Over the last few years radical new practices have emerged in strategy-making that have been described as “open strategy” (Whittington et al. 2011; Hautz et al. 2017). While strategy was conventionally understood as the exclusive domain of an elite group within an organization, and treated with utmost secrecy, we find that companies are increasingly opening up their strategy-making processes, propagating greater transparency and inclusion. New practices such as strategy crowdsourcing (Aten and Thomas 2016; Stieger et al. 2012), the interorganizational exploration of strategic issues (Werle and Seidl 2012), and strategy jamming (Palmisano 2004) are all indicative of this tendency. These new developments in the area of strategy have been associated with that of open innovation more than a decade ago (Chesbrough and Appleyard 2007; Doz and Kosonen 2008). This suggests that, despite some differences between these two domains, some of the insights that are gained in studies on open innovation might also pertain to open strategy. A transfer of knowledge between these two domains calls for a systematic analysis of the similarities and differences between these two fields. This is what we set out to do in this essay. In particular, we will examine the concept of openness in the fields of open innovation and open strategy and we will compare these two fields with regard to the openness they exhibit.

The first step in this endeavor is identifying a theoretical perspective that is general enough to capture both phenomena. The existing frameworks that studies on open innovation use seem unsuitable for our purpose, because they focus on aspects of innovation that are not necessarily present in the domain of strategy, such as the role of intellectual property rights (Chesbrough 2006; Henkel 2006; von Hippel and von Krogh 2003). Given that in the case of both innovation and strategy openness concerns aspects of communication, we suggest that the two domains could be fruitfully analyzed from a communication-centered perspective (Craig and Muller 2007; Putnam and Mumby 2013; Luhmann 1995). In each domain, openness can be conceptualized as the opening up of communication processes in terms of the different dimension of communication: opening up in terms of the range of different participants, in terms of the range of different topics allowed and in terms of the range of different purposes of the communication process.

Against this backdrop, we specify our research question as follows: how do communication processes in open strategy differ from those in open innovation. Our analysis reveals several similarities between the two domains in terms of some of its communication topics, participants and purposes. However, we also identify some marked differences in terms of the particular constellation of openness in the three dimensions. While open innovation tends to be more open in terms of range of participants, it tends to be less open in terms of range of topics and purposes. Open strategy in contrast tends to be less open in terms of the range of participants but more open in the other two dimensions. As we argue, this is partly the result of an attempt at keeping the overall complexity of the communication process within manageable limits.

The rest of this essay is structured into four sections. In the first section, we will draw on communication theory to develop our approach to examining openness in the context of open innovation and open strategy. This will result in a communication-theoretical framework, on the basis of which we will discuss the commonalities and differences between open innovation and open strategy in the following section. In the fourth section we will discuss our findings and relate them to the existing literature. In the concluding section, we will rehearse the main points of our argument and develop an agenda for future research on openness in strategy and innovation.

Comparing open innovation and open strategy requires that we start by defining clearly each concept. In the case of open innovation, a decade of research has led to a variety of approaches, most of which are juxtaposed to “traditional”, “proprietary” or “closed” models of innovation. Chesbrough (2006, p. 1), for example, defines open innovation negatively as “the antithesis of the traditional vertical integration model where internal research and development (R&D) activities lead to internally developed products that are then distributed by the firm”. In contrast to the traditional approach, according to this newer perspective innovation processes “combine internal and external ideas into architectures and systems” (Chesbrough 2006, p. 1). Similarly, West and Gallagher, referring to the article by Cohen and Levinthal (1990) on absorptive capacity, define “open innovation as systematically encouraging and exploring a wide range of internal and external sources for innovation opportunities, consciously integrating that exploration with firm capabilities and resources, and broadly exploiting those opportunities through multiple channels” (West and Gallagher 2006, p. 320). In contrast to these very broad and paradigmatic approaches to open innovation, others focus more on the role of intellectual property (IP) in open innovation. Baldwin and von Hippel (2011, p. 1400), for example, state that an “innovation is ‘open’ in our terminology when all information related to the innovation is a public good – nonrivalrous and nonexcludable”. This definition of “open” differs from Chesbrough’s much broader notion of openness in the sense of ‘openness’ to the acquisition of new ideas, patents, products, etc., from outside [an organization’s] boundaries” (Baldwin and von Hippel 2011, p. 1400).

Soon after Henry Chesbrough (2003a, 2003b) popularized the concept of “open innovation”, he was accused of presenting “old wine in new bottles”. In a paper with exactly this phrase in the title, Trott and Hartmann (2009) brought forward considerable evidence that many corporations have long been engaged in R&D activities that resemble the principles of open innovation that Chesbrough (2003a) described and that in fact there was already some research on each principle. However, while certainly making some valid points, Trott and Hartmann (2009) overlooked Chesbrough’s main contribution, which is the recombination and repackaging of different, previously unconnected insights into innovation under a new label: open innovation. Even Trott and Hartmann themselves acknowledge that “the dichotomy between closed innovation and open innovation may be true in theory” and call it a “helpful and stimulating tactic to introduce a “new concept” (such as Open Innovation) to companies that are already most of the way there” (Trott and Hartmann 2009, p. 728).

Some of the founding works of open innovation have also laid the foundation for the more recent debate on open strategy, which analogously distinguishes “open” from “traditional” or “closed” approaches to strategy-making. Tying the notion of open strategy to that of open innovation, Chesbrough and Appleyard argued that open strategy “balances the tenets of traditional business strategy with the promise of open innovation” (Chesbrough and Appleyard 2007, p. 58). Similarly, in their assessment of the concept of open strategy, Whittington et al. (2011) suggested that open strategy challenges traditionally exclusive approaches (see also Hautz et al. 2017). In their definition of open strategy, Whittington et al. (2011, p. 534) went so far as to argue that “open innovation is a subset of open strategy: innovation is just one of many kinds of strategy process increasingly subject to openness”. Stieger et al. (2012), in one of the first empirical works on open strategy, similarly emphasized that the origins of employing crowdsourcing methods in strategy-making lie in open innovation. There is a host of different items that can be subsumed under the label of “open strategy”, including the inter-organizational exploration of strategic topics (Werle and Seidl 2012), collaborative strategy-making between organizations (Hardy et al. 2006), strategy crowdsourcing (Stieger et al. 2012), strategy jamming (Palmisano 2004) and public strategy updates (Whittington et al. 2011).

While open innovation and open strategy have many aspects in common, the central link between the two is, of course, “openness”. Also, in both open strategy and open innovation, previous studies identify substantially similar – albeit differently labeled – dimensions of openness when describing the respective processes. Dahlander and Gann, who conducted a systematic review of the literature on open innovation, distinguished different forms of openness with regard to inbound vs outbound processes and non-pecuniary vs pecuniary processes and discussed “two forms of inbound innovation – Acquiring and Sourcing; and two outbound – Selling and Revealing” (Dahlander and Gann 2010, p. 700). Similarly, in the context of crowd science projects, Franzoni and Sauermann distinguished between “openness in project participation and openness with respect to the disclosure of intermediate inputs such as data or problem solving approaches” (Franzoni and Sauermann 2014, p. 7). In the field of open strategy, Whittington et al. (2011, p. 535) defined openness as “widening inclusion and increasing transparency” with regard to both internal and external stakeholders.

While the distinction that Dahlander and Gann (2010) drew between pecuniary and non-pecuniary aspects specifically relates to open innovation inputs and outcomes in the form of products or intellectual property rights, their distinction between inbound and outbound innovation is similar to the core distinction that Whittington et al. (2011) drew between inclusion and transparency. The distinction between openness in participation and the disclosure of intermediate inputs that Franzoni and Sauermann (2014) proposed also refers to similar characteristics.

In its most general sense, the notions of inclusion, participation, and transparency in the literature on open innovation and open strategy concern aspects of communication regarding innovation and strategy. Hence, a communication perspective can be a useful device for a comparative analysis of these streams of literature.

When focusing on communication, the most straightforward interpretation of openness refers us to the number of possibilities there are to carry a specific communication process forward in a meaningful way: If many different people can say many different things for many different reasons, we would consider this to be an open communication process. In a closed communication process, on the other hand, only a very small group of people can say very specific things for a very limited number of (legitimate) reasons – everything else will be considered meaningless for this communication process. Hence, when taking a communication perspective, the notion of openness directly refers us to the concept of meaning.

Building on Luhmann’s conception of meaning (1995, 2012, 2013), the openness of any communication process can be further specified in terms of the three dimensions of meaning – sociality, factuality and temporality. In social systems, sociality “concerns what one at any time accepts […] as an ‘alter ego’” (Luhmann 1995, p. 80). The social dimension, therefore, refers us to the question of which individuals are treated as relevant participants in a communication process; i. e. who is addressed and/or will be listened to. Hence, the openness of a strategy or innovation process with regards to the social dimension can be operationalized in terms of the variety of the different groups of people whose contributions will be treated as meaningful for that process. While in a typical “closed” innovation process, for example, only a small R&D team will be allowed to participate, open processes are often set up in such a way that they allow a wide variety of internal and external stakeholders to take part (e. g., Chesbrough 2006).

Factuality or the fact dimension of meaning, in turn, concerns the “themes of meaningful communication” (Luhmann 1995, p. 76). It refers us to the question of what can be addressed in a specific strategy or innovation process. Hence, openness of a strategy or innovation process with regards to the fact dimension concerns the range of different topics that can be discussed. In a traditional or “closed” product innovation process, for example, communication might be restricted to a specific, pre-defined product group or market (e. g. Bower and Christensen 1996). Open innovation processes, on the other hand, will typically be much more receptive to ideas about innovation in a wide variety of different product groups or markets (e. g., Baldwin and von Hippel 2011).

The last dimension of meaning, temporality, concerns the temporal projections in communication, particularly the past events and experiences on which communication is based as well as the future aims and goals at which communication is directed (Elias 1992; Luhmann 1995, 2013). Hence, openness of a communication process with regards to the time dimension refers us to openness in terms of the capability to integrate different purposes by allowing for different interpretations of the past, as well as different visions for the future (Kaplan and Orlikowski 2013). A “closed” strategy process, for example, will be characterized by a very restrictive understanding of the lessons to be learnt from the company’s past, as well as a rather limited range of options that are deemed as desirable for the company’s future. As a result, the range of meaningful purposes of that strategy process, i. e. acceptable strategies, will be very limited as well (cf. Hendry and Seidl 2003). An open strategy process, on the other hand, puts both, the lessons to be learnt from the company’s past, as well as the visions for its future, up for discussion. As a result, the number of acceptable and meaningful purposes that might drive the whole strategy process in the end will rise (cf. MacIntosh and MacLean 1999).

Apart from offering a refined understanding of the constitutive dimensions of meaning in communication, Luhmann’s communication theory points us to some important tensions that exist between these dimensions. As the capacity of organizations to deal with complexity is limited, increasing the openness, and hence complexity, of a communication process in one dimension of meaning will result in pressures to provide structure, that is, to decrease openness, with regards to another dimension of meaning (Luhmann 1995, 2012). If an organization, for example, decides to let multiple stakeholder groups participate in its strategy process, thereby increasing the openness with regards to the social dimension of meaning, the overall complexity of this process will rise. One way to reduce this complexity again could be to somehow restrict the discussions among these stakeholder groups to a limited number of topics or even to a single topic. Examples for such an approach are crowdsourcing approaches described by Afuah and Tucci (2012), which invite all kinds of participants (“distant search”) to address one specific problem.

This points us to an insight that has just recently come to the attention of open strategy scholars (see Hautz et al. 2017). Openness is not something that is unconditionally desirable and productive: Openness constitutes a continuous challenge to the formation and continuation of strategy and innovation processes because there exists a “risk of dysfunctional escalation of openness, for example the excessive promotion of individual interests of problems of information overload” (Hautz et al. 2017, p. 4). Therefore, opening up a process in an uncontrolled way and on all dimensions can also introduce a level of internal complexity that results in chaos and the dissolution of this process (as a meaningful unity). Only, if the openness of the process is at, rather than over, the edge of chaos, will we see the emergence and adaptivity that enables organizations to acknowledge the inherently emergent character of strategy-making (Mintzberg and Waters 1985; Schmitt 2010) as well as the exaptive potential of innovations (Dew et al. 2004).

On the basis of these conceptual considerations, we can develop a basic framework of openness from a communication perspective, which is represented in Fig. 1. In this figure the three dimensions of openness are represented as corners of a triangle. The higher the degree of openness in a particular dimension, the further the respective corner is pushed outwards. The surface area of the triangle symbolizes the overall complexity of the communication process, which is a result of the degrees of openness in the three dimensions: The higher the degree of openness, the larger the surface area. Hence, when extending the degree of openness in one dimension one has to reduce the degree of openness in the other dimensions if one wants to keep the overall surface area, i. e. overall complexity, at the same level. However, the figure also symbolizes that the extension of openness in one dimension typically also affects the degree of openness in the other dimensions, i. e. by pushing out one corner of the triangle, the other arrows become longer as well – unless those angles are pushed in. For example, by extending the range of people involved in the strategy or innovation processes we would typically expect that more topics will be brought up and a greater variety of purposes will be brought in by those participants – unless the topics and purposes are actively restricted.

Open image in new window

Taken together, this framework of openness enables us to develop an answer to our basic research question, namely in how far communication processes in open strategy and open innovation differ. On this basis we can now analyze the respective literatures with regard to the differences and commonalities in the three dimensions of openness – factuality, sociality and temporality – and with regard to how openness in each of these dimensions is established and sustained effectively.

When looking at the differences between open innovation and open strategy along Luhmann’s (1995, 2012, 2013) three dimensions of meaning, we can observe differences with regard to the degree of the respective openness. Open innovation is generally very open on the social dimension, inviting very wide and diverse “crowds” of people to contribute, for example, in “distant search” (Afuah and Tucci 2012). Leveraged by mainly digital crowdsourcing tools, the openness in terms of participants typically comes at the cost of restricting openness regarding topics and/or purposes in the factuality and temporality dimensions respectively.

Contrariwise, the empirical open strategy studies analyzed in this paper show a greater bandwidth of topics and purposes being discussed with comparably less openness in terms of potential contributors. Often, cases of open strategy-making only invite members of the respective organization to contribute. Our communication lens on the two phenomena thus reveals not only in what way open innovation and open strategy differ, but also show that neither of the two may feature completely unrestricted openness. In Fig. 2, we have illustrated the characteristic differences between open innovation and open strategy in terms of their degrees of openness in the three dimensions of meaning. Open innovation tends to have a very pointed shape with a long arrow in the social dimension, but short arrows in the other two dimensions. Open strategy in contrast has a fairly flat shape, with a short arrow in the social dimension, but long arrows in the other two dimensions. In spite of these differences, the surface area of the two triangles is more or less the same.

Open image in new window

However, while drawing these broad distinctions between open innovation and open strategy seems to be a permissible generalization, we can also observe a lot of variation within these groups. Some open strategy processes are indeed more open with regard to the social dimension, for instance in the case of Wikimedia, where literally thousands of volunteers and Wikipedia readers were invited to take part in a one year strategy process. As described by Dobusch and Müller-Seitz (2012), this openness created substantial difficulties to bring the open strategy-making process to a close, ending in a tiny group of consultants finalizing the strategic proposals eventually (see also Heracleous et al. 2017). On a much more general level, this is also discussed by Hautz et al. (2017), who speak about dilemmas of open strategy. Dilemmas of process, commitment, empowerment, disclosure, and escalation, all refer to the pressures on the fact and/or the time dimension that come from opening up the social dimension and which are likely to only unfold over time. The flipside is also true for some cases of open innovation that are more open in the temporal dimension (e. g., Fichter 2009) effectively resulting in restrictions on who was allowed to participate in the social dimension of increasingly “strategic” innovation decisions.

In our analysis of open innovation and open strategy so far, we have dealt with each separately. Yet, the processes of innovation and of strategy-making are often interlinked. For instance, comprehensive concepts of open innovation as a paradigm (see, e. g. Chesbrough 2006; von Hippel 2005) and works that place open innovation in the tradition of absorptive capacity (see, e. g. West and Gallagher 2006) increasingly incorporate aspects of open strategy. In some cases, topics that concern innovation are addressed from a perspective that is informed by strategy-making; in other cases, innovation and strategy are treated as alternating phases. As mentioned above, Whittington et al. (2011) would even go so far as to treat innovation as part of strategy. “Fundamentally,” they argue, “open innovation is a subset of open strategy: innovation is just one of many kinds of strategy process increasingly subject to openness” (Whittington et al. 2011, p. 543); for them, innovation is always strategic. While we agree that innovation and strategy are often closely related, we do not subscribe to this line of reasoning. Rather, we would argue that, even where strategy and innovation are linked empirically, it is possible to distinguish between them analytically. Thus, in contrast to Whittington and his colleagues, we distinguish between cases of open innovation that do not involve open strategy and cases that combine both.

A good example of cases that combine open innovation and open strategy is user innovation, where focal organizations pick up and build upon innovations that have emerged in a user community (Füller et al. 2013; Piller and Walcher 2006; von Hippel 2005). If open innovation becomes part of the strategy process, joint sensemaking will become important. For example, Fichter (2009) discussed organizations that share organizational and informational resources and thus build an innovation community, which contributes ideas and solutions that the organizations pick up and develop further. However, the necessity to build a community with certain rules and boundaries as a basis for joint sensemaking effectively reduces openness compared to mere crowdsourcing approaches. In other words, an organization is likely to pay a price in terms of openness in the sociality dimension due to adding the variety of accepted purposes by including strategic aspects and thus effectively increasing openness in the temporal dimension.

This has implications for those cases where open innovation may lead organizations to open up in other aspects of the value-creation process, such as strategy. Henkel et al. (2014, p. 888), for instance, speculated that open innovation “might be a potential first step toward more intensive collaborations with externals”. However, in the light of our comparison between open innovation and open strategy, we would expect such a development to require some re-balancing regarding openness in the sociality dimension. In other words, organizations probably need to be more careful in selecting potential participants for overall strategy-making than for those contributing innovative ideas.

In this paper, we have developed a communication-theoretical perspective on open strategy and open innovation. We argued that in its most general sense openness in strategy and innovation concerns aspects of communication. Drawing on Luhmann’s (1995) communication theory, we identified three different dimensions of communicative openness – openness in terms of the range of people participating in the communication (social dimension), openness in terms of the range of topics (factual dimension) and openness in terms of the range of purposes of communication (temporal dimension). The greater the degree of communication in these dimensions, the greater is the complexity of the communication process. We argued that due to the limited capacity to handle communicative complexity, there are limits to the degree of openness. Hence, increasing openness in one dimension is typically associated with lowered degrees of openness in others. Reviewing the respective empirical literature, we identified similarities and differences of openness in the three dimensions between open strategy and open innovation. On the most abstract level, we find that cases of open innovation tend to exhibit high degrees of openness in the social dimension and lower degrees of openness in the other two, while open strategy tends to exhibit the opposite constellation with lower degrees of openness in the social dimension and higher degrees in the other two.

Against the background of our communication-theoretical framework and the reviewed literature we can now develop an agenda for future research on openness in strategy and innovation. We propose three main areas for future studies. The first area of research concerns the different constellations of openness regarding the different dimensions. While we have already identified general differences between open strategy and open innovation in their tendencies to open up in the different dimensions, we lack systematic research into the specific ways in which the three dimensions interrelate. As addressed above, changes in the degree of openness in one dimension typically lead to changes also in the other dimensions – unless the latter changes are actively restricted. For example, including more people will typically lead to a greater variety of topics and purposes that these additional people bring in, if this is not actively restricted. Future research should examine systematically the mechanisms through which the different dimensions of openness are related to each other and the techniques through which natural increases in openness can be restricted. Such research could also result in a typology of constellations of openness in the areas of strategy and innovation. At the same time, various topics in either strategy or innovation may have an impact on how respective processes unfold, making it worthwhile to bring the actual issues discussed back in.

The second area of research concerns the developmental dynamics of openness. As existing research has shown, the degree of openness often changes in the course of a strategy or innovation process. Dobusch and Müller-Seitz (2012), for example, described how the strategy process at Wikimedia changed between phases of extreme openness and closure. Such changes in openness over time can be seen as ways of managing the communicative complexity resulting from openness. As studies have shown (Hautz et al. 2017; Baptista et al. 2017), reducing degrees of openness tends to lead to tensions that need to be managed skillfully. Future research could track systematically how openness and closure of strategy and innovation processes change over time trying to identify characteristic patterns – particularly also across the three different dimensions of openness. Furthermore, future studies could examine how such changes in openness are accomplished – and challenged – by either focal or more decentralized actors.

The third area of research concerns the role of technologies in managing openness. As the literature has shown (Whittington et al. 2011; Haefliger et al. 2008), the emergence of new technologies has enabled the trend toward more openness in strategy and innovation. Apart from making possible to reach more distant audiences, these new technologies are offering new means of handling communicative complexity. For example, crowdsourcing software (Aten and Thomas 2016; Stieger et al. 2012) allows structuring and processing thousands of contributions. From the perspective of our communication theoretical model, this means that the communication technology influences the degree of overall complexity that can be handled and hence the possible expansion of the surface area of our triangle of openness. Based on this line of reasoning, future research could examine the precise impact of different technologies on the ability to handle complexity in the three dimensions of openness. For example, some technologies might be better at handling complexity in the social dimension while others might be better at handling complexity in the temporal or factual dimension.

Taken together, our communication-theoretical perspective on openness in the field of strategy and innovation offers a way to compare and relate these diverse literatures in a meaningful way and highlights a range of different avenues for future research. These research opportunities have the potential not only to advance our theoretical understanding but also to shape the practical engagement with these important new developments in business life.