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Leadership

Why inclusion can help you to deliver successful strategies

Published 29 October 2021 in Leadership • 5 min read

When people in an organization do not understand why they are executing a strategy, or have had no involvement in its creation, it’s hardly surprising that things can fall apart. 

 

Our work with leading companies shows that inclusion makes a real difference in delivering successful strategies. At the Corporate Research Forum’s International Conference, I challenged delegates to reflect on ways to involve more people in their approach to strategy.  

When private equity firm 3G bought Tim Hortons, it had big ideas about how to make Canada’s go-to fast food chain more profitable, based on its experience with franchise-based challenger brand Burger King in the United States.  

3G hired in fresh young talent to drive new policies and urged franchise owners to offer customers limited time discounts and lots of new products – as if Tim Hortons, like Burger King, was challenging for the crown and not, like McDonalds, a top dog already.  

Of course, it didn’t work out. The franchise owners didn’t want to play ball, which resulted in a loss of trust. When asked why they were pursuing this new strategy, the young, bright things hired to help run the show had no convincing way of answering the question. They were just following orders.  

When people in an organization do not understand why they are executing a strategy, or have had no involvement in its creation, it’s hardly surprising that things can fall apart.  

Thankfully, there are other ways to approach both the development and delivery of strategy to improve engagement and performance in companies. Central to this is the idea of inclusion – where diverse employees are involved in the process, and therefore feel a sense of ownership, clarity and purpose. 

Initiatives to make Tom Hortons, Canada's fast-food chain, more profitable met resistance from franchise owners

Indeed, research published by Gartenberg, Prat and Serafeim in Organization Science has shown that there is a direct relationship between improved financial performance, a strong purpose, and clarity around people’s roles and responsibilities in delivering on that purpose. Based on a survey of 500,000 Great Place to Work respondents, they reported a 7.6% increase in financial performance among that particular subset of companies.  

Significantly, they also found that this improvement was most tangible when middle management and salaried workers felt connected to the purpose and strategy of the company. That means finding ways to include a whole range of employees that might never normally be involved in the creation of a firm’s purpose or strategy. 

How can your organization embrace the concept of inclusion to boost engagement among workers and enhance financial performance? When contemplating this question, it’s important to think of inclusion across two dimensions. First, the breadth of inclusion – how many people are you involving? And second, the depth of inclusion – what are you asking them to do?  

Four techniques to consider

1. Get more people involved 

Route one is simply to increase participation. It’s not perfect, but it has a big impact on how your employees feel. For example, Roche Diagnostics’ General Manager for Germany took a big leap of faith when updating the territory’s strategy. Instead of asking the executive team to come up with all the ideas, as per normal, he asked all 800 employees to say what they thought. As a result, engagement numbers at this regional arm of the Swiss multinational healthcare company went through the roof. 

2. Ask specific groups to take the lead 

Another option is to assign limited-sized, non-traditional groups to lead parts of the strategic process. Take the Finnish forest products firm Stora Enso. In 2011, the senior team of this big global company was all male, all white, all Finnish or Swedish, and all aged over 45. They understood that they did not necessarily have the right perspectives to build for the future, so they asked employees from across the company to apply to join a special group of “pathfinders” to act as a shadow executive board to devise strategic options for the future. A larger group of “pathbuilders” was created to continue this process and cascade the new strategy. The result was a linear increase in engagement, perhaps because the initiatives only involved a small number of a 20,000-strong workforce.  

3. Focus on the must-win battles 

This approach means not just democratizing the process of coming up with strategic options, but allowing a larger team to make strategic decisions based on those options. The incoming CEO of Northern European façade engineering firm Staticus wanted to change the habit of bringing in new people to fix problems by engaging more of the existing organization. In practice, this meant involving 25 out of 600 employees to decide what the critical priorities were and then to act as change agents to transmit the new approach throughout the company. With each change agent tasked with cascading the strategy to relatively small groups, Staticus’s engagement scores skyrocketed.  

4. Building strategy together  

Is it possible to involve large numbers of people at great depth in the strategic process, from coming up with ideas to making decisions and delivering on those decisions? Let’s go back to Roche Diagnostics. Following his success at the regional level, the head of Germany was promoted to lead a division of 1,600 people. He took a similar mindset to his new job. Through 60 workshops involving 800 people, 11,300 ideas were generated for the future, from which the groups made key choices for the division’s critical priorities. This initiative, under the banner “Building our organizational strategy together”, was a big success and resulted in a “step change” impact on engagement scores.  

As you explore options, it’s important to remember that embracing inclusion in strategy does not have to lead to a trade-off between the numbers involved and the depth of involvement. By going broad and deep with inclusion, executives can enable all employees in their organization to really understand what their roles are and the meaning behind strategic decisions in order to deliver successful strategies. 

Authors

James Henderson

James Henderson

Professor of Strategic Management at IMD

James E. Henderson is Professor of Strategic Management at IMD. Prior to joining IMD, he was an Associate Professor of Strategic Management at Babson College and Babson School of Executive Education, based in Boston, MA. He is Program Co-director of the Leading Sustainable Business Transformation program.

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