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top-down, bottom-up business strategy development

business strategy development

source: Rosabeth Moss Kanter, Harvard Business School

by Kenneth Rudich

The galloping pace of change in today’s business environment puts management at the mercy of having to deal with significant uncertainty.  It makes strategy development a dynamic and unfolding process.  Valter Lazzari, a Professor of Banking and Finance, describes it as emergent and adaptive, not static.

marketing strategy management implications

With an endowed chair at the Harvard Business School, Rosabeth Moss Kanter offers an even more radical perspective on the modern day concept of strategy.  She contends there are two different types of strategy: one is the longstanding convention of a scripted strategy, and the other is what she calls improvisational strategy.
 
The difference between them is that scripted strategy, like scripted theatre, is top-down and is comprised of an “analyze-plan-act” sequence.  Improvisational strategy, on the other hand, is more bottom-up in approach and is comprised of an “act-learn” sequence, during which small steps are taken to grow a strategy through action.  Much as the actors in improvisational theatre are relied upon to invent applicable responses to changing circumstances, so too are the employees in improvisational strategy.
 
In a complex and uncertain world, where the prospect of being outpaced by change is like constantly having a wolf at the door, Kanter believes improvisational strategy has certain advantages over scripted strategy. 

According to her research, improvisational employees were more likely to run adaptive experiments and prototypes in response to customer reactions, while scripted employees waited for answers to come cascading down from the top.  Improvisational companies were nimble in the face of uncertainty; scripted organizations showed a tendency to become paralyzed.
 
If responsiveness is critical to an organization’s success, then improvisational strategy has a far better chance of fostering it.  Kanter claims the improvisational employees typically emerged from the period of experimentation with improved models for meeting the organizational goals and objectives.

which is better

Andrew Campbell, Director of Ashridge Strategic Management Centre, asserts that neither type of strategy is better than the other.  Both serve a vital purpose when properly deployed.
 
The top-down scripted approach puts a face on the future by conveying the business course and direction, and it gives clues on how everyone should proceed.  It becomes a focal point around which all the other activities are formed.
  
But because no one can know for certain, or have the foresight to guess, what’s actually going to happen, it becomes advisable to also give employees the freedom to improvise – that is, enough wiggle room, or a safe zone, to invent solutions through trial and error.
 
Kanter says, “Leaders still need to establish themes, set goals, identify priorities, and assess results, seeding new projects and weeding others.  But instead of relying on the script, they empower the actors to invent productive responses to changing circumstances.”

the key to contemporary marketing strategy management

The key to making this work is for upper management to constantly stay abreast of what is happening throughout the organization, to recognize and reward productive responses, and to regularly adjust and re-adjust the organization’s business strategy as short term circumstances affect longer term prospects.
 
The ideal is to harness the best of both strategy development techniques and use them to keep the organizational goals and objectives in a consistent alignment all across the value chain.

Related Articles:

Evaluating Business Strategy with a Value Chain Approach

A Value Chain Approach to Marketing

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