When Top-Down Brings you Down

There have probably been times when you were the last person to hear about your company’s new strategy for innovation.

Because many big companies still cling to an antiquated notion of top-down “strategy”.

You’ve no doubt witnessed this method, where senior leaders dictate new strategies with little or no input from those at the ground level. It has long been the norm in business.

But in organisations that aspire to be innovative, this old-school approach is nonsense.

[Note: If you're interested in reading more about Innovation Strategy and how to structure it, check out the previous edition of Culture for Lunch on this topic.]

In today's article we’ll look into the limitations of a top-down, secretive approach to innovation strategy (and to strategy in general).

We’ll look at some of the real-world implications for innovation and compare them to the benefits of bottom-up contributions.

Because we need to answer a critical question:

To what extent do smart, visionary leaders unwittingly HARM their company’s potential for innovation and employee engagement?

How can we turn this around?

I hope that I can invite corporate leaders and innovation professionals to rethink how “strategy” gets formed within their organisations.

There are plenty of reasons why a more democratic and inclusive approach is needed nowadays if we want to encourage a healthy culture of innovation and for innovation itself to produce meaningful results.

1. Why Top-Down Innovation Strategies Fail

The stereotypical example of a top-down strategy is when a senior management team, often guided by well-dressed management consultants at eye-watering cost, detach themselves from the day-to-day business to craft the company’s next wave of strategic moves.

After much debate, much reflection and much caffeine, guided by well-travelled frameworks from the consultants, a gigantic deck of beautiful PowerPoint slides is produced – accompanied with an abstract new slogan like

🤗 "Shaping the landscape of tomorrow”

Or

🫡 "Orchestrating global solutions in an ever-changing world“

Next up is to communicate this grand new strategy “to the troops”.

Different people react to new strategies in different ways of course – some are naturally open, some are naturally averse to the slightest change.

But a rule of thumb I have observed is that, much to the disappointment of the hard-working managers and consultants who produced it, employees tend to be far less enthusiastic about the new strategy than its creators expected.

Rather than quote statistics on this kind of anticlimax (which I don’t have) I invite you to reflect on your own experience: Have you been on the receiving end of top-down strategy?

When there’a lack of employee involvement, it’s no surprise that companies see a disconnect between the new strategy its and implementation in practice.

In my experience such a lack of involvement has led to unrealistic expectations in the execution phase.

Generally, the less people are involved in the “strategising” phase, the less people will involve themselves in the execution phase.

And while there will always be some resistance to change, strategies handed down from above like the Ten Commandments are FAR more likely to meet with resistance from employees who played no part in the decision-making process.

(Beyond apathy, some people even sabotage new the strategy.)

Without diminishing the genuine brilliance of many top leaders and consultants, there are always nuanced insights that only employees on the front lines can provide.

To ignore the input of those who have daily contact with customers, suppliers and job applicants is madness.

Engagement in innovation inevitably suffers.

It’s tempting to wonder, “does this really matter?” 🤷

Well yes, I think it matters greatly. Innovation is the key to growing productivity and prosperity – both for a company itself and for the economy in which it operates.

Given that most companies are dissatisfied with the results they get from innovation, I believe it’s right to point the finger at the way “innovation strategy” is conducted.

So how might we turn this around?

2. The Benefits of Bottom-Up Strategy

Contrast the old-school approach mentioned just now with one where we consult with teams and colleagues throughout the organisation (and not just their managers).

The strategy process should begin with asking these colleagues for input based on what they see and hear every day.

I’ve found that such an approach has many advantages.

If two brains are better than one, then 10,000 brains are better than any top team – no matter how gifted. At least when it comes to creativity and innovation.

Because in the early stages, creativity is a numbers game.

More contributions means more data points and therefore a richer basis on which to craft a strategy.

This makes things more difficult, because there are many more people to engage. But the enhanced diversity of signals and ideas should far outweigh the cost of involving them.

It also means that an innovation strategy that combines input from all levels is far more likely to be aligned with the practical realities of the business. (Think of really basic things like how many phone calls can a human operator answer in one day.)

So you can expect the implementation to go much more smoothly.

Most impactful though is the impact of involvement on people’s sense of ownership and motivation.

When employees take part in the early stages of crafting a new strategy, their commitment to executing this new strategy is infinitely higher than when the strategy is parachuted from above.

The evidence seems to back this up: Research from McKinsey (no less!) found that organisations that empower employees to contribute to change efforts are 30% more likely to experience successful transformations.

HCL Technologies, an Indian multinational, has implemented an "Employees First" approach that involves employees in decision-making processes. All signs suggest that this has resulted in a greater commitment to innovation and has helped make HCL one of the fastest-growing technology companies in India.

Does this suggest that a company’s employees are its main strategists now?

3. Bridging the Gap

To involve people in strategy doesn’t mean that we become dependent on front-line staff to create the new strategy, nor is it their job.

It doesn’t relieve senior leaders of the responsibility for crafting and owning the strategy.

Nor does it mean that external consultants have no role to play.

👉 After all, the goal is to craft and implement a strategy for innovation that goes beyond what is being done today. Leadership brilliance and an external perspective will always have a significant role to play here.

So how do we combine their strengths with the ear-to-the-ground input we collect throughout the company?

First, the relatively easy part…

Senior management need to give managers and employees at all levels the time to discuss and reflect on strategic topics together. This simply means stepping away from operational responsibilities for a meeting or a workshop in order to think about longer term issues that affect the company.

Another effective change is to bring in continuous feedback mechanisms. Since “strategy" is not a one-off event, it makes complete sense to seek feedback from teams across the organisation about the old strategy.

Obviously this feedback needs to be considered when crafting any changes to the strategy.

But now for the hard part: You guessed it – some cultural shifts are required! 😉

Top executive teams increasingly need to demonstrate leadership styles that are open, inclusive, consultative and receptive to feedback.

Their ability and willingness to communicate –even over-communicate– are also important cultural ingredients for successfully shaping innovation strategy.

Anecdotally, I’ve certainly noticed a correlation between leaders who are both confident and competent when it comes to strategy and those who meaningfully involve teams and colleagues at all levels.

Arguably the causation could run both ways:

(a) Leaders who involve their teams can feel more confident that their new strategy will be accepted and implemented;

(b) Leaders who feel confident in their abilities around strategy are less likely to feel threatened by the input of more junior colleagues.

Collectively, both senior leaders and employees throughout the organisation need to feel incentivised to be more future-focused.

When an organisation creates an environment in which the whole company can have sensible, grown-up conversations about its long-term future, you create the conditions for an impactful strategy for innovation to flourish.

Leaders Still Gotta Lead…

In conclusion, to address the limitations of top-down strategising doesn't mean abandoning it, nor delegating it entirely.

Ironically, the solution in my view begins with... a top-down approach.

✋ But wait, this is not a contradiction! Please appreciate the nuance.

Leadership must initially dictate the shift towards a more inclusive strategy-crafting process.

By setting the tone and a framework for company-wide integration, leaders can ensure that the insights and creativity found at all levels of the organisation are heard, sought out – and implemented.

This strategic shift is essential for driving a culture in which each employee feels empowered to make a contribution to the company strategy.

This in turn enhances engagement, drives innovation, and –hopefully!– improves overall company performance.

Leaders who take this approach seriously will find that they’re not just inventing decent strategies, but they’re also developing a more dynamic workforce, with a greater capability to adapt when business conditions require it.

So in summary…

1. Set the tone and enhance the culture, top-down.
2. Seek out information and ideas, bottom-up.
3. Craft and communicate an inspiring, inclusive strategy, top-down again.

I hope it's clear that what all companies need is a clever mix of top-down and bottom-up approaches, to create an innovation strategy that is effective, sustainable and widely supported within the company.

I sincerely believe that all corporate leaders –particularly those who are disappointed with their company’s results from innovation– should consider how they can start to modify their approach to innovation strategy. 

Making innovation strategy a more inclusive process takes nothing away from the need for strong, inspiring leadership in innovation.

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