Crowd-sourcing Strategy FormulationPosted: May 10, 2012
The current issue of McKinsey Quarterly features an interesting article on firms crowd-sourcing strategy formulation. This is another way that technology may shake up the strategy field (See also Mike’s discussion of the MBA bubble). The article describes examples in a variety of companies. Some, like Wikimedia and Redhat aren’t much of a surprise given their open innovation focus. However, we should probably take notice when more traditional companies (like 3M, HCL Technologies, and Rite-Solutions) use social media in this way. For example, Rite-Solutions, a software provider for the US Navy, defense contractors and fire departments, created an internal market for strategic initiatives:
Would-be entrepreneurs at Rite-Solutions can launch “IPOs” by preparing an Expect-Us (rather than a prospectus)—a document that outlines the value creation potential of the new idea … Each new stock debuts at $10, and every employee gets $10,000 in play money to invest in the virtual idea market and thereby establish a personal intellectual portfolio. … A value algorithm revalues each stock, based on … items completed, inflows and outflows of employee money, and opinions about the stocks expressed in an online discussion board. When an IPO gains momentum and breaks into the company’s Top 20, the initiative is funded with seed money… (Gast and Zanini, McKinsey Quarterly, May 2012)
To me, this seems like a very neat way to surface ideas from those in the best position to identify them. It also helps the company sift through the many bad ideas that are likely to surface. My guess is that this would not work in just any company. For example, a certain type of corporate culture is likely to be an important complementary asset. As such, it would seem to have implications for dynamic capabilities — perhaps even the sustainability of such advantages.
I can also imagine important implications for stakeholder management. This seems like a unique way to reach out to stakeholders of all types. Again, we know of many social media platforms that have died on the vine so it is likely that not all such efforts would take root. When and where would it be most effective?
Is anyone out there studying this yet? As usual, academics may not be on the leading edge of new knowledge (though we often tell ourselves otherwise)…