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How top-down and bottom-up strategy processes are combined in manufacturing organizations

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We study strategy processes at six German manufacturing organisations in mature businesses. We use an organisational search perspective to interpret simultaneous top-down and bottom-up strategy making. While the final decision on important strategic initiatives remains at the top, strategic initiatives are distributed across many actors at varying hierarchical levels, depending on where expertise is concentrated: product-market positioning and large technological investment initiatives typically come from the top, method initiatives from the middle, and process improvements from the front line. On bottom-up created initiatives, top management guides and prioritizes but does not make content decisions. Thus, the top-down vs. bottom-up balance varies within the same organization according to the problem-solving area. Search theory predicts that coordination is an important part of strategy making, as it assures consistency among multiple parallel initiatives. Each of the six organizations uses multiple coordination mechanisms, including structures, processes and communication routines. Both coordination and top-down decision making represent control, in other words, alignment with the strategy and among actors. However, control must be weighed against the creativity that stems from delegated search; increasing top-down and coordination intensity may control and thus channel the organization’s exploration activities, but excessive control suppresses and paralyzes exploration by potentially better informed operational actors. Among our organizations, two suppress bottom-up creativity by excessive control, while one organization loses market effectiveness (and thus profits) because of inconsistent actions allowed by excessive autonomy. A framework emerges that allows us to articulate the control vs. creativity tradeoff in strategy processes, and measure both top-down intensity and coordination intensity.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2009/2009-60.pdf

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Copyright INSEAD. All rights reserved