Focussed Energy: Mastering Bottom‐up Organisation

Citation

Narasimhan, K. (2001), "Focussed Energy: Mastering Bottom‐up Organisation", The TQM Magazine, Vol. 13 No. 1, pp. 74-76. https://doi.org/10.1108/tqmm.2001.13.1.74.1

Paul Strebel is Professor of Strategic Change Management and Director of the Breakthrough Program for Senior Executives at the International Institute of Management Development (IMD), Lausanne, Switzerland. The book comprises 18 chapters (12 to 18 pages long, except for chapter 1 which is covered in seven pages) and is divided into three parts. A total of 12 professors at IMD have contributed to the book.

Part 1 comprises two chapters written by the editor and is titled “Bottom‐up organization”. It describes what the authors mean by an effective “bottom‐up organization”, why such organization is critical and the modes of achieving such an organization in practice. Part 2 comprises six chapters and looks at three essential dimensions of a highly energized organization. The next ten chapters form Part 3 and deal with how to focus the energy in bottom‐up organizations without either killing initiative or creating forces that could pull the organization apart.

Each chapter commences with a case study to illustrate the concept covered in the chapter. Then a brief overview of the concept and the structure of the rest of the chapter are provided. Figures and vignettes of mini cases are included to illustrate the points being emphasized. This is followed by a summary of the chapter, points from “best practice”, and a list of references.

In the first chapter, Paul describes what the authors mean by “mastering bottom‐up organization” and outlines the organizational components that generate front‐line energy, and what must be done to focus the energy to create value. According to the authors:

An effective bottom‐up organization is one in which the initiative for value creation comes from people on the frontline, that is, those running the business units, processes, projects, teams, or networks, those out in the field and on the shop floor …

In Chapter 2, Paul describes two classic change paths – discontinuous and continuous – pathways to achieve an effective bottom‐up organization. These two paths involve some combination of the following four basic change processes: task‐force‐driven change, top‐down turn‐around, widespread participation, and bottom‐up initiatives. The discontinuous path involves the use of task forces to prepare the ground for top‐down turn‐around, which forms the basis for pushing decision making down to the front line. The main drawback of this approach is that it remains a top‐down approach. Hence, an alternative approach is to use the continuous path to broaden task‐force‐led change into widespread participation and then encourage experimentation by front‐line staff by empowering and enabling them.

In Part 2 six authors deal with the three essential dimensions to an energized organization. Each of the dimensions is dealt with in two chapters. Peter Lorange, the President of IMD and Nestlé Professor of Strategy, explains, in chapter 3, why pioneering spirit is important for recognizing new opportunities before other organizations do and how this spirit can be developed to energize the organization. He emphasizes that pioneering is the only secure way to defend an organization in the future and it can be created by fostering a healthy dissatisfaction with the status quo and a positive context based on the dictum that good can always be done better. Creating such an atmosphere requires commitment at the top, selecting and nurturing internal entrepreneurs, giving them sufficient independence and nurturing a climate that supports pioneering and breakthrough performance.

Approaches that act as growth catalysts and those that do not are described in chapter 4, by Jacques Horovitz, Professor of Service Marketing and Management. He defines growth catalysts as “Organizational arrangements that energize the organization by providing a stimulus and outlet for bottom‐up activity”. The five common growth catalysts described are strategic ambitions, autonomy of business units, breaking the rules of the game, stretching core competencies, and customer focus. One of the eight dysfunctional growth methods described is that of concentration on short‐term growth.

In chapter 5, entitled “Craft networks”, Andy Boynton, Professor of Management, explains how bottom‐up organizations take advantage of skilled workers’ networks to outpace competition. He explains, with examples, that the key to managing craftwork is to use technology to speed up exchange of learning and create a repository of knowledge.

Thomas Vollmann, Professor of Manufacturing Management, explores issues involved in extending the craft network beyond the organizational boundary, to manage the supply/demand chain in an effort to better satisfy customer needs, in chapter 6. This change requires a new ways of collaborative working by focussing on how the chain can compete and implementing improvements that create advantages either in cost savings or in value creation.

Chapter 7 is one of the two chapters on developing flexible resources. In this chapter Jay Galbraith, a Professor of Management, deals with building up organizational structures that succeed in a fast‐changing business environment. He points out that organizations need to direct their responses along a large number of dimensions and, hence, have to be designed from the beginning to be quickly and easily changeable to exploit opportunities as they arise. The requirements of reconfigurability are examined in terms of structures, processes, reward systems and people management that fit with strategic flexibility required.

In Chapter 8, Piero Morosini, Professor of Strategy and Execution, argues that flexible execution is vital for success, on the basis of evidence from globalization. The five types of mechanisms that are central to successful execution are organizational tools and formal rules (building blocks), international assignment policies, communication mechanisms, co‐ordination mechanisms, and leadership. He emphasizes that:

The key point of execution in a bottom‐up organization is not the success of any particular mechanism utilized by a successful firm, but a company’s ability to continuously learn and adapt a series of execution capabilities that suit particular local contexts of global organization, and to develop managers capable of coordinating resources across organizational and cultural boundaries in concert with the firm’s values and objectives.

Chapters 9 to 18, forming Part 3, deal with how to find strategic direction by selecting the most promising options and developing internally, create a dynamic context for continuous collective learning, use shared information effectively, and integrate individual and corporate objectives. In chapter 9, Peter Lorange builds on themes outlined by him in chapter 3. It deals with the importance of top‐down leadership for creating an effective and thriving bottom‐up organization. CEOs of successful bottom‐up organizations balance bottom‐up initiatives with top‐down leadership by creating a climate for performance. They consider internal entrepreneurs an asset and allow individuals to experiment with new ideas, while at the same time introducing measures to assess the effectiveness of top‐down vision and leadership, bottom‐up entrepreneurship, proactive directional leaps, and developing customer/learning partner focus.

In chapter 10, Paul Strebel considers how to identify choices with potential for breaking through to new levels of value creation. The three aspects looked at are the contrast between evolutionary and revolutionary approaches to breaking through, identifying choices with potential, and deciding on whether to implement any of the options.

In the next chapter, Peter Killing, Professor of Strategy, argues that not planning for the future or outsourcing strategy to consulting firms is a dangerous move. With the aid of a road map, he provides practical guidelines for developing successful in‐house strategy. He stresses that strategy making should be treated as both a social and an analytical process, as building a strong relationship among the people at all levels will be an enduring competitive advantage.

In the following chapter, Xavier Gilbert, Professor of Industry Analysis and Strategy, points out that it is not possible to exploit the strategic flexibility of an energized organization with traditional methods of alignment and control. He explains how companies can create a dynamic context for focusing their energy with continuous collective learning. He explains the role of the four critical dimensions – culture, leadership, process, and infrastructure – that shape an organization’s ability to evolve, develop itself, and compete.

Using information to channel human energy is the topic of chapter 13. Don Marchand, Professor of Information Management and Strategy, points out that in this age of information‐rich economy, information is power. He presents the following seven key principles that managers must use to realize the full potential of an energized bottom‐up organization and how information can be used for strategic advantage:

1. 1.

   (1) personally set standards and values for effective information use;

2. 2.

   (2) know and communicate the role of information technology in the business;

3. 3.

   (3) know personally how to manage information effectively;

4. 4.

   (4) influence the mindsets of others;

5. 5.

   (5) understand what good information capability means, don’t just advocate it;

6. 6.

   (6) anticipate the future of the business by disrupting the current business model; and

7. 7.

   (7) realize that good information capability today is a crucial step towards creating the successful e‐business for tomorrow.

In chapter 14, the longest chapter of 22 pages, Jean‐Philippe Deschaps, Professor of Technology and Innovation Management, explains how to refocus people on the organization’s critical, value‐creating chain of activities, rather than on their specialized skills or organizational boundaries. The three aspects considered important for this process to succeed are building a process management system, creating mechanisms to sustain the processes over time, and mobilizing and motivating people around processes.

Jay Galbraith points out, in chapter 15, that most companies using matrix structure to coordinate activities laterally, vertically, and strategically still struggle. He describes how to match the type of lateral coordination with strategic priority, how to build the capability by capturing the learning, and how to create a leadership management process to set new priorities in a clear and timely basis.

In chapter 16, Paul Strebel explains how to build an enabling process of ongoing learning about the business to integrate individual and corporate objectives. The three aspects looked at in some detail are examples of learning compacts (agreements between two parties based on trust) to improve and innovate, enabling processes for the renewal of learning compacts, and creating and enabling learning contacts at the top of the organization. He concludes that, to be effective, “personal learning compacts require the willing and active participation of individuals”.

Chapter 17, “Turbo‐kaizen” by Thomas Vollman recommends an accelerated version of kaizen to support and drive the process of translating new employee ideas into action. He points out that turbo‐kaizen requires the development of networks that are able to subvert formal communication channels and that it is a new concept that has no templates for implementation.

In the final chapter, J.B. Kasserjian, Professor of Strategy and Organization, reflects on the implications for leaders of organizations pursuing the two seemingly contradictory objectives of encouraging experiments and pioneering initiatives from below and focussing on overall value creation to bring coherence to these often divergent views. He emphasizes that in future things that will become important for organizations are the need to define reality at more frequent intervals, the need to compose compelling stories that can engage and challenge the managers who will drive the changes, and the need to listen to signals from the front line.

The text is informative, well written and easy to read. This book is a useful source of reference for senior executives. The usefulness of the book would improve if the authors could develop a framework for self‐assessing the readiness of organizations to pursue the often conflicting dual goals.

Reading the case studies printed with a dark gray background strained my eyes, and I hope the publishers will consider using a lighter background for them.