A strategy can fail if goals are not cascading correctly. But what’s the right way to cascade goals for your business?
As Harvard Business School Professor Clayton Christensen describes in Disruptive Strategy, most successful, established businesses consist of multiple people, teams, and departments working together toward a common goal. In this type of system, individual contributors must understand how their work helps achieve this shared goal as well as how it impacts others. If even a single contributor doesn’t execute their duties effectively or understand how their work affects achieving the goal, then your company’s ability to reach its goal will be affected.
So as we take a look at the difference between cascading goals upwards versus downwards, we will evaluate which way is most likely to result in achievable goals for your business. This is with the understanding that goal achievement requires alignment up and down, as well as across your organization.
In business, we often throw around terms such as strategy, objectives, and goals. There are almost as many definitions of these as there are blog articles on the web. For the purposes of this article, we’ll use the following framework:
“A goal is a broad primary outcome that the organization is aiming for. A strategy is the approach the organization takes to achieve that goal. An objective is a measurable step you take to achieving the strategy.”
The GOST Framework
So, making a statement that says “become the number one or two in all markets in which we operate” is a goal, not a strategy. It does not specify how you’re going to achieve this, just what you hope the outcome will be. As a manager or employee at any level of the organization, it’s important to know the difference between the goal/outcome and the strategy.
As a general rule of thumb, downwards goal setting is deliberate and upwards goal setting is emergent.
Emergent goals, or upward goal setting, may be the right choice for your business if the future is uncertain, competitor actions are unknown, or there’s no clear long-term strategy. By using an emergent goal-setting process, your organization remains more nimble and can make adjustments as more information becomes available.
When using an emergent goal setting process, it is crucial that all employees understand your resource constraints and are aligned in their long-term view of the organization. This type of goal setting relies on trust and empowerment.
Consider deliberate goal setting if a winning strategy is clear. Deliberate goal setting is a better fit once an organization has reached a certain level of maturity, stability, and commitments.
We have seen some organizations successfully shift from an early stage, with an emergent goal-setting mindset, to a more deliberate approach once they have achieved some success and maturity. Walmart is a real-life example of emergent goal-setting environments that matured into deliberate goal setting.
The most obvious difference between top-down and bottom-up goal setting is the influence that all team members have on how the goals are developed. The logic is that someone who is closely involved in a certain field would be better able to determine a suitable goal for the organization that relates to that area. This leads to a better estimate of outcomes and more significant milestones. The downside can be that goal setting takes longer as more stakeholders need to be involved but the advantages are often considered to outweigh this problem.
To achieve successful bottom-up goal setting, strong communication with team members is an absolute necessity. It requires high levels of both trust and comfort. Not all members feel comfortable speaking their mind in front of a group, but to make sure a bottom-up goal setting process succeeds, all involved need to be able to contribute to that clear communication.
One of the major advantages of bottom-up goal setting is that it allows the team to make decisions with a much wider pool of knowledge. As each additional team member is involved, they contribute their own unique knowledge and experience to the goal structure. PM2 Consulting’s observation is that these goals have a much higher degree of accuracy for the individual elements of that goal.
Employee engagement is increasingly one of the most important elements of job satisfaction. While not being a truly horizontal or Matrix approach, a bottom-up strategy lets team members know that their views are important, and their knowledge is valued. This recognition leads to greater loyalty and feelings of ownership among team members, which inevitably results in higher goal achievement.
With a top-down goal-setting approach, it is critical that the leadership team fully discerns the strengths and weaknesses of the organization. However, with a bottom-up approach, each employee can help by making their unique knowledge available to the broader company thought process. This enables the organization to see beyond any individual’s constrained thinking.
Top-down vs. bottom-up management styles
When it comes to choosing between a top-down and bottom-up approach, there’s no right or wrong answer–it boils down to what’s best for your team, your management style, and your organization. It may even entail some trial and error.
Software is always a good resource to plan your company’s goals in an efficient way. If you’re wanting to increase your ability to effectively plan goals, take a look at performance management software to see which system fits your needs.