“Successful firms are characterized by maintaining bottom-up driven internal experimentation and selection processes while simultaneously maintaining top driven strategic intent” Stanford professor Robert Burgelman once wrote.
And I thought “What…?!”
What (on earth) might Robert mean with that? I don’t know but I am willing to take a guess. Let’s take the first part: “Bottom-up driven internal experimentation and selection processes”. You have to realise that Robert spent much of his academic life in Intel, studying how they developed strategy. And he found that for instance their big success – microprocessors – wasn’t the result of some planned analytical strategy-making process at all. Instead, Intel’s top management had allowed employees to work on some of their pet projects and technologies that these individuals were very enthusiastic about, but from which is was actually quite unclear if they would ever lead to anything useful (and profitable).
Many of these pet projects failed, some of them became reasonably successful (e.g. a product called EPROMS), but there was one which turned out to be this multi-billion dollar product called microprocessors. That’s the “experimentation” part of Robert’s statement (I think…).
Intel’s management did not only allow for this experimentation stuff to happen, it also made sure that at some point, a choice – i.e. a “selection” – would be made in terms of what (pet) products were going to receive priority and be continued, and which ones were going to get the chop. One such selection mechanism was a complex production capacity allocation formula which determined what was and what was not going to be manufactured. Another element concerned high levels of autonomy for middle managers, which made sure that those things most people thought were important for the future of the company would get done, but the things nobody quite believed in (anymore) would die out…
So that’s the “internal experimentation and selection processes” bit (I think). But what is this “maintaining top driven strategic intent”…?
It would be a mistake to believe that companies – including Intel – can be successful without a clear strategic direction (or “intent”) and can just rely on some bottom-up experimentation stuff. If you have bottom-up experimentation without a clear strategic direction in your organisation, soon you will be all over the place. Hence, although these “experimentation and selection processes” are useful, top management will still need to develop a clear strategic course for the firm, to make sure they’re coherent and going somewhere.
Yet, just having a top-down strategy (without the bottom-up stuff) won’t work either; it will likely make you rigid, myopic and simply unsuccessful. You need the top-down strategic intent to give you direction, but you simultaneously need the bottom-up thing to get you the unpredictable, unforeseeable successes that you really can’t dream up as a lone top dog.
Hence, as Robert said (be is slightly awkwardly), you need both, at the same time.