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Our lawyers are experts in their fields. Through commentary and analysis, we give you insights into the pressures impacting business today.
VIEW ALLLast month, an opinion piece in the FT by Andrew Hill (11 October 2021), questioned the willingness of businesses in posing "big strategic questions to their employees" as well as suppliers, customers or competitors. Of course, asking the questions is in fact easy, implementing the findings often less so.
This goes well beyond what might have been considered "big" decisions prior to the pandemic. Online strategies, working practices and, as Hill notes, the "right office layout" are simply outcomes of core business strategy. The post pandemic world may demand a more fundamental review of first principles and this cannot be achieved by keeping decision-making within a narrow management team.
A survey by Professor Sadler at Warwick Business School (Open Strategy by C. Sadler, J Hautz, K Matzler, S Fredrick Von Den Eichen, MIT Press, 2021) referenced in Hill's column, finds the majority of senior leaders open less than a third of strategic initiatives to people outside of the executive team. This is despite the fact such initiatives represent "half their companies’ revenues and profits". Sadler, et al argues businesses should enable the "smart opening up" of strategic initiatives, not just to a range of employees, but also other stakeholders such as customers, suppliers and advisors.
At Howard Kennedy, our own programme of research on business agility suggests there is growing recognition of the importance of "open strategy". Our work, comprising surveys conducted before and during the pandemic, found that while senior leadership teams dominate strategic business decision making, recent years have seen just over a third of companies engaging a wider range of stakeholder involvement in the direction of the business.
As might be expected, we found larger more established businesses operated with a wider decision making base, often encompassing investors and advisors. However, smaller companies also reported a small increase in those involved in decision-making, with the inclusion of families as well as professional advisors.
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38%
Increased
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56%
Unchanged
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6%
Reduced
Change in recent years to the range of business stakeholders involved in strategic decision making
Note: Based on November 2019 survey responses. Excludes ‘Don’t Know’ responses.
Source: Howard Kennedy
Whilst the worst of the pandemic is, hopefully, behind us, businesses now face the long road to recovery in a very different world. Lockdown has given way to an economic re-awakening, inciting staff shortages, rising wages and higher input and transport costs. The challenges are undoubtedly different to those faced in spring 2020, but they are challenges, nonetheless.
The work by Sadler and many others underlines the positive impact of open strategy, but while our study suggests a move in that direction, there is clearly more to do to achieve a more collaborative and advice driven approach to decision making.
Undoubtedly, this presents new challenges to management teams and requires some bravery as well as clear governance structures. The pandemic underlined the imperative for decisive leadership, a key finding of our research, but decisions have to be based on evidence, reality and deliverability. If ever there was a time to utilise wider experience it is now.