Top-down goals are commonly used and have many benefits. They also have drawbacks, like long implementation times and inflexibility. They can create blind spots. Bottom-up goals allow more ideas to flow through your company.
Top-down goals are set at the company level and then allocated to or set by departments or teams. They are often called cascading goals. Cascading goals create tight alignment, which is why they are commonly used. They also come with downsides.
Each step takes time. One level of the company usually doesn’t start until the level above it sets its goals. The sum of the time for all these steps can be long in companies with many levels. If you use a rapid iteration planning system like OKRs, the frequency of goal-setting cycles doesn’t allow the time required for linear top-down goal setting.
Cascaded goals are often difficult to change because it interrupts the sequence and causes a second cascade of changes down through the company layers.
Unless the process starts with input from all levels of the organization, it will lack the ideas and potentially the support from lower levels of the company. This can stifle innovation. It also may make a company blind to its environment.
Great ideas can come from anyone in the company. Each employee has unique expertise and access to information. Top leadership often doesn’t directly communicate with customers or suppliers. A huge amount of business environment knowledge comes from those conversations. That information needs to rise through the company.
I wish you ideas from the top, bottom, and everything in between. I wish you well.
- Rob Stephens
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