A great internal debate has raged for many years within the management ranks of US corporations. Should strategy be top down or bottoms up? Both sides agree strategy is about organizational change. The battle seems to be over who controls the change.
The top down view is that while Strategy is about change, organizational change and Strategy are not the same things. Organizational change is a result of strategy, not a driver of strategy.
To simplify, the highest levels of management, a group I will label as executive management determines strategy and passes it down through the organizations management layers. Middle management is responsible tactical efforts, preparation and readiness. First level managers are responsible for execution and operations.
The Top down crowd sees strategy as finding a direction and setting a course. It is about matching the ways, means and ends. Strategy is not about preparation to execute or the act of execution. Strategy must be a top down effort.
The Top down crowd even has laws that guide the philosophy. Chandler’s Law, which has been the rule for well over a half a century -- structure always follows strategy, and systems always follow structure. And Ghoshal’s Law, which has been a supporting rule for the last decade -- process always follows purpose and people always follow process. With the most current Top-down philosophy interweaving these two laws together – Purpose to Strategy to Process to Structure to People to Systems.
The bottom line is that the intent is organizational structure and systems will change, in order to implement the strategy. Bottoms Up strategy tends to be more about culture driving strategy, which means that structure and systems driving direction.
2 comments:
Hi Michael, interesting post but if I've read this correctly, I wouldn't necessarily say that culture driving strategy is a bottom up approach, rather that culture and values are a combination of resources and processes and play out in both a human and a finacial sense.
Hi Bruce. I guess that values are included in my definition of culture. I also include behaviors that are driven by rules and beliefs.
I guess I would suggest we can have the very same resources (people) and processes (actions) within two or more different cultures, and produce very different results.
I have found that culture is more powerful than policy. Enron is a great example. People are willing to break laws at work, that they would not break at home or in church.
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