Strategic Decision-Making: Bottom-Up or Top-Down?

One of the many challenges facing business leaders when changing strategic direction or reviewing new opportunities is knowing how or when to involve the company at large in the process. It used to be that strategy was strictly for the Board of Directors or the most senior executives and it's true that the final decision -- the buck -- stops with the CEO and perhaps a few executives at the top. However, there is a golden opportunity to engage the workforce up front so that they know what they are going to execute and why. This approach also can make for better decision-making.

A few thoughts below on why gathering ideas and information as well as assumption-testing and implementation is a Bottom-Up process while the final decision is Top-Down.

Diversity of Thought: Once we get to the top of wherever we are, we tend to share the space with others who think like us. Introducing other people who are at the front end with customers and suppliers or who have a unique perspective like Human Resources, Marketing, etc. will provide a broad spectrum of information and insight that is invaluable when evaluating opportunities. Experience tells me that there is always at least one person who brings a point of view so different from the business leaders and so on the mark that it changes the course of strategy development for the better.

Utilize Bias: Rather than thinking of bias as a negative, consider it a necessary part of evaluating strategy and opportunities. Our experiences and the work we do shape our perspectives; we recognize other peoples' biases and tend to view them unfavorably unless they mesh with our own. The leader's job is to acknowledge the biases, including her own, balance them with good dialogue and help the contributors have their say without dismissing their ideas prematurely.

Use Scenarios: It's a rare thing to find that a strategic decision is correct 100% of the time. There are complex ideas, a lot of information and many assumptions that go into the process. There also is a need to avoid paralysis and make the best decision in the time available. That's why it's critical to have all assumptions documented with alternative scenarios or plans in the wings to course correct. The worst case is having the company execute the strategy, get a long way down the road before it's discovered that certain assumptions were incorrect and the strategy is flawed. Aside from wasted time and resources, employee could see the failure as their own and will be reluctant to get behind the next important decision. It's important to let employees know that testing assumptions is part of strategy execution and that raising a red flag is a critical part of their jobs. This is how successful strategies are designed: they aren't perfect 100% of the time at the outset but there is a process to modify and move on.

Make Timely Decisions at the Top: That's the job of the CEO. It's why they are called decision-makers.

Use Strategy Maps, Metrics and Scorecards: Translating complex ideas into visual representations and creating metrics that test the success of a strategy are both helpful tools for the business leader and employees who have to implement. It isn't necessary to invest in sophisticated technology. Below are a couple of examples using only the software on our laptops (thanks go to my business partner, Cathy Missildine-Martin, SPHR for creating these).

Scorecards should be created at the lowest level that can be properly measured and aggregated. Metrics are relevant to that level (can be aggregated or disaggregated) and are designed to help everyone understand what is being done, what they are responsible for and how they are contributing to the success of the company. Isn't that the definition of engagement?

So, the final decisions including those that pull the trigger or the plug as well as the tools and the responsibility for idea gathering is still Top-Down. Idea generation, testing assumptions and providing feedback on what's working and what isn't is Bottom-Up. It's a two-way street.