Story:
Democratizing the Corporate Strategy Process at Red Hat

First, leaders from across the organization worked together to develop an overall framework, identifying several areas both internal and external that we thought made sense to explore in more detail. Some examples of the types of areas we explored include the business model, operating model, technical vision, and commercial model for the organization. Then we brought in an experienced facilitator, Joe Anglim, to help everyone through the process.

We next recruited members of the leadership team to sponsor the exploration teams. All of the senior leaders of the organization were involved, and the team leads included executives like our CIO, VP of Operations, VP of Services, and VP of Marketing, among others. But rather than naming the "usual suspects," we asked leaders to step out of their comfort zones and lead efforts far removed from their daily responsibilities. For example, the head of the "People" team was asked to analyze the financial model of the company and the CFO was charged with exploring design and operational system enhancements. By setting it up this way, it wasn't just top leaders learning, but all of us.  Senior leaders gained perspective and understanding of worlds they'd never spent much time in before.

An Open Approach to Communications and Engagement

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. 

We looked for any and all chances to engage our people in a dialog, to start a lively discussion about our strategy at all levels within the company.

We also decided it was worth setting up a specific cross-functional team--a strategic internal communications team that included representatives from our people, brand, internal communications, and IT teams.  This helped us ensure we didn't take our eye off the ball. 

We built an internal wiki that leaders of each exploration team used to organize their thoughts and ideas out in the open where any employee could make comments or suggestions. Anyone who was particularly interested could read about the progress, and add their ideas or volunteer to help (and many did).

This information-gathering dialog lasted about 5 months. We communicated our progress along the way through regular updates at company meetings, through email, and on the Intranet. The strategy team leaders posted status updates to the wiki and replied to comments on their team's internal blog. Jim hosted a company-wide online chat session where associates could ask him any question they wanted to about the strategy process (or anything else that was on their minds), and team leads communicated key updates through company-wide announcements and discussions.

The leaders did as much listening as they did speaking on the topics. Thinking evolved as part of the process. For example, in the business model exploration, we started the conversation by talking about a defensive differentiation strategy that would halt our competitors progress, but quickly realized that focusing on ideas for how to create more value for our customers through the products and services we provide would yield even better, more compelling (and more sustainable) results.

Synthesizing the Ideas

Red Hat employees generated ideas--LOTS of ideas. In fact, they generated more than we knew what to do with. Many of these ideas were developed within the working teams and vetted via the wiki, but on other occasions, ideas from the broader associate base were incorporated in the thinking as well. Not every idea could bubble up and become part of the strategy effort, but the best ones did and spurred a lot of great dialog.

For example, it became clear that we needed to take another look at the mission of Red Hat (a process Jim Whitehurst wrote about for the MIX here) to make it more specific and easier for employees to rally around.  Jim formed a team to take on this task, and this team engaged the entire company in its development.

In another innovative example, the technology roadmap team not only engaged the best minds from within the organization to uncover ideas, but also pulled in the open source development community as well. We utilized existing networks in the open source community to "keep our minds open" and socialize ideas outside of Red Hat. 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. 

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. We even discussed potential strategies with the leaders of other organizations so they could understand our goals and help us work through ways that we could achieve them while not undermining the goals of the larger community.

The process to this point did a great job of coalescing market and customer insights, and identifying areas of opportunity, and some very clear themes began to emerge. But we knew deciding how to execute against these strategies was the next challenge, so it was time to shake things up.

Driving Accountability into the Organization

As I mentioned previously, each initial group had been led by a member of the senior leadership team. But now that we had highlighted our key areas of focus, we wanted to give people at more levels in the organization the freedom to decide how we would tackle the priorities.

We built entirely new teams around our new areas of focus, this time headed up by leaders a level removed from the senior leadership team. They, in turn, tapped the people with the most knowledge and the most interesting ideas to take charge of actually developing the strategy and plans in each area. True to the spirit of the Red Hat meritocracy, the people who were charged with actually developing the strategy and plans in each area were those who knew the most about it and had the most interesting ideas.

We designed a new communications plan for this phase, including creating an iconic diagram that we'd use over and over when leading conversations about the strategy process. This diagram worked like a "You Are Here" map that would show people where any discussion might fit into the overall strategy. We wanted to ensure that each associate understood how his or her work fit into a larger vision.

These groups took the major strategic themes and ran with them, building strategies and plans to execute on our new priorities. But where in most strategic planning projects, these teams would be asked to build strategies and plans and then bring them back to the leadership team to make decisions, we left accountability and responsibility in the hands of the people who knew the most--those who were doing the work.

This had three key effects: First, 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. By allowing the strategy to be developed at the same level in the organization where it would be executed, we empowered those who would have to implement the plans to control their own destiny. By giving them the freedom to develop the plans the way they saw fit, we increased their accountability for the end result.

Second, by leaving the responsibility for deciding what should be done deep within the organization rather than bubbling things up to the senior executive level for every decision, we avoided the typical 50,000-foot oversimplification of the strategy that so typically occurs in these projects. Much of the work Red Hat needed to do against these strategies was complex and nuanced. By letting people who understood this make the decisions, we were able to ensure the right plans were developed with the best information available.

Finally, by leaving it in the hands of the people who were working with these issues on a daily basis, we improved the flexibility and adaptability of the strategy. As new opportunities emerged or changes in the market occurred, the team was empowered to make changes real time rather than having to go back to the senior leadership team for approval. While the overall framework and initiatives stayed the same, each individual group had the ability to ensure their plans were current and agile. This was not simply a strategy planning team, it was the strategy execution team as well.

You won't be surprised to hear that there were times when we required that the whole company shift its thinking, and in these situations, the leadership team--and Jim in particular--stepped back in. In one instance, a strategic theme was not well articulated and was being misconstrued by many within the organization. Rather than sticking with it as originally envisioned, we renamed and repositioned it so that it so that it could be better understood and more inclusive of all of the tactics being implemented by multiple groups.

Executing the plan

In all our combined years of conducting strategy exercises Jim and I have never seen an organization follow through on its plan over a three-year period like Red Hat has done.  The framework, initiatives, and themes have remained intact--with every employee understanding the strategy and how they personally fit into it.  The teams have continued executing and adapting.  We've monitored key metrics along they way. 

Every team has made significant progress, and in some cases, people's "day jobs" have changed to give them even more time to directly work on executing against the strategy.

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.

As I write this, we are beginning to address new opportunities to compete in a quickly evolving enterprise infrastructure space that we would not have been able to address in the past. As we execute systematically against our current opportunities, we have provided ourselves with more freedom to begin thinking about exciting and different opportunities for the future.