, and as an emerging academic field, “promises increased transparency and inclusion regarding strategic issues, engaging both internal and external stakeholders” (Hautz et al., 2017: 298; see also Whittington et al., 2011). Open contexts, by involving greater transparency and inclusiveness, strongly impact the way multiple stakeholders make sense of strategy or, in other words, negotiate, disseminate, or even contest the issues at play in strategic change. The diversity that openness brings to the strategic table – a diversity of people (inclusion) but also of information and of perspectives (transparency) – offers organizations more possibilities to help them to make sense of their complex environment (Seidl & Werle, 2018). To uphold the dual promise of inclusion and transparency, Open Strategy would therefore benefit from sensemaking research’s attention to the detailed practices through which people form a shared understanding. Indeed, combining together a diversity of people and of outlooks to reach an actionable meaning of what’s going on is no small feat. It is a social process that is rooted in people’s identities and may be politically sensitive as each set of actors interpret the information they share and that is shared with them in accordance with their respective interests, background, and expertise (Seidl & Werle, 2018). It can also challenge wellestablished understandings and potentially lead to important clashes (Chreim & Tafaghod, 2012). Bringing together people from different organizations, units, roles, and professions may thus steer the process toward convergent or divergent sensemaking (Smith, 2016). The process of

sensegiving, which consists of sharing information with participants in such a way as to orient their interpretation (Bowman, 2016; Corvellec & Risberg, 2007), can also represent a challenge to Open Strategy, as it may appear to reinforce or contradict the principles of transparency and inclusiveness. Even though Open Strategy research is strongly concerned with issues related to sensemaking such as commitment (Hutter et al., 2017; Nketia, 2016) and impression management (Gegenhuber & Dobusch, 2017; Whittington et al., 2016), to name a few, it has until now paid scant attention to sensemaking and sensegiving (Seidl & Werle, 2018; Teulier & Rouleau, 2013). Yet, we can find research that uses the sensemaking lens in Open Strategy contexts without using the label as such, in particular in interorganizational collaboration. Combining both is a fruitful union as Open Strategy and sensemaking share many assumptions regarding transparency and inclusiveness and, together, they offer a better account of what goes on when people join forces in strategy making. Literature has shown, for instance, that greater openness in strategy and sensemaking brings about both benefits and drawbacks and contributes to either establishing and dismantling knowledge boundaries between actors (Birkinshaw, 2017; Smith, 2016). Most importantly, when both are considered together, it becomes clear that they are distributed processes that weave together time and space: Open Strategy makes sense when people from elsewhere bring in information about what took place elsewhere and at another time. Inclusion and transparency are mutually reinforcing – positively or not – as bringing information to the 241

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table (transparency) also means genuinely welcoming the contribution of the people who voice and embody those perspectives (inclusion). Despite the challenges they pose to each other, we argue in this chapter that sensemaking offers an alternative vantage point on Open Strategy that highlights its processual and situated nature. By drawing on three brief case studies from our research, we will show how sensemaking is concretely performed in open contexts. It relies on the articulation of three processes that are key for making sense of an Open Strategy and yet remain overlooked in current research, namely presentification (making information and perspectives available in the conversation), embodiment (doing so through one’s body and voice), and translation (transporting contributions across time and space and adjusting them to the strategic issues at hand). The chapter contains four sections. First, we review sensemaking and its connection to strategy. Second, we move on more precisely to the way sensemaking has been used so far in research on Open Strategy contexts. Third, we present three vignettes that allow us to illustrate underexplored and particularly relevant dimensions of sensemaking in Open Strategy contexts. The chapter then proposes an agenda for advancing research on sensemaking and Open Strategy processes and practices, before concluding by suggesting that sensemaking may be constitutive of Open Strategy.

14.1 What Is (Strategic) Sensemaking? According to Weick’s (1995) seminal book, Sensemaking in Organizations, sensemaking and organizing are tightly connected, as the latter precisely consists of the multiple efforts made by human agents to reduce the equivocality arising from novelty, ambiguity, and tensions that are intrinsic to social reality. From their ongoing activities with others, people collectively build interpretive convergence among conflicting beliefs, expectations, and behaviors. In this sense, organizing is less about structuring and controlling than

about the capacity of actors to remove equivocality from their informational environment and commit themselves to a convergent set of goals. Colville, Pye, and Carter (2013: 1203) suggest that reducing equivocality does not mean eliminating it, but rather that “action clarifies by shaping what it is that you are attending to and in the doing, shapes what is going on.” Even though an array of specific definitions of sensemaking exists in the literature, they all refer in one way or another to the relational and collective aspect of meaning making. For instance, Balogun and Johnson (2004: 524) define sensemaking as the “process through which people create and maintain an intersubjective world” through formal and informal interactions, from exchanging narratives to gossiping. While they explicitly emphasize the creative power of sensemaking, they nevertheless insist on its subjective aspect. Other definitions focus instead on the recreation or the reproduction of the organization and downplay individuals’ interpretative acts. In that sense, Taylor and Van Every (2000: 275) describe sensemaking as “a way station on the road to a consensually constructed coordinated system of action.” It is important to note that sensemaking is more than interpretation. Indeed, Brown, Colville, and Pye (2015: 267) explain, citing Weick (1995: 13), that contrary to interpretation, “sensemaking is less about discovery than invention, i.e., sensemaking refers to processes by which ‘people generate what they interpret’.” Sensemaking, whether it is during change or crises (Maitlis & Sonenshein, 2010) or during times of stability (Sandberg & Tsoukas, 2015), is often conceived in the literature in terms of process. Triggered by rare events or new information, the sensemaking process allows organizational members to reduce the equivocality of meanings in order to restore or reproduce a “normal” state of shared understanding. Even though it is methodologically arduous to segment a sensemaking process into discrete phases, the process of sensemaking is generally described in three or four stages. Weick (1979, 1995; see also Weick et al., 2005) initially proposed four analytical steps: environmental change (something

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happens), enactment (people try out responses that also shape that environment), selection (the most appropriate one is chosen), and retention (this response becomes the frame to make sense of future occurrences). Many authors have sacrificed the retrospective nature of Weick’s proposal (people act first and then figure out what things mean) and reverted to a more conventional view of the meaning-action sequence. For example, Maitlis and Christianson (2014) identify three “sensemaking moves”: (1) perceiving and noticing cues; (2) creating interpretation; and (3) taking action. Therefore, adopting a sensemaking lens means investigating “the specific interpretive processes actors carry out to generate a specific sense and the actions taken on the basis of the sense already made of the interrupted activity for the latter to be restored” (Sandberg & Tsoukas, 2015: 14). Sensemaking research offers a set of related constructs that contribute to refining how we understand the sensemaking process (see Maitlis & Christianson, 2014: 69, for a list of sensemaking-related constructs). Among the better known is the notion of “sensegiving.” Gioia and Chittipeddi (1991: 442) define sensegiving as the “process of attempting to influence the sensemaking and meaning construction of others in a preferred redefinition of organizational reality.” Sensegiving is generally viewed as a topdown process exercised by leaders and managers who are trying to influence the sensemaking of others. According to Rouleau (2005: 1415), sensemaking and sensegiving, as discourse and action, “are less distinct domains (Hopkinson, 2001) than two sides of the same coin – one implies the other and cannot exist without it.” Some researchers also associate the search for shared meanings with the relationships between cues and frames (Colville et al., 2013). While cues denote a piece of information, the Goffmanian term of frames refers to guides for interpretation and action. Frames are thus preexisting knowledge acquired during prior sensemaking episodes, i.e., past and remote events that people use for interpreting information, cues, or their current situation.

Sensemaking has several key features that are unanimously recognized in the literature. Among others, this process is generally viewed as retrospective, communicational, and identity-based. Focusing on people bringing in their frames of reference acquired from socialization and past experiences, research on sensemaking has mainly emphasized its retrospective character, even though it also ties together past, present, and future (Maitlis & Christianson, 2014). The sensemaking literature has also paid attention to how organizational members construct communicational accounts in order to comprehend the world and act collectively. Yet, sensemaking not only is discursive, but also involves emotional, bodily, spatial, and social practices of all kinds (Balogun et al., 2014). Its anchoring in identity makes the sensemaking process politically sensitive (Brown et al., 2015). Defining the situation is also defining the self, and the other way around (Weick, 1995: 20). Depending on one’s understanding of the environment, it is also roles, responsibilities, and relations that organizational members are shaping (Chreim & Tafaghod, 2012). Finally, sensemaking can be adaptive or inadaptive, to the extent that it can both aid and hinder adaptation to change. Far from being always shared, sensemaking can also be a potentially costly process. This is the case, for example, when it is exercised to one’s advantage or reserved to a specific group (Huzzard, 2004). Moreover, commitment to a set of beliefs not only helps organizational members move forward but also creates blind spots that inhibit sensemaking during change (Maitlis & Sonenshein, 2010). Unless it is part of a reciprocal sensemaking process, sensegiving can, for instance, lead to sensebreaking or sensehiding, the withdrawal or suppression of alternative proposals (Monin et al., 2013). While sensemaking is a phenomenon in its own right, it also offers a perspective to look at different other issues and processes taking place in and around organizations, including strategy making. Adopting a sensemaking lens draws attention to the multiplicity of people and viewpoints that the situation under study brings about and focuses on

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people’s joint effort as they work out the meaning of that situation. Whether any person’s or group’s intended or preferred meaning will prevail is an open question (Maitlis, 2005; Maitlis & Sonenshein, 2010). In this sense, strategic sensemaking constitutes a specialized form of sensemaking that refers to the specific cues and content related to the sense made in the context of strategy planning or implementation. Research on strategic sensemaking focuses on the way organizations and their members “enact” their environment and make sense of it, which is an integral component of the strategy formation process. More precisely, strategic sensemaking refers to the symbolic and relational processes by which managers, organizational members, and external stakeholders create sense for themselves and others about what they consider to be the “raison d’être” and the future of the organization (Rouleau & Balogun, 2011). Gioia and Chittipeddi (1991: 442), who first introduced sensemaking/sensegiving in the strategy field, define strategic sensemaking as a process of “meaning construction and reconstruction” leading to the creation of a shared “framework for understanding the nature of the intended strategic change.” For the most part, strategic sensemaking research has focused on how top managers and their teams, often in dedicated strategic meetings, make sense of strategy for others (Corley & Gioia, 2004; Gioia & Chittipeddi, 1991; Maitlis, 2005). This has led to an overstatement of strategy’s deliberate and localized achievement (see Sonenshein, 2006). For example, Corley and Gioia (2004) view sensemaking as intentionally performed among top managers, and then communicated to the rest of the organization through sensegiving activities to influence how organizational members select interpretations of the new organizational identity. This top-down view assumes that a set of plausible meanings are “shared,” at least in the sense that “they enable the same behavioral consequences” (Maitlis & Sonenshein, 2010: 561). In contrast, an emerging stream of research, borrowing from the practice turn in strategic management, has observed the way strategic sensemaking actually unfolds, without making assumption

as to whose meaning matters the most. This stream is less concerned with what meaning is reached, and focuses more on how conversations and other practices bring about meaning during strategic change (e.g., Cooren et al., 2015; Garreau et al., 2015), including through sensegiving (Balogun et al., 2014). This research attitude has allowed recognizing that sensemaking is a cooperative achievement that may implicate an array of organizational members and that may lead to the adoption of fragmented interpretations that result from multidirectional relationships (e.g., Ritella & Ligorio, 2016; Tao & Tombros, 2017). For instance, the strategic sensemaking of middle managers has been a regular topic of study (Rouleau & Balogun, 2011; Radaelli & Sitton-Kent, 2016). This shift to a more processual and bottom-up understanding of strategic sensemaking is particularly relevant for the study of Open Strategy, as it means that having a greater number of actors around the table is not an anomaly or an exception. Rather, research adopting such an understanding of strategic sensemaking will empirically look at the way people themselves deal with the additional participants and the elements of information they contribute.

14.2 Sensemaking and Open Strategy Until now, Open Strategy research has been more concerned with sensemaking-related issues such as commitment (Hutter et al., 2017; Nketia, 2016) and impression management (Gegenhuber & Dobusch, 2017; Whittington et al., 2016). While the former serves as the foundation for sensemaking (Weick, 1995), the latter is not very far from the idea of sensegiving. Moreover, sensemaking in Open Strategy research appears to be considered as the antecedent (Birkinshaw, 2017) or the result or consequence (Hutter et al., 2017) of being more transparent and inclusive in the strategy formation process. For instance, Birkinshaw (2017) suggests that “collective sensemaking” in capital markets is an important dimension of Open Strategy for private firms and places this dimension at the top of his framework. Drawing on an online initiative by Siemens, Hutter, Nketia, &

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Füller (2017) showed that employee participation in open strategizing engenders employee sensemaking that reinforces the sense of virtual community. These studies use a broad definition of sensemaking that is synonymous to interpretation. Nevertheless, we can find in the literature studies undertaken in “Open Strategy contexts” – whether they use the term Open Strategy explicitly or not – and that draw on sensemaking to complement their analytical apparatus. Table 14.1 provides examples of studies that adopt a sensemaking perspective to look at open contexts. As the table shows, the sensemaking perspective has been mostly adopted when looking at Open Strategy in interorganizational situations. There is therefore room for adapting sensemaking to strategy making within a single organization. That being said, looking at interorganizational contexts may serve as a magnifying glass and make salient the role of sensemaking in open contexts, as different frames, cultures, and professional identities clash. Each study exemplifies the sorts of challenges to which a sensemaking lens allows responding, but also the challenges and opportunities Open Strategy contexts and sensemaking pose to each other. Together, these studies offer a collection of case studies from which we can offer theoretical insight that may be generalized to other Open Strategy contexts (Eisenhardt & Graebner, 2007; Flyvbjerg, 2006). To reveal the details of meaning production without making assumptions about the voices that matter, sensemaking studies in Open Strategy contexts tend to adopt a qualitative research approach focusing on the communicative practices of participants. This can be done by looking at the product of sensemaking, which will typically take the form of a text (e.g., reports, plans, guidelines, conventions, and so on) that constitutes a (provisional) stabilization of the negotiation between all the involved parties (Bowman, 2016; Teulier & Rouleau, 2013). The production, distribution, and consumption of texts, in this respect, can be seen as the result of the activities that happen in different interconnected spaces (Ritella & Ligorio, 2016; Teulier & Rouleau, 2013). Alternatively, it is also possible to concretely observe the practices deployed by participants as they are engaged in

collaborative sensemaking itself. This can be done, for instance, by analyzing the details of their conversations (Ritella & Ligorio, 2016), the interactions during which they jointly write a text (Teulier & Rouleau, 2013), and the meetings in which they prepare presentations, scenarios, prototypes, and so on (Bowman, 2016). In addition to magnifying the sensemaking process, interorganizational situations also make issues of hierarchy and power less obviously salient, thus allowing us to look at how sensemaking itself makes them relevant or not. Conventional channels of communication also cannot be presumed. Indeed, adopting a sensemaking lens means remaining open to how people themselves can bring their contribution to the table, make sense together of a changing environment, and select an appropriate response when transparency and inclusion are thrown into the equation – without assuming that a specific group (e.g., top managers) matters more than another or that things will unfold according to usual procedures. In this sense, research on sensemaking in Open Strategy contexts has often emphasized the blurring of the conventional spatial, hierarchical, and knowledge boundaries of strategy making (Bryson et al., 2009; Ritella & Ligorio, 2016; Smith, 2016). Sensemaking, indeed, regularly serves to figure out new ways of working together when novel forms of strategic collaboration are put in place. Sensemaking in Open Strategy contexts, then, consists not only of developing frameworks of meaning around a shared issue or project, but also of providing or building a common direction by understanding each other’s identity, profession, or interests (Bowman, 2016; Corvellec & Risberg, 2007; Ritella & Ligorio, 2016). While transparency and inclusion, which are central to Open Strategy, may empirically take a variety of forms, and while there may be cases where one exists but not the other, a sensemaking perspective sheds a different light on the two notions and stresses their interrelatedness. Transparency, indeed, does not only concern a preexisting top management team sharing sensitive information downward (and in fact such a vertical hierarchy may not exist ahead of the

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Regional partnership of public service organizations

Researchers and computer engineers working on a web platform

Cooperation between Figuring out how to work university researchers together without precise and private firms to create guidelines new technology

Interorganizational collaboration to handle water scarcity issues

Bowman, 2016

Ritella & Ligorio, 2016

Smith, 2016

Seidl & Werle, 2018

Finding a common strategy across organizational differences to manage a common resource

Devising a strategy to convince entrepreneurs to use the platform

Formulating a 10-year common vision for the delivery of public services

Cross-sector study group Working out together the in civil engineering and relevance of a technology public works for the industry

Teulier & Rouleau, 2013

Selsky & Parker, Cross-sector social 2005 partnerships

Handling cooperation among the public, private, and nonprofit sectors for social issues

Defining a joint strategic initiative to create a common GIS system

Bryson, Crosby, & Bryson, 2009

Regional forum for sharing geospatial data

Giving a direction to a large array of groups toward the successful implementation of wind energy

The strategic challenge

Corvellec & Ris- Wind power berg, 2007 development involving multiple partners, government agencies, and environmental stakeholders

Open context

Offering “informed opinions about how it works and what needs to be improved”

“ . . . reconciling the different (professional) cultures” and understanding that of entrepreneurs

Jointly making sense of an environmental issue in order to figure out “how [to] do something about it?”

Agreeing to pool together each organization’s “knowledge of different aspects of water”

Making sense of each other’s Releasing more or less work, knowledge, and information about one’s organizational interests work and professional identity to others

Each partnership member brings to the table their own scenarios and community plan

Enriching meetings and writing sessions with technical guidelines and descriptions of sectorial issues

Joining individual stories to describe the region as a single entity

Translating (moving and transforming) information about the technology across industries and firms

Understanding each other’s Sharing knowledge of the work, making common sense issue and of each sector’s on the issue and the resources way of working available, and identifying potential partners

Scenario planning as a practice of simplexity: handling complex thought with a simple process

Translation spaces help understand technology in interorganizational collaboration

The core group invites new participants to broaden the range of cues, but these come with their own interests and may redefine the issues at hand

Clarifies the interplay between issues, participants, and their interests

Agreeing to consider others Sensemaking, strategizing, as part of one’s group and group boundaries may impede on innovation projects

Voicing absent Strategic sensemaking entrepreneurs to bring their takes place across time experience into the and space conversation

Including each partner’s story into a single one through the joint activity of scenario planning

Taking into account a diversity of target audiences’ needs when authoring reports and organizing industrial visits

Reaching out to potentially Prospective sensemaking relevant partners and may help deal with drawing on their societal issues competencies

Connecting together An Actor-Network Theory a range of relevant players view of strategic planning in the field in the public sector

Contributing heterogeneous objects (maps, PPT, graphs, prototypes, etc.) and linking them together

Strategic planning as a “way of knowing,” i.e., following people’s own meanings of their association

Sensegiving as “mise-ensens,” or staging of meaning

The paper’s main contribution

Welcoming concerns and questions early in the project

How inclusion contributes to sensemaking

Sensegiving as a way to Describing the technical impulse a common direction features of the project in (“mise-en-sens”) to an array response to criticism of diverse groups and neutralizing opposition

The sensemaking challenge How transparency contributes to sensemaking

Table 14.1 Studies Offering Cases in Interorganizational Open Strategy

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sensemaking process). It also includes the way participants reveal the knowledge they hold about the issue or project at hand (Bryson et al., 2009; Corvellec & Risberg, 2007; Ritella & Ligorio, 2016; Seidl & Werle, 2018; Selsky & Parker, 2005; Teulier & Rouleau, 2013), as well as the knowledge about themselves (Bowman, 2016; Smith, 2016): the interests that lead them to join the collaborative strategizing effort, their ways of working, or their stories. What is at stake is the very constitution of a team that pools together its expertise and its methods in order to build a shared understanding of the common project and of its strategic challenges. It is not surprising, then, that inclusion works hand in hand with transparency when it is looked at from the perspective of sensemaking: what matters is not only bringing people from diverse professional and hierarchical positions, but also that those people can contribute information or expertise to the strategic conversation. This is why inclusion often consists in inviting partners to participate into the project being carried out (Bryson et al., 2009; Seidl & Werle, 2018; Selsky & Parker, 2005), or at least finding ways of representing relevant concerns and experiences (Bowman, 2016; Corvellec & Risberg, 2007; Ritella & Ligorio, 2016; Teulier & Rouleau, 2013). Importantly, inclusion is not only about others being merely present, but supposes actually considering them as part of the group and listening to their voice (Smith, 2016). Focusing on sensemaking in Open Strategy contexts therefore questions the assumption that there is a core group doing the strategizing work, and others who are included as extras. This is not to say that there may not be an inner circle (whether formally or not) or tensions between participants, but whether these do matter or not is one of the elements of which people need to make sense. This entails that transparency and inclusion are not as easily distinguishable: transparency is not a specific group’s business, as everyone may withhold or disclose information; and in order to contribute information, one must have been included in the first place. To study sensemaking in the context of Open Strategy, where multiple stakeholders coalesce or

oppose, there is therefore a need to understand what sensemakers and “sensegivers actually do when they are involved in sensegiving” and sensemaking (Corvellec & Risberg, 2007: 308). Observing the minutiae of meaning production, negotiation, and diffusion will reveal how varied knowledge – from different disciplines, professions, roles, identities, etc. – interacts through various modalities (through bodies, speech, writing, drawing, etc.) as people figure out their organization and its changing environment, but also their own individual and collective identity as strategy makers. This is what we will do in the next section.

14.3 Three Cases Studies: Presentification, Embodiment, and Translation in Action We propose to analyze succinctly three case studies taken from our own research. They each add a layer to the understanding of the sensemaking process in Open Strategy. The first, taken from the microbrewing sector, not only highlights how the inclusion of many participants opposes but also complements the leadership team’s efforts at transparency in the more conventional sense, which leads the decision-making process to take an unexpected turn. This is possible, we will argue, because the case allows expanding the notion of inclusion to the way participants presentify – make present or available in the current situation – not only absent actors (similarly to Ritella & Ligorio, 2016; Teulier & Rouleau, 2013), but also events and information that are distant in time and space. The second, taken from the healthcare sector, reverses our usual understanding of inclusion through the notion of embodiment, and explores how a change agent includes himself in various groups and provides them with cues not only through visual and narrative practices, but also through his own body, to create strategizing opportunities. Finally, the third case, drawn from the public works and civil engineering sector, explores the interdependence of diverse “translation space” that makes up the arena of open strategizing where meaning is jointly produced.

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Table 14.2 How the Three Cases Illustrate Presentification, Embodiment, and Translation in Open Strategy Context

Form of strategic sensemaking

Transparency

Inclusion

Sensemaking process

Industry-wide branding and marketing decisions at a microbrewers’ association

Collaborative sensemaking to respond to sectorial challenges by larger breweries

Executives share disastrous financial results and unconvincing new plan of action

Representatives of the association’s members participate in decision making. People also voice absent others.

Presentification (widening the range of actors, organizations, and events by even including absent ones)

Introduction of the patient-partner approach in the healthcare sector by a director who is himself a patient

Sensegiving to create new strategies in the healthcare system that will transform the logic of care

Shares his expertise on the approach, but also stories concerning his own experience as a patient, through narratives, visuals, and his body

Includes himself, both as an expert and as a patient, among various groups and adapts his story to each audience

Embodiment of the basic features of the change in order to provide rich cues for strategizing

Interorganizational collaboration in the civil engineering and public works sector concerning technology

Jointly making sense of the relevance of a new technology for the industry (definition of a digital mock-up that would transform the sector)

Being candid about each firm’s needs and understandings with the technology

Using interdependent and sequential translational spaces to consider different viewpoints on the technology

Translation (transform and transport ideas through time and space)

(V1) Making Cues Present Through Discourse About a Future Event in the Microbrewing Sector The first vignette illustrates how sensemaking in Open Strategy contexts also relies on the way participants make present in the situation events and information that are spatially and temporally distant, a practice that has been called “presentification” (Benoit-Barné & Cooren, 2009). Presentification takes place as people lend their voice, their body, their writing, or otherwise offer substance, to materialize information, ideas, rules, or other entities that would have no other way of being “present” in the given situation. As a practice, presentification combines inclusion and transparency, as people’s inclusion in the meeting makes it possible for them to offer substance to otherwise unavailable information, thus contributing greater transparency. This case takes place at the Microbrewers Association (MBA), an industry association in a Canadian province. At their annual congress, representatives of member organizations engaged in

interorganizational strategizing to make a strategic decision: whether or not to hold a second edition of a beer festival they had created to provide visibility to their new brand and raise money for their association. Open strategizing became a part of the MBA’s annual meeting ever since member organizations collectively elaborated a strategic plan for the microbrewing industry ten years prior to compete with the large breweries that control the market (Piette et al., 2014). In terms of transparency and inclusion, the annual meeting offers an opportunity for member representatives from various microbreweries to create a community of interacting stakeholders and to strategize together using information about their industry and the political context provided by the executive committee. The first edition of their beer festival was held during the summer of 2016. To get the festival off the ground, each member microbrewery had agreed to pay a special fee, and larger members provided loans to the MBA that would be reimbursed with the event’s profits. The festival was a critical success, but a financial disaster. Only about 6,000 people attended, instead of the expected 30,000, and

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the MBA came out of the event with an important debt. At the following annual meeting, members had to decide whether to go ahead with a second edition of the festival, to be held in 2018. To shape up an image of an improved version of the beer festival, the MBA annual meeting’s attendees had to build on cues from past events and compare them to a new road map for the event. The challenge – in particular for the chair of the organizing committee – was therefore to make present in the room, i.e., to “presentify,” the previous edition in a way that would be useful for the sensemaking process, along with some new information allowing him to envision a successful version of the event. This took the form of an explicit sensegiving exercise for the committee chair. He sent budgetary and financial information showing expected profits by email prior to the meeting. While email would appear to offer easy access to the documents he had sent, in fact it turned out to make them less readily available, as most participants had not brought electronic devices with them or did not have convenient internet access. In the name of transparency, which he seemed to associate with a form of self-criticism, the chair of the organizing committee only gave a partial glimpse at the 2016 event, and emphasized what went wrong – and not so much the reasons why the event was needed in the first place, its strategic import, or its critical acclaim. The new business plan suggested an event of similar scale and budget for the 2018 festival, at the same location, but with a more efficient advertising campaign. Having to decide within the same day, but with only a partial and negative account of the past event, participants had little choice but to view it as an unsuccessful venture, and therefore to project this diagnosis forward on the 2018 event, which ended up being described as “risky.” This can be seen as a failed attempt at sensegiving by the committee chair, who tried to provide cues to convince participants to endorse this new course of action for the beer festival. However, he was ineffective in orienting the sensemaking process because of the poor choice of cues made present.

The conversation took a shift when a participant shared his experience with a smaller festival in his hometown, thus contributing an alternate piece of sensegiving from the floor. Here transparency and inclusion collide: involving a greater number of participants provided an opportunity for the presentification of alternative and enriching pieces of information to the sensemaking process. By conversationally taking the room on a journey to a different location and a different time, he gave his colleagues access to a new sensemaking frame: a festival can also be a smaller-scale event; it can be manageable, regional, and low-risk. By making present, through his account, the example of his own small festival, the participant provided his fellow meeting attendants with a much-needed frame to make sense of the worrying information the chair of the organizing committee was offering them. The strategic decision was made accordingly, giving a new and unexpected orientation regarding the beer festival as a strategic asset. The leaders’ sensegiving, carried out in the name of transparency, ended up backfiring, but sensemaking worked as cues were pooled to explore new possibilities regarding collective strategy. The inclusion of many actors who materialized and “made present” cues from other times and spaces made it possible for them to orient the sensemaking process toward unexplored strategic directions. This vignette shows intertwined dynamics between transparency and inclusion in the context of Open Strategy, as shown by analyzing the sensemaking process through the concept of presentification. This concept also reveals the multidirectional aspect of sensemaking in Open Strategy contexts and how it makes decision making more complex (Hautz et al., 2017). Greater transparency by leaders through sensegiving (following a top-down direction) does not necessarily mean the provided cues will be used as intended. Greater inclusion means that more participants materialize cues that would not be available otherwise and that may orient the strategic conversation. In that sense, presentification relies on inclusion, but contributes to transparency by making useful information available.

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(V2) Embodying the Success of the Patient-Partner Strategy in the Healthcare System Continuing on the idea that absent people, events, and information are made present in a given situation through their materialization, this second vignette insists on the role of embodiment in the strategic sensemaking process. In this case, a school of medicine mandated John, a consultant, to implement a new patientcentered strategy in its hospital system. However, the hospitals and each of their departments were relatively autonomous in their decision to adopt or not to adopt the strategy. To steer leaders toward a positive decision, John organized brainstorming workshops at various hospitals to reflect with professionals about what a patientpartner strategy could mean for them. In this case, the transparency and inclusion dimensions of Open Strategy are part of this implementing process. Having received blood transfusions to treat his hemophilia, he has seen the hospital and healthcare system from the inside. Infected with HIV when he was a teenager, he came to embrace a different way of dealing with healthcare professionals. Indeed, by embodying the patient-partner himself during his presentations to professionals and managers, he provides them with cues related to the new strategy, as they are responsible for elaborating their work plans and figuring out whether the patient-partner strategy is meaningful for their departments. By including himself in the strategic target, he also incarnates transparency by sharing with health professionals a patient’s feelings and experiences. The third author analyzed a series of such sessions, during which John hoped to make a variety of health managers and professionals understand that patients have an expertise of their own, with the ultimate goal of conducing them to develop their own local strategy drawing from the patient-partner philosophy (Renaud et al., 2016). John would explain how he was – and continues to be – involved in his own treatment, and the outcomes he experienced with his own body.

In doing so, he embodied the patient-expert, inviting participants to directly engage with the meanings he tries to convey to them. Thus, he did not only speak of patients’ knowledge, but offered the professionals a chance to be in the presence of a skilled patient-partner: himself. He embodied his understanding of patients, which for him is not a mere mental image, but a lived journey. When presenting himself in a group of doctors, to provide them with cues to understand and appropriate the patient-partner strategy, John turned the spotlight to his body bearing no visible signs of illness and displaying happiness and energy. He offered an incarnate example of what the future can be for patients who are empowered in their relationship with their doctors. When he was in a meeting with nurses, he physically demonstrated his proximity with them, to illustrate that they are patients’ natural allies and the true change-bearers toward a patient-partner philosophy. He would typically have a nurse with him on stage, and displayed physical proximity with her, for instance by touching her arm and making jokes with her. In one case we observed, the nurse responded by laughing, providing her group of peers with cues in the form of joint embodiment, displaying the closeness between the patient-partner philosophy and the nursing profession, or between patients and their caregivers. It appeared as a natural, simple, and almost intimate relationship. When he was among a group of managers, John created cues that connected to his audience’s needs and interests. He would wear a suit and speak their language by using charts and graphs that showed the roles patients could play in the care continuum, as well as statistics to demonstrate the efficiency of the strategy. Once he established his credibility in speaking to a managerial audience, John would also tell his own story as a patient who has been successful in taking control over his own treatment by collaborating with healthcare professionals. The apparently healthy, affable, and “managerial” body that stood in front of the managers, and that looked so much like them, therefore turned out to be the product of the patient-partner strategy.

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Here again transparency and inclusion appear to be multidirectional, as John included himself in those groups and embodied a strategy to assist participants, creating a positive meaning of the patient-partner strategy. John’s efforts can be read as attempts at inclusion and (strategic) transparency by building a coalition to bring together all the key players around the patient-partner strategy. He did not only tell them about the interests and concerns of each party, but also embodied the strategy and created environments where it could be interpreted and appropriated by health professionals. This case shows that when applying a sensemaking lens to strategy – which is never disincarnate – the bodies of all those involved do matter as they are vehicles through which inclusion and transparency are achieved. We can effectively see it from successful business or political leaders who are incarnating the spirit of their products and philosophy. For instance, Steve Jobs embodied the friendliness of Apple products, Richard Branson embodied daredevil entrepreneurism, and John Legere, the longhaired, young-acting CEO of T-Mobile US, is rarely seen without the purple t-shirt that reminds one of the company’s colors.

(V3) Translating the Relevance of a Software for Public Work and Civil Engineering Firms The third vignette illustrates that, while Open Strategy may involve fragmentation through time and space, sensemaking helps reconnect the dots through interdependent and sequential translation spaces. Translation, here, must be understood both in the geometrical sense of movement through time and space, and in the linguistic sense of adapting meaning to a new context. Indeed, in strategic sensemaking, translation consists both in connecting together previous occasions for meaning making into a coherent whole and adjusting these meanings to the issues at hand. The example in our case is that of Communic Group, a crosssector study group bringing together middle managers and other collaborators from public work and

civil engineering firms, dedicated to understanding how the introduction of a 3-D design software will transform the work practices in the sector. The group members were supposedly competitors but agreed to put aside differences and to express transparency by sharing business information in order to make sense collectively of this new technology. Inclusion was achieved not only through the gathering of these representatives, but also because each of them voiced the concerns and interests of the many members of their respective firms. Along with another researcher who followed the Communic Group over a period of three years, the third author analyzed the members’ sensemaking process (part of this work is reported in Teulier & Rouleau, 2013). The study revealed the importance of translation spaces – including intensive work sessions, industrial visits, writing sessions, and organizational meetings and talks – where the group members, along with middle managers and other stakeholders from various organizations, explored what the new software meant for their firms’ strategy by pooling their individual and collective knowledge and past experiments. This has led to defining translation as the way a heterogeneous group of people transport cues, in the form of objects and ideas, from one context to another, and transform them so that they become meaningful in the new context. A part of Communic Group’s work consists in attempting to model the software’s behavior using a mock-up. A challenge with the mock-up (and eventually the software) was to meet the expectations and demands of the various tasks and professions represented around the table. Inclusion complexifies the task of adapting the software to the needs of different specialities (earthwork, drainage, structural engineering, etc.) and functions (foundations, finishing layers, restoration, etc.) in the sector. During the intensive work sessions using the mock-up, the group started by sharing their respective firm’s preoccupations regarding the characteristics and the possibilities of the new technology. The many contributions, of both data and frames to make sense of them,

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served to translate the new piece of software into issues, values, interests, and other elements that spoke to the group members. More specifically, the translation consisted in reframing problems, from technical to organizational, and the other way around. This sensemaking process allowed them to develop a new joint strategy around the potential use of the new technology in their sector. In parallel to working on the mock-up, they took part in industrial visits at firms from another sector, which allowed them to see that the software was more than a visualizing and display tool for clients. It was also a cooperation and a project management tool. Including a new site for collecting cues allowed for a greater diversity in the meanings involved, but still required the work of selecting cues and interpreting what these cues would mean for them in their own context. To report on their findings, the group’s members engaged in intense writing sessions that served to reconcile interpretative differences among themselves. Not only was each writing session a conversational space where different interests, including those of potential readers at partner firms, were brought to the table, but the texts themselves constituted such spaces. Indeed, the term “translation” takes here an almost literal sense, as the information to be included and its wording were both carefully considered to craft texts that would be meaningful to all stakeholders back at the member firms. When the group’s members would go back to their respective firms, they would organize meetings to report on their work, and share their newly formed understandings of the software, thus engaging in sensegiving for their colleagues’ benefit. Here they were translating the result of their sensemaking processes within the group, in order to orient sensemaking of their firms’ members into understanding the potential benefits of adopting the new technology. To do that, they speak on behalf of the technology, explaining what it demands, what it entails, and what it brings to the firm, in concrete terms that are relevant to their colleagues.

These four translation spaces – working on the mock-up, the industrial visits, the writing sessions, and reporting on the group’s findings – are sensemaking and sensegiving occasions where group members meet among themselves or with other stakeholders to contribute the knowledge they have, generate new knowledge, and make sense of it all. This case shows that, in often fragmented Open Strategy processes that take place across spaces and time frames, meetings and other gatherings must also serve as translation spaces in order to weave together the many places and times of the sensemaking process and alleviate the complexity created by the inclusion of a range of stakeholders.

14.4 A Research Agenda These three cases were chosen because, although they are drawn from broader and more complex studies, they each condense and illustrate one of three unexplored features of sensemaking that becomes salient when it is used as a perspective to look at Open Strategy, namely presentification, embodiment, and translation. The first vignette, concerning the Microbrewers Association’s decision over whether to hold a beer festival, illustrated the way sensemaking requires cues from past events or events to be made present or “presentified.” The second vignette, concerning John’s efforts to promote the patient-partner philosophy, showed how a strategic proposal is made sense of not only through visuals, objects, language, and rational arguments (although these mattered too), but also through the literal embodiment of the various stakeholders’ interests and concerns. Finally, in the case of Communic Group, middle managers were involved in various translation spaces and practices through which they had to design a future technology that will transform the whole sector. We will first provide a specific research agenda for advancing our knowledge of presentification, embodiment, and translation and then we will propose some directions for moving forward research on sensemaking in Open Strategy.

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For the Study of Presentification, Embodiment, and Translation Presentification, embodiment, and translation each raise a central question for understanding the process of sensemaking in Open Strategy, questions that we use to sketch a specific research agenda that addresses these concerns: (1) What cues and frames are brought into the sensemaking process, and how is the selection made through presentification? (2) How are these cues and frames brought in by participants or, in other words, how are they concretely embodied in the Open Strategy context? and (3) How are cues and frames made relevant or how are translation processes carried out and managed by/for various stakeholders? Presentification offers a reworking of the notion of transparency through a sensemaking lens. Rather than thinking of transparency as an unproblematic peek at existing information, presentification invites the researcher to concretely look for the processes and practices through which people select information and bring it to the strategic table. To do this, we could follow the method suggested by Cooren (2010), which consists in identifying in each interaction the many “figures,” as he calls them, that make a difference in the unfolding of action. In our case, the action is strategizing, and we must ask ourselves, as we observe participants engaged in the practice of strategizing, what documents, objects, ideas, principles, values, past events, or concerns people invoke as they progress through their joint strategizing effort, and what concrete difference these figures make (see Cooren et al., 2015). Embodiment, for its part, recognizes that these figures are always made present through people or things. Most often, since we study human interaction, this will be through bodies, as in John’s case. Even if someone refers to a figure in their speech, this is still a form of embodiment, as the person will make that reference using their own voice, their own tone, their own assuredness, and so forth. In future research on sensemaking in Open Strategy, we need to recognize the multimodal character of any sensemaking/sensegiving

situation (Mondada, 2011): sensemaking is not only about figuring out words in the abstract, but also about utterances spoken or written by fleshand-blood people in specific ways. What difference the body and other nonverbal modalities, such as props, documents, or technology, make in the sensemaking process must therefore be studied closely, as it determines the unfolding of the process. Finally, translation is a concept borrowed from Actor-Network Theory (see Callon, 1986; Latour, 1986, 1987) and already echoed by some authors in the field of strategy (Bryson et al., 2009; Hardy & Maguire, 2010; Ritella & Ligorio, 2016). Nevertheless, more has to be done because we still know next to nothing about the artfulness of this complex process. Moving from the technological to the organizational, or from one industry to another, or from a group to others, is not a mere issue of translating words (although it certainly also is). It is also a matter of moving different sensemaking episodes across time and space and providing coherence to them. For instance, figuring out what a precise feature of a software means when inserted into a given organization also amounts to linking together prior experiences, conversations, and challenges with equivalent problems in another one. Studying sensemaking therefore involves paying close attention to the ways different people may bring to the table a series of apparently disconnected concerns they have experienced in different space-times, and yet find ways to build equivalences between them to make them relevant for each other.

For the Study of Sensemaking in Open Strategy Presentification, embodiment, and translation help take a step back and approach sensemaking in Open Strategy from a different angle. They first reveal that strategic sensemaking in Open Strategy is a “distributed” process that takes place across various spaces and practices. No one person can single-handedly control the meaning they want to transmit or impose on others, which also entails that strategizing cannot be reduced to one given

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group of individuals. The top-down transmission of strategic decisions from the management team to lower-level employees may in fact be but one contribution among possible others in a broader strategic sensemaking puzzle. Future research should adopt a “distributed” view and consider that sensemaking in open context is enacted by a collective, an organized group of people having divergent interests and goals. This research attitude is important when sensemaking is made more complex by inclusiveness and transparency in Open Strategy contexts. The distributed character of sensemaking and Open Strategy also makes salient the need to move away from cognitive explanations of strategy making, and toward relational approaches. Presentification, embodiment, and translation all point to the fact that people collaborate as they engage in sensemaking: not only do they bring into the current situation cues, including their experience in past situations, and do so with their body and identity, but must also translate these experiences for others to recognize their relevance. The social character of sensemaking takes on special importance in Open Strategy. Adopting a sensemaking perspective allows recognizing that strategy making is a creative process (not only an interpretative or a subjective act, as we previously said) during which people collectively contribute to shaping their organization, rather than the mere transmission of individual cognitions. Sensemaking and strategy, then, are the emergent and always-shifting outcome of relations, in line with the ongoing conversation on relationality in the social sciences (Cooper, 2005; Emirbayer, 1997; Kuhn et al., 2017). Research on sensemaking in open contexts should therefore not only show that people have or have not adopted a new strategic frame but rather pay attention to the cycle of sensemaking moves (Mailtis & Christianson, 2014) by which they produce and reproduce meanings by acting and relating with others. This shift toward relationality invites reconsidering the sorts of theories used to study sensemaking in Open Strategy. To account for the relational and social practices from which strategic meanings emerge, some researchers are already suggesting adopting Actor-Network

Theory (Steen et al., 2006), the communicative constitution of organization approach (also known as CCO; see Cooren et al., 2015), the practice approach (Whittington, 1996; see also Fenton & Langley, 2011), or activity theory (Jarzabkowski & Wolf, 2015). These theoretical orientations, while diverging in many respects, share the conviction that sensemaking and strategy are a joint accomplishment that cannot be reduced to actors’ interests, interpretations, or other features. Furthermore, they hold that the accomplishment of sensemaking and strategy is observable, which leads them to adopt a variety of empirically grounded methodologies. For instance, they use ethnography (Vásquez et al., 2018), video methods (Gylfe et al., 2016), or discourse-based methods (Phillips et al., 2008). These methods allow the concrete observation of the temporal unfolding of practices and processes, without having, a priori, to assume that some people or some behaviors matter more than others. Adopting one of these theories and research methods, or any other that permits exploring the distributed and relational nature of sensemaking would enable the field of Open Strategy to remain open to discovery and to embrace surprise. This chapter has revealed that sensemaking in Open Strategy is still in its infancy. Moreover, most research has so far been done on interorganizational case studies. Future research should explore how sensemaking is achieved in open context belonging to the corporate world. Innovation, platform work, and new social media technologies are becoming part of daily life in contemporary business and they affect the strategy making. These new trends transform the corporate world into an ecological and distributed system in which joint sensemaking is requisite for value creation. This will allow us to compare different contexts and see if there are contingency factors that favor the accomplishment of sensemaking in open contexts.

14.5 Sensemaking as a Constitutive Dimension of Open Strategy As open contexts involve multiple stakeholders, competing interpretations and demands about

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what is going on increase the level of equivocality. In that sense, it could be argued that strategic sensemaking – or the process of reducing equivocality through plausible meanings and commitment about strategic issues – is what makes Open Strategy possible at all (Mack & Szulanski, 2017). Indeed, Weick’s (1979, 1995) description of sensemaking parallels many features that are usually associated with strategy: sensemaking, according to him, is about people figuring out their environment to decide on an appropriate course of action, which echoes many conventional definitions of strategy. To paraphrase Weick (2001: 95), who wrote “Sensemaking makes organizing possible,” it is clear for us that not only “sensemaking makes Open Strategy possible” but we contend that “sensemaking is constitutive of Open Strategy.” More than a perspective (as we have considered it until now in this chapter), we suggest that sensemaking is at once an effect of Open Strategy and its antecedent. More precisely, sensemaking in open context is produced and reproduced during the multiple actions related to the strategy formation and implementation. Their co-constitution is reinforced by the fact that they share some similarities in terms of nature and direction. They both share the challenges of transparency and inclusion, they can be largely altered by the complexities of their enactment, and they can have beneficial or costly outcomes. In this chapter we traced back the evolution of sensemaking research since Weick’s foundational work, and showed how authors have used this concept, along with its corollary “sensegiving,” in the strategy literature. We discussed challenges associated with studying sensemaking and sensegiving in Open Strategy settings, in particular in light of transparency and inclusion issues, which are essential characteristics of these settings. Drawing on vignettes taken from our recent work, we identified three aspects of sensemaking processes (presentification, embodiment, and translation) that can lead to a research agenda for researchers interested in understanding Open Strategy from a sensemaking perspective. Open Strategy provides a compelling and challenging territory to explore possibilities associated with a sensemaking approach that goes

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CHAPTER

15

A Dialogic Perspective on Open Strategy LOIZOS HERACLEOUS

Open Strategy is a process that engages internal and external stakeholders in various degrees of transparency and inclusion (Whittington et al., 2011). It presupposes at minimum episodic information transfer among the parties involved, and for more meaningful inclusion, continuing dialogue (Heracleous et al., 2018). Dialogue, as an ongoing process of communication among actors who pursue a particular goal or set of goals, is integral to Open Strategy processes. As a way of linking an organization with its stakeholders, an effective dialogic process can provide generative diversity to the ideas that inform strategy and contribute to a strategic direction that has stakeholder and market relevance. There are costs, however, as dialogue can also fuel the undesirable side of the dilemmas outlined by Hautz, Seidl, and Whittington (2017) and various types of tensions noted by other authors (e.g., Baptista et al., 2017; Heracleous et al., 2018). Ongoing dialogue with little hierarchical, ideational, or temporal constraints, for example, can lead to conflict, inefficient decision making, wasteful use of resources, and pursuit of personal agendas, as pointed out by the dilemma of process (Hautz et al., 2017) and illustrated by ethnographies of a dialogical organization par excellence, Wikimedia (Jemielniak, 2014, 2016). We begin the chapter with a discussion of conceptual approaches to the dialogic process discussed in terms of a typology of functional, interpretive, and critical approaches, building on a corresponding discursive typology (Heracleous & Barrett, 2001). We observe that recent studies of dialogue in the context of the emerging field of Open Strategy processes have tended to fall within the functional perspective, indicating the research

opportunities to conduct studies from additional perspectives as the field grows. The chapter continues with an outline of Bohm’s (1985, 1996) ideas on dialogue. David Bohm was a theoretical physicist who contributed influential ideas to quantum physics and explored the nature of thought and reality. Bohm’s (1996) approach to dialogue involves free-flowing meaning and inclusive, ongoing exchange of ideas among equals, without any preset agenda, explicit goals, or action expectations as an outcome of dialogue. Bohm’s ideas on dialogue formed a prominent approach that has influenced subsequent scholars, including those working in the field of organization development (Ford, 1999; Isaacs, 1993, 2001; Senge, 1990). Bohm’s dialogic approach was shaped by his philosophical investigations into thought whose operations he believed fragmented a more holistic reality. He argued that we perceive the world as a series of separate entities because of the nature of our mental representations that are shaped by our memories, assumptions, and sensory inputs; and that this is both an individual and a collective process. He saw thought as not only reporting on reality, but as participating in forming reality (Bohm, 1992). Bohm argued that what we perceive are only surface, piecemeal aspects of an implicate order, which he saw as the deeper, interconnected, holistic nature of the world. An awareness of these thought processes, which he believed could be fostered by Bohmian dialogue, would lead to a kind of “proprioception” of thought that more accurately and clearly grasps the world, and to the evolution of corresponding shared meanings. Bohm employed the concept of proprioception, the sense of bodily and spatial orientation that humans perceive, as a useful analog for

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developing his idea of proprioception of thought. By this he meant the development of a deeper selfawareness of how our thought operates, through paying explicit attention to our assumptions and interpretations in the context of dialogue and in broader interactions. We juxtapose Bohm’s emergent and free-flowing dialogic approach with strategy as a goal-oriented, directive practice (Chaffee, 1985). Through this juxtaposition we derive a number of tensions that may arise in the context of Open Strategy. We suggest that despite the fundamental importance of transparency and inclusion in Open Strategy (Whittington et al., 2011), features that align with key aspects of Bohmian dialogue, pursuing or espousing these ideals in the context of a strategic practice will almost inevitably engender tensions. We discuss these tensions along six parameters: leadership of the process, stakeholder participation, communication openness, communication flows, structuring of process, and process goals. We then discuss Wikimedia as an exemplar of a dialogic organization and outline its development of a five-year strategic plan using an Open Strategy process. While the process did culminate in a strategic plan, it was rife with tensions, and we outline these along the six parameters discussed previously. We end the chapter with recommendations for further research. These include the need to study both dialogic features and Open Strategy contextually and in practice, in order to understand how key features of each domain interact with each other. Further, to incorporate ambidexterity or paradox perspectives that can allow us to understand how organizations can balance the conflicting demands of the egalitarian nature of a dialogic process with the instrumental, goal-oriented nature of strategy. Finally, we point out the opportunity to go beyond the functional paradigm and to conduct studies from different paradigmatic standpoints as the field grows.

15.1 Conceptual Perspectives on Dialogic Processes Dialogue is a composite term with etymological origins in ancient Greek: “dia” means via or

through, and “logos” means “the word,” or “reason” in the rhetorical sense of logical argument. The origins of dialogue as a term therefore point toward a process of engaging in discursive and argumentational exchange. Further, “dia” as a directional concept also implies that some goal is pursued via this exchange. Dialogue as a term does not impose a limit on how many actors can be engaged in dialogue. Some organization development approaches such as Large Group Interventions are only limited by the size of the physical space available, since in these approaches physical copresence is deemed essential (Bunker & Alban, 2006; Weisbord & Janoff, 2005). Developments in technology, however, mean that the number of parties to dialogue can be as large as a meaningful exchange of views would allow. In the case of Wikimedia, for example, thousands of Wikimedians were involved in contributing to a five-year strategic plan via an Open Strategy process (Heracleous et al., 2018). Dialogue has been an influential discursive concept as well as a useful methodological orientation in organization studies, informing studies from a variety of perspectives. Heracleous and Barrett’s (2001) discursive typology of functional, interpretive, and critical discursive approaches can enable us to map dialogic approaches along these lines. In the functional approach, dialogue is seen teleologically as the sharing of ideas via communicative interaction, in order to accomplish some kind of organizational outcome such as enhancing leadership effectiveness, organization change, or strategy implementation. Some authors are more explicit about these connections (e.g., Ford, 1999; Heracleous et al., 2018; Maccoby, 1996; Skordoulis & Dawson, 2007), while others are more implicit (e.g., Pye, 1995; Schein, 1993). In the functional approach, accomplishing a particular goal gains a higher emphasis than exploring assumptions and processes of interpretation. In the interpretive approach, dialogue is seen more epistemologically and existentially as a way in which assumptions and perspectives can be surfaced, shared, and discussed, so that a new shared social consciousness and ways of being in the

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A Dialogic Perspective on Open Strategy 261

world can emerge. Even though goals are often part of the discussion, the emphasis here is on interpretative and relational processes rather than goal accomplishment. Ford (1999), for example, views dialogue as a reflective, collaborative effort where participants explore their underlying assumptions with the purpose of developing more effective interactions. He notes that “dialogue provides an opportunity for people to examine and authentically deal with their conversations as the fundamental presumptions, presuppositions, assumptions, and backgrounds in which they dwell and to reflect on the implications of those conversations” (Ford, 1999: 490). In a similar vein, Gergen, McNamee, & Barrett’s (2001: 682) concept of transformative dialogue refers to “any form of interchange that succeeds in transforming a relationship between those committed to otherwise separate and antagonistic realities (and their related practices) to one in which common and solidifying realities are under construction.” The critical approach dialogue is seen as a reflexive process of exploration through which assumptions that perpetuate social inequalities and domination can be made explicit, so emancipatory assumptions can be fostered, and actions of resistance can be initiated. Influenced by Foucauldian (Foucault, 1972, 1977) or other postmodern approaches, use of language is seen as intertwined with subtle forms of power that include surreptitious agenda control, disciplinary mechanisms, and framing of issues in terms of dominant interests (Jacobs & Heracleous, 2001). Thus, Hammond et al. (2003: 150) argue that “dialogue is a human opportunity for discovering or creating truth and empowering action. . . . Power, we argue, is omnipresent in this human dialogue. . . . power does not exist without dialogue just as dialogue necessarily involves power.” In a similar vein, Oswick et al. (2000) take issue with what they see as Senge’s (1990) rendition of dialogue as a goal-driven, univocal pursuit and argue for a polyphonic, multifaceted view of dialogue: “‘real dialogue’ is the dynamic and interactive process through which dominant univocal accounts of ‘organizational reality’ can be undermined. Dialogical scripting has the potential to aid the creation of deeper and richer polyphonic understandings of organizations and

the process of organizational learning” (Oswick et al., 2000: 900). In this approach dialogue is seen as a form of emancipatory discourse that can enable shared consciousness and action in organizations (Raelin, 2008, 2012). Table 15.1 maps dialogue studies in terms of these approaches. It should be noted that while this typology can be analytically useful for understanding the terrain of dialogue and discursive research, particular studies may not always map neatly within a single approach. Functional studies often recognize that the potency of dialogue to accomplish particular outcomes is based on the social construction role of language. Ford (1999), for example, is particularly interested in how effective dialogue can facilitate organizational change, a classic functional, teleological concern. His views on the nature and socially constructive potential of dialogue, however, are decidedly interpretive, as noted previously. Further, interpretive and critical studies share a deep understanding of the potency of dialogue and discourse more generally to construct, sustain, or change social realities (Heracleous, 2006; Lakoff & Johnson, 1980), even though the foci in particular studies may differ. This typology could inform the theoretical positioning of how dialogue or communication is studied in relation to Open Strategy processes, whether or not the study is explicitly labeled dialogical. For example, Aten and Thomas’s (2016) study of the use of crowdsourcing technology in Open Strategy processes from a technology affordances perspective and a discursive lens would fall within the interpretive approach. Most recent contributions, however, would fall into the functional perspective. For example, in Heracleous et al.’s (2018) study of Wikimedia’s Open Strategy process the concern was to introduce a dialogic lens to the Open Strategy literature, understand the role of dialogue at different stages of the process as well as the occasioning of tensions, and to derive organizing principles for effective employment of dialogue in these processes. Further, Gegenhuber and Dobusch (2017) showed that new ventures’ modes of linking with stakeholders (broadcasting, dialoguing, and including) have differential impression management effects, at different stages of the firms’ evolution. Hutter,

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Table 15.1 Dialogical Perspectives Along Functional, Interpretive, and Critical Lines Dialogic perspective

Dialogue definitions

References

Functional: Dialogue seen as “Managing is about dialogue – listening and talking – and about communicative interaction ‘doing’ – taking action” (Pye, 1995: 445) and sharing of ideas, from “. . . through dialogue and inquiry, organization members play a role a teleological perspective. in defining outcomes for their firms” (Powley et al., 2004: 68) Dialogue serves as a means of accomplishing outcomes “. . . dialogue is a necessary condition for effective group action” such as organizational (Schein, 1993: 42) . . . “dialogue aims to build a group that can learning, strategy think generatively, creatively, and, most important, together” implementation, or (pp. 43–44, emphasis in original) organization change “The Socratic dialogue is particularly suited to organizations and companies that are in a process of change, in which basic norms, values and goals need to be challenged and explicitly communicated if the organization is keen to promote alignment across all levels” (Skordoulis & Dawson, 2007: 998)

Ford, 1999; Heracleous et al., 2018; Maccoby, 1996; Powley et al., 2004; Pye, 1995; Schein, 1993; Skordoulis & Dawson, 2007

Interpretive: Dialogue seen Dialogue is a “stream of meaning flowing among and through us as a process that can engage and between us . . . out of which may emerge some new with and shape agents’ understanding” (Bohm, 1996: 7, emphasis in original) experiences of the world, “. . . talk is a vehicle for communicating between organizational mental maps, and actions constituents who, through dialogue, from time to time, find or create through effectively coherent ideas or images that reconstruct their understanding of understanding and engaging organizational reality” (Hatch & Ehrlich, 2002: 108) with each other’s perspectives. In the process Dialogue is “a reflective conversational mode; a diagnostic new ways of looking at and moment where participants can review their existing mental being in the world can emerge models, and a generative moment where emergent mental models may be shaped” (Jacobs & Heracleous, 2005: 344)

Beech et al., 2010; Bohm, 1996; Bushe & Marshak, 2009; Gergen et al., 2004; Gergen et al., 2001; Hatch & Ehrlich, 2002; Isaacs, 1993; Isaacs, 2001; Jacobs & Heracleous, 2005

Dialogue is a “sustained collective inquiry into the processes, assumptions, and certainties that compose everyday experience” (Isaacs, 1993: 25) Critical: Dialogue seen as a reflexive process of exploration that can expose taken-for-granted power inequalities, social domination, and institutional constraints, with the aim of activating and fostering a critical consciousness and inspiring emancipatory or resistance-oriented actions

“Defining dialogue provides the very closure of a subject matter that dialogue resists; however, three dialogic themes contribute a priori constructs . . . (a) dialogue as generative, (b) dialogue as grounded in diversity, and (c) dialogue as critical of power” (Heath, 2007: 149) “Meaningful dialogue in this sense requires a critical deconstruction of ideological constraints operating on the existing consensus on interests and needs” (Kersten, 2000: 238)

Hammond et al., 2003; Heath, 2007; Kersten, 2000; Oswick et al., 2000; Raelin, 2008; Raelin, 2012; Zoller, 2000

“. . . dialogue is seen as the genetic material for building a culture of democracy freeing people from institutional forces that limit their personal autonomy and leading to their acquisition of a collective consciousness” (Raelin, 2012: 819) “Dialogue must bring with it a new conceptualization of power in order to create equitable conversations in the face of knowledge differences” (Zoller, 2000: 198)

Nketia, and Fuller’s (2017) study of participation in Siemens’ Open Strategy process through an online platform found that different forms of participation affected the sense of organizational and virtual community differently; and that stakeholder participation could facilitate strategy implementation and organizational learning.

The Open Strategy field is emerging, and studies of the dialogic or communicative aspects in this process are also at their infancy. Given this early stage of development, the paradigmatic diversity of studies is still undeveloped, offering the opportunity for further research from different paradigmatic standpoints. So far for example, there do

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A Dialogic Perspective on Open Strategy 263

not appear to be any studies of dialogical processes in an Open Strategy context from a critical perspective. Such studies could potentially draw from Foucauldian understandings of strategy as a discursive constitutive practice rather than as a rationalist endeavor (e.g., Ezzamel & Willmott, 2008; Knights & Morgan, 1995). Kornberger and Clegg’s (2011) study of the strategy project undertaken by the City of Sydney that engaged the broader community, even though not explicitly dialogical, offers insights on the general approach critical dialogic studies might take.

15.2 Bohmian Dialogue – An Ideal-Type Dialogic Process Bohm (1996) proposed dialogue as a process through which participants could explore mutual topics of interest in a nonjudgmental, generative manner that could ultimately lead to the transformation of social consciousness. Participants to Bohmian dialogue interact within a “pool of common meaning which is capable of constant development and change” (1985: 175). Bohm advocated that participants suspend their prior assumptions, beliefs, and judgments and engage in a collaborative, ongoing process in a reflective, exploratory manner. Differences among participants should not be hidden but surfaced and talked about. Bohm’s dialogue approach can serve as an ideal-type configuration, as an analytical starting point with which features of strategy as a directive practice, and Open Strategy as a variant, can be juxtaposed. In terms of the framework of functional, interpretive, and critical approaches discussed previously, Bohm’s ideas on dialogue would fall within interpretivism, and more specifically the phenomenological brand of this tradition. Bohm pays close attention to and theorizes processes of thought (Bohm, 1992). He offers an elaborate set of ideas addressing not only how we form our thoughts, impressions, and knowledge of the world, but also how we might move toward better ways of thinking about the world and reaching a reshaped social consciousness. Making an effort to be aware of these thought processes in ourselves, and their manifestations in others, is a key feature

of Bohmian dialogue. One example is Bohm’s suggestion that participants to dialogue suspend their assumptions. By this he meant that they should “neither carry them out nor suppress them. You don’t believe them, nor do you disbelieve them; you don’t judge them as good or bad. . . . think of it as suspended in front of you so that you can look at it – sort of reflected back as if you were in front of a mirror” (Bohm, 1996: 20). Bohm urges individuals to be reflective in terms of how both their own and others’ assumptions play out in dialogue, a context where these processes, along with any other themes that emerge, could be surfaced and talked about. There is also a critical aspect to Bohmian dialogue in that the ultimate result of long-term dialogic processes could be a shared consciousness that can perceive reality more holistically in terms of its systemic, implicate order rather than in the fragmented, partial way that our established mental maps lead us to perceive it. As Bohm (1996: 46) noted, “I’m suggesting that there is the possibility for a transformation of the nature of consciousness, both individually and collectively, and that whether this can be solved culturally and socially depends on dialogue.” But Bohm’s process-oriented, emergent approach is far from the preset agenda and politically committed goals of critical theory to expose power inequalities in the status quo and create social change in favor of marginalized groups. Bohm held that “in principle, the dialogue should work without any leader and without any agenda” (1996: 17) and was emphatic that the process should not a priori aim to result in any decisions: “in the dialogue group we are not going to decide what to do about anything. This is crucial. Otherwise we are not free. We must have an empty space where we are not obliged to do anything, nor to come to any conclusions, nor to say anything or not to say anything. It’s open and free. It’s an empty space” (1996: 19). Bohm believed that this empty space could be generative and could allow insights to emerge that went beyond the knowledge and understanding with which the group started. Bohm’s (1985, 1996) views on the dialogic process as a way for groups to develop shared meanings and novel understandings have influenced subsequent theorists and reflective practitioners, particularly in the organization development field

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(e.g., Ford, 1999; Isaacs, 1993, 2001; Senge, 1990). Several contributors to Bushe and Marshak’s (2015) volume on dialogic organization development draw from Bohm’s ideas. Dialogic processes in an organizational development context have pragmatic goals, often to address particular strategic or operational challenges organizations are facing and to produce aligned action to address these challenges. It is useful to note the changes that arise when a set of ideas traverses their original context to be employed in new domains, such as Bohm’s phenomenological dialogic ideas shaping the interventions of the pragmatic organization development field. Bohm insisted for example that dialogue should not be beholden to any single or particular purpose; and that if a purpose emerged in the proceedings, it should be subject to ongoing change. He also noted the difference between a dialogue and a discussion, where discussion is more of an analytical pointscoring exercise rather than a collaborative exploration of meaning: “. . . the word ‘discussion’, which has the same root as ‘percussion’ and ‘concussion’. It really means to break things up. . . . Discussion is almost like a ping-pong game, where people are batting the ideas back and forth and the object of the game is to win or to get points for yourself. . . . In a dialogue however, nobody is trying to win. Everybody wins if anybody wins. There is a different sort of spirit to it” (Bohm, 1996: 7). A juxtaposition of Bohmian dialogue and strategy illustrates important points of disjuncture along key parameters. Table 15.2 outlines six such parameters, their status within a Bohmian dialogic process, their status within strategy as a goal-oriented practice, and potential resulting tensions when a dialogic process that at minimum tries to be faithful to Bohm’s approach, or aspects of it, is employed as part of an Open Strategy process. These six parameters were selected as they refer to key aspects of both Bohmian dialogue as well as strategy. For example, Bohm was clear that dialogic processes should be leaderless (even though some facilitation may be needed at the early stages), goal-less, and structure-less. Also, that they should be inclusive of any stakeholder who wished to participate, with open communications where information flows in a nonhierarchical

manner. These dimensions are also key to strategy processes that typically involve leaders who control resources and make decisions within a more structured process that has particular goals and decide which stakeholders should participate. Communication openness is circumscribed by confidentiality and competitiveness issues, and communication flows involve levels of hierarchy. Open Strategy as a variant of broader strategy processes operates within these constraints. The challenge however is that Open Strategy, with its emphasis on transparency and inclusion, aligns well with principles of Bohmian dialogue. Therefore, there is a schizophrenia at the heart of Open Strategy: Bohemian (and Bohmian) ideals on the one hand, and the competitive, goal directed nature of strategy on the other hand. To use Bateson’s (1972) term, Open Strategy is caught in a double bind; it has to live by two sets of injunctions that are mutually contradictory. This double bind gives rise to the types of tensions described in Table 15.2 and exemplified by the Wikimedia case and by other research we describe as follows. It is interesting to note that organizations may wish, for reputational or impression management purposes, to convey that they view stakeholders as equals in the dialogic process, that they are keen to receive inputs from as broad a group of actors as possible, and that they are open and transparent in the communicative process; i.e., that they want to dialogically engage along the lines of important aspects of a Bohmian approach to dialogue. Whether organizations are really committed to these aspects or whether they are superficially espoused, and the effects on rising tensions, would be interesting to investigate empirically. Several of the tensions outlined in Table 15.2 can be seen in recent empirical studies of open strategizing. For example, tensions of power dynamics, tensions of information transparency, and tensions of communicative integration were found to be central to the radically open strategizing process of the Premium Cola Collective (Luedicke et al., 2017). These tensions were referred to respectively as power asymmetry, information asymmetry, and information overload in Luedicke et al.’s (2017) study. Baptista et al.’s (2017) study of the use of social media in Open Strategy processes illustrates

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A Dialogic Perspective on Open Strategy 265 Table 15.2 Juxtaposing the Bohmian Dialogic Process with Strategy as a Directive Practice Parameters

Bohmian dialogic process

Strategy as directive practice

Dialogical tensions in Open Strategy

Leadership of process

Participants as equals

Senior managers control resources and decision process

Tensions of power dynamics

Stakeholder participation

Everyone can in principle be included

Selected stakeholders can be included

Tensions of participation

Communication openness

Information exchange is free and unconstrained

Information exchange is bounded by Tensions of information confidentiality and competitiveness transparency issues

Communication flows

Network-oriented communication flows

Hierarchical-oriented communication flows

Tensions of communicative integration

Structuring of process

Unstructured, free-flow of ideas

Process is designed to deliver particular outcomes by particular times

Tensions of process design

Process goals

Process does not aim to reach Decisions should be reached so that Tensions of teleology a decision but to develop new investments and actions can follow shared understandings

the tensions of process design and tensions of teleology that arise when unstructured, free-flowing ideas without a clear goal interact with the structured, teleological processes of strategy as a directive practice. Baptista et al. (2017) found that tensions were occasioned within different combinations of extent of feedback moderation on the one hand, and extent of network capabilities to connect with others and contribute on the other hand. They also found learning effects where organizational capabilities developed to improve the process and mitigate the tensions. In order to illustrate the framework in Table 15.2 and to develop issues for further research, we discuss how Wikimedia developed its five-year strategic plan via an Open Strategy process; and explore the tensions that arose in this process. The discussion of Wikimedia draws from the study by Heracleous et al. (2018), whose authoring team includes Philippe Beaudette, who acted as a facilitator for the Open Strategy process and subsequently was Director of Community Advocacy at Wikimedia.

15.3 Wikimedia Foundation as a Dialogical Organization The Wikimedia Foundation was founded in 2003 to provide a governance structure for various Wiki

projects, including Wikipedia. Wiki projects are carried out by volunteers, who operate within local Wikimedia chapters that are decentralized, independent organizations overseeing Wikimedia projects within their regions (Beaudette, 2012). Selfgovernance of the global volunteer community through local chapters is complemented by the institutional umbrella of the Wikimedia Foundation (Morell, 2011), and by a Board of Trustees. Wiki projects develop via inputs and information exchange among thousands of volunteers, in a process of ongoing dialogue enabled by technology that transcends physical and temporal boundaries. These dialogic interactions and inputs are subject to substantial amounts of regulation, enforced by volunteers who wield bureaucratic power and social authority. There are over 1,200 regulatory documents, with the 50 more important ones amounting to around 150,000 words (Jemielniak, 2016). Experienced Wikimedians can apply for one of several levels of administrative power, which grant them corresponding access to wikis, for example to serve as “bureaucrats” on local projects or “stewards” in global roles (Forte et al., 2009). The ongoing dialogue process occurs through various online platforms such as the Wikimedia Meta-Wiki, focused wikis on particular themes, local Wikimedia chapter wikis, Wikimedia Signpost, and a number of mailing lists.

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Wikimedia projects follow a number of contentmanagement and dispute resolution principles to aim for quality and nonpartisanship, such as “consensus over credentials,” “neutral point of view,” “verifiability,” and “no original research.” Despite advice to aim for consensus, avoid personal attacks and edit wars, and act in good faith, there are ongoing vendettas being played out on the site. Jemielniak (2014: 59) notes that “conflict is possibly the most common form of interaction that people take part in or otherwise observe on Wikipedia.” In a context of lack of hierarchy and formal authority, where equality and consensus are valued, and 80% of Wikimedians involved should agree on a course of action, long disagreements and ongoing tensions are rife: “arguments can grind on ad nauseam. Even the most insignificant topics become bones of contention. . . . deciding whether the proper spelling . . . should be ‘yoghurt’ or ‘yogurt’ took ten large debates, and many conflicts between editors” (Jemielniak, 2016; 368–369).

15.4 Wikimedia’s Open Strategy Development via a Dialogic Process Among Thousands In 2009 Wikimedia’s Board of Trustees decided that the organization should develop its strategy based on the principles of transparency, collaboration, and stakeholder participation that were central to its DNA. The strategy project facilitators decided that in this process the principle of consensus would not be implemented as rigidly as in regular Wikimedia projects. Rather, transparency needed to be balanced with clarity and structure so that difficult decisions could be taken and a strategic plan ultimately developed. Thirty-seven experienced Wikimedians volunteered to become project convenors; they organized and merged proposals, facilitated participation, encouraged ongoing contributions, and resolved disputes. They coordinated with other convenors via a to-do list and regular discussions using the organization’s internet relay chat (IRC) infrastructure. Discussion summaries and IRC logs were posted online. The process was overseen by Wikimedians with “sysop” (system

operator or administrator) rights, six “bureaucrats,” and the Foundation’s steward team. While the process was transparent and participative, its top-down initiation and structure was perceived as going against the organization’s tradition of community-led projects; an issue of substantial online critique and debate. More fundamentally however, as discussed in the next section, these critiques were animated by the tensions between the organization’s open, transparent, and emergent culture with the requirements of strategy as a directive practice. The Open Strategy process involved four phases: level-setting, deep dives, synthesis, and call to action. In terms of level-setting, a “strategy wiki” was created to serve as the online hub for the process, supported by a knowledge base with factual data, opinions, and research on Wikimedia as an organization. Volunteers were invited to submit proposals on what the pertinent strategic issues were that should be addressed by the process. The proposals were posted, rated, debated, grouped, and merged. In terms of deep dives, a task force committee made up of 15 individuals selected volunteers to staff 14 task forces made up of 5–10 individuals each, that each addressed a strategic issue within the three emergent categories of sustainability, development, and accessibility. While the task forces aimed for consensus as a decision-making principle, individuals within these groups were granted with the power to make the final decisions. There were teething troubles in terms of quality of recommendations, which were subsequently addressed. In the synthesis phase, a strategy task force of 20 individuals was formed to integrate prior proposals into a draft of Wikimedia’s five-year strategic plan, which outlined five strategic priorities (quality content, innovation, increasing participation, growing readership, and stabilizing infrastructure). The task force brought together over 900 proposals and recommendations into around 1500 content pages. In the final phase of the call to action, the community reviewed and refined the five strategic priorities. The community was invited to debate the rationales underlying the priorities, key indicators,

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A Dialogic Perspective on Open Strategy 267 Table 15.3 Dialogical Tensions in Wikimedia’s Open Strategy Process Parameters

Traditional strategy process

Open source peer production

Wikimedia’s strategy process

Dialogical tensions in Open Strategy at Wikimedia

Leadership of process

Top-down, transactional

Relational, emergent

Relational, emergent, with boundaries set centrally

There was facilitated open dialogue, but within “container,” aiming for particular types of outcomes

Stakeholder inclusion

Only selected internal stakeholders

Any stakeholder who wishes to participate

Any competent and sufficiently committed stakeholder

Requirement for strategic competence meant potential contributors were excluded

Communication openness

Controlled and confidential process

High levels of transparency

High levels of transparency

Preexisting high levels of transparency and lack of requirement for confidentiality mitigated this tension

Communication flows

Mostly top-down Peer-to-peer

Peer-to-peer, topdown, bottom-up

Horizontal communications characterized by open dialogue, vertical communications guided by requirements of strategy

Structuring of process

Hierarchy

Network

Hybrid, both hierarchy and network

Network engendered open dialogue; hierarchy created instrumental guidelines

Process goals

Deliberate

Emergent

Hybrid, both deliberate Strategy plan was created, based on broad and emergent ranging dialogical engagement and delicate negotiation of tensions

possible targets, and other measures, a call to action was launched inviting volunteers to implement the plan, and the completed five-year strategic plan was published.

15.5 Dialogic Tensions in Open Strategy Processes Tensions were endemic in Wikimedia’s Open Strategy process. These did not just arise from the customary approach to Wiki projects of open participation, robust debate, and even conflict that are enabled by the lack of hierarchy and the need to reach consensus (Jelmieniak, 2014; 2016). Rather, they arose from the interpenetration of two domains with differing assumptions along key parameters, as shown in Table 15.3. Broadly speaking, Bohmian conditions of dialogue where interlocutors are seen as “equals within a conversational space” in ongoing interaction (Gergen et al., 2001: 705) on the one hand, occurred in the context of strategy as a structured, directive, hierarchical practice that aims to accomplish particular outputs and results (Chaffee, 1985) on the other hand.

In Wikimedia’s case, for example, as Table 15.3 shows, tensions arose from the hybrid structuring of the process, where both hierarchy and network elements were employed; and from the hybrid nature of the process goals, that were both deliberate and emergent. These were respectively referred to as tensions of process design and tensions of teleology in Table 15.2. The multidirectional communication flows, and the nature of the leadership process as both relational and also emergent within centrally set boundaries occasioned further tensions. These were referred to as tensions of communicative integration and tensions of power dynamics in Table 15.2. The Bohmian approach to dialogue advocates equality among participants, self-reflexivity, free flow of meaning, and ongoing exploration that suspends assumptions and appreciates others’ points of view, aims for convergence, and aspires to show new ways of being in the world (Beech et al., 2010; Bohm, 1996; Gergen, 2001; Gergen et al., 2004). Strategy as traditionally understood and as practiced by most organizations does not sit well with the previous conditions. Strategy is seen as the responsibility and province of senior management, who have discretion on and how any

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inputs by others are treated. Despite the perceived unfashionableness of strategic planning, the practice is alive and well, and it places the task in the hands of particular individuals who are seen as experts in carrying it out (Whittington et al., 2017). As Mack and Szulanski (2017: 385) note, “in centralized organizations, top managers have traditionally played an influential role in directing the strategy of the organization and increasing inclusiveness and transparency may lead to situations where the authority of senior management is challenged or undermined by subordinates. . . . The general trend toward greater openness in strategizing thus creates a tension for organizations that rely on more conventional and centralized forms of decision-making.” Strategy involves the need to make difficult choices among competing alternatives, requires leaders who can make such choices, is constrained by scarce resources and limited time, and necessitates the need to commit and align resources in the pursuit of objectives. Committing to and carrying out Bohmian (or Bohm-inspired) dialogue within a strategy process is an existentially challenging and precarious balancing act. It is worth noting that Bohmian dialogic conditions would be most at home in open source peer production such as the process used for the computer operating system Linux, as well as Wikimedia’s ongoing projects, such as Wikipedia. The imposition of a central and structuring authority in Wikimedia’s Open Strategy project challenged the usual community-led practices and engendered a significant amount of tensions. While the open strategizing process involves inherent tensions, these arise in the pursuit of functional outcomes. As shown in Table 15.3, the process goals of creating a strategic plan at Wikimedia were indeed accomplished, assisted by a delicate negotiation of rising tensions. Further, tensions could be generative, as for example when visuals or other boundary objects enable differing assumptions and agendas to become discussable and be negotiated, leading to robust discussions that ultimately support a shared understanding of an organization’s strategy (Knight et al., 2018). In Wikimedia’s case, tensions spur individuals to be engaged, better defend their points of view, be watchful and vigilant of others’

contributions, and to make higher quality contributions in the first place. The success of Wikimedia projects in terms of their impact attests to the generative power of tensions. Wikipedia, for example, is ranked as the fifth most visited website in the world in Alexa’s top 500 sites list (after Google, YouTube, Facebook, and Baidu), an outcome accomplished by an organization with miniscule resources as compared to other organizations owning top sites.

15.6 Directions for Further Research Studies to date have shown that dialogic processes can take different forms within different contexts. Some considerations for example include the rate of communicative interaction, the extent to which contributions are indeed taken seriously by an organization, the resources an organization devotes to an Open Strategy process, whether participants are copresent or interact via technology, and whether the technology is easy to use. Transparency and inclusion as key concepts of Open Strategy can be operationalized in very different ways by organizations. Dialogue is essential to both. Meaningful transparency implies that stakeholders are able to not only access relevant information, but also seek clarifications and interact with organizations as needed. Meaningful inclusion implies that stakeholders would need to feel that their inputs are at least heard and considered, and that they could have an impact on strategy or other processes, which would necessitate dialogue. Both dialogic and Open Strategy processes therefore are contingent, context-embedded, and context-dependent. A first research direction is that given the emergent state of the field, there are opportunities for a deeper understanding of the key features of dialogic interaction, the key features of Open Strategy processes, and how these two sets of features interact. This would allow us to develop practice-based, middle-range theories that are sensitive to the nuances of dialogue and Open Strategy. For example, it would be fruitful to research whether dialogic processes differ in contexts where stakeholder participation in boards of directors is legally mandated, such as, for example, in Germany, Austria, Norway, and Sweden (ETUI,

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2015), versus where these are voluntarily initiated by organizations. Second, we have argued previously, drawing from Bateson’s (1972) double bind concept, that Bohmian dialogic processes and strategy as a directive field sit uneasily with each other. There are a number of tensions along key parameters. It is possible, however, that organizations could develop capabilities (Baptista et al., 2017) to balance the competing demands that give rise to these tensions. Therefore, the ambidexterity (Raisch & Birkinshaw, 2008) and paradox (Papachroni et al., 2015) perspectives could offer insights as to what these capabilities might mean, both conceptually and in practice. Thirdly, given the emergent stage of the Open Strategy field and the embryonic stage of dialogic studies of Open Strategy, there is opportunity to expand the number of paradigmatic perspectives that are being employed. The functional perspective is currently dominant; interpretive and critical studies would offer additional insights to help advance the field, particularly to give a more nuanced view into dialogical and Open Strategy practices, and into the experience of the actors that are being engaged in these practices. With respect to methodologies, as well as intellectual resources, the field of organizational discourse (Heracleous, 2006) has substantial resources to offer; for example, in terms of the ontological understanding of language, rhetorical aspects of argumentation, and issue framing. Further, the broader field of discourse enriched by social theory can lend immense conceptual resources, such as dialogical concepts from Habermas (1984, 1987), Luhmann (1995), Bakhtin (1981), or Buber (1970). Luhmann’s (1995) dimensions of meaning (sociality, factuality, and temporality), for example, have been used to discuss the dimension of openness in Open Strategy (Dobusch et al., 2017). Further, the qualitative, case-based, ethnographic, grounded theory approaches associated with strategy as practice research would be an appropriate fit with dialogical studies of Open Strategy processes, given that triangulation of linguistic and observational data can be revealing and provide insights to nuances of context that would not be otherwise available (Heracleous & Barrett, 2001; Paroutis & Heracleous, 2013).

Open Strategy as a practical endeavor would seem vacuous without some form of ongoing dialogue, whether or not related communications are labeled or recognized as such. Understanding Open Strategy would entail a solid grasp of the dialogic processes that permeate and shape Open Strategy. Given the significant rate of failures, uncertainties, and challenges in realizing strategy, an understanding of the dialogic processes of Open Strategy would be vital for both theory and practice. References Aten, K., & Thomas, G. F. (2016). Crowdsourcing strategizing: Communication technology affordances and the communicative constitution of organizational strategy. International Journal of Business Communication, 53, 148–180. Bakhtin, M. M. (1981). The dialogic imagination. In M. Holquist (Ed.), C. Emerson & M. Holquist (Transl.). Austin: University of Texas Press. Baptista, J., Wilson, A. D., Galliers, R. D., & Bynghall, S. (2017). Social media and the emergence of reflexiveness as a new capability for open strategy. Long Range Planning, 50, 322–336. Bateson, G. (1972). Steps to an ecology of mind. NJ: Jason Aronson. Beaudette, P. (2012). From Wikipedia to Wikimedia: How not to structure a movement. Presentation, 30 January. Personal communication. Beech, N., MacIntosh, R., & MacLean, D. (2010). Dialogues between academics and practitioners: The role of generative dialogic encounters. Organization Studies, 31, 1341–1367. Bohm, D. (1985). Unfolding meaning. London: Ark. Bohm, D. (1992). Thought as a system. London: Routledge. Bohm, D. (1996). On dialogue. London: Routledge. Buber, M. (1970). I and Thou. New York: Charles Scribner & Sons. Bunker, B., & Alban, B. (2006). Large group interventions and dynamics. In J. V. Gallos (Ed.), Organization development (pp. 309–321). San Francisco: Jossey-Bass. Bushe, G. R., & Marshak, R. J. (Eds.). (2015). Dialogic organization development. Oakland: Berrett-Koehler. Bushe, G. R., & Marshak, R. J. (2009). Revisioning organization development: Diagnostic and dialogic premises and patterns of practice. Journal of Applied Behavioral Science, 45, 348–368.

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Hautz, J., Seidl, D., & Whittington, R. (2017). Open strategy: Dimensions, dilemmas, dynamics. Long Range Planning, 50, 298–309. Heath, R.G. (2007). Rethinking community collaboration through a dialogic lens. Management Communication Quarterly, 21, 145–171. Heracleous, L. (2006). Discourse, interpretation, organization. Cambridge: Cambridge University Press. Heracleous, L. (2017). Discourse theory. In A. Langley & H. Tsoukas (Eds.), Sage handbook of process organization studies (pp. 190–203), London: Sage. Heracleous, L., Goesswein, J., & Beaudette, P. (2018). Open strategy-making at the Wikimedia Foundation – A dialogic perspective. Journal of Applied Behavioral Science, 54, 5–35. Heracleous, L., & Barrett, M. (2001). Organizational change as discourse: Communicative actions and deep structures in the context of IT implementation. Academy of Management Journal, 44, 755–778. Hutter, K., Nketia, B. A., & Fuller, J. (2017). Falling short with participation – Different effects of ideation, commenting, and evaluating behavior on open strategizing. Long Range Planning, 50, 355–370. Isaacs, W. N. (2001). Toward an action theory of dialogue. International Journal of Public Administration, 24, 709–748. Isaacs, W.N. (1993). Taking flight: Dialogue, collective thinking, and organizational learning. Organizational Dynamics, 22(2), 24–39. Jacobs, C., & Heracleous, L. (2005). Answers for questions to come: Reflective dialogue as an enabler of strategic innovation. Journal of Organizational Change Management, 18, 338–352. Jacobs, C., & Heracleous, L. (2001). Seeing without being seen: Toward an archaeology of controlling science. International Studies of Management and Organization, 31 (3), 113–135. Jemelniak, D. (2014). Common knowledge? An ethnography of Wikipedia. Stanford: Stanford University Press. Jemielniak, D. (2016). Wikimedia movement governance: The limits of a-hierarchical organization. Journal of Organizational Change Management, 29, 361–378. Kersten, A. (2000). Diversity management: Dialogue, dialectics and diversion. Journal of Organizational Change Management, 13, 235–248.

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16

A Social Network Perspective on Open Strategy J U L I A HA U T Z

16.1 Introduction Social network theory has been suggested to offer a particularly suitable perspective for studying both the emergence of increased openness in strategy processes as well as its consequences at multiple levels (Hautz, 2017; Hautz et al., 2017). Social network research and analysis have featured in the social sciences for nearly a century (Borgatti et al., 2009), but their application in an organizational context has increased significantly in recent years, undergoing exponential growth (Borgatti & Foster, 2003; Phelps et al., 2012). This dramatic increase is part of a general shift of research toward more relational, contextual, and systemic understandings (Borgatti & Foster, 2003). In this context, social networks offer a diverse repertoire of theories and frameworks to describe, analyze, and explain the behaviors and consequences that emerge from increased transparency and inclusion in strategy processes. These two dimensions of Open Strategy are based on concepts central to the network perspective, as they refer to increased internal and external transfer of strategic information and to external and internal exchange of information, views, and proposals intended to shape the continued evolution of an organization’s strategy (Whittington et al., 2011; Hautz et al., 2017). Thereby, relationships are established between actors from within and outside organizational boundaries through which they exchange resources such as information, knowledge, and ideas, and through which they build and accumulate resources such as trust and power (Carpenter et al., 2012; Phelps et al., 2012). Introducing openness in the strategy process on one or both dimensions – also supported by the increased use of social technologies (Haefliger et al., 2011; von Krogh, 2012; Majchrzak & Malhotra, 2013; Mack

& Szulanski, 2017) – has the potential to fundamentally change the way how and with whom actors interact and build relationships (Hautz, 2017), thereby impacting outcomes relevant to a successful strategy process. Hence, a social network perspective could offer new insights in the area of Open Strategy. This chapter continues as follows. The next section briefly introduces network terminology and concepts, such as multiple levels of analysis and network constructs. To exemplify these, I provide links to research questions addressed in existing Open Strategy studies. Then a central 2 × 2 framework categorizing research on the consequences of social networks is outlined (Borgatti & Foster, 2003). Using this framework, I will identify opportunities to inform future Open Strategy research. Key themes identified in the four quadrants of the framework are summed up in the final section, which highlights the advantages of a networkbased research agenda.

16.2 Social Network Research: Levels and Constructs Over the past decades, scholars have devoted considerable attention to examining networks in organizational and management contexts and have addressed numerous research questions (see, for example, Kilduff & Brass, 2010; Carpenter et al., 2012; Phelps et al., 2012; Tasselli et al., 2015 for extensive reviews). These network studies span multiple fields of research and vary significantly in the level of networks analyzed (Zaheer et al., 2010) and the level of network constructs included in their theoretical models (Borgatti & Foster, 2003; Moliterno & Mahony, 2011; Carpenter et al., 2012). Given the space constraints, this chapter does not

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provide a comprehensive review of the field or detail the individual research areas and theoretical lenses adopted in network research. Rather, it outlines those key concepts that are seen to be particularly relevant for addressing and contributing to central themes in Open Strategy research. Scholars have drawn on network literature to address numerous questions related to opening up the strategy process (Kilduff & Brass, 2010; Carpenter et al., 2012; Hautz, 2017), such as the creation and implementation of creative outcomes (Burt, 2004; Obstfeld, 2005; Uzzi & Spiro, 2005; Perry-Smith, 2006; Fleming et al., 2007; Baer, 2010; Lingo & O’Mahony, 2010; Sosa, 2011), increased knowledge transfer and information sharing (Constant et al., 1996; Hansen, 1999; Hansen, 2002; Reagans & McEvily, 2003; Phelps et al., 2012; Tortoriello et al., 2012), power and influence (Brass & Burkhardt, 1993; Ibarra & Andrews, 1993), or strategic decision making (McDonald & Westphal, 2003). The majority of this work defines a network as a social phenomenon composed of entities connected by specific dyadic ties reflecting interaction and interdependence (Carpenter et al., 2012). Although recent research has called for the application of a social network perspective to Open Strategy in order to generate additional insights (Matzler et al., 2016; Hautz et al., 2017), so far only one conceptual study on openness in the strategy process (Hautz, 2017) draws explicitly on network literature. However, many existing empirical studies on Open Strategy refer to settings and questions that provide opportunities to explore and extend research questions informed by a network perspective. Therefore, this section refers to the settings of existing studies to demonstrate, explain, and exemplify key concepts and constructs of network literature in the context of Open Strategy. Section three shows how social network research could particularly inform and extend our understanding of behaviors and consequences that emerge from increased transparency and inclusion in strategy processes.

16.2.1 Level of Analysis One of the major appeals of the network approach is the distinctive lens it brings to

a range of organizational phenomena at different levels (Kilduff & Brass, 2010; Carpenter et al., 2012). These levels of networks are determined by the scope of focal actors. The nodes, or actors, can be any kind of entity, ranging from individuals to collectives, such as teams, organizations, or countries (and their representatives) (Borgatti & Foster, 2003; Phelps et al., 2012) (see Table 16.1). At a macro-level, social network research focuses on either interorganizational relations between firms or intraorganizational networks, in which the focal actors are subunits, divisions, or teams. In both cases, actors consist of multiple individual members or the major representatives of those organizations (Carpenter et al., 2012). The first studies to investigate the concept of Open Strategy at an organizational level have begun by examining collaborations in strategy making across firm boundaries, such as interorganizational workshops, strategic alliances, coalitions, or business ecosystems (Pittz & Adler, 2016; Wulf & Butel, 2016; Seidl & Werle, 2018). Seidl and Werle (2018), for example, argue that when facing meta-problems – multidimensional problems of strategic significance that often cut across different industries or even different sectors – organizations open up their strategizing process and collaborate with other firms. Thereby, organizations seek to complement their own variety and ensure that they attain the overall requisite variety that is needed to capture the metaproblems. These interorganizational collaborations include, for example, workshops, which are conducted with organizations represented by groups of individuals, consisting mainly of middle and senior managers (Seidl & Werle, 2018). At an intraorganizational level, Mount and Pandza (2017), for example, investigate how IT-based Open Strategy formulation can change and reduce perceptions of intraorganizational power asymmetries between organizational divisions. Micro-level network research, in contrast, has examined interpersonal ties between individual actors. The majority of empirical studies on Open Strategy focus less on collaborations, interactions, and exchanges between organizations but rather on the inclusion of previously excluded individuals in

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Table 16.1 Level of Networks Level of network

Type of focal actor

Relation to Open Strategy studies

Interorganizational

Relationships between organizations

e.g., interorganizational workshops (Werle & Seidl, 2012; Pittz & Adler, 2016; Wulf & Butel, 2016)

Intraorganizational

Relationships between subgroups, e.g., relationships in intraorganizational workshops among divisions, teams divisions, intraorganizational networks (Mount & Pandza, 2017)

Interpersonal

Relationships between individual actors

e.g., in online communities, blogs, email lists (Hutter et al., 2017; Luedicke et al., 2017; Neeley & Leonardi, 2018)

the strategy process of an organization, often facilitated by social technologies. These newly involved individuals may be internal employees (Stieger et al., 2012; Matzler et al., 2016; Hutter et al., 2017) or external individuals such as, for example, customers, scientists, or students (Aten & Thomas, 2016; Morton et al., 2016; Dobusch & Kapeller, 2017; Malhotra et al., 2017). Social technologies enable the enactment of open practices such as blogging, online communities, or contests, which facilitate asynchronous, direct, low-cost interaction and communication between those participating individuals independent of geographical proximity and time (Stieger et al., 2012; Hautz et al., 2017). Multiple studies in the area of Open Strategy have examined these individual-toindividual relationships through which resources such as knowledge, information, content, and support are provided, as well as the consequences of these relationships (Hutter et al., 2017; Luedicke et al., 2017; Neeley & Leonardi, 2018). In their qualitative case study, Neeley and Leonardi (2018), for example, specifically investigate the mechanisms that enable and encourage employees within an organization to connect with each other and to share knowledge via internal social networking sites. Also, Luedicke et al. (2017) examine how 1,650 individual members of the German-based Premium Cola collective communicate via a mailing list in order to set strategy agendas, to participate in strategy deliberations, and to contribute to decision making (Luedicke et al., 2017). Together with single-level network research, which has explored how networks of individuals, groups, or firms relate to outcomes at the same level of analysis, there has also recently been an increased focus on cross-level network research,

which considers relationships connecting individuals and collectivities (Ibarra et al., 2005). It is increasingly acknowledged that organizations are multilevel systems, where one level of network influences higher and/or lower levels of the system (Moliterno & Mahony, 2011). Hence, micro-level interpersonal interactions also relate to higherlevel organizational outcomes. Trust, for example, develops as a result of interpersonal exchanges, and provides the foundation for the development of trust in the whole intraorganizational network (Tasselli et al., 2015). Increased openness in strategy making is very likely to be related to such cross-level relationships. When organizations include additional internal or external individual actors in their strategy process, this leads to new micro/macro-level relationships. Participating individuals interact, communicate, and share their information, knowledge, and ideas. These networks of individuals might influence outcomes in higher-level networks, such as at intraorganizational or interorganizational levels, and vice versa. Neeley and Leonardi (2018), for example, not only focus on the establishment of connections between individual actors but also investigate the conditions under which the knowledge that is shared among these connections can then be integrated into firm-level routines. They highlight the need to also focus on a firm’s ability to encapsulate knowledge gained based on individual-toindividual networks and to enact it at an organizational level (Neeley & Leonardi, 2018). Hence, Open Strategy does not only refer to relationships between organizations, groups, or individual actors. Rather, it also concerns relationships between organizations who open up their strategy process and the participating individuals. In their

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qualitative case study, Dobusch and Kapeller (2017) compare the relational setup of relying on either communities or crowds in an Open Strategy process. They demonstrate that while communities consist of networks of individual interrelated actors who engage in interpersonal exchange, crowds mostly comprise actors who do not share interpersonal ties but who are mainly related to organizations. This difference in network levels is found to relate to the practices and tensions emerging from openness (Dobusch & Kapeller, 2017). While single actor–level networks in communities tend to actively enact strategy-making practices that are more open when it comes to decision making, multilevel networks in crowds exhibit the opposite tendency. As discussed in the final section of this chapter, multilevel network research (Ibarra et al., 2005; Moliterno & Mahony, 2011) can help us to obtain deeper insights into these micro/macro-level relationships and phenomena in the context of Open Strategy.

16.2.2 Network Constructs Network studies differ significantly not only regarding the level of networks examined but also regarding the network constructs included. These can range from properties of network structure, to properties of dyadic relations, and of individual nodes (Moliterno & Mahony, 2011; Carpenter et al., 2012; Phelps et al., 2012). While the level of networks under consideration typically derive from researchers’ specific research questions, the network constructs applied are largely determined by the theories scholars use to address these questions (Borgatti & Foster, 2003). As discussed previously, social networks are typically conceptualized as consisting of actors at different levels, which are connected by network ties. These relationships can be distinctively conceptualized, for example, as social relations (friend of, boss of) or dyadic interactions (talks to, sells to), and can have distinctive properties in terms of, for example, strength or similarity (Phelps et al., 2012; Kane et al., 2014). A set of ties that links actors is not independent but rather congregates to form paths, which provide mechanisms for nodes to affect one another

indirectly. The system of paths forms a structure in which each node occupies a particular position (Galaskiewicz & Wassermann, 1994; Burt, 2005). If the focus is on a single, focal actor, this actor is called “ego” and the nodes that this actor has established ties with are called “alters” (Borgatti & Foster, 2003). The sum of ego, his/ her alters, and all the ties between them is called an “ego-network.” In the following subsection, this chapter focuses on different structural properties, types of relationships, and relational properties and links them to existing Open Strategy research. Structural Properties Research on the structural features of networks refers to network positions, ego network structure, and whole network structure (see Table 16.2) (Phelps et al., 2012). Individual positions describe focal actors’ locations in the whole network, determining the overall pattern of their connection with others (Burt, 1992; Carpenter et al., 2012). Positions indicate focal actors’ access to and control over resources, their roles, importance, influence, and actions in that network (Borgatti & Foster, 2003). These structural properties of actors are captured by the concepts of user level centrality (Wasserman & Faust, 1994). An actor’s centrality refers to the extent to which he/she is in the center of a network and reflects that actor’s importance in that network (Freeman, 1979; Kilduff & Tsai, 2004). At the ego-network level, research on structural properties has focused on whether a focal individual’s direct contacts have ties to each other (Burt, 1992). Structural holes, for example, exist if two individuals share a tie with a third individual but are not connected with each other (Burt, 1992). These unique ties to other individuals provide superior access to unique resource bundles and the ability to affect flow between otherwise disconnected groups (Burt, 1992). Network constraint, in contrast, indicates the extent to which an actor’s contacts are redundant and lack structural holes. At a network level, for example, network density, the degree of connectivity in a network, or a network’s centralization, referring to the overall cohesion or integration of the network (Freeman, 1979), can have effects on

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Table 16.2 Structural Network Properties Structural properties

Network constructs

Relation to Open Strategy studies

Positions

location of a node relative to others: centrality measures (degree, betweenness, eigenvector, structural equivalence . . .)

(Luedicke et al., 2017)

Ego-network patterns of ties among a focal’s node in a bounded population: structural holes, constraint

(Hautz, 2017)

Whole network

(Hautz, 2017; Mack & Szulanski, 2017)

pattern of ties among all nodes in a bounded population: network density, size, centralization, clustering, cohesion

multiple outcomes such as diffusion of resources, etc. (Singh, 2005). Network density refers to the sum of ties actually present divided by the number of possible ties and may give insights into such phenomena as the speed at which information diffuses among actors (Hannemann & Riddle, 2005). High centralization of a network indicates a high variability of an actor’s connections, hence the power and influence of individual actors vary quite substantially, meaning that, overall, positional advantages are rather unequally distributed in such a network (Hannemann & Riddle, 2005). In her conceptual study, Hautz (2017) draws on a network perspective to conceptualize the consequences of openness in the strategy process. In the framework developed in that study, it is suggested that the different structural properties of social networks allow for the costs and benefits of strategic activities in different phases of an Open Strategy process to be optimally balanced (Hautz, 2017). While larger network size, low density, and many structural holes are shown to have a positive impact on heterogeneity and increased knowledge diversity during idea generation, smaller, more cohesive, and homogeneous networks might be beneficial for selection purposes. Finally, the framework implies that large cohesive networks, exhibiting high density and few structural holes,

produce the benefits of knowledge and information transfer and collective support and action during implementation (Hautz, 2017). The inclusion dimension of Open Strategy refers to the greater involvement of a broader set of actors. In this context, previous studies have raised the question of how strategically relevant and influential individuals can be identified (Matzler et al., 2014; Matzler et al., 2016). It has been shown that among the large crowd of newly involved actors, some might be more “central” than others. Luedicke et al. (2017), for example, not only suggest the existence of more central individuals, but also propose a potential core/periphery structure in relation to the entire Premium Cola communication network: “Premium is registered as a private company in the name of the ‘central organizer’ (emic term) Ulrich (pseudonym) . . . Apart from Ulrich, the collective is constituted of 3 salaried staffers, about 20 highly active, core group members (i.e., members that have posted more than 100 emails and participated in most strategic debates), about 50 occasionally active members, and about 1650 other members who are involved in various ways” (Luedicke et al., 2017: 374). The study of Mack and Szulanski (2017) also implies that network-level structural properties, such as the centralization of, for example, an intraorganizational network (Freeman, 1979), could have a significant impact on the outcomes of opening up the organizational strategy process. In their qualitative case study, they discuss the impact of organizational centralization versus decentralization on information flow in the context of an Open Strategy initiative (Mack & Szulanski, 2017). Dyadic Relationships In addition to structural properties, Borgatti et al. (2009) note that different types of ties need to be considered in the context of social networks (see Table 16.3). Relations are ties that reflect persistent social connections, such as roles-based connections (family, organization) or affective relations (like, support) (Borgatti et al., 2009; Kane et al., 2014). Interactions include discrete, transitory, relational events, such as having lunch, meetings, sending emails, or signing an agreement with another node

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A Social Network Perspective on Open Strategy 277 Table 16.3 Types of Network Relationships Types of relationships

Relation to Open Strategy studies

Social relations

Relational states formal work relationships (boss of, etc.), informal private relationships (friendship, relative of . . .)

e.g., Neeley & Leonardi, 2018

Interactions

Relational events meeting, talking to, sending emails, commenting, blogging

increasing reliance on social technology, e.g., Stieger et al., 2012; Baptista et al., 2017

Flows

Resources that move along ties information, advice, ideas, knowledge, power, reputation

e.g., Gegenhuber & Dobusch, 2017; Hutter et al., 2017; Mount & Pandza, 2017

(Borgatti et al., 2009; Kane et al., 2014). Finally, flows refer to tangible or intangible resources (money, information, ideas, beliefs, power) that can move from one node to another when nodes interact (Friedkin, 1982; Borgatti et al., 2009). Openness in strategy making affects types of relationships and their relevance. Different types of interactions might become more prominent in the context of Open Strategy processes. While previously strategy work has mostly been realized in analog interactions, such as meetings, workshops, etc., increased openness in terms of inclusion and transparency has been realized and enacted mainly through the increased availability of social technologies (Haefliger et al., 2011; Stieger et al., 2012). These digital technologies, such as blogs, wikis, online contests, and community platforms facilitate and influence exchange relationships, communication, and interaction (Haefliger et al., 2011; von Krogh, 2012; Majchrzak & Malhotra, 2013; Baptista et al., 2017). Recent studies on digital interaction support the notion that online communication/interaction serve an equal social function to face-to-face interaction and can be used to study the underlying network of social relationships (Dunbar et al., 2015). In addition to new types of interactions in the strategy process, distinctive types of social relations

might also become more relevant in Open Strategy settings. While previously formal top-down/hierarchical relationships, in the form of either formal work relationships or contractual relationships with consultants, have dominated strategy work, the inclusion of a broader set of internal and especially external actors has shifted the focus to more informal social relationships. Neeley and Leonardi (2018), for example, investigate the role of nonwork-related interaction versus work-related interaction on knowledge implementation in an employee social network. They find that nonwork-related interactions on social media generate curiosity and trust, which encourage individuals to connect and share knowledge. However, they also emphasize that these non-work-related interactions may create tensions, a fear of exposure and criticism, reduce engagement, and, finally, hinder a firm’s ability to encapsulate knowledge in the form of routines (Neeley & Leonardi, 2018). Different types of interactions and social relations and different flows of resources might have distinctive consequences in the context of Open Strategy. Studies have shown that increased inclusion can improve the sharing of information and knowledge, or provide new strategic ideas (Gast & Zanini, 2012; Morton et al., 2015), but it can also go deeper, allowing for the synthesis, discussion, development, and evaluation of strategic initiatives and, in addition, a collective focus on the realization and implementation of those initiatives, implying a growing sense of community over time (Hutter et al., 2017; Mack & Szulanski, 2017). Hutter et al. (2017), for example, find that while “commenting [on]” and “evaluating the ideas of others” create a sense of virtual community – a feeling of virtual belongingness to other participants in an Open Strategy platform – the “submission of ideas” alone has no or even a negative effect. They speculate that “while the isolated act of posting ideas may contribute creative thoughts to strategy making, it might be counter-productive to strategy implementation if it instigates employees to (mis-)use the OS platform as an idea dump without generating interest toward understanding the other users’ perspectives or grasping the big picture” (Hutter et al., 2017: 356). Mount and Pandza (2017) focus on power asymmetries in the strategy-making process between

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Table 16.4 Relational Properties Relational properties

Relation to Open Strategy studies

Tie strength: frequency and depth at e.g., Hautz, which two nodes interact 2017 Reciprocity:

whether nodes in a dyad reciprocate a tie

Multiplexity: extent to which two actors are linked by multiple ties simultaneously Simmelian ties:

e.g., Gegenhuber & Dobusch, 2017 no existing Open Strategy studies

between three actors, if no existing two actors are Open Strategy reciprocally connected to studies one another and both are also reciprocally connected to the third one

interorganizational divisions and argue openness in the strategy process reduces perceptions of asymmetry. Hence, it can be assumed that greater openness influences flows and accumulation of power, distinguishing them from established power networks in closed strategy settings. While not specifically related to networks and network research, properties of content and resources transferred along network relationships are relevant here. Hence, in the case of Open Strategy, we can refer to the tacitness/complexity of knowledge shared or the types of ideas submitted (radical vs. incremental), for example. Network relationships are characterized by different properties which, for example, refer to their strength and reciprocity (see Table 16.4) (Kane et al., 2014). Tie strength is an important dyadiclevel construct, reflecting a function of frequency and intensity, relational duration, emotional intensity, and attachment of interaction (Granovetter, 1973; Friedkin, 1982). Direct reciprocity occurs if there are repeated interactions between the same two actors. Another dyadic level construct is multiplexity, which indicates the extent to which two actors are simultaneously linked by two or more different types of relationships (Beckman & Haunschild, 2002). Such ties in multiple social contexts, for example, having a formal work relationship and private friendship at the same time, increase opportunities to

interact and improve mutual understanding. Simmelian ties refer to the special nature of dyadic ties embedded within triads. Relations embedded in such three-person cliques are suggested to be stronger, more durable, and in particular more able to produce agreement and effective sensemaking processes between actors (Krackhardt & Kilduff, 2002). Opening up the strategy process typically results in larger networks of connected individuals (Hautz, 2017). As more opportunities for relationships, often based on digital interactions, are enabled, it has been suggested these larger “Open Strategy networks” are characterized by weaker, less frequent, emotional, effortful, nonreciprocal ties between involved individuals, compared to the stronger, reciprocal relationships found in a traditional closed strategy setting (Hautz, 2017). However, different tie strength might be beneficial at different stages of the strategy process. Weak ties might allow the actors to access diversified resources and knowledge, thereby benefiting idea creation, while strong ties facilitate information exchange and drive mutual action in the context of implementation (Hautz, 2017). Research has shown that relationships in Open Strategy settings can differ in their reciprocity. They can be one-directional, involving one-way communication of strategic information to a greater internal and external audience (Yakis-Douglas et al., 2017) or bidirectional, reciprocal engagement in a dialogue (Gegenhuber & Dobusch, 2017). This reciprocity is thereby not limited by the type of relationship. Gegenhuber and Dobusch (2017), for example, distinguish between the open practices of broadcasting, where a blog is used as a one-way channel to transmit information to an audience, and dialoguing, where the blog is also used to reveal strategic information “but simultaneously soliciting opinions and engaging external audiences in an open conversation” (Gegenhuber & Dobusch, 2017: 342).

16.3 A Framework for Social Network Research and Avenues for Future Research on Open Strategy In order to reduce the complexity inherent in network research due to its multiple constructs and levels of analysis, Borgatti and Foster (2003) have

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classified the literature on the consequences of social networks by providing a 2 × 2 framework based on two dimensions. Explanatory goals (social homogeneity vs. performance variation) and explanatory mechanisms (network structure vs. content) describe four “canonical” approaches of social network studies (Borgatti & Foster, 2003), which offer different opportunities for future Open Strategy research (see Table 16.5).

16.3.1 Explanatory Mechanisms: Structure versus Content Studies on the outcomes and consequences of networks differ from each other in how they treat ties and their functions (Borgatti & Foster, 2003). A fundamental tenet of social network research is that a node’s position in a network structure helps determine the opportunities and constraints it will encounter (Borgatti et al., 2009). Here, a focus is on the exploitability of certain features of a network’s structure or typology, such as the abundance of structural holes (Burt, 2000), which may be the primary source of benefits in a network. This structural, topological approach tends to neglect the content of ties and focuses on the patterns of interconnection. The connectionist stream, in contrast, draws attention to the nature of content flows through social ties (Lin, 2001). In this approach, an actor is successful because he/she can draw on the right resources controlled by his/her alters, including information, power, etc. (Borgatti & Foster, 2003).

16.3.2 Explanatory Goals: Performance Variation versus Homogeneity The second dimension specifies whether social network research focuses on explaining social homogeneity or performance variation (Borgatti & Foster, 2003). The performance variation, or social capital approach, describes the benefits of social positions and relationships and examines how and why particular nodes perform differently as a result of their network properties. Social capital reflects the instrumental utility and beneficial consequences of a social network to its participants (Burt, 1997; Nahapiet & Ghoshal, 1998; Lin,

2001). Scholars have recognized two basic sources of these benefits. As outlined previously, these include the structural patterns of connections across actors (Adler & Seok-Woo, 2002) and the resources that inhere in the social network (Lin, 2001). In the social capital view, the actors are assumed to be rational and active agents, who deliberately choose their ties, manipulate and create network structure, and deliberately exploit it to maximize gain (Borgatti & Foster, 2003). Social homogeneity, or the diffusion perspective, in contrast, takes the network structure as given and examines its consequences in terms of behavior and outcomes for individual nodes (Davis, 1991). Hence, this perspective is implicitly about how the network changes the actors in the sense of adopting a practice or developing an attitude. This research, characterized by environmental determinism, is more interested in the process by which practices, for good or bad, spread through a system (Valente, 1995). Studies on social attitude formation, or social influence studies, for example, are part of a structuralist tradition that emphasizes constraints rather than opportunities. These contrasting explanatory goals of social capital versus diffusion studies reflect the classical tension between the fields of strategy and organization theory (Borgatti & Foster, 2003). To the extent that these four approaches to social network research differ in their research goals (explaining the variation in actors’ success vs. explaining homogeneity in actors’ attitudes, beliefs, and practices, both as a function of social ties), their assumptions of actors’ rationality, deliberateness, and determinism, and their conceptualization of positional (topological/structuralist) versus relational (flow/connectionist) perspectives (Borgatti & Foster, 2003; Kane et al., 2014), they offer different opportunities for addressing particular aspects of Open Strategy. In the following subsection, this chapter identifies and outlines the potential future contributions to Open Strategy research of each type of network literature (see Table 16.5).

16.3.3 Structural Capital Structural capital network studies focus on a structuralist perspective of social capital and

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Table 16.5 Types of Network Research and Future Avenues for Open Strategy Research

Structuralist (typology)

Social capital (performance variation)

Diffusion (social homogeneity)

Structural capital: How can actors occupy positions in the network that are beneficial for desired outcomes (e.g., having a sparse ego-network, being located along the shortest paths)

Environmental shaping: Do actors adopt common attitudes or practices in terms of similar network environments

• How do positional network characteristics of more diverse and newly included actors in Open Strategy settings enable divergent relevant outcomes such as e.g., - generation of new and more radical strategic ideas - mobilization of support for ideas • Who are the most influential/most centrally positioned individuals in an Open Strategy setting • How does network centralization/decentralization influence information flow Connectionist (flows)

• How do structural network properties of communication networks enable and result in, e.g., - increased similarity in learning about strategic issues - increased similarity in knowledge about strategic issues - increased agreement about strategic direction - increased acceptance and legitimacy of strategy

Social access to resources: How can actors form and beneficially exploit ties for desired outcomes → success function of the quantity and quality of resources controlled by actors’ egos, actor can access these resources through ties

Contagion: How do ideas, practices, and information, etc. spread along ties → explains shared attitudes, patterns of behavior, and practices, etc. through interaction

• Which types of relationships e.g., formal/informal,

• How does increased spread of strategic

intraorganizational/interorganizational, reciprocal/ nonreciprocal are beneficial for e.g., - creativity/creation of new strategic ideas - knowledge transfer - mobilization of support • How does access to different resources (strategic information, power, technological resources) affect strategy making

information affect e.g.,

- employees’ attitudes toward the organization,

- their behavior in terms of commitment and actions

- adoption of new approaches and routines

• How can conflict/negative opinion adoption spread among newly communicating actors

the benefits that accrue to actors due to desirable patterns of ties (Granovetter, 1985; Coleman, 1988; Burt, 2005). Central positions in networks (Brass & Burkhardt, 1993; Ahuja et al., 2003) or having an ego-network with a certain beneficial structure (Burt, 1992, 1997; Ahuja, 2000a) have been associated with beneficial outcomes. Work on the outcomes of individuals’ social network structures follows a debate on the merits of two different views (Gargiulo & Benassi, 2000; Burt, 2005; Obstfeld, 2005). One view stresses the benefits of having a sparse ego-network, being located along the shortest path between otherwise unconnected actors (Burt, 1992). These unique ties to other individuals provide superior

access to diverse information and experience, varying preferences, and multiple perspectives (Burt, 1992, 2004). Having individuals situated at the confluence of different social domains generates heterogeneity and, thereby, opportunities for novel combination and recombination of diverse information and knowledge, which results in increasing attractiveness of ideas (Burt, 2004; Rodan & Galunic, 2004; Nerkar & Paruchuri, 2005; Fleming et al., 2007). The contrasting view stresses the benefits of densely connected networks (Coleman, 1988). Individuals are likely to be aligned, and shared language, value systems, and mutual understanding are readily available (Obstfeld, 2005; Uzzi &

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Spiro, 2005; Rivera et al., 2010). Such structures facilitate the development of trust, norms of cooperation, and reputation (Gargiulo et al., 2009), and support the transfer and exchange of complex information and knowledge (Reagans & McEvily, 2003; Uzzi & Spiro, 2005; Tortoriello et al., 2012). At the network level of analysis, structural capital studies seek to relate the network structure of a group – for example, an organization, division, or team – to its performance (Borgatti & Cross, 2003). The structural capital network perspective has the potential to inform future research on Open Strategy in multiple ways. In the case of openness through inclusion practices, networks are established consisting of newly involved actors connected by their exchange of information, knowledge, views, ideas, proposals, etc., intended to shape organizational strategy. These networks, especially those supported by digital technologies, are often quite large in size and, as the first case studies have shown, actors are very heterogeneous in terms of participation, importance, and strategic influence, etc. (Luedicke et al., 2017). Identifying the most relevant and influential actors, however, might be problematic and difficult in an Open Strategy context, as the roles of actors might be independent of hierarchical, formal positions and may even involve anonymous, external individuals. The structural capital network perspective will allow future studies to generate more insights in terms of identifying the most “central” actors – individuals, divisions, teams, organizations – and will enable a more nuanced understanding of sources of their relevance and importance, and their particular impact within these large networks of newly involved actors. Due to their favorable structural positions (see Table 16.2), these central actors might be the most relevant for achieving distinctive desired outcomes, which are critical in strategy settings. Future research attempts into Open Strategy using a structural capital network perspective could investigate the impact of these actors and their favorable network positions on multiple consequences, such as the generation of new strategic ideas, creativity, or influence in strategic decision making. However, the structural capital approach not only is particularly suitable

when investigating research questions at the actor level, but also allows researchers to address questions related to the consequences of entire network structures. Future research could, for example, investigate how different structures of relational systems, such as density, or centralization versus decentralization of organizations, divisions, or online communities, facilitate a range of outcomes in an Open Strategy setting, such as the sharing of complex strategic knowledge, the generation of trust, access to diverse information, or transparency.

16.3.4 Social Access to Resources This particular type of network research focuses on the connectionist aspect of social capital (Borgatti & Foster, 2003). In this perspective, an actor’s success is a function of the quality and quantity of the resources controlled by the actor’s alters (Anand & Khanna, 2000). Different types of ties (see Tables 16.3 and 16.4) have different capacities for extracting these resources (Borgatti & Cross, 2003). Research examining the impact of different types of ties on innovation outcomes, for example, suggests that advantages associated with bridging ties are contingent upon the nature of the ties forming the bridge, specifically, whether these bridging ties are Simmelian (Krackhardt & Kilduff, 2002). Tie strength has also been considered in this context. Weak ties, which are not necessarily reciprocal and involve less frequent and intense interaction (Granovetter, 1982b), are likely to provide diversity and non-redundancy of information, search benefits (Constant et al., 1996; Hansen, 1999), and facilitate autonomy (Perry-Smith & Shalley, 2003; Perry-Smith, 2006). However, weak ties might also result in different language. If knowledge shared on a tie cannot be framed for mutual understanding, comprehension can be difficult and costly (Borgatti & Cross, 2003). Future studies on the consequences for Open Strategy could benefit from adopting this particular network perspective, focusing on social access to resources when investigating consequences of both dimensions of openness. This approach provides avenues for future research to generate deeper insights into which types of relationships and

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which tie properties are beneficial in Open Strategy settings for achieving specific desired outcomes. Promising future research questions include the exploration of the distinctive effects of different types of ties established between newly involved actors, such as formal work-related ties versus nonformal, private ties, or digitally mediated versus analogous ties and their potential consequences, such as motivation to be involved, creation of new strategic ideas, and knowledge transfer. But this approach also provides opportunities to investigate questions related to different properties of relationships (see Table 16.3). As outlined previously, increased transparency encompasses greater internal and external transfer and visibility of strategic information and knowledge. Hence, networks constituting different types of interactions – digital or analogous, in the form of meetings, town halls, blogs, wikis, emails, etc. – are established, where information and knowledge flows along the ties between involved actors. Open Strategy research has a special interest in studying the consequences and implications of this increased transparency. Future studies focusing on the beneficial outcomes of increased transparency could, for example, explore the impact of the reciprocity of ties or the consequences of tie strength. These research attempts could compare the effects of one-directional versus two-way reciprocal relationships within networks established through practices of increased transparency. This could provide insights into the impact that different open practices have on outcomes such as mobilization of support, increased knowledge transfer, or enhanced understanding.

16.3.5 Environmental Shaping Network studies adopting an environmental shaping perspective take network structure as given and examine its consequences in terms of behavior and consequences for actors (Kane & Alavi, 2008; Kane & Borgatti, 2011). Specifically, they try to explain common attitude formation, behaviors, and practices in terms of similar network environments, such as centrality or structural equivalence (Galaskiewicz & Burt, 1991). Equivalence defines the similarity of two actors’ profiles in terms of

their network relations regardless of whether they are connected to each other (Burt, 1987). Increasing equivalence between persons in an organization, for example, has been found to increase the similarity of what they learn and know about their organization (Walker, 1985). The environmental shaping approach could also be beneficial in creating new insights in the context of Open Strategy research in several ways, enabling researchers to explore its consequences within communication networks established to achieve greater transparency or interaction networks generated through practices of inclusion. But rather than focusing on which structural positions result in superior performance, future Open Strategy research could engage in explaining behavioral patterns and the development of attitudes, for example, similarities between involved actors in terms of learning and knowledge about strategic issues, increased agreement and acceptance of strategy and strategic directions by involved actors, or similarities in their commitment to realizing and implementing strategic initiatives. Thereby, research could gain insights into how practices, attitude, and beliefs are adopted among larger groups of actors, newly involved in the strategy process, due to their shared structural properties within networks.

16.3.6 Contagion Social network research adopting a contagion perspective focuses on how different types of network content can spread through social networks and thereby affect actors who come into contact with it and, for example, influence their attitudes and behavior (Borgatti & Foster, 2003; Kane et al., 2014). Hence, shared attitudes, culture, and practices are not explained through shared structural properties, as in the case of environmental shaping, but through interaction between actors (Geletkanycz & Hambrick, 1997; Krackhardt & Kilduff, 2002). For example, executives’ intra-industry ties have been found to be related to strategic conformity (Geletkanycz & Hambrick, 1997), while Simmelian ties, defined as dyads embedded in three-person cliques, have been found to predict

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higher levels of cultural agreement than raw ties (Krackhardt & Kilduff, 2002). Social influence studies in the context of new product diffusion have also focused on this aspect of network research (Aral, 2011). Studies investigating how content spreads within social networks and influences actors have also been of considerable interest in the context of networks mediated by social technologies (Aral & Walker, 2011). This network perspective offers a particularly suitable approach for Open Strategy researchers to investigate how relevant content – strategic knowledge, information, ideas, power – spreads within networks influenced by openness of the strategy process, and its consequences on affected actors. In the context of increased internal transparency, future research could, for example, contribute to a better understanding of how communicated information spreads and results in a common understanding of strategy or similar attitudes toward it. But this approach also helps us to explore the negative consequences of openness. As suggested by Hautz et al. (2017), increased inclusion could result in dilemmas of commitment, participation, and escalation. Clearly, newly involved individuals have expectations concerning the recognition of their contributions, do not want to be excluded from further developing them, or demand to be involved in later stages of the strategy process. If these expectations and interests are not met, this could lead to demotivation, frustration, protest, and conflict (Baptista et al., 2017; Hautz, 2017; Malhotra et al., 2017). Future studies could investigate how negative content, protest, or conflict might spread within networks of involved actors, for example, online communities, employee social networks, blogs, or workshop groups, and result in the adoption of negative attitudes, for example, toward strategic initiatives, the strategic direction of the organization, or the organization itself.

16.4 Opportunities for Open Strategy Research from a Network Perspective As already stated, the adoption of a network perspective has the potential to benefit Open Strategy

research in multiple ways. Questions raised in existing qualitative case studies on Open Strategy may be extended and quantitatively addressed. In addition, it has been shown that social network research offers opportunities to address new research questions that have not yet been considered in an Open Strategy context. The following section summarizes the advantages of the network perspective when studying the increased openness of strategy processes. First, by adopting a network perspective when exploring questions related to Open Strategy, it is possible to move from an actor centered perspective toward a more relational, contextual, and systemic understanding. Rather than analyzing individuals’ and organizations’ behaviors, attitudes, and characteristics, the focus is on the relational system in which the social actors are embedded (Granovetter, 1973; Granovetter, 1982a; Borgatti et al., 2009). Such a dyadic perspective allows us to study complex social phenomena, such as groups of interacting individuals, teams, divisions, workshop groups, organizations, online communities, or crowds, and to explore their structure, their interdependence, and the importance of actors and actor’s contributions within these social systems (Borgatti et al., 2009). Second, the network perspective provides an opportunity to apply a quantitative method to an empirical study of these complex social phenomena. Thanks to social network analysis (SNA), we are no longer limited to an investigation using qualitative tools but can explore these phenomena using quantitative and graphical analyses (Borgatti et al., 2009). IT-based Open Strategy initiatives in particular, such as online communities, blogs, or wikis, allow the researcher to capture digital network data based on actual interactions between actors saved on the log-file of the relevant platform server (Hautz, 2017). Various forms of computer-mediated social interaction and communication activities, such as email, blogs, chats, commenting functions, etc., create a digital record of relationships between actors while they virtually interact and view, reply, annotate, comment, rate, or link to another’s content (Smith et al., 2009). This network data on digital ties is often readily available and allows

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for new insights into exchange relationships between actors within social structures. Third, this chapter shows that Open Strategy research has been concerned with different levels of analysis that analyze interactions between organizations and divisions, as well as between individuals. Network research could enable future studies to better understand and leverage these multilevel settings. Multilevel research has focused on how networks at one level influence networks at higher or lower levels (Moliterno & Mahony, 2011). This would allow future studies to investigate, for example, how properties of interpersonal employee networks influence characteristics and outcomes of networks of divisions at an interorganizational level. Opening up the strategy process often results in new micro-macro linkages between individuals and organizations as collectives. Organizational network research has also been concerned with questions zooming back and forth between individual and collective levels of analysis, such as divisions or organizations (Ibarra et al., 2005). This type of multilevel network research enables insights into how organizational outcomes, such as organizational learning, are affected by structural network properties of individuals. Finally, the framework of network literature discussed in this chapter has focused in particular on the consequences of social networks and is therefore highly appropriate for studying the outcomes of increased openness. Although multiple benefits have already been associated with Open Strategy, research has also highlighted potential downsides to increased openness, which might result in inefficiencies and costs of increased openness (Hautz et al., 2017). If organizations want to be able to create and also capture value through opening up their strategy processes, a deeper and more nuanced understanding of the effectiveness of Open Strategy is required. Hence, for research as well as for practice, it is of great relevance to further explore the various and multifaceted consequences of greater transparency and inclusion. When adopting a network perspective, it is assumed that increased openness on both dimensions has an impact on properties of the established networks (Hautz, 2017), related to the structuralist

and connectionist perspectives shown in Table 16.5. Both greater transparency and inclusion lead to a wider exchange of information, knowledge, ideas, proposals, etc. (Hautz et al., 2017), resulting (i) in the establishment of new relationships between actors that have not been connected before, such as communicative relationships between a top manager and an employee via discussion in an Open Strategy blog; (ii) in the creation of new types of relationships, such as digital connections established through IT-based Open Strategy initiatives or informal, non-workrelated relationships with actors from outside organizational boundaries; (iii) and in the establishment of new network structures, such as larger crowds of interacting actors in online communities, etc. Depending on the specific research question and the particular network perspective adopted, these changes in network properties – ties and structures – allow us to investigate not only different types of consequences of increased openness, including superior outcomes of particularly favorably connected or positioned actors, but also the alignment of outcomes, such as similar patterns of behavior or attitude. While a majority of network studies in the social sciences has focused on the consequences of social networks (Borgatti et al., 2009) as discussed in this chapter, network research has also explored the patterns and determinants of network formation, evolution, and change (Ahuja, 2000b). Hence, the network perspective also provides promising and insightful avenues for future studies on Open Strategy in terms of understanding network development processes and explaining antecedents of networks and their specific properties and network dynamics. Future research could, for example, investigate how actors change their tendencies to establish relationships in the context of new open practices and digital technologies. Such studies could explore if greater openness enables actors to overcome homophily, the tendency to form ties with similar others (McPherson et al., 2001). In summary, a network perspective offers a diverse and promising range of avenues for future research into Open Strategy. As argued, it is particularly suited to providing insights into complex systems of social relationships

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CHAPTER

17

An Institutional Perspective on Open Strategy: Strategy in World Society JAN G O L D E N ST E I N a nd PE T E R WAL GE NBACH

17.1 Introduction This chapter uses new institutional theory to shed light on the recent trend toward openness and inclusiveness in strategy making. New institutional theory depicts an extraordinary vivid strand in management and organizational research. This vitality is foremost reflected in the large amount of different theoretical substrands that populate new institutional theory (for an overview, see Greenwood et al., 2017). While some of these substrands such as institutional work or institutional entrepreneurship tend to highlight microprocesses, we, in this chapter, focus on Open Strategy as a world societal phenomenon. Therefore, we draw on world society theory (Meyer, 2010) as this stream in new institutional theory sheds light on macro-processes. Based on this perspective, we establish the argument that the phenomenon of Open Strategy may be considered as neither unexpected nor revolutionary. We do so by contemplating Open Strategy as a current global trend of organizations toward openness (Whittington et al., 2011; Stieger et al., 2012; Appleyard & Chesbrough, 2017), which represents a “dynamic bundle of practices that affords internal and external actors greater strategic transparency and/or inclusion” (Hautz et al., 2017: 299). In more detail, we focus on the role of globalization for the development of Open Strategy approaches (for an overview of other globalization perspectives, see Drori, 2008; Höllerer et al., 2017). We will build our argument on the idea that Open Strategy represents a further expansion of globally shared cultural beliefs within an increasingly isomorphic world society. From this perspective the phenomenon of Open Strategy may not be considered an unexpected revolution in the

strategy making of organizations. This also implies that organizations – from an institutional perspective unsurprisingly – become structurally increasingly isomorphic (cf., Meyer et al., 1997; Meyer, 2010). Since its emergence in the late 1970s and early 1980s, new institutional theory highlights the striking isomorphism of organizations (e.g., Meyer & Rowan, 1977; DiMaggio & Powell, 1983). Work in the field of new institutional theory suggests that modern organizations are basically constructed from a tool kit of universal and standardized models of managing and organizing (Drori et al., 2006; Meyer & Bromley, 2013; Drori et al., 2009; Bromley & Meyer, 2015). In other words, new institutionalism considers organizations as entities that adopt ways of structuring and managing that mirror legitimated rationalized cultural beliefs of their environment (Meyer & Rowan, 1977). For example, management concepts such as shareholder value, corporate social responsibility, total quality management, or international certification standards (IAS or ISO) by now belong to the worldwide canon of management practices that are believed to be effective and efficient (Walgenbach et al., 2017). In terms of the world society perspective in new institutional theory, these universal models of management and organizing represent institutions that constitute the taken-for-granted cultural beliefs of the form and function of organizations around the globe (Meyer & Jepperson, 2000). In the following, we introduce the core ideas of Open Strategy (section 17.2), outline the core arguments of the world society approach within new institutionalism (section 17.3), which highlights global isomorphic trends, and reveal why Open Strategy is a striking example of globally

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expanding cultural beliefs (section 17.4). Finally, we will suggest implications for further research drawing on new institutional theory. In detail, we outline potential research within the realm of theorization, diffusion, and glocalization (section 17.5). Especially by integrating a glocalization perspective, we highlight that our argument may also stimulate institutional research that is not solely interested in globalization processes in world society. The glocalization perspective enables an understanding of Open Strategy as mutually embedded in both the cultural beliefs in world society and the specificities of local/national institutional contexts (Tempel & Walgenbach, 2007; Drori et al., 2014a).

17.2 The Organization and Its Strategy in Management Literature In the strategic management literature, organizations are typically considered to be bounded and rational actors (cf., Hart & Banbury, 1994; Peng et al., 2009; Ciabuschi et al., 2011). In this literature, it is generally accepted that organizations define their boundaries in order to manage transaction costs, acquire competitive advantages through valuable and scarce resources, gain power over crucial external forces such as competitors or customers (for an overview, see Santos & Eisenhardt, 2005), and rationally pursue their interests and maximize their profits (Lee et al., 2007). The boundaries that organizations establish consequently imply that organizations are exclusive entities with a strong focus on optimizing their own strategies in secrecy (cf., Dobusch, 2014). From this perspective, openness in strategy making appears to be a contradiction that dissolves the image of organizations as competitive entities, as the recent trend demands the transcendence of boundaries and the relinquishment of (competitive) secrecy. Rather it favors the inclusion of a growing range of internal and external audiences and transparency in the formulation and communication of business strategies (Whittington et al., 2011; Stieger et al., 2012; Dobusch, 2014; Whittington et al., 2016; Hautz et al., 2017). Practices such as

“Open Innovation” (Chesbrough & Appleyard, 2007), “strategy jamming” (Bjelland & Wood, 2008), “strategy crowdsourcing” (Aten & Thomas, 2016), or organizational reflexiveness (Baptista et al., 2017) appear to increase uncertainties for organizations (cf., Mack & Szulanski, 2017), limit the opportunities to exploit competitive advantages, constrain the possibility of longterm planning, and decrease control over external forces. One argument, which is consistent with the traditional strategic management literature and which could dissolve or at least reduce the degree of contradiction and conflict with the traditional image of the competitive organization, holds that Open Strategy simply improves economic efficiency and, therefore, must be considered as a rational way of managing organizations. However, until now, this argument has been only speculative (e.g., Chesbrough & Appleyard, 2007; Stieger et al., 2012; Dobusch, 2014; Hautz et al., 2017). Evidence that Open Strategy as an approach to manage organizations indeed yields positive and particularly persistent effects for organizations is weak (for two recent studies demonstrating the partial effects of Open Strategy on success, see Aten & Thomas, 2016, and Whittington et al., 2016). Management scholars in the field of Open Strategy also refer to other arguments in order to theorize the recent trend toward Open Strategy. Whittington et al. (2011) build on Abbott’s (1988) work about the development of professions and argue that strategy making depends strongly on organizational, societal, cultural, and technological forces that may change over time. The authors argue that in the period from the 1950s to the 1970s the decision toward more secrecy and exclusion appeared to be rational. The size and product diversity of large corporations demanded a strong focus on the strategic planning of organizational activities with a view to the organization’s primary goals. As a consequence, strategic planning became centralized at the top-management level (organizational force). Centralization of organizational decisions at top-management level was further enforced by the image of competition as warfare (headquarters). Most managers at this time

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were socialized in military services (social force) and carried the scientifically supported belief in the superiority of hierarchical, and, therefore, exclusive decision making (cultural force). At last, primitive communication techniques facilitated exclusion and secrecy as they simply did not allow the spread and flow of information to an extent that would be necessary for openness in strategy making (technological force). From the 1980s onwards – as the argument of Whittington et al. (2011) proceeds – the change of these four forces let organizations reconsider their strategy making. In order to manage the growing internationalization of business operations, it now appeared appropriate to decentralize planning and to establish network-like organization structures (e.g., Chesbrough & Appleyard, 2007; von Krogh et al., 2012), which in turn fostered cooperation within and across multiple organization units or other autonomous organizations (organizational force). New regulations started to impose greater obligations (e.g., the SEC’s Fair Disclosure rules or the Sarbanes-Oxley Act) in order to communicate strategically relevant information (social force). In addition, strategy planning became a subject of business education, which led to the formation of a distinct management profession and the stigmatization of nontransparent and exclusive processes of strategy formulation (e.g., Whittington et al., 2016; cultural force). Finally, new information technologies enabled the spread and exchange of information (technological force). In sum, the recent strategic management literature accounts for the trend toward more transparency and inclusiveness (i.e., Open Strategy) and the aligning of organizations to the demands of external pressures such as market developments, regulations, and technologies. However, the question remains unanswered as to why these forces changed strategy making the way they did. We do not state that the outlined descriptions are incorrect; on the contrary. However, we argue here that the depicted changes have to be considered in a broader context. In the next sections, we illustrate that Open Strategy describes a symptom, which indicates that the character of managing and organizing has changed dramatically over time. In this context, the trend toward

Open Strategy corresponds with increasingly globally shared cultural beliefs. To substantiate our argument, we will, in the next section, present the core ideas of the world society approach within new institutionalism, and we will subsequently discuss Open Strategy in light of these ideas in the following sections.

17.3 World Society: Organizational Actorhood and the Rationalization of Management The world society approach within new institutionalism is committed to the study of the institutional consequences of globalization. In particular, world society scholars argue that global culture, grounded in ideas of progress and justice, has been evolving since the end of World War II (cf., Thomas et al., 1987). Within the same time frame, ideas of openness – even if initially related to the social system of open and individualistic societies – started to emerge (cf., Popper, 1945). The central cultural beliefs, which then in this context diffused globally, are rationalization and actorhood (Meyer et al., 1994; Meyer, 2000; Meyer & Jepperson, 2000). Following Meyer, Boli, and Thomas (1994), this definition of culture in the world society approach establishes an unambiguous counterpoint in comparison to former rationalistic social theories (e.g., Coleman, 1990; Drori, 2008). In rationalistic social theories, actors, such as organizations, are treated as unitary, rational, and ontologically given. Thus, culture is reduced to a shared system of values encompassing aspects of morality and taste. In contrast, proponents of the world society approach highlight the universalistic and rationalized gestalt of modern culture. From this perspective universality and rationalization denote the institutionalized expectation that everyday life is structured in everlasting and standardized meansend relations that serve progress and justice. In other words, progress and justice depict the ultimate ends of modernity, which are assumed to be reached by seemingly appropriate (rational) means such as, for instance, transparency and inclusion.

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World society scholars do treat not only rationalization in general but also actors as cultural constructions that have no ontological value on their own (Meyer et al., 1994; Meyer & Jepperson, 2000; Meyer & Bromley, 2013). Based on its intellectual foundations, i.e., sociological phenomenology (e.g., Garfinkel, 1967) and the sociology of knowledge (e.g., Berger & Luckmann, 1967), world society scholars study culture as a worldwide expanding system of institutions that establish “a social order or pattern that has attained a certain state of property” (Jepperson, 1991: 145). These institutionalized characters of modern society not only provide a “rulelike status in social thought and action” (Meyer & Rowan, 1977: 341) but also construct the “features of the modern actor” (e.g., organizations; Meyer & Jepperson, 2000: 117). In sum, the expanding global culture “defines and integrates the framework of society as well as actors that have legitimate status and the patterns of activity leading to collective goods. Lines of thought treating culture as only rule of value and technique at the moral and natural boundaries of society ignore the fact that the central cultural myths of modern society are those giving meaning and value to society and its components” (Meyer et al., 1994: 17). In the context of this chapter, the most important universal rationalization of organizational actorhood holds that organizations possess the abilities and capacities to act strategically as unitary entities, which means that organizations necessarily need a strategy in order to appear more like actors rather than organizations lacking a strategy (Meyer & Bromley, 2013). Global culture also provides several standardized models of management and organizing, which, on the one hand, give the strategically informed actions of organizations a legitimate foundation and, on the other hand, lead to structural similarity across all kinds of organizations (Bromley & Meyer, 2014). In this way, new institutionalism turns the discourse of rationality, as found in the general strategic management literature, on its head. It treats the adoption of management practices and organizational structures as imposed by a universal and rationalized global culture and not as the result of strategic decisions of unitary organizational actors that aim

to optimize their fit with environmental demands (Meyer & Rowan, 1977; Drori et al., 2009). Instead, proponents of institutional theory demonstrate that numerous organizational practices and structures work as rationalized myths and have no or only little impact on organizational efficiency but instead foremost contribute to organizational legitimacy and survival (Meyer & Rowan, 1977; Walgenbach et al., 2017). In sum, the strategic and therefore rational acting organization is a presupposition that downplays the cultural context of organizations and the ritualized and ceremonial nature of the adoption of managerial practices and organizational structures. According to the institutionalist notion of the universalized and rationalized nature of global culture, organizations are deeply embedded in the web of world society, which, on the one hand, extends (Djelic & Quack, 2003) and, on the other hand, fosters the diffusion of globally rationalized models of management and organizing (Bromley & Meyer, 2015). As a consequence, new institutionalists highlight that the cultural core of world society transcends the boundaries of organizations. In effect, the inherent logic of organizations moves from particularistic (i.e., self-determined) to universalized (i.e., institutionally governed), in the sense that organizations worldwide conform to the cultural beliefs in world society (Höllerer et al., 2017). In numerous studies, institutionalists have unpacked cultural principles on which basis ontological beliefs in universal rationalization and actorhood are transmitted in world society. In the absence of an authoritative global state (Meyer, 2000) and the increasing decline of the relevance of the nation state, organizations are increasingly perceived as a rational way (if not the only way) of structuring social life (Meyer et al., 2006). This cultural belief is grounded in the natural law of science and global norms of morality (Meyer et al., 1994), namely scientization, education, and individual rights and capacities (Meyer & Bromley, 2013). Science transforms the natural and social world into calculable risks and scientifically elaborated principles of good and correct (i.e., rational) ways of living. Organizations are now perceived as actors that possess the capacities to incorporate and enact these principles through legitimated practices of

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management and organizing (Meyer & Bromley, 2013). Educated professionals of all shades distribute and enact these practices of management and organizing worldwide in the form of standardized knowledge (Sahlin-Anderson & Engwall, 2002; Meyer et al., 2006) and in turn monitor organizational conformity through the development of codes of conduct or certification audits (Meyer & Bromley, 2013). The idea that every human being is an actor with inalienable human rights and capacities, and the transfer of this idea to organizations, in turn, strengthens the capacities of organizational actors to serve as responsible agents on behalf of these individuals. In this regard, organizations become responsible for individuals and – as this idea expanded – for other organizations, which are constituted by voluntary membership of individuals, and for nonhuman entities, such as animals and nature in general, which are not constructed as actors, but which are considered worthy to be protected (Meyer & Jepperson, 2000). In this way, responsibility is at the center of actorhood and is considered the ultimate principle of modern societies (Meyer & Jepperson, 2000; Campbell, 2007; Goldenstein et al., 2019). It is important to note that the patterns of action that follow responsible actorhood do not originate from the rational choice of organizations or their managers but instead emanate from the wider cultural frame (Meyer & Jepperson, 2000). Corporations, for example, are not only profit-seeking entities but are also expected to conform to environmental standards, ensure diversity in the workplace, or support gender equality. These responsibilities of organizations as actors are inherently derived from the norms of morality of world society and are, for example, reflected in rankings (e.g., Dow Jones Sustainability Index) and reporting initiatives (e.g., GRI).

17.4 The Consequences of Globalization for Organizational Actorhood The Diffusion of Open Strategy as an Expression of Global Convergence We share the observation of Whittington et al. (2011) that strategy making has fundamentally

changed in recent decades. We argue that what Whittington et al. (2011) observe to have happened after the 1970s is the final decline of the most dominant form of social structuring until that time, namely bureaucracy. Unlike bureaucracies, organizations no longer serve the purposes of one clearly defined external sovereign (i.e., nationstates, owners) but act as strategically operating entities in their own right (Meyer & Bromley, 2013; Bromley & Meyer, 2015). Bureaucracies in a Weberian sense form an impersonal and hierarchical “iron cage” serving the interests of an external sovereign, while organizations, as actors, turn into sovereigns themselves by adopting person-like capabilities of actorhood including the formulation of strategic goals and taking responsibility for multiple internal and external audiences. Following this perspective, we argue, the trend toward Open Strategy mirrors the expansion of the cultural frame of world society. With the construction of organizational actorhood and related responsibilities, organizations are forced to position themselves as members of society. To reach a status similar to a natural person, organizations signal sovereignty, citizenship, and locus of control (Meyer & Bromley, 2013). First, organizations display sovereignty through legitimated management practices and organizational structures. Specifically, to appear as honest members of society, organizations incorporate scientifically elaborated and legitimated management practices (Meyer & Rowan, 1977; Meyer et al., 2006). We argue that Open Strategy serves as a management practice that allows organizations to demonstrate sovereignty because it provides organizations the opportunity to expose governance processes to internal and external audiences. This demonstration enables audiences to denote the incorporated organizational practices and structures as comprehensible and coherent and, therefore, to ascribe organizations the status as sovereign actors. Following this perspective, organizational actorhood necessarily involves more openness in strategy making. To appear as sovereign actors, organizations are, on the one hand, forced to depict more transparency in terms of making their strategies publicly available and, on the other hand, have to include relevant audiences

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in the formulation or at least in the communication of their strategies. Both aspects in strategy making now belong to the institutionalized scripts of organizational actorhood and appear highly rational. Second, organizations behave as corporate citizens by talking about themselves as person-like entities and by explicitly drawing attention to their responsibilities (e.g., social commitments, environmental issues). For example, on its web page, the German car manufacturer Daimler AG positions itself as a sovereign citizen in society: “Daimler is a good corporate citizen. Daimler is more than just a renowned vehicle manufacturer that creates fascinating products. Daimler is also a company that is appreciated on account of its social commitment.” In a similar vein, the US pharmaceutical company Pfizer communicates its social commitment as a conscientious actor: “Pfizer accepts its responsibility to use animals in a humane and ethical manner and expects all colleagues to treat animals with respect.” These statements reflect that, in line with a world society perspective, the consideration and inclusion of a growing range of internal and external audiences in strategic operations refers to the nature of organizations as members of society. Because organizations are constructed as actors, they operate under the same civic duties and moral norms as individuals do (Drori & Meyer, 2006). Third, organizations display their ability and capability to act (i.e., locus of control) by collecting data through multiple information systems, aggregating them into measures, and making them publicly available in order to mirror their conformity with the cultural and moral norms of world society. Such activities are also intended to demonstrate that organizations address their culturally ascribed responsibilities (Meyer & Bromley, 2013). For example, organizations not only produce a huge amount of reports reflecting their actions in terms of their social responsibilities, sustainability, or diversity, but also develop manifold measures to quantify their progress in these areas. In sum, we argue, complementing the argument of Whittington et al. (2011), that it is not only the growing internationalization of operations that leads to decentralized planning and

the network-like structure of modern organizations, which, in turn, fosters the invention of more open forms of strategy making (organizational force). Rather it is a cultural development in world society that fosters the establishment of organizational structures, which support Open Strategy. Furthermore, according to the world society perspective within new institutional theory, it is not only corporations but all kinds of organizations that turn into actors and adopt the same universal and rationalized models of management and organizing (e.g., decentralized planning and network structures), regardless of whether they follow elaborated internationalization strategies or not (Bromley & Meyer, 2014). Further, we argue that the demand for more openness (social force) on the part of hard-law and soft-law can be explained by the expanding cultural frame of world society, which legitimizes organizational actors as sovereign and responsible members of society. These regulations are to be considered as the formalized outcome of norms of morality, which emerged in world society. The fact that strategy planning became the subject of business education (cultural force) supports this argument. Rationalization, an important activity of academics and other professionals (e.g., consultants), is grounded in scientific knowledge. Organizational actors in turn ensure their legitimate ability and capability to act through the incorporation of rationalized practices of management and organizing, which are theorized and enacted by professionals of all shades. Finally, information technologies have indeed enabled the spread and exchange of information, independently of the corporation’s will (technological force). However, one underlying force behind the development and usage of information technology also lies in the nature of the responsible actor. Organizations are forced to prove their responsible actorhood and therefore establish elaborate information and accounting systems to measure their status quo, to communicate their progress, and to justify their action plans for the future. The claimed commitment to progress and justice probably also explains the inclination of external audiences to put organizations in the pillory for perceived misconduct (e.g., WikiLeaks).

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The Role of the Local in the Enactment of Open Strategy In many ways, world society puts cultural demands on all organizational actors. However, organizations and management practices do not become identical. According to new institutionalism, organizations vary due to their degree of global orientation. Different degrees of global orientation emerge due to conflicting institutional demands, as organizations operate globally and locally at the same time (Walgenbach et al., 2017; Goldenstein et al., 2019). The complexity of global influences and local embeddedness (Tempel & Walgenbach, 2007) results in what is described as glocalization. World society scholars treat the global and the local as analytical categories, which are mutually constitutive. In this respect, the relationship between the global and the local can be characterized as a process of transcendence of various social and cultural boundaries (Drori et al., 2014a, 2014b). The global is “an abstraction and aggregate of various local instantiations of the very same abstract ideas, floating in the global sphere and being repeatedly enacted in local contexts” (Höllerer et al., 2017: 221), while the local is increasingly influenced by global forces (Drori et al., 2014a). This dialectical relationship highlights the fact that global isomorphism in world society is accompanied by local variation. The notion of glocalization points to the fact that modern organizational practices and structures are part of globally diffused ideas of appropriate management, which become enacted and interpreted differently in different local environments. These local interpretations, in turn, may scale up to the global level again. The global and local are therefore co-constituted over time (Drori et al., 2014b). Following this perspective, glocalized organizational actors do not emerge from strategic or rational decisions of the management but are reciprocally shaped by global and local institutions and may vary in the degree of their global orientation. The globally oriented organization consists of two analytically dividable dimensions, namely operations and identity. Operations are marked by breadth (i.e., number and diversification) and extent (i.e., transnational or multinational) of

organizational activities and do not merely refer to functional activities (i.e., profit maximization) but also to many additional tasks and actions, involving charity, diversity, human rights, and environmental protection. A globally oriented identity is exhibited in intense identity work aiming at the creation of a global “state of mind” that signals that the social horizon of the organization is the world. In this way global orientation is by no means a fanciful way of describing functional globality; rather it accounts for the complexity of a glocalized institutional environment and the fact that organizations are transcended by global and local institutions alike. Global orientation highlights that there is no contradiction between attending global and local demands at the same time. For example, the Israeli food and beverage group Strauss has a distinct focus on its national origin (identity) but operates from Brazil to Australia (Walgenbach et al., 2017). In this context, Open Strategy and its dimensions, i.e., transparency and inclusion, indeed belong to the cultural frame of world society and are adopted by organizations worldwide. This argument stands in contrast to the statement of Whittington et al. (2011: 540) that “large multinationals from China, Russia and other authoritarian but fast-growing societies may not be subject to the same organizational, cultural and societal pressures for transparency as traditional publicly owned western corporations. Such vast stateowned enterprises as Gazprom and China Mobile could be powerful counter-weights in any trend towards openness.” We argue that the empirical task remains of uncovering the influences of local contexts on the alignment of organizations to the cultural frame of world society. Nevertheless, the concept of the globally oriented organization highlights the fact that organizations such as Gazprom or China Mobile may have a stronger connection to their respective local context, but it is hard to imagine that they entirely resist cultural expectations in world society. Indeed, both organizations, Gazprom and China Mobile, add transparency to their organizational goals. OAO Gazprom’s strategy rests on the following principles of operation: continuous improvement

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in operational excellence through utilizing the Company’s experience, scientific and technological capabilities; effective management of resources (natural, human, financial, innovative and technological); diversification of operations through highly efficient projects that create high added value; raising capitalization and credit ratings; respecting the interests of all OAO Gazprom shareholders; improving corporate governance; increasing financial and business transparency; making managers personally responsible for executive decisions; minimizing specific negative impact on the environment. (Gazprom; emphases by the authors) Our goal has always been to enhance our corporate value, maintain our sustainable long-term development and generate greater returns for our shareholders. In order to better achieve the above objectives, we have established good corporate governance practices following the principles of integrity, transparency, openness and efficiency, and have implemented sound governance structure and measures. (China Mobile; emphases by the authors)

A surprisingly similar statement can be found on the web page of Coca-Cola: In November 2013, our Company announced a set of industry-leading commitments to protect the land rights of farmers and communities in the world’s top sugarcane-producing regions and to advance our ongoing efforts to drive transparency and accountability across our global supply chain. (Coca-Cola; emphasis by the authors)

With these examples, we illustrate that organizations are modeled according to the global templates derived from the cultural frame of world society. However, as the conception of the globally oriented organization suggests, organizations’ alignment with these universal and rationalized principles of management and organizing depends on the configuration of the local context in which the organization is embedded. The local context – and the multiple, often conflicting institutional logics within the respective local context (Thornton et al., 2012) – may influence the globally oriented organization across three dimensions, namely the formal, practice, and meaning dimensions, and thus lead to glocalization (Höllerer et al., 2017).

The formal dimension of glocalization refers to the scientifically rationalized nature of management practices and organizational structures, which are incorporated by organizations and lead to structural isomorphism worldwide (Meyer & Rowan, 1977; Meyer et al., 2006). The incorporation of CSR managers or accounting departments belongs to this canon as well as the usage of claims about a distinct corporate identity in corporate mission statements. Indeed, the previous mission statements reveal an astonishing similarity. This indicates that the different local contexts of the United States, Russia, and China do not hinder the adoption of statements referring to transparency as an element of Open Strategy. This, however, does not necessarily imply that Open Strategy is perceived as a rational solution for existing local problems or that it is consistently enacted, but rather it may be accepted as an abstract form to display honest organizational actorhood. The practice dimension of glocalization highlights the way that management practices and organizational structures are enacted in daily routines. Global models of appropriate management and organization practices have been extensively theorized. Theorization denotes the process in which a praxis case is reduced to its core principles and abstracted in the form of a global model of management and organizing (Strang & Meyer, 1993). Once theorization is achieved, these now global models of management and organizing are able to travel around the world and are ready to be translated and inserted into specific local environments (Czarniawska & Joerges, 1996). During this translation process, the theorized model of management and organizing often becomes widely detached from the idea it was associated within the local context from which it originally emerged (Kennedy & Fiss, 2009). For example, as Meyer and Höllerer (2010) show with regard to the shareholder value idea, a management concept, which originally did not fit in the local environment in Austria, can nevertheless become institutionalized in this context. Consequently, the practice dimension of glocalization is probably less standardized and universalized than the formal dimension (Höllerer et al., 2017). In other words: Formal structures and practices may only be loosely

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coupled or completely decoupled from each other (Meyer & Rowan, 1977; Powell & Bromley, 2012). This often loosely coupled or decoupled relationship between the formal and the practice dimension is often evoked by the final dimension of glocalization, i.e., the meaning dimension. Formal structures and practices are closely linked to meaning structures in societies. The material world and the way of acting in it demonstrate a visually perceptible disclosure of how current generations think (Berger & Luckmann, 1967). In this way, meaning represents a specific cognitive focus on the social world (Lizardo, 2010), which serves as a self-regulating mechanism that enforces the appropriate application of action scripts (Jepperson, 1991). Consequently, the meaning dimension encompasses both the perception and interpretation of different internal and external audiences regarding the appropriateness of the organization and processes of sensemaking taking place inside organizations. Meaning systems evolve over time within a specific local context leading to stable and inert perceptions and interpretations. For example, Goldenstein and colleagues (2019) investigated the relationship between corporations’ local origin and the adoption of the global idea of responsible actorhood. They found that the local nestedness of organizations explains the patterns of variation regarding the responsibilities that the corporations display. The three dimensions of glocalization imply that the materialization of Open Strategy (e.g., the implementation of transparency and its inclusion in mission statements) is in line with the global and universal idea of openness. This observation corresponds with the perceived trend toward Open Strategy approaches in the strategic management literature (e.g., Whittington et al., 2011; Stieger et al., 2012; Dobusch, 2014; Whittington et al., 2016). Nevertheless, how organizations actually enact and interpret Open Strategy is likely to be also influenced by the expectations of their local environment. The extent of this influence is mediated by the global orientation of a specific organization. The examination of the global orientation of an organization is crucial for

understanding how Open Strategy is materialized (formal structure), lived (practices), and perceived (meaning).

17.5 Implications: Using New Institutionalism as a Conceptual Framework in Open Strategy Research Open Strategy as a Meaningful Practice The culture of world society puts an imperative on organizations to incorporate management practices and organizational structures in order to gain the status of sovereign organizational actors. Nevertheless, the notion of glocalization highlights that these practices and structures are highly theorized and abstracted from actual praxis (Strang & Meyer, 1993). This opens three pathways for management scholars to study Open Strategy. First, studies may take an in-depth sensegiving perspective (e.g., Strang & Meyer, 1993) and ask how and why Open Strategy emerged as a management concept from the universal ideas of organizational actorhood in world society. More specifically, research can address the institutional work of actors, including their predefined interests and power struggles and the process of how and why the management concept of Open Strategy initially emerged (Lawrence & Suddaby, 2006). Management scholars may also focus on meaning construction (e.g., Haack et al., 2012), the role of social movements (e.g., Hensmans, 2003), and professionals (Vaara & Whittington, 2012) by investigating the mutual co-constitution of the global and local in order to shed light on how and why specific practices and meanings fail to become part of the theorized nature of Open Strategy and why others succeed. Second, another stream of research may take a sensemaking approach (e.g., Weick, 1995) and ask how organizations react to the trend toward more openness in strategy making and how Open Strategy is conceived and consolidated in specific local contexts and by organizations with diverging global orientations. For example, Lounsbury and Glynn (2001) argue that a locally suitable recontextualization and interpretation of practices

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facilitates the harmonization of the modified organizational identity with the expectations of important stakeholders. Research in this context explicitly recognizes the role of the configuration of local contexts and investigates how local contexts may function as a powerful filter for the diffusion of management practices. It remains an empirical question what exactly happens when management practices pass through this filter and how local perceptions and interpretations regularly lead to modifications of management practices on the organizational level or across fields of organizations (e.g., Meyer & Höllerer, 2010; Meyer, 2014). Third, as Strang and Meyer (1993) mention the bottom-up aspect of theorizing only in passing, future research can carve out how the local shapes the global. Local systems of strategy makers such as corporate elites, consultants, state agencies, media, or business schools (Vaara & Whittington, 2012) derive locally adequate practices and meanings from global models of management and organizing. Nevertheless, management scholars may want to learn more about how and why the local interpretation of a practice often, in turn, “boomerangs back to its source” (Strang, 2014: 117), namely the global level of world society and the local context from which it has descended in the first place.

Globally Oriented Organizations and the Organizational Field The global orientation of organizations may vary across the formal, practice, and meaning dimensions of glocalization. By adopting management practices and organizational structures, enacting these in their daily routines, and assigning meaning to their identity as actors, organizations can demonstrate how globally oriented they are. However, organizations do not operate in a vacuum, and, thus, global orientation is foremost an attribute that is necessarily ascribed by external audiences. New institutionalism provides a theoretical construct that supports the conceptualization of relevant audiences, namely the concept of the organizational field. Organizations are embedded

in organizational fields, which form the relevant institutional environments for organizations (DiMaggio & Powell, 1983; Scott, 1994). Organizational fields encompass communities of organizations, including, for example, agencies of the nation state, profit and nonprofit organizations, employers’ federations, or unions. Fields develop an overarching structure depending on the composition of the field members; they may organize around specific industries, markets (Greenwood et al., 2002), local environments (Goldenstein et al., 2019), or debated issues (Hoffman, 1999; Wooten & Hoffman, 2008). As a result, organizations become part of a common system of meaning over time (Scott, 1994). In this respect, a field depicts a shared meaning system, which provides field members with understandings and interpretations about the social world (Giddens, 1984; Scott, 2014). The notion of glocalization in the world society approach points to the fact that all organizations are members of multiple organizational fields on local and global levels. Nevertheless, the global orientation, which is ascribed by local and global audiences, influences the relevance of different audiences (Walgenbach et al., 2017). For example, in terms of Open Strategy, organizations that are perceived as local actors are likely to be more strongly influenced by local perceptions and interpretations of what transparency and inclusion means and how these dimensions should be addressed in daily routines or organizational structures. Organizations that are perceived as being globally oriented, on the other hand, are more likely forced to conform to the cultural frame of world society and to satisfy the sometimes contradictory institutional demands of and logics within multiple local contexts at the same time. The notions of glocalization and global orientation suggest interesting directions for the study of Open Strategy. First, research may address how Open Strategy becomes part of the meaning system in organizational fields and how organizations, depending on their global orientation and membership in different fields, incorporate Open Strategy on the formal, practical, and meaning dimensions of glocalization. Such investigations may shed light on the explanatory role of local contexts and world society in processes of increasing

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isomorphism and the remaining heterogeneity of organizations within and across organizational fields. Second, management scholars may study how glocalized organizations maintain their legitimacy. While, on the one hand, less globally oriented organizations may lack legitimacy in reference to the institutional demands of world society, more globally oriented organizations may lack legitimacy due to contradictions between local and global institutional requirements (Greenwood et al., 2011).

The Expansion of Cultural Beliefs in World Society World society is essentially grounded on taken-forgranted cultural beliefs about the nature and functioning of organizations (Meyer et al., 1994; Meyer & Jepperson, 2000; Meyer & Bromley, 2013). Despite their stabilizing character, cultural beliefs are not ontologically given, but rather the result of historical processes of the cultural construction of meaning across multiple local contexts and at the world society level (cf., Campbell, 2007; Drori et al., 2014a; 2014b). This simple notion of time in historical processes of cultural constructions of meaning opens up multiple avenues for research. First, management scholars may adopt a world society perspective and investigate how the meaning of what counts as strategy or as strategic action of organizations has changed over time. Taking a longitudinal perspective enables researchers to uncover how the universal principles of world society emerged in the first place (cf., Boli & Thomas, 1997; Powell & Colyvas, 2008) and how practices of strategy making became infused with varying meanings over time (cf., Kennedy & Fiss, 2009). Second, a focus on time also highlights that the development of cultural beliefs is not a one-way road. Rather, meaning emerges from a reciprocal co-constitution between local and global levels (Drori et al., 2014a; 2014b), which does not preclude that the meaning of organizational practices changes several times. In this regard, researchers might be interested in studying the framing of strategy and strategy practices in public discourse and consequently shedding light on the connection between discursive interactions on the local level and cultural beliefs on the macro-level and vice versa (Cornelissen & Werner, 2014).

Third, to shed more light on the co-constitutive evolution of global models of management practices and organizing and their adoption in local contexts, a longitudinal perspective also opens up the potential to conduct comparative research. This stream of research may investigate how and why different local contexts conform to or resist the cultural demands of world society. For example, these studies may use time as a physical fact and elaborate on the time-dependent manifestations of the coexisting isomorphism that emerges from the cultural frame of world society and the simultaneous creation of forms of local variation. Furthermore, future studies may investigate time as a cognitive concept (cf., Evans, 2015). In this sense, how time is understood depends fundamentally on the subjective experience of actors. For example, if time is perceived as something that approaches, the past (e.g., the already established organizational structures) is likely to be conceptualized as an important resource for future actions. If time, however, is perceived as something inescapable, the past becomes meaningless for future actions, while the future itself appears to be widely predetermined (e.g., time as external vigor). In this way, the conceptualization of time becomes the independent variable, which may explain, for instance, the coexistence of structural inertias (i.e., orientation toward the past) in some contexts and the rapid isomorphism of organizations (i.e., disengagement with local traditions) in others (cf., Drori et al., 2014b). Acknowledgement: We thank Georg von Krogh, David Seidl, Richard Whittington, and the participants of the 2017 EGOS Sub-theme 50 “Open Strategy: Practices, Perspectives and Problems” for their valuable feedback on earlier drafts of this chapter. References Abbott, A. D. (1988). The system of professions: An essay on the division of expert labor. Chicago: University of Chicago Press. Appleyard, M. M., & Chesbrough, H. W. (2017). The dynamics of open strategy: From adoption to reversion. Long Range Planning, 50(3), 310–321. Aten, K., & Thomas, G. F. (2016). Crowdsourcing strategizing. Communication technology

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Daimler AG [www.daimler.com/Projects/c2c/chan nel/documents/1488194_AI_2007_Annual_ Report.pdf; access: 14.11.2016] Gazprom [www.gazprom.com/about/strategy/ exploration/; access: 14.11.2016] Gazprom [www.gazprom.com/f/posts/53/331565/ sustainability-report-2011-en.pdf; access: 14.11.2016] Gazprom [www.gazprom.com/press/news/2016/ february/article266959/; access: 14.11.2016] Pfizer Inc. [www.pfizer.com/research/research_clini cal_trials/laboratory_animal_care; access: 14.11.2016] The Coca-Cola Company [http://transparency.coca -colajourney.com.au/frequently-asked-questions; access: 14.11.2016] The Coca-Cola Company [www.coca-colacompany .com/our-company/addressing-global-issues#6; access: 14.11.2016]

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PART V

Challenges of Open Strategy

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CHAPTER

18

The Politics of Openness STEWART C LEGG, MARK VAN R IJMENAM, a nd JOCHEN SCHWEITZER

18.1 Introduction Recently, openness has become a new approach in strategizing as ownership and control of internal assets are no longer vital to achieving competitive advantage (Chesbrough & Appleyard, 2007). Nowadays, knowledge is widespread and open systems are generally regarded as beneficial in terms of organizational design and work culture. However, openness also comes with politics and it is not a practice that will necessarily be welcomed by all. Openness changes the power dynamics within an organization; there are critics as well as friends, as we shall explore. Openness is a process that can change over time, becoming more or less open as events occur and contingencies or actors change. We are interested in how dominant organizational actors can seemingly manipulate “open systems” strategically. Openness is problematic per se for social systems. Systems endogenously construct their differentiation from other systems through closure achieved through specific cognitive rules. In this chapter, we use Clegg’s (1989) “circuits” approach to a theory of power to grasp the politics of openness in terms of three circuits of power. Some of the recent problems posed in the wider world of social media will be analyzed in terms of the three circuits to illustrate some potential problems. We start from the premise that organizational structures are constituted by rules that make variable resources available to different actors. These create relations of autonomy and dependence, which actors, drawing on resources, reproduce as relations of domination (Giddens, 1981: 28–29). Structures provide rules and resources; systems are reproduced, as are regular practices through the codifications they deploy. Actors draw on these structures: the more strategic resources are held, the greater the autonomy

and the less the dependence of the actors concerned. Actors in this context may be of any type: human or nonhuman, material or immaterial. When resources are deployed, they can be depleted as they are used, or through their use, they may increase in value. Creating power through reproducing particular ensembles of social order presupposes consensus and the regular predictability of other actors’ actions. Events, of course, can undermine these assumptions, as we shall discuss subsequently. In what follows we shall first define Open Strategy, providing some examples of what is usually involved. Second, we shall move to a discussion that positions the importance of both trust and power relations in developing Open Strategy, while considering the case for new forms of digital affordances, such as blockchain, to render these transactionally redundant. Third, we shall discuss the sphere that has been most privileged in discussions of Open Strategy – the field of Open Innovation, which we shall steer toward a politics lens. Fourth, doing so provides an entry to our next section – the politics of openness, which we initially explore discursively before moving to a more analytical discussion, framed through the model of “circuits of power” (Clegg, 1989). In a penultimate move, we continue the discussion of circuits of power by addressing it to the conjunction of big data, open systems, and Open Strategy, looking at the use of such data by firms such as Cambridge Analytica. Finally, we draw some overall conclusions about the politics of openness that, perhaps, run a little counter to some of the more enthusiastic discussions of Open Strategy.

18.2 Defining Open Strategy Open Strategy, as an extension of Open Innovation (Whittington et al., 2011), involves harnessing 307

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Stewart Clegg, Mark van Rijmenam, Jochen Schweitzer

collective creativity in the strategy process (Chesbrough & Appleyard, 2007). Whittington et al. (2011) define Open Strategy as an inclusive and transparent form of strategizing that allows participation beyond organizational boundaries (e.g., allowing consultants, customers, suppliers, and even competitors to contribute) as well as internally. Inclusiveness involves previously excluded actors in the strategy-making process (Amrollahi & Ghapnchi, 2016; Appleyard & Chesbrough, 2017; Dobusch et al., 2015; Kennedy et al., 2016; Pittz & Adler, 2016), while transparency is a concern to be transparent when communicating with those actors (Amrollahi & Ghapnchi, 2016; Appleyard & Chesbrough, 2017; Gegenhuber & Dobusch, 2017; Pittz & Adler, 2016). Tavakoli, Schlagwein, and Schoder (2015), in a paper that arrives at a consolidated definition of Open Strategy, add “IT enabledness” as a key aspect to facilitate inclusiveness and transparency through digital affordances.1 Openness focuses on discovering, exploring, and exploiting opportunities through multiple internal or external resources, resulting in better or new products and services (Chesbrough, 2003c; Dobusch et al., 2015). Open Strategy creates value (Chesbrough & Appleyard, 2007) by lowering entry barriers for new stakeholders (Boudreau, 2010). Openness utilizes a collective intelligence, whereby involved stakeholders are connected so that collectively they act more intelligently than any individual, group, or computer (Leimeister, 2010) to enable better decision making (Stieger et al., 2012; Surowiecki, 2005), conceived almost as a digitally enhanced “invisible hand.” The result is claimed to be a strategy process that is “multivoice, divergent, egalitarian and inclusive” (Aten & Thomas, 2016: 171). One example is crowdsourcing, which allows organizations looking for innovation ideas and solutions to engage a previously excluded crowd (Afuah & Tucci, 2012; Boudreau & Lakhani, 2009; Howe, 2006, 2008), one that will not always be well informed about technologies, strategies, or investments. Organizations can crowdsource innovation via idea contests (Piller & Walcher, 2006), innovation challenges (Edwards et al., 2015), and events such as the

IBM Innovation Jam (Afuah & Tucci, 2012; Bjelland & Wood, 2008; Boudreau et al., 2011; Lüttgens et al., 2014; Terwiesch & Xu, 2008). Brabham (2012) found the crowd to be predominantly made of self-selected professionals who opt in to crowdsourcing arrangements and exert large amounts of work and expert knowledge for little reward, serving the profit motives of those companies that initiate the open invitation.

18.3 Open Strategy: Innovation Different motivations for openness exist, such as quite functional searches for faster and more efficient innovation. The desire for openness may herald more transparent and participatory forms of organizing (e.g., Tkacz, 2012) as Dobusch, Dobusch, and Müller-Seitz (2017: 2) suggest. In either case, creating a community of practice attuned to the specific constraints of whatever ideals of openness are enacted is vulnerable to criticism from those that do not share these ideals. Studies of Open Innovation have become very popular and led to a rapid evolution of the field (Huizingh, 2011; Van de Vrande et al., 2010). Chesbrough (2003b: 24) suggests that organizations increasingly follow external ideas via purposeful flows of knowledge, technology and resources beyond organizational boundaries. Socalled “Open Innovation” occurs in a distributed network that includes external partners (Bogers & West, 2012; Chesbrough, 2006a). Through collaboration among internal and external actors, it is claimed, organizations are able to leverage complementary assets and capabilities, fast track the commercialization of ideas, and improve governance (Chesbrough, 2003a; Chesbrough & Bogers, 2014; West et al., 2014). Snow, Fjeldstad, Lettl, and Miles (2011) call this the Collaborative Community of Firms Model, where organizations that want to succeed will have to share knowledge and engage in collaborative relationships with industry partners and stakeholders to drive innovation. The majority of studies have examined the firmlevel application of Open Innovation (e.g., Chiaroni

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The Politics of Openness 309

et al., 2011; Dahlander & Piezunka, 2014; Laursen & Salter, 2006; Van de Vrande et al., 2009) via knowledge exchange or technology transfer between two organizations (West & Bogers, 2014). Those studies have shown how organizations can foster innovations together with suppliers, customers, and partners via R&D alliances and technology partnerships (e.g., Clausen, 2013; Obal & Lancioni, 2013), through search and integration of knowledge and technology (e.g., Cassiman & Veugelers, 2006; Hughes & Wareham, 2010), and patent and IP portfolio management (e.g., Vanhaverbeke et al., 2008; West & Gallagher, 2006). These Open Innovation mechanisms eventually advance innovation processes (e.g., Enkel et al., 2009), outcomes (e.g., Faems et al., 2010), and organizational performance (e.g., Laursen & Salter, 2006). Thanks to the plummeting costs of communication and new technologies, collaboration at a distance across the boundedness of the system becomes more feasible (Chesbrough & Appleyard, 2007), relying on trust among actors being created through a system of reputation, governed either by a central party (Dellarocas, 2004) or by cryptography. With these possibilities for (closed) organizations that are part of closed systems to open up and achieve innovation, there is the possibility of value creation and strategic advantage being stimulated by joining or forming collaborative communities (Tremblay & Yagoubi, 2017), typically characterized as having open and transparent exchange relationships. A fine balance between openness and filtered selectivity for optimal results typifies “open” power relations (Hardy et al., 2006). A filtered “open” system of cooperation can promote innovation, elaborate different aspects of a problem, and reform agendas through wider participation by different actors (Hardy et al., 2006), albeit under conditions that invariably involve agenda setting from the initiating organization.

18.4 Open Strategy: Trust, Power, and Blockchain Trust and power are two alternative bases for organizing relations with stakeholders. Relations of

power over people functions as one among several media of communication through which dominant and subordinate groups of actors coordinate and control their social interactions. Another option may be to constitute a social relation with others based on trust (Fox, 1974) as an alternative to one based on power relations. Trust is often seen as the basis for a relation of openness because organizations would not want to be open to those they did not trust, although a lack of trust does not prevent openness. While firms often trust internal knowledge more than external knowledge (Tapio Lindman, 2002), mutual commitment among involved actors (Bogers, 2011) or legal mechanisms (Dahlander & Gann, 2010) can position organizations for more systemic open relations with other organizations. In an environment such as the Internet, however, the options of mutuality or legal dictate might not be available, resulting in a lack of trust and a negative impact on any open strategic initiative (Whitty & Joinson, 2008). Traditionally, organizations have been focused on ownership and control of (in)tangible assets to achieve innovation and competitive advantage by using the power leverage that these afford to create favorable relations with external stakeholders. Internal stakeholders are already implicated in hierarchical and other power relations through contracts of employment and divisions of labor. In the past, strategic innovation equalled control; to be successful, it required full control and a closed system, protected with secrecy, patents, and legal process (Chesbrough, 2006b).2 Innovative progenitors strove to steal a march on potential competitors; one thinks of highsecurity research laboratories, or skunkworks buried deep inside a bureaucracy. Of late, however, strategy and innovation have increasingly become associated with openness as a positive virtue, especially in terms of digital affordances. The most recent of these is blockchain, which changes the existing power and trust balances within organizations (Davidson et al., 2016; Mattila, 2016). With contemporary digital technologies, such as blockchain, new environments are evolving that explicitly rely on an open setting. Trust is created cryptographically, adding a never before seen dimension to the game (Beck et al., 2016). Thus,

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as a research topic, blockchain brings a new dimension to openness, where traditional power dimensions may no longer influence an organization’s strategy because cryptography and smart contracts take over. Blockchain technology is a perfect example of a self-referential or autopoietic system of communication that reproduces itself by following an internal logic driven by a system-specific binary code. An autopoietic system is organized to respond to the world while preserving its integrity; it has a memory that organizes the parts even while those parts may be adding up to produce the functioning whole. With a single binary code steering the system, it can be considered closed as it can only make sense of external stimuli in relation to its own internal operations and parameters, lodged in memory and in smart contracts. On the other hand, the system is also open and not deterministic, given that the feedback from the environment, deciphered in the binary way of the code, influences its reproduction.3 An autopoietic system is not deterministic but contingent over time, meaning that choices made lay the basis for later choices. Earlier choices are not determinate of later ones, but they help form contingencies. Research into blockchain is at the top of the current agenda for research into forms of open system organizational communication if only because it promises transparency in power relations and enables trustless transactions. What appears to be possible is the creation of a “fundamentally new paradigm for organizing activity with less friction and more efficiency, and at much greater scale than current paradigms” (Swan, 2015: 27). This decentralized technology enables an increasingly liquid society of networks in which the web interconnects much of social reality. However, we are not yet aware of how blockchain technology will actually play out as a political device. The ability to track all contributions to a system through the irreversible record of the blockchain enables all those actors that have access to a particular blockchain to know what transactions have occurred. While blockchain is certainly a mechanism for producing transparent transactions, it is not yet so clear what difference it will make to more structural, less transactional, elements of

organization. In terms of Open Strategy, these will remain characterized not only by digital enablement, transparency, and inclusiveness but also by a politics of openness.

18.5 The Politics of Openness Open Strategy is based on principles of inclusiveness and transparency (Amrollahi & Ghapnchi, 2016); it builds stakeholder relationships (Schmitt, 2010) and improves engagement of internal and external actors (Dobusch & Kapeller, 2013). Examples of open approaches to strategy have been documented in IBM (Bjelland & Wood, 2008), Red Hat (Gast & Zanini, 2012), and the Wikimedia Foundation (Dobusch & Kapeller, 2013). What characterizes open strategizing is a focus on sensemaking of the changing environment that combines industry dynamics and stakeholder empowerment to develop a strategy that, in its rhetoric, benefits all participating actors (Schmitt, 2010). It does so by enabling actors to see different aspects of the problem and opening agendas for wider participation by various previously excluded internal and external actors (Hardy et al., 2006). Increased openness can generate resistance and resentment (Luedicke et al., 2017); similar social technology platforms attract different levels of engagement (Neeley & Leonardi, 2016), with openness sometimes needing to be constrained in order to minimize identity promotion and resentment of such promotion by particular individuals (Dobusch et al., 2017). The classic case of all three tendencies may well be the Kylie Jenner effect, registered on February 22, 2018: The Snapchat parent’s shares sank as much as 7.2 percent Thursday, wiping out $US1.3 billion ($1.7 billion) in market value, on the heels of a tweet from Kylie Jenner, who said she doesn’t open the app anymore.4

Pursuing Open Strategy enables organizations to claim alignment between their objectives with those of their stakeholders (Newstead & Lanzerotti, 2010). Although any organization practicing strategic openness will lose some control of

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its direction internally, the benefits are alleged to be that it creates a sense of ownership, belonging, loyalty, engagement, and commitment among those involved (Dobusch et al., 2015; Gegenhuber & Dobusch, 2017; Luedicke et al., 2017; Newstead & Lanzerotti, 2010); again, the assumption is that allies rather than critics are seeking engagement. Organizationally, openness can be relative: for instance, in terms of strategy, organizations are not fixed at any specific point on the continuum of Open Strategy and may move between different practices over time (Appleyard & Chesbrough, 2017). Especially with software development, for example, where the driver is to develop software through the inputs of customers with the objective of reducing development costs and decreasing time to market, organizations will often use open sourcing (Spaeth et al., 2014). Stakeholders, customers, critics, management, and markets can change the parameters of practices (Appleyard & Chesbrough, 2017). Organizations may move from open to closed for any number of reasons, including increased competition, which could lead one firm to acquire another in order to close it down in an attempt to reduce competition. Also, especially in mature markets, the benefits of being open decrease as competitors move from value creation to value capture (Appleyard & Chesbrough, 2017). These drivers admit diverse sources of social closure into the open system and, as such, there are broad and nuanced reasons why organizations might shift on the continuum of closed vs. open. Whittington et al. (2011) suggest that Open Strategy may not be appropriate for every organization. Open Strategy is not binary but exists on a continuum (Amrollahi & Ghapnchi, 2016; Appleyard & Chesbrough, 2017; Dobusch & Kapeller, 2013) and where it is on the continuum differs for every type of organization (Whittington et al., 2011). The more interaction that occurs within the Open Strategy–making process, the more the potential loss of control by the organization (Amrollahi & Ghapnchi, 2016; Dobusch & Kapeller, 2013; Luedicke et al., 2017): openness has a politics. As Heracleous et al. (2017) note, variable voice, appropriate degree of structuring of the process of openness, and the need to take account of diverse perspectives to arrive at a

commonly shared direction for the future all entail a politics. Dobusch, Dobusch, and Müller-Seitz (2017) suggest that the idea of organizational openness does not signify some essential democratic ideal. As Kornberger, Meyer, Brandtner, and Hö llerer (2017) show, opening up to external actors does not necessarily replace the need for secrecy within the organization, premised on areas of jurisdiction and existing hierarchies. Open Innovation brings together different actors, with different objectives, philosophies, and information processing capabilities (information may be too much, irrelevant, or ambiguous for actors who have difficulty in extracting meaning from all that knowledge to improve interactions and conversations; see Luedicke et al., 2017; Malhotra et al., 2017), as well as different notions of status or power (Hardy et al., 2006). Differential knowledge is closely related to different capabilities for acting in power relations that might either positively, by enhancing power to, or negatively affect the outcome of Open Strategy by restricting access (Cronin & Weingart, 2007) or predefining relevant issues and nonissues (Bachrach & Baratz, 1970). Research by Dobusch and Müller-Seitz (2012) identifies filtering mechanisms that may be in place to enact such selectivity: for instance, O’Neil (2011: 8) suggested that some 1,500 people are determining what is “encyclopedic” on Wikipedia at a time that the project had 12 million user accounts. All forms of openness are also a form of closure as Dobusch, Dobusch, & Müller-Seitz (2017) note: where the boundaries are drawn is the issue; hence, any system is fundamentally liquid, multi-agent, and heterogeneous, an argument that is the key to the strong sociomateriality view (Barad, 2007; Orlikowski & Scott, 2008; 2015). Understanding power in open systems requires understanding how the boundaries are being drawn and contested and who is engaged in the drafting and the contesting. To dwell on boundary drawing and closure in open systems is to introduce agency and power in the construction of systems. The decision to open strategy formulation to previously excluded actors is especially likely for those organizations that attempt to lead through innovation while facing

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uncertain business conditions and so adopt an Open Strategy approach in order to try and learn from what they do not yet know (Chesbrough & Appleyard, 2007; Hardy et al., 2006). Organizations already participating in crowdsourcing or engaging with external others through a community of practice (Dobusch & Kapeller, 2013) are likely to deepen their openness. This will especially be the case, the literature suggests, when these organizations are facing real world, complex, interconnected, and constantly changing environments, presenting “wicked problems” (McMillan & Overall, 2016). Where many stakeholders with conflicting values are involved and where information is confusing (Churchman, 1967), multiple interrelated issues cannot simply be solved by solving each issue individually (Macfadyen et al., 2014; Schmitt, 2010). Under these circumstances, engaging stakeholders for sensemaking can help organizations create and construct new understandings from which they can take action accordingly (Dobusch et al., 2015; Schmitt, 2010). The engagement occurs, as remarked, on terms mandated by the initiating organization, not those chosen by the stakeholders that engage. The “borders” of all organization are emergent performative constructs composed of social interactions and interpretations (Czarniawska, 2014: 6) enacted by agencies shaping the system’s power relations. Mostly, they consist of the routines and practices that are regularly enacted and reenacted in processes of organizing. Organization, rather than having an objective being (Nayak & Chia, 2011), is better viewed as a “momentary apprehension of an ongoing process of organizing” (Clegg et al., 2004: 158) or as stabilized expressions of behavior patterns constituted as social actions (Schutz, 1967), whose ontological existence is sustained by “rational myth” (Meyer & Rowan, 1977). Therefore, openness is not just a characteristic of an organization but also an outcome of processes that involve not only the relationship between a reified organization and its “environment” but also the internal dynamics of the organization/system. Looking at the issue of “openness” or opening in this perspective unlocks an array of interpretive/ critical opportunities.

We shall explore these opportunities using a process model of power conceived of as flowing through distinct circuits. We will do so because, as we have established, being open does not eliminate closure, it does not generate pure transparency, and it is not necessarily participative. In short, other than in the transactional world of blockchain, Open Strategy does not negate power relations. These power relations are not merely episodic, where the behavior of some agency or agencies is restricted or directed by another agency, such as the collectively decided will of the 1,500 people determining what is “encyclopedic” on Wikipedia. Power is also positive: it can make things happen through being facilitative as well as shaping the dispositions of agencies. An integrated approach to the analysis of power needs to be able to address these variable modes of structuration, which is what the model of circuits of power does.

18.6 Circuits of Power At the core of any analysis of politics are models of power: we have chosen to use the framework of circuits of power, developed by Clegg (1989), as the model for analysis. Early research largely conceived power as a mechanism creating effects over others, in which power was portrayed negatively (Lukes, 1974; Dahl, 1957) in terms of actors getting others to do what they might not otherwise have done. However, there is not just one essential model of power as Dahl (1957) suggests; instead, there are different concepts having “family resemblances,” as Haugaard (2010) puts it. In Clegg (1989), these family resemblances are accommodated through a threefold model of circuits of power (see Table 18.1). The “circuits of power” framework comprises three circuits of episodic, dispositional, and facilitative power, specialized on agency, social integration, and system integration, respectively (Clegg, 1989). The framework explores how different types of power circulate through networks promoting stability and/or change. Figure 18.1 represents the basic model, while Table 18.1 provides examples relevant to the discussion of Open Strategy.

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The Politics of Openness 313 Table 18.1 Power: Over, to, and with Circuits

Focus

Dimension

Episodic Circuit “Power over”

Agency of Members and Significant Others

Oriented to internal openness of structured power relations and resistance to these

Dispositional Circuit “Power to”

Social Integration

Oriented to openness of agendas and issue formulation and resistance to these

Facilitative Circuit “Power with”

System Integration

Oriented to openness to work with others: other technologies, people, organizations, disciplinary practices and resistance to these

Focus

Level of Circuit

Type of Power

Episodic Power Relations

Agency

Causal

Circuits of Power

Social Relations

Agencies

Standing conditions Means Resources Control

Outcomes

control/contest reproduce/transform

Rules of Practice

Social Integration

Dispositional

Obligatory Passage Points

fix/re-fix

Rules fixing relations of meaning and membership

facilitate/restrict

Domination

System Integration

Facilitative

empower/disempower

Exogenous environmental contingencies

Innovation in techniques of discipline and production

Figure 18.1. Circuits of Power

The episodic circuit notion derives from Dahl’s (1957) perspective of a single underlying concept of power as causal, which, under appropriate standing conditions, can achieve certain outcomes. Normal organization power in relation to its members resides here. Members of organizations have agency that organizations seek to structure in pursuit of organizational objectives. The episodic circuit is characterized largely by power over others where others are obliged to do things at the behest of a dominant power, often one legitimated by the sanctions and privileges of authority. In this circuit, empowering others where they were not previously so empowered is a major mechanism for opening strategy. Increasingly, rather than rely on coercive measures, organizations are more likely to seek to empower their members so that they are able to use

their agency creatively in pursuit of objectives. What is entailed is an enhanced organizational openness, where roles are more fluid, organizational relations and opportunities to make initiatives more liberal, and the overall organization more liquid than highly structured. An example would be the Holacracy developed at Zappos (McKinsey Quarterly, 2017), in which the organization chart is available online in real time and is changed up to 50 times a day, with every one of 1,500 employees being able to view what every employee’s purposes and accountabilities are as projects shift. The episodic circuit is constituted by the actions carried out by these actors in their social relations in which they seek to control whatever resources are available to achieve intended outcomes. As Clegg (1989) argues, such power

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requires the availability and stabilization of appropriate standing conditions as well as the overcoming of any resistance either inherent in those conditions as they have ben experienced in the past or that are constitutive of the new freedoms being charted. The dispositional circuit focuses on the relations between actors in a social system that is open to other social systems. It embraces symbolic power associated with rules of meaning (the ways actors make sense of the world) and membership (what actors perceive to be appropriate categories of membership for framing social action). It is in this circuit that actors’ dispositions, comprising their sense of the institutional order, are fixed, in Bourdieu’s terms, as a habitus (Bourdieu, 1977: 95). The dispositional circuit concerns the nature of habitus in terms of the ways in which individuals perceive the social world around them and react to it. These are dispositions shared by people within organizations, who acquire habitus through mimesis and conscious techniques of socialization, induction, and communication. In terms of power, the emphasis is on power to, through democratizing access to agenda shaping processes, meetings, and issue formulation, shaping strategy as practice in the present in its formulation and in the future in terms of its impact and those issues that it affects. An example of this is Phononic, an early stage technology company that develops solid state heating and cooling by co-creating with customers in developing imagined futures in which highly complex, precision engineered equipment costing millions of dollars is codesigned by fully integrated teams of engineers, supply chain experts, sales, and marketers working closely in partnership with customers defining new products, designs, prototypes, and manufacturing specifications (Chandell, 2016). This circuit is “structured” because its dispositions are the product of past experiences and practicing, which allows for the reproduction of practices, and it is “structuring” because its dispositions allow for improvisation and invention in the context of new practices, the emergence of new “rules” of practice. It is through the introduction of new rules that power to is spread and distributed to places and people where Open Strategy designs it to be. Rules are both a source and a consequence of power. In the “circuits of power” framework,

rules depend on the context of interpreters, the actual situation in which the rule is interpreted, and the acceptance and enactment of those rules by actors (Clegg, 1989). Rules frame the relations between members of different systems through framing dispositional power that enables a set of capacities with potential application (Clegg 1989). For instance, in open engagements by organizations through co-creativity with customers and other stakeholders, the tendency is often to engage more fully with stakeholders whose dispositions are more aligned organizationally than those that are not. The problem in such a situation is that it is from the fiercest critics rather than the warmest friends that an organization is likely to learn innovations that further system integration. The facilitative circuit focuses on situations where material conditions of production or relations of knowledge between actors and actants change, empowering or disempowering relations with these actors. The circuit of facilitative power is characterized by power with, which entails making forms of collaboration with others and with other things possible. These collaborations may be with people, organizations, technologies, and disciplines engaged in efforts to extend the range of powers of those concerned. Power in this circuit is exercised through being embedded in different forms of knowledge and disciplinary formation, often made material. These materialities, such as Wikipedia’s architecture, frame everyday routines that depend on actors’ compliance with collective goals through the exercise of power translated into disciplinary practices, such as normalization and routinization, establishing conventional borders of and for organizational practice.

Episodic Circuit of Power Relations To engage participating actors, existing management needs to create episodic power relations with significant others. The notion of episodic power implies that there is a narrative in play, that there is a strategic and discernible direction to the power enacted with intent. Management needs to generate exchanges with specific others, identify with the relevant conversations that are exchanged, mutually establish coherence in meaning, and

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contribute without harming the others’ objectives yet sustain tensions from which it can be represented that all actors can benefit (Chesbrough & Appleyard, 2007). Too little engagement means that, from an organization’s view of its effectiveness, specific actors, either internally or externally, prioritize their own objectives; too much engagement means actors, internally and externally, may end up subordinated to an organization’s dominant objectives to the detriment of their autonomous being. In the latter scenario, a conception of organizational effectiveness that consists of total commitment on the part of participants overwhelms the effectiveness of individual autonomy; in doing so, it threatens the spark of creativity and innovation that is lit by deviance and lack of commitment – by what elsewhere has been termed “punk production” (Carlsen et al., 2012). Thus, thinking more explicitly about the politics of openness, at the level of the first circuit of an Open Strategy, that of episodic power relations, the issue is one of engagement with and management of those invited in from outside the system.

Dispositional Circuit of Power Relations Social integration in more traditional and less open organizations is framed by explicit rules of meaning and membership. These are problematic in open ventures. There is no constitution defining the meaning of legitimate and illegitimate social actions, in keeping with open and anti-bureaucratic cultural tendencies. Identity is not determinate in digitally open communities: offline identities and competencies, as categories of membership, carry no weight online, nor are they differentially rewarded for there is no standard practice for rewards and incentives (Newstead & Lanzerotti, 2010; von Krogh et al., 2012). The basis for social integration resides online and nowhere else. There is a risk in openness: Habermas’ (1971) notion of an ideal speech situation is fulfilled to some extent – there may be few explicit barriers to entry but the geeky masculine culture offers many implicit barriers. Anyone can criticize or debate, not just those dominant authorities that may feel secure in dispensing with reason’s tools (Flyvbjerg, 1998). The lines between the reasoned

and the risible may be somewhat elastic. To the extent that open systems’ communities revolve around meritocracy a too centralized approach is regarded as potentially harmful (Chesbrough & Appleyard, 2007). A fine balance between the different activities and guidance is needed to ensure the outcomes of collaboration (Hardy et al., 2006). Openly sourced actors are not regulated by contracts or financial incentives (Spaeth et al., 2014) and to attract and keep actors engaged organization transparency in information sharing and feedback is important.

Facilitative Circuit of Power Relations The core claim to openness is that open source technology transforms techniques of production and discipline. The open system in contemporary practice is, above all, technologically enabled albeit that it may well be driven by cultural predilections, policy preferences, and organizational requirements (Whittington et al., 2011). The ideal is that organization is open – anyone can contribute and in principle, anyone, irrespective of disciplinary credentials, is as expert as the next person. New obligatory passage points are readily formed, as innovative technologies become actants in the system. For instance, Dobusch and Müller-Seitz (2012) demonstrate that the wiki technology used by Wikimedia for large-scale open strategizing is used differently in different phases of gathering strategic ideas and legitimizing them. This is not use made by humans of a neutral technology so much as a process by which the affordances inherent in the technology engage the actors using it. In the politics of openness, relations are ideally between peers (as per those engaged in the Open Source Software movement and open source content development) where anyone is potentially a peer; however, not everyone is equally qualified for engagement. Open Strategy brings together different actors to create value: organization members, content creators, and suppliers from outside as well as consumers and (digital or material) artifacts. Attracting, engaging, and retaining these actors are key for successful organizations (Chesbrough & Appleyard, 2007; Spaeth et al., 2014). Organizations need to enable and encourage actors

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to participate, create, and interact during strategy formulation (Kohler, 2015) to improve their quality (Dobusch & Kapeller, 2013) in positive ways. Organizations that seek to connect with actors for strategy making from outside their system can seek to shape the intrinsic motivation of participating actors through utilizing resource bases such as their legitimacy, premised on factors such as reputation related to expertise (is the organization capable of fulfilling claims?) and trustworthiness (can actors trust the organization?). Relative openness is exemplified by the extent to which an organization encourages mutual knowledge exchanges between different actors. Due to the information asymmetry that exists between management and previously excluded actors (Yakis-Douglas et al., 2017), knowledge sharing within an Open Strategy can range from broadcasting only that strategic information deemed public from the center, to starting a conversation and actively asking for feedback, to involving previously excluded actors in decisionmaking processes, which includes a higher degree of accountability (Gegenhuber & Dobusch, 2017). In principle, all practitioners in Open Strategy can potentially exercise power although the assumptions about appropriate interactions by designers of social media platforms might frame who is able to enter online discussions and information sharing. Power not only requires but also creates knowledge. The recursivity of power/ knowledge (Foucault, 1980) might grant designers control over the strategic discussions that occur on the social platform. What is legitimate as a post or type of content may be more or less explicitly policed. Foucault argues that it is in power relations that identities become posited and resisted (Foucault, 1977). Hence, “identity is always in process, always subject to reproduction or transformation through discursive practices that secure or refuse particular posited identities” (Clegg, 1989: 30). Since knowledge and power are irretrievably entangled (Foucault, 1977), the more knowledge that is shared within an Open Strategy the more the balance of power relations will be affected. Management may simultaneously diminish their capacity for power over by providing opportunities for new actors to be involved, enhancing their capabilities for power to make a

contribution, and to the extent that the latter are successful and their innovations are incorporated in the organizational repertoire then by “giving power away” the management may actually increase their power to as a capability. Therefore, power/knowledge reciprocity, as well as access to the matter being developed, is fundamental for the intrinsic motivation of the actors involved (Spaeth et al., 2014).

18.7 Big Data, Open Strategy, and Open Systems Covert Facilitative Power Relations Through Social Integration While there are overt facilitative power relations of system integration, there are also covert ones. Carole Cadwalladr (2017a; 2017b), in detailed investigative journalism, shows how big data derived from open systems can be gamed for political advantage, since knowledge gained from big data analytics creates a competitive advantage (Chluski & Ziora, 2015; Gobble, 2013; Kiron & Shockley, 2011; McAfee et al., 2012; Prescott, 2014; Sharma et al., 2014; Vinod, 2013). We shall explore this issue next. In terms of the politics of openness, big data analytic companies such as Cambridge Analytica created a “central node” in “alternative news and information networks” using open sourced data to do so. Their strategy consisted of precise targeting of finely grained demographics constructed from the mass of available data. The data it used was constituted by combining mass data harvesting of big data and micro-targeting of individualized messages, drawing on military strategies of psychological warfare to target a civilian population in order to influence their voting behavior. Key to the whole enterprise of facilitative power working though open networks is Facebook. Facebook is a venue in which “friends” share their pages. Its data was harvested, in terms of likes, from which “personality traits, political partisanship, sexuality and much more” (Cadwalladr, 2017a) can be inferred with a very high probability of accuracy. The disciplinary

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power that enabled access to this data was personality testing. A company, known as Global Science Research, advertised for Facebook users who would be paid to take a personality test, which over six million people did. An academic, Aleksandr Kogan, using his company, Global Science Research (GSR), in collaboration with Cambridge Analytica, paid hundreds of thousands of users to take a personality test on the basis of an agreement that their data was available for academic use. This data was then combined with the purchase of “consumer datasets – on everything from magazine subscriptions to airline travel and uniquely [Cambridge Analytica] appended these with the psych data to voter files. It matched all this information to people’s addresses, their phone numbers and often their email addresses” (Cadwalladr, 2017a). Doing this they were able to do what they call bio-psycho-social-profiling, not only those who had completed the personality profiles but also those they nominated as “friends” on Facebook. In the United States, this data matching exercise was done in the 2016 presidential election both to target Republican voters to encourage them to vote and to persuade Democrat voters not to; in Britain, it was used to press the case for Brexit, bombarding a small number of people identified as “persuadable” with over a billion anti-EU ads transmitted in the last few days of the referendum campaign. In addition, pro-Brexit traffic automated by bots on Twitter “programmed to look like people, to act like people, and to change the conversation, to make topics trend,” comprised over one-third of all feeds immediately prior to the EU referendum.5 The actor-network created thus recursively generated and reproduced itself through its interactions (Law, 1992). The strategy that was pursued through the circuit of facilitative power in each case enabled one organization, the Republican Party and pro-Brexiteer organizations, such as Vote Leave, to extend their powers to communicate with voters by precisely targeting demographics and tailoring messages to these demographics. The openness was not in the strategy itself, which was extremely covert, but in the open availability of the data that Facebook afforded, unbeknownst to those who had proffered

the data, combined with the results of the personality test, created through the users of an app developed by GSR. The business strategy of Facebook, based on individuals creating their own open systems of communication, albeit closed to those not included among the circle of friends, meant that these open systems of communication provided rich data that could be sold on to other organizations such as GSR who were able to trawl what Facebook had harvested.

Simultaneous System Integration and Disintegration of Circuits of Power Analytically, what Cadwalladr documents is the simultaneous system integration and disintegration of the circuits of power created by use of social media. The strategies are simple: harvest data, identify the obligatory passage point that one wants to channel communication through, in terms of individuals and social media sites, automate the bots, bombard the messages, and strive to find the edge that advantages one’s side in politics (also see: www.smh.com.au/world/fake-news-why-the-westis-blind-to-russias-propaganda-today-20170123gtxbuw.html). According to Morozov (2012, 2014), this has become possible due to, what he calls, the “fetish for digital openness.”6 The information provided by internet users on platforms such as Facebook or Twitter offers organizations and (future) regimes not only a possibility to bombard people with personalized messages but also the ability to track down dissidents or dispense propaganda (Morozov, 2012). On March 16, 2018, as a result of the latest reports from The Guardian’s investigative journalists Carole Cadwalladr and Emma GrahamHarrison (reported in The Guardian www.the guardian.com/news/2018/mar/17/cambridge-ana lytica-facebook-influence-us-election, accessed March 17, 2018), Facebook announced that it was suspending access to Facebook’s platform and data for Cambridge Analytica. Within a week, Facebook shares were down 10%; US regulators, as well as those in Britain and Australia, were proposing increased regulation of Facebook; Mark Zuckerberg was very slow

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in responding; Cambridge Analytica suspended its CEO, Alexander Nix; and the Cambridge academic, Alkeksandr Kogan, whose company, Global Science Research, had provided the data to Cambridge Analytica in the first place, came under pressure from the University of Cambridge to confirm that no university data, resources, or facilities were involved in the unfolding story.

The Circuit of Social Integration and Dispositional Demographics The politics of openness is premised digitally in this case in the circuit of system integration, on identifying and aggregating individuals who, perhaps unwittingly, reveal their dispositions online. Cambridge Analytica used the Facebook friends’ data of those who took the GSR personality test to build a dispositional circuit of power of mega proportions: it is now known that 87 million individuals were analyzed and categorized in terms of their dispositions (Solon, 2018). On this basis, bots were targeted to attack individual social media participants on a mass scale in pursuit of an end that was anything but transparently revealed. From the open systems of Facebook circles of friends, new forms of social closure were achieved by algorithmically programming messages. By bulk buying domain names the initiating organization, Cambridge Analytica, used automation to create the appearance of a consensus favoring the chosen message dispatched through the open digital system to the many members of the circles digitally identified. Shared and affiliated worldviews offer openings in terms of tracking dispositions. Designing covert systems of social integration that amalgamate these dispositions and target them in terms of the emergent demographics enables data analytic organizations to exercise “power to” politically and culturally through system integration of the data. Simultaneously, however, the strategy creates overall system disintegration because it creates digital solidarities by disintegrating the electorate into those persuaded and those dissuaded through a form of psychological warfare. The most crucial categories of persuasion are premised on threats to

identity of “others” – people not like us – in the present and future. It is for this reason that Facebook friends and likes are such a valuable field because they comprise a network premised on assumptions of identity and, as Lakoff (2014) notes, people vote in terms of their identity, their values, and those they identify with. Messaging and websites that affirm that sense of identity, as they disaffirm the identity of those significant others that one opposes and that oppose one, then become the crucial strategy of closure in an open society. In such a context, whoever has the most resources of money, domain names, data, bots, and technology has stacked the best odds for effecting closure to their advantage. At present, these resources have been largely those controlled by right-wing populism, such as that of Trump and Brexit and, as Bauman (2017: 69) writes, “keeping anger perpetually smouldering and glowing offers the best recipe for the populists’ success: anger of the excluded and abandoned is a uniquely rich ore from which constant supplies of profuse political capital can be extracted.”

18.8 Conclusion The most dramatic and, from the politics of openness perspective, most covert use of the open systems of social media may be occurring in campaigns run by firms such as Cambridge Analytica. However, social media data is not only used in politics (Bennett, 2012), but it can also be used to identify an organization’s most loyal customers and followers and target them with personalized communication (Tucker, 2014) to either sell them personalized products or services or bring them closer to the business through co-creation (Lorenzo-Romero et al., 2014). As should be clear, co-creation is not only a form of system integration but also of social integration as it is a way of extending organizational commitment to those who are not necessarily paid to have it. Hence, the borders of the organization are not objectively defined other than by the flux and flows of meaning constituting the borders of systems.

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The Politics of Openness 319

Discussion of predetermined objectives can create an agenda of carefully constructed ignorance and knowledge, issues and nonissues.7 By carefully distributing “openings” one creates and closes off obligatory passage points through the maze of possibilities. In Wikipedia, the tags that are attached to various entries would be a case in point.8 Openness is paradoxical because organizing, by definition, entails selection and therefore forms of closure of alternative possibilities, times, and orderings.9 Notwithstanding existing orderings, change may be accomplished if the effects of endogenous change or the impact of events exogenous to the system enable the acceptance and accommodation of new sets of rules within the social system. New technologies such as big data or blockchain enable openness to the extent that they make it easier to find, connect, and interact with previously excluded external actors. Nonetheless, as data-driven firms shift their focus from the marketing of products and services to the marketing of politics, a dramatic shift in the practices of openness occurs. Cambridge Analytica, along with a few others, is only one example of how data can be used for manipulative purposes. Companies such as Google, Facebook, or Alibaba are organizations that have long recognized that data is a valuable asset (Fisher, 2009), collecting data rigorously since their beginning (Richards & King, 2014), resulting in them not only becoming powerful monopolies but also contributing to a centralization of the world wide web and directly influencing politics. New circuits of power are being created. Internally to organizations, Open Strategy can be pursued through the reduction of power over, the increase in opportunities for power to, and the expansion of collaborative opportunities for power with. These are the ways in which organizations can pursue the positive benefits of an Open Strategy. There is a dark side, however. We have considered this through starting from consideration of the overall capacities for system integration and disintegration that are available to organizations that have access to capabilities for managing vast amounts of open data collected digitally. The

examples we chose were Facebook, Cambridge Analytica, and Global Science Research. Working on a collaborative basis with each other organizationally, they were able to focus on and restructure the demographics of individual dispositional power. Data analytics applied thus are a digitally disguised persuader, a targeted and deliberately fragmented version of the one-dimensional hidden persuasion that Marcuse (2013) found in Packard (1957). Personalized data gathered by organizations to offer personalized products and services seeks to reinforce or limit free will through the power of persuasion and reinforcements (Zuboff, 2015). As such, organizations have tremendous power over people whose data is available to organizations interested in them as consumers either of goods and services or of political options. While there remains hope that a better society that utilizes advances in technology might yet bring Habermas’ (1971) idealistic vision of an open society based on open communication closer to reality (Blum & Zuber, 2016), there are many reasons to be more pessimistic than optimistic. As in all matters of material reality, questions of the ownership and control of productive technologies cannot be ignored. Hence, there are ample opportunities for research to be pursued by scholars to understand how emerging practices will affect openness and whether or not emerging technologies will either increase openness (due to a decentralized approach) or decrease openness (because the artificial intelligence limits what it deems important for decision makers) as well as how the politics of technology enabled openness will change over time, depending on the dimensions that are affected. Acknowledgement: One of the best things about good colleagues is that they make great critics: we gratefully acknowledge the contributions of Marco Berti, Geoff Breach, Xavier Deroy, Danielle Logue, and Ace Simpson to the development of this chapter.

Notes 1. Digital technologies, including social media and web 2.0, now allow organizations to use “the intelligence of the crowd” analogously to the “invisible hand” to improve solutions,

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innovate, or make better decisions. The analogies between open sourcing, the wisdom of the crowd, and the invisible hand are family resemblances that have long characterized discussions of openness in a parallel “open” stream to that of open systems theory – that of the “open society” (Popper, 2012; see Tkacz, 2012). However, today the world’s biggest holiday accommodation company, Airbnb, doesn’t own a single hotel, the biggest taxi company, Uber, doesn’t own a single vehicle, and the biggest general store and bookstore, Amazon. com, doesn’t own a single grocery/book (Goodwin, T. 2015. The Battle Is for the Customer Interface, Vol. 2017: Techcrunch. Goodwin, 2015). That this affordance is significant can be seen in the recent adoption by the Australian Stock Exchange of blockchain to replace the current Clearing House Electronic Sub Register System (CHESS) to settle share trades (Richardson, 2017). See www.bloomberg.com/news/articles/2018– 02-22/snap-royalty-kylie-jenner-erased-a-bil lion-dollars-in-one-tweet, accessed 22.02.2018. Behind Cambridge Analytica are the key figures of Steve Bannon, Trump’s once strategic advisor, and Robert Mercer, a reclusive billionaire, who also founded the Government Accountability Institute that trawls the “dark web” to dig up adversarial data on political opponents that can be disseminated by bots to swamp search engines and social media, which as Morozov (2012; 2014) argues, shows the weakness of the openness of the Internet. These strategies were used effectively in Russian information warfare, particularly in its informational support of territorial warfare in Crimea and Ukraine. Cadwalladr (2017b) noted the Russian connection that Morozov (2012) elaborates. The Brexit decision in the UK is a case in point. Both Remainers and Leavers each accuse the other of having followed this strategy. See https://en.wikipedia.org/wiki/Wikipedia: Tags, accessed 22.02.2018.

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Schutz, A. (1967). The phenomenology of the social world, G. Walsh and F. Lehnert (trans.). Evanston: Northwestern University Press. Sharma, R., Mithas, S., & Kankanhalli, A. (2014). Transforming decision-making processes: A research agenda for understanding the impact of business analytics on organisations. European Journal of Information Systems, 23(4), 433–441. Snow, C. C., Fjeldstad, Ø. D., Lettl, C., & Miles, R. E. (2011). Organizing continuous product development and commercialization: The collaborative community of firms model. Journal of Product Innovation Management, 28(1), 3–16. Solon, O. (2018). Facebook says Cambridge Analytica may have gained 37m more users’ data. The Guardian, April 5, 2018, available at www.the guardian.com/technology/2018/apr/04/facebookcambridge-analytica-user-data-latest-more-thanthought, accessed 16.04.2018 Spaeth, S., von Krogh, G., & He, F. (2014). Research note – Perceived firm attributes and intrinsic motivation in sponsored open source software projects. Information Systems Research, 26(1), 224–237. Stieger, D., Matzler, K., Chatterjee, S., & LadstaetterFussenegger, F. (2012). Democratizing strategy. California Management Review, 54(4), 44–68. Surowiecki, J. (2005). The wisdom of crowds. New York: Anchor. Swan, M. (2015). Blockchain: Blueprint for a new economy. Sebastopol, CA: O’Reilly Media, Inc. Tapio Lindman, M. (2002). Open or closed strategy in developing new products? A case study of industrial NPD in SMEs. European Journal of Innovation Management, 5(4), 224–236. Tavakoli, A., Schlagwein, D., & Schoder, D. (2015). Open strategy: Consolidated definition and processual conceptualization. In International Conference on Information Systems (ICIS) 2015, Fort Worth, TX, USA. Terwiesch, C., & Xu, Y. (2008). Innovation contests, open innovation, and multiagent problem solving. Management Science, 54(9), 1529–1543. Tkacz, N. (2012). From open source to open government: A critique of open politics. ephemera, 12 (4), 386–405. Tremblay, D.-G., & Yagoubi, A. (2017). From open innovation to crowd sourcing: A new configuration of collaborative work? American Journal of Industrial and Business Management, 7(03), 223.

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CHAPTER

19

The Relation between Openness and Closure in Open Strategy: Programmatic and Constitutive Approaches to Openness L A U R A D O B U S C H a n d L E O N H A R D DO B U S C H

19.1 Introduction Two facets are all but universally present in current works on Open Strategy. First, while being aware of and addressing challenges and dilemmas associated with openness in strategy making (Hautz et al., 2017), increasing openness is mostly perceived as normatively good, as an ideal that should be achieved. Generally speaking, studies on openness in strategy making focus on different forms and degrees of collaboration with newly invited actors and on the potential benefits of Open Strategy by generating more and more suitable ideas (Whittington et al., 2011; Stieger et al., 2012; Aten & Thomas, 2016). Even when tensions and dilemmas of greater openness such as “compromising speed,” “undermining competitiveness,” or “burdening wider audiences with the pressures of strategy” (all taken from the overview in Hautz et al., 2017: 302) are discussed, these are considered limitations or hurdles to be overcome for achieving the desired greater openness. Second, openness is mostly considered to be the opposite of closure, or at least the other endpoint of a continuum from closedness to various degrees of openness in terms of greater transparency or inclusion (Whittington et al., 2011). Consequently, openness is associated with increasing transparency by sharing more strategically relevant information (Gegenhuber & Dobusch, 2017; Yakis-Douglas et al., 2017) and with inviting broader sets of actors to participate in strategic conversations (Heracleous et al., 2018; Turco, 2016) or even

strategic decision making (Dobusch & Kapeller, 2018; Luedicke et al., 2017). Taken together, an affirmative perspective on openness as opposed to closure is central to a currently dominant programmatic approach, which is mainly concerned with putting openness into practice and unleashing its respective potential. However, as we will argue in this chapter, addressing many of the tensions or dilemmas observed in empirical endeavors to implement greater “openness” could potentially benefit from another perspective, which understands openness (and closure) as a paradox (Putnam et al., 2016) where openness and closure appear contradictory but yet simultaneously depend on each other. Key for such a constitutive approach toward openness is that this paradox cannot be dissolved entirely but only addressed in a specific way, namely by legitimate forms of closure. But before we lay out our constitutive perspective on openness in detail, we first summarize insights of the dominant programmatic approach in the next section.

19.2 Openness as a Programmatic Approach The literature on Open Strategy is full of affirmative accounts of introducing or increasing openness in strategy making, promising various benefits for strategy processes, outcomes, and an organization’s legitimacy (e.g., Chesbrough & Appleyard, 2007; Stieger et al., 2012). Opening up strategy in these views is a desirable program to be promoted

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with different motivations for openness reported in the literature, ranging from functional rationales such as potential gains in innovation and efficiency (e.g., Jeppesen & Lakhani, 2010; Bauer & Gegenhuber, 2015) to principled attempts at establishing more transparent and participatory forms of organizing (e.g., Tkacz, 2012, 2015; Turco, 2016). Already Chesbrough and Appleyard (2007), in a paper that primarily associated Open Strategy with preceding literature on Open Innovation, argue that “we need a new approach to strategy – what we call ‘Open Strategy’” (p. 58). Such an approach is said to embrace “the benefits of openness as a means of expanding value creation for organizations,” which “will balance value capture and value creation” (ibid.). Many studies on Open Strategy followed in these footsteps, investigating various cases of “greater openness” in strategy making. For instance, Stieger et al. (2012: 49) celebrate the use of crowdsourcing tools for internal strategy making as “an important sign of openness – employees’ ideas are welcome.” YakisDouglas and colleagues (2017: 411), to give another example, conclude “that increasing the transparency of M&A strategy to investors through voluntary communications can bring share-price related benefits.” While dealing with different dimensions of openness – participation in the former, transparency in the latter case – both view openness as a continuum and identify situations where moving toward “greater openness” is basically beneficial for the cases under study. Such affirmative positions do not necessarily preclude the authors from recognizing difficulties, tensions, or dilemmas associated with putting openness into practice. Quite to the contrary, most empirical works actually deal with the various tensions (Dobusch & Kapeller, 2018; Heracleous et al., 2018) or dilemmas (Hautz et al., 2017) organizations face when trying to open up previously exclusive strategy-making processes. Hautz et al. (2017: 5), for example, argue that harvesting the benefits of openness by sharing wider sources of knowledge might come at the cost of “compromising speed, flexibility and control” – a dilemma of process – and of “creating escalating expectations about increasing openness” – a dilemma of commitment. Eventually, however,

this literature frames these tensions and dilemmas as hurdles in the way of – at least selectively – increasing openness, which is the reason why we suggest calling such a perspective a programmatic approach. It is programmatic because (1) openness is associated with vastly positive aspects – be it from an ethical and/or an economic perspective – and because (2) the underlying goal of most research is to identify efficient ways or degrees of openness in strategy making, thereby more or less promoting the implementation of Open Strategy processes. At the same time, the generally affirmative undertone of a programmatic approach in combination with the great variety of practices subsumed under the term of openness both frees and forces organizations to develop their own understanding – ideal – of what “open” should mean in their particular empirical context (Dobusch et al., 2019). However, the related conceptual work on how openness should be defined, (can be) measured, and practically achieved is often ad hoc in its theorizing (see, for example, the variety of definitions, categories, and concepts applied even within the same special issue on Open Strategy published in Long Range Planning in 2017) and tends to neglect literature with similar concerns in the realm of diversity, equality, and inclusion (see, for example, a literature review on organizational inclusion efforts by Shore et al., 2018). This lack of specification of what openness entails in a particular case can lead to labeling something – an organization, a process, or a policy – as “open,” which eventually works as a “non-performative” (Ahmed, 2012: 117). This means that the articulation of openness as a goal for the organization or describing organizing practices as already “open” may be a non-intended way to conserve the status quo and actually complicate endeavors of “opening up.” For instance, Heimstädt (2017b) describes cases of “openwashing” in his study of municipal “Open Data” transparency initiatives, where under the banner of openness information is orchestrated for a particular audience or presented in a highly selective manner. Maybe less intentionally, the proclaimed radical openness of Wikipedia as “the encyclopedia that anyone can edit”1 makes questioning its actual open qualities particularly difficult:

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How can something be not open (enough) that allows literally anyone to take part? In this context, Tkacz (2015: 22–23) refers to persisting gender inequalities to demonstrate that the assumption of unrestricted access to the platform – as it is in principle “open to everybody” – results in denying organization-wide structural and cultural reasons for the skewed participation of men and women and thus blocks appropriate change attempts: Remember, “anyone can edit.” The project encourages participation and collaboration, and if people are really unhappy, for any reason, they can always create a fork. So there are a series of possible responses that can fend off a gender critique based on empirical grounds: “it’s not our fault that there are more male contributors because anyone can edit”; “if the situation were that bad, people would fork the project and realize their own gender-balanced vision.” A more extreme position could even place the blame with the nonexistent female contributors for “not participating.”

The argument is thus that the concrete implementation of “opening-ups” might actually reproduce or even lead to additional exclusionary effects. For example, in the field of open source development, anyone with the ability to read and write code may contribute to the joint endeavor. This radical openness, however, may make it difficult to police “toxic behavior” with exclusionary effects on already underrepresented subgroups such as women programmers (Reagle, 2012). Contrariwise, establishing and maintaining certain forms of openness might be enabled by backstage dealings (Heimstädt, 2017a) or by closure in terms of procedures (Dobusch et al., 2019), which we will describe in more detail in the section on legitimate closure.

19.3 Openness as a Constitutive Approach In contrast to the programmatic approach, a constitutive approach toward openness understands openness neither as a desirable goal to be reached nor as the positive opposite of closure. Rather, by applying a relationalist ontology (Emirbayer, 1997) a constitutive approach understands the constructs of openness and closure as

inextricably linked and interacting with each other. By “understanding all phenomena as constituted through relations, and treating relations themselves as processes” (Powell, 2013: 187), it becomes clear that the idea(l) of openness does only make sense in comparison with the notion of closure. We would even argue that openness requires the possibility of closure attempts and is not at all immune to unintended closure, otherwise it could not be framed as “open” in the first place (Armbrüster & Gebert, 2002). This means a constitutive approach does not frame closure as a hurdle for openness that needs to be removed. Rather, it understands the coexistence of openness and closure as a necessary condition, with the arrangement of the relationship being a matter of negotiation and research. For strategy making labeled as “open” this means dealing with the paradoxical relationship of openness as requiring the coexistence with (the possibility of) closure. It is a paradox in the sense that the constructs of openness and closure are commonly perceived as “contradictions” (Putnam et al., 2016: 72) that in fact “impose and reflect back on each other” (ibid.). Therefore, paradoxes tend to “create situations of almost impossible choice” (ibid., pp. 75–76), which can lead to unexpected or seemingly absurd results such as “equity programs that legitimate discrimination, and democratic systems that restrict participation” (ibid.). Revisiting previous empirical studies of Open Strategy, we can indeed find examples of closure that are associated with or originate from attempts of increasing openness in strategy making (see Table 19.1 for an overview with respective examples). Further, even on an abstract level “complete openness” is impossible on none of the various dimensions of openness identified in the literature. Regarding transparency, a key dimension of openness according to Whittington et al. (2011), disclosing information always means (actively) prioritizing – highlighting – some information as being worthy of being documented, which is a precondition for any way of sharing it. Not only does disclosure of some information automatically leave – if not push – other information in(to) the dark (Fenster, 2015), the limits of transparency begin even earlier. Since “archivization produces

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The Relation between Openness and Closure in Open Strategy 329 Table 19.1 Examples of Closure in Empirical Studies on Open Strategy Study

Example of closure

Consequences of closure

Aten & Thomas (2016)

Contribution in strategy making by external volunteers - scope of action limited to rules of the is restricted to environment and rule-set of a massively MMOWG multiplayer online war game (MMOWG) - game allowed high number of online participants

Baptista et al. (2017)

Internal social media channel allowed employees to - concealment of individual identity allowed raise issues they otherwise would not without the safety more open discussion of certain issues of anonymous posting - contributions might lack context and/or credibility Limitless openness of allowing “anyone” to contribute - reduction of translation efforts to Wikimedia’s strategy process reproduced - reduction of diversity among participants preexisting biases such as dominance by contributors from the United States and Western Europe

Gegenhuber & Dobusch (2017)

Companies used polls among readers of their corporate - higher levels of participation compared to blogs to decide on product development strategy, other forms of audience responses such committing to following decision by the participants in as comments advance (closure of procedure) - renunciation of control

Heracleous et al. In spite of consensus decision making in task forces, (2018) individual group members with final decision-making powers had been identified at the beginning of the process

- fallback rule of situations, in which reaching consensus was not feasible

- shadow of hierarchy

Hutter et al. (2017)

Participation on an online platform set up by Siemens to - thematic focus guided criteria for evaluating find new business ideas was thematically restricted to contributions the issue of sustainability - thematic focus represented an agenda beyond the Open Strategy initiative itself

Luedicke et al. (2017)

Informal practices such as “selective participation” and - addresses practical barriers of radically open “authoritative decision making” counterbalanced approaches to strategy making radically open practices such as “distributed agenda setting”

Mack & Lower level of transparency when the strategy process - full control of strategic decision making Szulanski (2017) in a firm proceeded to the selection phase remained with senior management Malhotra et al. (2017)

Explicit guidelines defined what types of knowledge - restricted scope and variety of contributions could be contributed by online crowds in Open Strategy - allowed analyzing a large number of process contributions

Schmitt (2010)

The situation for an Open Strategy process was framed - issue framing shaped the stakeholders’ in a particular way, e.g., “a wicked issue” or “as a 40perceptions of the meaning of the proposed year-project” solutions

Stieger et al. (2012)

Use of a crowdsourcing tool for strategy making was temporally and topically restricted

as much as it records the event” (Derrida, 1998: 17, cited in Fenster, 2015: 158), any decision regarding open access to strategically relevant information depends on and is restricted by preceding decisions regarding relevance or codification. Similarly, we know that formalizing secrecy may actually enhance transparency of an organization by creating a space for “official secrets” (Weber, 1978: 992, cited in Costas & Grey, 2014: 1427). Costas and Grey (2014: 1431)

- temporal restriction avoided continuously burdening all employees with strategic tasks

define formal secrecy as “the intentional concealment of information by actors in officially defined, established and recorded ways.” Allowing access to official secrets equals closing spaces of formal secrecy, with the very likely consequence of creating or reinforcing informal – and thus maybe even less transparent – spaces. Accordingly, transparency scholars, such as Christensen and Cheney (2015), argue that calls for transparency “may impose new types of

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closure, as both a reaction and a proactive form of protection” (p. 80, emphasis in original). On the other hand, formalizing previously informal arrangements to enable transparency and participation may immediately reinforce the relevance of other informalities still in place (e.g., van den Brink et al., 2010). In other words, opening up previously closed spaces – whether they had been formally or informally closed – may quickly lead to newly closed spaces (see also Hansen & Flyverbom, 2015; Laari-Salmela et al., 2017). A similar pattern can emerge with respect to inclusiveness, another core dimension associated with openness (Whittington et al., 2011). For instance, Clegg (1994) points to the fact that the predominance of a specific set of values – even when it revolves around an “openness agenda” – can result in closing tendencies regarding the composition of the organizational membership: Openness does not equate with non-distorted communication. Where openness is premised on recruitment in an ideological image, conversation in the organization becomes more monological as values get cloned and reinforced in recruits. Any organization with a strong value base risks the ultimate paradox of becoming cultish and thus increasingly incapable of reflexivity with respect to the environment in which it operates. Consequently, where value of openness is paramount, successful organizations must build dissent into their practices, even as it may challenge core values of the organization. (p. 171)

If there is no openness without closure, this raises the question of which forms of closure are legitimate in or necessary for strategy making characterized by particular open qualities such as broad participation and collaboration of various internal and external stakeholders (Aten & Thomas, 2016; Dahlander & Piezunka, 2014), access to and sharing of various knowledge sources (Chesbrough, 2006; Jeppesen & Lakhani, 2010), as well as transparent and collective decision-making practices (Luedicke et al., 2017). The focus thus shifts from questions of degrees of openness to questions of what combinations of openness and closure are desirable in strategy making labeled as “open.” At the same time, such a constitutive perspective on openness forces researchers and practitioners

alike to explicitly address the normative aspects of openness, which are oftentimes only implicit in programmatic accounts. Of course, assessing the legitimacy of closure in Open Strategy–making requires a frame of reference. In short and very basically, we understand legitimacy according to Suchman’s (1995: 574) classic definition as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.” In our research context, the respective system relates to the broader openness discourse and the ideals connected to open organizing influenced by scholars and practitioners alike. Against this background, we propose to assess closure with regard to these very openness ideals adopted by an organization in order to assess the (il)legitimacy of exclusion of actors from access to sensitive information (“transparency” dimension in Whittington et al., 2011) and from participating in strategy design and implementation, respectively (“inclusiveness” dimension, ibid.). To illustrate these theoretical arguments regarding the role of closure in and for openness, we use previous empirical studies on Open Strategy–making and explain in more detail (a) the illegitimacy of exclusionary openness and (b) inclusion through legitimate closure. Thereby we show that even though the openness paradox cannot be resolved, it can be proactively addressed and moderated.

19.4 The IIlegitimacy of Exclusionary Openness Key for a constitutive approach on organizational openness is the recognition that any form of opening up also implies certain forms of closing. This is no new observation. For instance, in the realm of equal opportunities and diversity policies the relationship between the inclusion of historically disadvantaged groups is connected to direct or indirect forms of exclusion of majority group members. This becomes particularly manifest with respect to affirmative action programs, whose controversial, explosive force is, however, not commensurate with its actual dissemination (Dobbin & Kalev, 2016): be it in the case of rather

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“hard” affirmative action approaches entailing specific recruiting or training programs for women and minorities, which became popular in the 1970s among US firms (Kelly & Dobbin, 1998), or be it in the case of “milder” forms of tiebreak preferential treatment, which involves favoring certain minority group members over other applicants with equal qualifications (Verbeek & Groeneveld, 2012). Among the – repeatedly contested (Reyna et al., 2005; see, for example, Calpin, 2017) – legitimacy premises of affirmative action programs is that the direct exclusion via positive action (e.g., targeted programs) or indirect exclusion via positive discrimination (e.g., preferential treatment) of some applicants is a justifiable side effect for counteracting historically developed, structural inequalities in society. These actions are thus considered to be contributing to the – at least quantitative – inclusion of disadvantaged members in both the respective organization and society at large (Plous, 1996; Noon, 2010). When applying an openness lens, affirmative action can be understood as a response to the fact that formal – limitless – openness to all kinds of applicants reproduces a systematic underrepresentation of certain historically disadvantaged groups. In the context of organizational strategy-making processes, “simply” broadening the access to sensitive information or inviting wider sets of people to participate is also likely to reproduce certain biases, such as in the case of low shares of women programmers in Open Source Software projects (Reagle, 2012; see also Dobusch et al., 2019). Furthermore, given a certain level of communication technology, increasing openness by inviting more and more participants might overburden both the organization and the participants in the strategy process (Hautz et al., 2017), making it increasingly difficult to engage in actual strategy making as a form of joint sensemaking. As a consequence, merely increasing openness might reduce the quality of inclusion in terms of actual participation opportunities or the diversity among participants in the process (Dobusch et al., 2017). In the case of Wikipedia mentioned previously, the simple but formally limitless openness of “anyone can edit” leads to the reproduction of structural inequalities rooted in regarding Internet

access or language skills. Given that Wikimedia, the organization behind Wikipedia, applied the principle of limitless openness not just to its encyclopedia but also to a year-long Open Strategy process (Dobusch et al., 2019), provides us with several examples for exclusionary openness. For instance, overrepresentation of volunteers from Englishspeaking countries made English the default language for strategy. Underrepresented contributors were thus either excluded from taking part or burdened with additional translation tasks. In combination with other biases associated with online volunteer editing such as Internet access and access to higher education, eventually all of the top 11 contributors responsible for over 40% of edits in Wikimedia’s “Strategy Wiki” were based in Western Europe and the United States – even though literally anyone was allowed to contribute. Additionally, the management of the Open Strategy–making process was characterized by the absence of predefined procedures or explicit rules for information sharing and participation opportunities. One consequence of this limitless openness was not the increase of influence of “ordinary” people on the development and outcomes of the strategy-making process, but rather the opposite: Wikimedia board members and hired consultants modified – whether intentionally or accidentally – both content and course of the strategizing endeavor without providing any official ways for volunteers to express their disagreement regarding neither specific procedures nor the process as a whole (ibid.). In sum, officially opening up access to participation of anyone has, at least in the case of Wikimedia, turned out to be self-defeating. The potential contribution by anyone turned out to be in favor of certain groups and biased against other groups (for a more general, similar argument, see King, 2006). For Wikipedia and its carrier organization Wikimedia, this exclusionary openness poses a legitimacy problem given its own ideal of an “unbiased” openness, striving for a “neutral point of view.”2 We would argue that unintended exclusion and respective biases are common in most – if not all – strategy-making processes described as open in the literature. Of course, the criteria for assessing the il/-legitimacy of such exclusion vary depending on

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an organization’s goals in general and the ideals for its openness in strategy making in particular. Ironically, the inherent limits and exclusionary effects of openness are particularly visible in cases labeled as very – radically – open. Luedicke et al. (2017: 382), for example, state how in the case of the German Premium Cola collective the formally “radically open practices” such as “distributed agenda setting” or “consensual decision making” needed to be counterbalanced by more informal practices such as “selective participation” and “authoritative decision making.” These counterbalancing practices were driven by information and power asymmetries resulting from division of labor in the collective. According to Luedicke et al. (ibid.), “Premium members do not frame counterbalancing practices as problematic, but legitimize them as pragmatic ways of raising, deliberating, and deciding on strategic issues in spite of practical barriers.” This, of course, puts the question of legitimacy again center stage. Insofar as this exclusion can be considered illegitimate in comparison with the proclaimed openness ideals of an organization and its Open Strategy process, this raises the question what kinds of (closing) measures – coping strategies – might be necessary to counteract illegitimate, mostly nonintended consequences of opening up.

19.5 Inclusion through Legitimate Closure We identify two related types of closure that potentially contribute to particular open qualities in strategy making and thereby also account for the non-resolvable openness paradox such as: (1) the formalization of closures, and (2) the closure – predefinition – of procedures. Formalization of closure. The basic rationale behind the emphasis on formalizing closure in order to enable particular open qualities is rooted in the assumption of the “constitutive significance of formality and formalization, both for the securing of organisational purposes and for individual freedom” (du Gay & Lopdrup-Hjorth, 2016: 8; emphasis by authors). Formalization can include

various elements such as the explicit definition of procedures, rules, and responsibilities including specifications of information sharing and decision making (Pugh et al., 1963). The key feature of formalization – regardless of its degree, be it in the form of a voluntary self-commitment or in the form of law-enforced regulations – is the limitation of the scope of action for a certain period of time in order to enable and secure a particular corridor of action (which might also entail procedures to change exactly this corridor). However, formalization – particularly in the context of bureaucratic organizing in general – should not be understood as the “solution” to exclusionary openness, given the critique of being a barrier to innovation as well as to enhancing equal opportunities (Thompson & Alvesson, 2005; see also Ferguson, 1984). Nevertheless, formalization can counteract – not completely prevent – exposing the individual organizational member or contributor to the “free play” of the “inevitably elitist and exclusive nature of informal communication networks” (Freeman, 1972–73: 155). Instead, formalization helps to institutionalize opportunities for “organized dissonance” (Ashcraft, 2001: 1304), which supports the individual actor in maneuvering amidst the unsolvable tensions and dilemmas between openness and closure (Hautz et al., 2017). For instance, similar to formal secrecy increasing transparency within an organization (Costas & Grey, 2014), formalized closure of participation opportunities may help to support openness. Restricting participation – the inclusiveness dimension (Whittington et al., 2011) – in certain parts of a process might be legitimized by correspondingly increasing transparency, that is, being open about a certain closure and its rationale. This is of particular importance, since the responsibilities and resources of actors involved in strategy making differ according to their status inside or outside the respective organization, even in a strategy-making process labeled as “open” (see, for example, Luedicke et al., 2017). Formalizing closure, especially in terms of overall procedures, does not level these differences, but allows discussing the (il)legitimacy of exclusionary consequences of these very rules.

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The Relation between Openness and Closure in Open Strategy 333

In the case of the Wikimedia strategy process, wiki-based transparency was an attempt to guarantee transparency even in stages of the process where only a very limited number of actors were actively involved in shaping the strategic plan (Heracleous et al., 2018). For example, task forces with only a couple of members working on selected topics such as “financial sustainability” or “Wikipedia quality” were “strongly encouraged” (ibid., p. 10) to document their discussions and findings in a publicly accessible wiki. Closure of procedures. By clearly defining procedures for access to sensitive information and participating in the strategy design and implementation in advance, addressing – and changing – the rules of the strategy-making process itself becomes possible for the “ordinary” contributor. What appears paradoxical is the fact that the predefinition of procedures, which can be interpreted as the limitation of one’s individual freedom of action, forms the basis for the capacity to act on content creation or decision making in the first place. This is in line with Freeman’s (1972–73) perception of the “tyranny of structurelessness,” which is based on the idea that an absence of bureaucratic organizing might reduce instead of enhance opportunities for participation by certain groups. Similarly, Armbrüster and Gebert (2002: 176), building on Popper (1966 [1944]), emphasize the importance of closing procedures for ensuring “open” capacities for action: “In Popperian terms, the establishment of bureaucracy is a step from the closedness of patronage towards the openness of rules and procedures.” In the case of the Wikimedia Open Strategy process, lack of clearly stated participation procedures may have unintentionally undermined the openness of the strategy-making process as a whole (Dobusch et al., 2019). On the other hand, closure of procedures may even allow participation of external actors in decision making, as has happened in the case of “Mite,” a software-as -a-service firm that repeatedly allowed readers of their corporate blog to vote on product development decisions (Gegenhuber & Dobusch, 2017). Taken together, formalization of closures and closure of procedures bring us back to the example of affirmative action mentioned previously.

By directly or indirectly excluding participation by members of certain strata, participation of members of other strata becomes viable. And by formalizing the respective procedures, they are constantly under scrutiny regarding the legitimacy of exclusionary and inclusionary effects.

19.6 Conclusion Our understanding of openness as inextricably bound to and even constituted by closure raises crucial questions that cannot be ignored: Is the conceptualization of openness as relying on particular forms of closure a contradiction in itself? Does it turn the idea of openness into an empty shell that loses its potential for change and eventually undercuts the main reasons why openness was brought to the field of strategy making in the first place? These are plausible objections to our approach. However, such objections only hold when relying on certain ontological assumptions that privilege substance over relations (Emirbayer, 1997; Powell, 2013). Such a view, which is typical for programmatic approaches, perceives openness as an idea entailing an essential and contextindependent meaning, whose inherent boundaries result from these very features. In contrast, a constitutive approach based on relationalist assumptions does not attribute any absolute and intrinsic properties to the notion of openness, but rather understands it as contextdepending and relative. It is depending on the context in the sense that the term of openness we are referring to is rooted in the open source movement in the 1990s (Weber, 2004). It is relative in the sense that its meaning becomes only manifest in relation to and in distinction from a counterpart. However, we don’t imply a rigid relationship between fixed relata, but rather a dynamic and mutually affecting one in order to take the constitutive relationship between openness and closure into account. We argue that only by paying attention to the openness paradox – which means the inextricable linkage and oscillating movement between practices of opening and closing – we can achieve more convergence of openness ideals

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and openness in practice. It is important to acknowledge that this convergence cannot be reached in its entirety as it is always a matter of (collective) legitimation and thus an issue of negotiation and interpretation power. Nevertheless, we deem it possible to tailor the respective closing measures to the openness ideals in a particular context. For researchers who want to apply a constitutive lens on phenomena labeled as “open” or “closed,” we see at least three opportunities for future studies. Empirically, revisiting cases described as exemplars of openness from a constitutive perspective would require focusing on the particular open qualities associated with these cases as well as the legitimation of corresponding closures. Given that most of the examples for exclusionary openness we refer to in our chapter deal with the invitation of external contributors (e.g., Wikipedia, Open Source Software), we consider revisiting cases of intraorganizational Open Strategy–making to be particularly promising in this regard. Methodologically, a constitutive perspective requires devoting particular attention to nonparticipants, non-mentions, and non-topics in allegedly open environments and processes. Capturing this excluded “other” is a methodological challenge because it – by definition – cannot be simply coded in the material collected on Open Strategy platforms and, to some degree, interviews with participants. One way forward among others could be to also collect data from potential but not actual contributors to processes labeled as “open.” Theoretically, the constitutive approach to openness may allow for crossfertilization between related streams of literature such as the discourse on organizational inclusion (e.g., Ferdman & Deane, 2014; Shore et al., 2018) or the literature on visibility, transparency, and (dis)closure (e.g., Christensen & Cheney, 2015; Albu & Flyverbom, 2019). In each of these fields we observe the potential of introducing the distinction between programmatic and constitutive perspectives on the phenomenon of interest and thereby capturing the (un-)intended side effects of change attempts.

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Index

Actor-Network Theory (ANT), 19, 179, 221, 229–231, 236, 253 actorhood, 291–294, 297–298 Aegon company, 92 agency Actor-Network Theory and, 229 Giddens’s notion on, 234 habitus and, 226 heroic leader and, 163 human vs. nonhuman, 236 material agency, 179 in open systems, 311 in power relations, 312 Schatzki’s perspective on, 228 strategy agency, 30, 31 in structuration theory, 159, 161, 223–224 technology and, 172 agenda-setting, 66, 194, 309, 332 ambidexterity perspective, 260 analog vs. digital forms of inclusion, 201.140, 88–90 Annual General Meetings (AGMs), 142 anonymity in online interactions, 114–115 Aristotelian ethics, 163 Art&Space practice, 156, 159–160 Atkinson, Neil, 97 authenticity in participation research, 34–35 Balanced Scorecard, 176 Barclays Bank, 16 bibliometric analysis, 72, 75f, 76t big data and openness, 316–318, 319 blockchain technology, 309–310, 319 blogs/blogging, 15, 87, 89, 236, 237 board meetings, 144 Bohm, David, 259–260, 263, 265t Booster Programme, 94 bottom-up collective strategizing, 59 boundaries, organizational, 94, 95–96, 101, 111, 152 Bourdieu, Pierre, 222, 224–226, 233–234, 236, 237 Bridge&Shed practice, 155, 159 Bungartz, Thomas, 99 business communication, 110 business model design, 151, 157, 158–159, 161 Callon, Michel, 222 Cambridge Analytica, 35, 200, 316, 317, 319

Canadian Treatment Advocates Council, 108 case-based studies, 43 centralized vs. decentralized organizations, 231, 235, 281 Change Leader Conference (CLC), 97 Chesbrough, Henry, 44–46, 60, 61, 73 China Mobile, 295–296 circuits of power, 312–313t, 316, 317–318, 319 citizenship behavior, 18 closed strategy, 199, 278 closure illegitimacy of exclusionary openness, 330–332 inclusion through legitimate closure, 332–333 in openness, 19, 311–312, 329–330, 332–333 in participation research, 35–36 co-citation analysis of strategic openness, 73t, 73, 74f co-creation of strategy, 33, 67–68, 158 coalitions, 273 Coca-Cola, 296 cognitive diversity of participants, 92 collaboration software, 173 Collaborative Community of Firms Model, 308 collaborative crowdsourcing, 121, 127 collaborative decision-making, 21 collective intelligence, 90, 92, 308 collective meaning-making, 88–89 collective strategy, 47, 112 commons-based production, 171, 175 Communic Group, 108, 251–252 communication-based approaches, 19–20, 22, 264 communicational sensemaking, 243 communicative constitution of organizations (CCO), 20 community platforms, 87, 89, 97 community social capital, 126 competition vs. collaboration in crowdsourcing, 125–126 competitive advantage information technology and, 171–172, 176 relative competitive advantage, 63 secrecy in organizations and, 131 strategic openness and, 63 through power, 309 transparency and, 2 competitive secrecy, 290 competitively sensitive information, 18 The Constitution of Society (Giddens), 223 contagion perspective, 282–283 content-management solutions, 266

337

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338

Index

control in participation research, 36 core capabilities of firms, 171 corporate governance, 9, 37, 136, 160, 194, 296 corporate social responsibility (CSR), 18, 296, 297 Cromme Code, 136 crowdsourcing assigned tasks differences, 125 benefits of, 67, 127f, 129 bottom-up collective strategizing, 59 collaborative crowdsourcing, 121, 127 competition vs. collaboration, 125–126 composition of crowd, 130–131 crowdsourced strategizing, 111 data collection, 132–133 decision-making over, 49 definition of, 308 desired outcome differences, 123–124 dialogic process and, 261 individual motivation differences, 125–127 inherent risks, 121–127 motivation in, 129 new initiatives in, 128 “post and run” behaviors in, 125, 129 reciprocity in, 126 social technology of, 97, 101–102 strategic blind spots in, 128–129 validating existing initiatives, 127–128 withholding useful knowledge, 126–127 cultural beliefs in world society, 299 cultural capital, 225, 234, 236 Daimler AG, 294 decision-making accountability and, 316 authoritative decision-making, 234 bundles of practices and, 235 collaborative decision-making, 21 consensual decision-making, 332 in crowdsourcing, 49 employee inclusion in, 194, 195 in interorganizational strategizing, 109 make-or-buy decision, 67 management decision-making, 28, 163, 237 organizational decision-making, 36, 46, 62 organizational strategy-making capabilities, 197 participation research and, 27 rights of firms, 69 social and cultural capital, 236 strategy making, 27, 29, 64, 198 subdimension of, 16 top management decision-making, 28 voluntary strategic disclosures, 15 wisdom of crowds to improve, 92 yes-no decision binary, 68, 70 democratization, 11 design dimension, 41–43, 49t, 49, 51–52 Deutsche Telekom, 92, 99

dialogue theory/dialogic process Bohmian dialogue, 259–260, 263, 265t, 267, 268, 269 conceptual perspectives, 260–263, 262t critical approach to, 261, 262t functional approach to, 260, 262t interpretive approach to, 260–261, 262t social media and, 264–265 sustainable strategy dialogue, 194 transformative dialogue, 261 Wikimedia Foundation, 265–268 digital technology in management and organizations, 45 digital vs. analogue forms of inclusion, 89 Discipline and Punish (Foucault), 226 disciplining strategy, 30, 195 dispositional demographics, 318 dispute resolution solutions, 266 double bind concept, 269 dyadic interactions, 275, 276, 277t, 278t dynamic capabilities, 109 econometric analyses, 43 economic capital, 225, 234 ecosystems, business, 273 ecosystems, platforms, 68 ego network, 275, 280 Electronic Meeting Systems (EMS), 114 Emergency 2.0 initiative, 96, 97 enterprise social media, 190, 191–197, 192f. See also social media environmental scanning, 111 epistemic dimension, 41–43, 49–51 equivocality, 242 Etherton, Sarah, 95 ethnomethodology, 236 European Institute of Innovation and Technology ICT Labs, 109 exclusion, 330–332, 334 exploration in interorganizational strategizing, 111 face-to-face encounters, 89, 113–115, 190, 197 Facebook, 35, 200, 316–317, 318, 319 fast follower strategy, 188 Financial Reporting Council, 136 first mover strategy, 188 5-Flows model, 191, 192f, 198–199, 200 Five Forces framework, 176 flat ontology, 227, 230 Foucault, Michel, 222, 226–227, 233, 236–237 Free software, 152, 153 GameChanger innovation strategy workshops, 15 gamification (competitive incentives), 129 Gazprom, 295–296 Giddens, Anthony, 221, 222, 223–224, 226, 234, 237 GitLab company, 92–93, 96 Global Science Research (GSR), 317, 318, 319 glocalization, 295–297, 298–299

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Index 339 Google’s Android operating system, 42 Graham-Harrison, Emma, 317 habitualizing effects on social activities, 224 habitus, 226, 314 Henkel company, 92, 99 Hewlett–Packard, 197 homogenization dynamics of strategic openness, 63 horizontalization of industries, 63 HypoVereinsbank (HVB), 93–94 IBM company, 96 idea generation phase, 88, 93–94, 100 ideation contests, 87, 89 identity and power, 227 illegitimacy of exclusionary openness, 330–332 illusio, 225, 234 image enhancement, 48 implementation benefit, 16–17 impression management, 20, 65, 261, 264 infographics, 210–211 information and communication technologies (ICT), 9 information asymmetry, 21, 64, 136 information-based approaches to Open Strategy, 21, 22 information sharing, 87, 93, 126, 227, 315, 316, 331, 332 Information Systems (IS), 169 information technology (IT). See also technology external facilitators in, 179–180 IT-based Open Strategy initiatives, 283, 284 scale in, 176 scope in, 174–176, 179 strategic significance of, 170f, 171t, 173 structure in, 177–178 suitability in, 176–177 types of, 173, 174t, 180 information transparency, 264 innovation benefit, 17 Innovation Jam (2006), 1 institutional approaches to Open Strategy actorhood and rationalization of management, 291–293 cultural beliefs in world society, 299 global convergence, 293–294 glocalization, 295–297, 298–299 management literature on, 290–291 as meaningful practice, 297–298 organizational field, 298–299 role of the local in, 295–297 integration communicative integration, 264 integration/disintegration of circuits of power, 317–318 social integration, 315 strategic reintegration phase of inclusion, 93 vertical integration, 69 Intel, 144 intellectual property, 130, 155 interorganizational knowledge transfer, 66 interorganizational strategizing

business communication, 110 collaboration, 88, 241, 273 definition of, 106 dynamic capabilities, 109 exploration function, 111 face-to-face vs. online, 113–115 industrial network, 110–111 learning function, 111–112 legitimacy building, 112 main function of, 111–113 Operational Research, 109–110 participant numbers, 113 place and time, 113–114 process structure, 114–115 sensemaking and, 107–108, 116, 245, 246t strengthening relationships in, 112–113 theoretical perspectives on, 106–111, 107t topic and stage of analysis, 114 internationalization of business operations, 291, 294 Internet, 171. See also online internet relay chat (IRC), 266 interpersonal exchange, 275 interpretivism, 263 intranet-based applications, 96 investor confidence, 48 ISI Web of Knowledge (ISI) database, 71 isomorphism of organizations, 289 jams, 221 J.P. Morgan, 95, 99 knowledge aggregation of, 92 crowdsourcing and, 126–127 exchange of, 21, 46, 52, 88, 145, 309, 316 external knowledge, 47, 48, 50 greater access to, 16 interorganizational knowledge transfer, 66 ISI Web of Knowledge (ISI) database, 71 operational knowledge, 225 power relations, 227, 233 stolen knowledge, 191 strategic knowledge, 196, 207, 225, 233, 237, 281, 283 knowledge-based view of firm dimensions of, 21 epistemic dimension, 50, 51 Open Innovation, 21, 41, 42–43, 49 by senior leadership, 192–193 social media in Open Strategy, 187–189 knowledge sharing accountability and, 316 crowdsourcing, 124, 126–127, 132 social media, 188, 189–191, 231, 233 transformation vs. transfer in, 189 knowledge sources, search in, 42–43, 47, 49–53 Kogan, Aleksandr, 317, 318 Kylie Jenner effect, 310

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340

Index

Land Care Research, 97 Large Group Interventions, 260 Latour, Bruno, 222 learning interorganizational strategizing, 111–112 social learning process, 71 strategic learning, 49, 50, 51, 52 legitimacy benefit, 17 legitimacy building in interorganizational strategizing, 112 legitimate strategy language, 226 Linus’s Law, 162 Luhmann, Niklas, 20 management science/studies, 157t, 160, 207 marginality effect, 92 material agency, 179 materiality and information technology, 171–172, 180 meaning-action sequence, 243 meaning systems, 297–298 meritocracy of ideas, 18 Microbrewers Association (MBA), 248–249, 252 Microsoft, 96 middle managers Communic Group case study, 251, 252 participation of, 28–29, 87 role in sensemaking, 29, 108, 244 in strategy making, 9, 17, 30, 31, 222 monetization, 161, 162 morality, 291, 292, 293, 294 motivation for inclusion practices, 100 motivation in crowdsourcing, 129 mystification discourse, 30, 195 Naval Air Warfare Center Aircraft Division (NAWCAD), 114 netnography, 200, 235 network pictures, 110 network technologies, 171 network theory, 21 networked foresight tool, 109 networks. See also social networks density of, 276 ego network, 275, 280 individual-to-individual networks, 274 industrial network, 110–111 intra-organizational networks, 273, 276 micro-level network research, 273–274 organizational network research, 284 reciprocal relationships, 282 single actor-level networks, 275 single-level vs. cross-level network research, 274 Nix, Alexander, 318 Nokia company, 94, 97 Novartis, 42 Obama, Barack, 136 online

community platforms, 97 interorganizational strategizing, 113–115 open collaboration, 31, 35 platforms, 173 wargames, 1, 15 open collaboration online, 31, 35 Open Data, 1–2, 9 Open Government, 1–2, 9, 21, 136 Open Innovation benefits of, 48 common issues and solutions, 49t, 49–52 comparison to Open Strategy, 43, 44 crowdsourcing, 18, 121–127, 122f, 124t definition of, 60 design dimension, 41–43, 49t, 49, 51–52 epistemic dimension, 41–43, 49t, 49–51 intellectual history of, 44–46 knowledge-based view of firm, 21, 41, 42–43, 49 open source projects, 47 Open Source Software, 42, 152, 153, 162 Open Strategy link, 63–64 practices of, 46–48, 308–309 strategic openness comparison, 61f, 65–66 Open Science, 1–2, 9, 21 Open Source Software, 42, 152, 153, 162 openwashing, 327 operational research, 107, 109–110 organization design of strategic openness, 62, 65, 69–70 organized dissonance, 332 paradox perspective, 260 participation research approaches to, 31, 32t authenticity vs. ceremoniality, 34–35 co-creation of strategy, 33 deep engagement, 33–34 enabling or constraining of, 29–30 limited participation in Open Strategy, 31 openness and closure in, 35–36 power and control in, 36 practice theories on Open Strategy, 231 social media, 194 sociocultural practices, 36–37 strategy process, 28–29 subjectivity and power, 30–31 technology impact on, 35 particularistic organizations, 292 passive Open Strategy, 178 performance variation vs. homogeneity, 279, 280t PEST (Political, Economic, Socio-cultural, and Technological) analysis, 176 Pfizer company, 294 phronêsis, 172 Polaroid, 111 politics of openness big data and, 316–318, 319 circuits of power, 312–313t, 316, 317–318, 319

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Index 341 covert facilitated power, 316–317 dispositional circuit, 314, 315 episodic circuit, 313–315 facilitated circuit, 314, 315–316 integration/disintegration of circuits of power, 317–318 Open Innovation and, 308–309 Open Strategy and, 48, 307–308 principles of, 310–312 portfolio perspective of strategic openness, 65, 68–69 post-feminist theory, 179 power/power relations agency in, 312 balance/imbalance of, 18, 144 circuits of power, 312–313t, 316, 317–318, 319 competitive advantage, 309 control in, 36 covert facilitated power, 316–317 dynamics of, 30, 179, 180, 225, 264, 307, 309–310 facilitated circuit, 314, 315–316 identity and, 227 knowledge relationship and, 227, 233 in participation research, 30–31, 36 social power, 227, 233, 236 subjectivity and, 30–31 trust and, 309–310 ubiquitous power of discourses, 227 PowerPoint, 211–213, 212f practice bundles theory, 221, 227–229, 235, 237 practice theories, 3, 4, 19, 27, 30, 36, 163, 229 practitioners’ agency, 222 praxeology, 221, 224–226 praxis, 222–223, 225 prediction markets, 87, 89 Premium Cola company, 94, 95, 264, 276, 332 problem-solving effectiveness, 90 procedural openness, 11–12, 16 process perspective on Open Strategy, 65, 66–67 programmatic approach to openness, 326–328, 333 property rights and openness, 68 proprioception of thought, 259–260 proto strategy, 193 Provisional Code of Corporate Governance for Securities Companies, 136 public engagement, 154 Publish&Flourish practice, 155–156, 159, 160 push and pull communication, 138, 140, 142–143 quantitative and qualitative data on Open Strategy, 199–200, 236 radical Open Strategy, 231, 332 rational myth, 312 rationalization of management, 291–293, 294 reciprocal relationships, 282 Recomendações sobre Governança Corporativa, 136 Red Hat company, 92, 93, 94, 97, 99 reflexivity of practitioners, 226, 229

regulation, organizational, 151, 157, 160, 161–162 Resource-Based View (RBV), 2, 10, 12, 18, 171 Rite-Solutions, 99 robust strategy, 50–51 Rollins, Kevin, 196 Rumelt, Richard, 50–51 Sarbanes-Oxley Act, 136 scenario-planning, 108 Schatzki, Theodore, 222, 227–229, 235, 237 search in knowledge sources, 42–43, 47, 49–53 secrecy in organizations, 131, 311, 329 selective participation, 332 selective revealing in strategic openness, 61 self-actualization discourse, 30 self-awareness of thought, 260 self-selection process, 94, 95 SEMATECH, 144 sensemaking collective sensemaking, 48, 90, 146, 208, 244 communicational sensemaking, 243 constitutive dimension of, 254–255 definition of, 242–244 embodiment in, 242, 247, 248t, 250–251, 252, 253 enactment in, 242–243 environmental change as stage in, 242–243 equivocality in, 242 external sensing, 111 identity-based sensemaking, 243 individual vs. collective, 208 interorganizational strategizing, 107–108, 116, 245, 246t presentification in, 242, 247, 248t, 249, 252, 253 retention in, 242–243 retrospective sensemaking, 243 rules-in-practice, 160 selection in, 242–243 sensegiving, 243, 244, 297 social networks, 278 translation in, 242, 247, 248t, 251–252, 253 transparency and, 241, 242, 245–247, 248 visuals in Open Strategy, 207, 208 Sensemaking in Organizations (Weick), 242 shared cognition, 111 Shell company, 42, 111 Siemens company, 95, 97 Simmelian ties, 282–283 “simplexity” lens, 108 sites in practice bundles theory, 229 Slack platform, 114, 115 social capital, 126, 225, 233–234, 236, 279 social consciousness, 260, 263 social exchange theory, 21 social homogeneity, 279, 280t social integration, 315, 318 social justice theory, 138 social learning process, 71

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342

Index

social media challenges with, 199–200 crowdsourcing, 121 dialogic process in Open Strategy, 264–265 directing strategy by senior management, 196–197 employee-based direct feedback, 194–195 employee-based input, 193–194 enterprise social media, 190, 191–197, 192f 5-Flows model, 191, 192f, 198–199, 200 information technology, 170, 173 interorganizational strategizing, 110 interaction in, 190, 234 knowledge-based strategies, 187–189 knowledge sharing approach, 188, 189–191, 231, 233 organizational strategy-making capabilities, 197 platform of interaction through, 189 practice theories and, 231, 234 process of, 198–199 seamless sharing, 234 senior leadership knowledge, 192–193 strategy conversations with, 186 transparency and, 138 visuals in Open Strategy, 205 social network analysis (SNA), 283 social networks. See also networks access to resources, 281–282 constructs, 275–278 contagion perspective, 282–283 content vs. structure, 279 dyadic interactions, 275, 276, 277t, 278t environmental shaping, 282 human and nonhuman actors, 230 level of analysis, 273–275, 274t non-work-related, 277 performance variation vs. homogeneity, 279, 280t structural capital, 279–281 structural properties, 275, 276t social relations, 97, 225, 230, 272, 275, 277, 284–285, 309, 313 social software technologies, 87, 89–90, 97–99, 101–102, 170, 175, 221, 231, 232–233, 236, 272, 274, 277. See also social media socio-cognitive theories in strategy, 146 sociocultural practices in participation research, 36–37 sociotechnical processes, 129 sociomateriality, 179, 180 “spaghetti” organization, 64 stakeholder theory, 21, 145–146 stakeholders engagement of, 9, 19, 106 external stakeholders, 10–11, 12, 96, 112, 130, 309 internal stakeholders, 10–11, 12, 112, 130 strategic management, 21, 48 transparency of ideas/information to, 64 standardization dynamics of strategic openness, 63 standards of excellence, 163 stock prices, 48

stolen knowledge, 191 strategic agility, 111 strategic alliances, 49, 60–61, 69, 273 strategic dialogue, 194 strategic openness (SO) bibliographic coupling analysis, 73, 75f, 76t bibliometric analysis, 72–73 co-citation analysis, 73t, 73, 74f definition of, 60, 61–63 key word analysis, 76, 77f, 78t Open Strategy comparison, 61f, 65–66 Open Strategy link, 63–65, 71–72 organization design, 65, 69–70 portfolio perspective, 65, 68–69 process perspective of Open Strategy, 65, 66–67 transactional perspective, 65, 67–68 strategic resonance, 212 strategic resources, 171, 187, 198, 200, 307 strategy agency, 30, 31 strategy-as-practice, 64, 66, 71, 160, 188, 197 strategy blogging, 221 strategy workshops, 87 structural capital, 279–281 structuration theory, 221, 223–224, 234 subjectivity in participation research, 30–31 sustainable energy systems, 112 SWOT matrix, 211 syndicating in social media, 234 Syngenta company, 92, 99 “sysop” (system operator/administrator), 266 talent identification, 17–18 technê, 172 technological affordance, 19 technologization discourse, 30, 195 technology. See also information and communication technologies; information technology blockchain technology, 309–310, 319 digital technology in management and organizations, 45 in face-to-face encounters, 190 impact on participation research, 35 inclusion/inclusiveness and, 15–16 material technologies in strategy, 180 materiality and information technology, 171–172 network technologies, 171 open collaboration online, 31 Open Source Software development, 42 social software technologies, 87, 89–90, 97–99, 101–102, 170, 175 social technology, 221, 231, 232–233, 236, 272, 274, 277 virtual technology, 34 technology-in-use, 151, 157, 159–160, 161 teleo-affective structure, 228 tools-in-use, 158 top management agenda of, 153 crowdsourcing and, 101

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Index 343 decision-making, 28 dominant logic, 17 impact on middle management, 29, 30 internal actors and, 95 IT executives, 171 objectivity and control, 10, 11, 100, 151, 160, 162, 237 orientations and, 152 outsiders and, 153, 154 participation of, 36 shared responsibility, 163 strategic planning by, 16, 31, 35, 154, 172, 290 support for, 152 transparency and, 245 worker issues, 143 transactional perspective of strategic openness, 65, 67–68 transformation vs. transfer in knowledge sharing, 189 translation perspective, 108 triadic business models, 158 trust, 309–310, 316 Twitter, 317 Unilever company, 92–93, 95, 97 US Navy, 1, 15 universalized organizations, 292 value capture, 151 value creation, 151 verifiability, 266 vertical integration, 69 virtual community, 277 virtual technology, 34 visuals in Open Strategy capturing, 213–214 cognitive focus, 208, 209t comparing/contrasting, 214

connections within, 209–213, 210t, 212f creating, 214–215 definition of, 207 guiding principles, 213–215 illustration of, 211–213 material focus, 208, 209t multimodal focus, 208–209, 209t research focus, 206, 209t VocalPoint community, 130 web-based crowdsourcing, 121, 131 Whitehurst, Jeff, 93 wicked problems, 111–112, 125 Wikimedia Chapter wikis, 265 dialogic process, 260, 265–268 dialogic tensions, 267t, 268 Meta-Wiki, 265 Open Strategy development, 266–267, 331 rights to delete content, 33 Signpost, 265 Wikipedia, 327, 331 wikis in strategy, 87, 173, 232, 236 Williamson, Oliver, 2 wisdom of crowds, 92 works councils, 142–143 World Business Council for Sustainable Development, 109 World Café, 88–89 world society theory, 21 Yeaney, Jackie, 94, 97 yes-no decision binary, 68, 70 Zeppelin Rental, 99 Zuckerberg, Mark, 317–318

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