bottom up planning definition business

Bottom-up strategy: Explained with Examples

A bottom-up strategy in business refers to a method where planning and decision-making start at the operational level and move up to the executive level. In contrast to top-down strategy, which typically begins with high-level strategic goals that are then translated into operational directives, bottom-up strategies focus on operational capabilities and efficiencies to inform strategic goals and directions.

Here are some key features of a bottom-up strategy:

• Employee empowerment: In a bottom-up strategy, front-line employees often have more decision-making power and are encouraged to innovate and improve processes. They are closer to the day-to-day operations and customers, which usually allows them to see improvement opportunities that might not be evident at higher levels of management.
• Communication: Information in a bottom-up strategy flows from the operational level to the executive level. Employees share their insights and observations; management uses this information to make strategic decisions.
• Implementation: With bottom-up strategies, implementing new initiatives often begins at the operational level and expands throughout the organization. This can result in high levels of buy-in and adoption, as employees feel ownership of the ideas and changes.
• Flexibility and Adaptability: Bottom-up strategies can be highly adaptable and flexible. They allow for quick adjustments based on feedback from operations and can result in ongoing improvements and modifications to operations and strategy.

While this strategy can create highly responsive and adaptable organizations, it has potential downsides. These include the potential for inconsistency across different areas of the organization, challenges aligning operational initiatives with strategic objectives, and the potential for slower decision-making processes due to the need for input and buy-in from a broader range of stakeholders.

Top-Down Strategy: Explained with Examples

How to develop a bottom-up strategy for the organization?

Developing a bottom-up strategy requires a shift in organizational culture, processes, and structures. Here are some steps to developing and implementing a bottom-up strategy:

• Engage Employees : Begin by engaging employees in strategy development. Encourage input from all levels of the organization and be open to new ideas. Employees closest to the work or customer are often best equipped to identify opportunities for improvement. Use meetings, surveys, or suggestion boxes to solicit input. What are employee engagement strategies?
• Empower Decision Making : Create a culture of empowerment where employees at all levels are encouraged and given the autonomy to make decisions. This involves granting permission and ensuring employees have the information and resources necessary to make informed decisions. Strategic Decision-Making Process & Examples
• Open Communication Channels : Develop transparent and open communication channels for employees to share their ideas and feedback with upper management. This could be through regular team meetings, intranet forums, or strategy review sessions. Internal Communication Strategy & Plan| Examples| Best practices
• Training and Development : Invest in training and development to ensure employees have the skills needed to contribute to strategy development and decision-making. This could include critical thinking, problem-solving, or specific technical skills training.
• Recognition and Reward : Acknowledge and reward employees who contribute valuable ideas or improvements. This could be through formal recognition programs or informal praise. Recognizing contributions reinforces the importance of employee involvement and encourages ongoing participation.
• Flexible Structures and Processes : Develop flexible organizational structures and processes that allow for quick changes and adjustments based on employee feedback. This might involve creating cross-functional teams or flattening organizational hierarchies.
• Align Goals : Make sure that the organization’s overall goals are well communicated and understood by everyone. Then, encourage each department or team to set goals aligned with the overall objectives.
• Regular Review and Adjustment : Regularly review and adjust the strategy based on employee feedback. This keeps the strategy relevant and effective and reinforces the importance of employee involvement.

Remember, shifting to a bottom-up strategy requires changes in organizational culture and may take time to implement fully. It’s essential to remain patient and persistent and to communicate openly with employees about changes and progress.

Examples of bottom-up strategy in business

Bottom-up strategies can be applied in many different ways depending on the context and industry. Here are a few examples:

• Toyota’s Lean Manufacturing System : Toyota is known for its lean manufacturing system, a significant part of which is the concept of Kaizen or continuous improvement. This system encourages front-line workers to stop the production line and suggest improvements when they see an opportunity. This is a powerful example of a bottom-up strategy where decisions and improvements are driven by those closest to the work.
• Google’s 20% Time : Google has a policy allowing its employees to spend 20% of their time on any project they think will benefit Google. This empowers employees to innovate, resulting in successful products such as Gmail and Google News. This policy exemplifies a bottom-up strategy, as it relies on the creativity and initiative of all employees, not just top management.
• Whole Foods Market’s Team-Based Structure : Whole Foods Market has a decentralized, team-based structure where decisions about product selection, pricing, and promotions are made by local teams closest to their customers and suppliers. This approach allows the company to tailor its offering to local needs and tastes and encourages innovation and entrepreneurship at the store level.
• Semco’s Participative Management : Semco, a Brazilian company, is renowned for its radical form of industrial democracy. Employees set their work hours and even their salaries. More significant strategic decisions are made collectively and transparently. As a result, Semco experienced significant growth and high levels of employee satisfaction.

These examples illustrate how bottom-up strategies can result in innovation, improved efficiency, and increased employee satisfaction and engagement. However, they also require a culture of trust, openness, and respect, where employees feel empowered and supported to contribute their ideas and take risks.

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Top-Down Vs. Bottom-Up: Which Approach is Better for Your Business?

Managing a business is no small feat. You have to make decisions, plan strategies, allocate resources, and monitor performance. But how do you decide what is the best way to do these things? Do you follow a top-down approach or a bottom-up approach?

In this blog post, we will explain what these two approaches are, how they work, and what are their pros and cons. We will also give you some tips on when to use each approach and how to balance them.

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What is the Top-Down Approach?

A top-down approach is a management style where the leaders or executives set the goals, objectives, and strategies for the organization. They then communicate them to the lower levels of the organization, who are expected to follow them without much input or feedback.

The top-down approach is based on the assumption that the leaders have the best knowledge and vision of the organization and its environment. They are able to see the big picture and make decisions that align with the overall mission and vision of the organization.

The top-down approach is often used in situations where there is a need for speed, efficiency, consistency, and control. For example, when launching a new product, implementing a change, or dealing with a crisis.

What is the Bottom-Up Approach?

A bottom-up approach is where the employees or lower levels of the organization are involved in the decision-making process. They are encouraged to share their ideas, opinions, and feedback with the leaders or executives, who then consider them before making the final decisions.

The bottom-up approach is based on the assumption that the employees have the best knowledge and experience of the daily operations and challenges of the organization. They are able to provide valuable insights and suggestions that can improve the quality and effectiveness of the decisions.

The bottom-up approach is often used in situations where there is a need for innovation, creativity, diversity, and empowerment. For example, improving a process or solving a problem.

Differences Between Top-Down and Bottom-Up Approaches

The main difference between top-down and bottom-up approaches is the direction of the flow of communication and decision-making. In top-down approach, communication and decision-making flow from top to bottom. In bottom-up approach, communication and decision-making flow from bottom to top.

Another difference is the level of participation and autonomy of the employees. Employees have low participation and autonomy in the top down approach. They are expected to follow orders and instructions without questioning or challenging them. In bottom-up approach, employees have high participation and autonomy. They are expected to contribute ideas and opinions and take initiative in their work.

A third difference is the type of culture and environment that each approach creates. In top-down approach, the culture and environment are more formal, hierarchical, and centralized. There is a clear chain of command and authority. In bottom-up approach, the culture and environment are more informal, flat, and decentralized. There is more collaboration and teamwork.

Advantages of Top-Down Approach

Provides clarity and direction for the organization. The goals, objectives, and strategies are clearly defined and communicated by the leaders. This helps to align everyone’s efforts and avoid confusion or conflict.

Ensures consistency and quality across the organization. The decisions are made by the leaders who have the expertise and experience to ensure that they meet the standards and expectations of the organization.

Saves time and resources for the organization. The decisions are made quickly and efficiently by the leaders who have access to all the relevant information and resources. This reduces delays and wastage.

Enhances control and accountability for the organization. The leaders have full authority and responsibility for the outcomes of their decisions. They can monitor and evaluate the performance of their subordinates and take corrective actions if needed.

Advantages of Bottom-Up Approach

Fosters innovation and creativity for the organization. The employees are given opportunities to express their ideas and opinions freely. This stimulates their creativity and generates new solutions.

Improves motivation and engagement for the organization. The employees feel valued and respected for their contributions. This boosts their morale and commitment.

Enhances learning and development for the organization. The employees learn from each other and from the feedback they receive from the leaders. This improves their skills and knowledge.

It builds trust and collaboration for the organization. The employees develop mutual trust and respect with the leaders and with each other. This improves communication and cooperation.

Disadvantages of Top-Down Approach

It can create resistance and resentment for the organization. The employees may feel ignored or imposed upon by the leaders. They may not agree with or understand the decisions that are made for them. This can lead to dissatisfaction or rebellion.

Stifles innovation and creativity for the organization. The employees may not have the chance or the incentive to share their ideas or opinions with the leaders. They may also fear being criticized or rejected by the leaders. This can limit their creativity and potential.

Causes communication and coordination problems for the organization. The leaders may not have enough information or feedback from the lower levels of the organization. They may also have difficulty communicating or coordinating with a large number of subordinates. This can result in errors or misunderstandings.

Creates dependency and complacency for the organization. The employees may rely too much on the leaders for guidance and direction. They may also lose their initiative and sense of responsibility. This can reduce their productivity and performance.

Disadvantages of Bottom-Up Approach

Creates confusion and conflict for the organization. The goals, objectives, and strategies may not be clear or consistent across the organization. There may be too many or conflicting ideas or opinions from the employees. This can lead to confusion or conflict.

Compromises consistency and quality for the organization. The decisions may not meet the standards or expectations of the organization. There may be variations or discrepancies in the quality of work or service across the organization. This can affect the reputation or credibility of the organization.

It can waste time and resources of the organization. The decisions may take too long or too much effort to make. There may be duplication or inefficiency in the use of information or resources across the organization. This can increase costs or delays.

Reduces control and accountability for the organization. The leaders may have difficulty overseeing or influencing the outcomes of their decisions. They may also have difficulty holding their subordinates accountable for their actions or results. This can affect the performance or security of the organization.

When to Use Top-Down Approach and Bottom-Up Approach

There is no one-size-fits-all answer to which approach is better for your business. It depends on various factors, such as:

Nature and complexity of the decision or task

Urgency and importance of the decision or task

Availability and reliability of information and resources

Skills and experience of the leaders and employees

Culture and values of the organization

As a general rule, you should use a top-down approach when you need to:

Make quick and decisive decisions

Ensure consistency and quality across the organization

Deal with a crisis or a change

Have a clear vision and direction for the organization

You should use a bottom-up approach when you need to:

Generate new and diverse ideas

Improve motivation and engagement across the organization

Solve a complex or ambiguous problem

Collaborative and empowering culture in the organization

Top-Down or Bottom-Up: Which Method Should Your Company Choose?

The best way to manage your business is to balance both top-down and bottom-up approaches. You should not rely on one approach exclusively, but rather use them in combination to achieve optimal results. One way to do this is to use an iterative or incremental process, where you alternate between top-down and bottom-up phases. For example, you can start with a top-down phase where you define the overall goal or problem, then switch to a bottom-up phase where you develop or test possible solutions or components, then go back to a top-down phase where you evaluate or refine your solutions or components, then repeat until you reach your desired outcome.

Here are some additional tips on how to balance top-down and bottom-up approaches:

Involve both leaders and employees in setting goals, objectives, and strategies for the organization. This will ensure alignment and buy-in from all levels of the organization.

Communicate clearly and frequently with both leaders and employees about the expectations, progress, and outcomes of the decisions or tasks. This will ensure transparency and feedback from all levels of the organization.

Delegate authority and responsibility to both leaders and employees according to their skills, experience, and interests. This will ensure empowerment and accountability from all levels of the organization.

Recognize and reward both leaders and employees for their contributions, achievements, and improvements. This will ensure appreciation and recognition from all levels of the organization.

Top-down approach and bottom-up approach are two different management styles that have their own advantages and disadvantages. Depending on your situation, you may need to use one approach more than the other, or balance them both.

The key is to understand your goals, objectives, strategies, resources, challenges, opportunities, strengths, weaknesses, culture, values, leaders, employees, customers, competitors, stakeholders, environment, etc.

By doing so, you will be able to choose the right approach for your business.

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Hansani has a background in journalism and marketing communications. She loves reading and writing about tech innovations. She enjoys writing poetry, travelling and photography.

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Top-down approach vs. bottom-up approach: What’s the difference?

The top-down approach to management is when company-wide decisions are made solely by leadership at the top, while the bottom-up approach gives all teams a voice in these types of decisions. Below, we cover the details, pros, and cons of top-down vs. bottom-up management.

The top-down approach to management is a strategy in which the decision-making process occurs at the highest level and is then communicated to the rest of the team. This style can be applied at the project, team, or even the company level, and can be adjusted according to the particular group’s needs.

What is the top-down approach to management?

In the top-down approach to management, a team or project manager makes decisions, which then filter down through a hierarchical structure. Managers gather knowledge, analyze it, and draw actionable conclusions. They then develop processes that are communicated to and implemented by the rest of the team. You may hear this style of management referred to as “command and control” or “autocratic leadership.”

The top-down approach is probably what you think of when you think of the management process. Traditional industries like retail, healthcare, or manufacturing typically apply the top-down management style .

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How the top-down approach works

When approaching a project from the top down, higher-level decision-makers start with a big picture goal and work backward to determine what actions different groups and individuals will need to take in order to reach that goal.

The entire project planning process takes place at the management level. Then, once an action plan has been created, decision-makers communicate it to the rest of the team to be implemented (usually without much room for adjustment ).

The top-down approach can be effective because it remains the same from project to project, allowing teams to establish a well-practiced process that grows more efficient over time. Since the nature of the top-down style is so steady and reliable, many organizations (think: IBM, The New York Times, and other legacy organizations) choose to operate their entire companies according to this approach.

When to use the top-down approach

Today, very few organizations apply a purely top-down approach to management. Most teams apply a hybrid approach that falls somewhere along a spectrum of combinations between top-down and bottom-up management styles. 

The top-down approach is more rigid and structured, so teams with multiple sub-teams, many different project parts, or any other factor that makes processes difficult to keep organized will benefit from incorporating elements of top-down methodology. Smaller teams or teams with a narrower project focus will have the freedom to lean more heavily on the bottom-up style.

Advantages of top-down management

There are benefits to a top-down management style, especially for larger teams that consist of multiple smaller teams or groups that function together in a broader organizational hierarchy.

Well-known management style

The top-down management style is common, which means there’s less of a learning curve for new hires if they came from a company that uses this structure. As a team leader, you can help new team members adjust more quickly by incorporating some familiar elements of top-down methodology into your management style.

Greater clarity

The top-down approach results in clear, well-organized processes that leave little room for confusion. Because all decisions are made in one place and all communication flows in one direction, mix-ups and misunderstandings happen less frequently than with other management styles.

More accountability

When problems or inefficiencies do occur, the top-down management approach makes it easy to track them to their source. With clearly defined teams that each have their own separate responsibilities, it’s easier to locate, diagnose, and solve problems quickly and efficiently.

Quicker implementation

Since the decision-making process takes place at just one level of management, they can be finalized, distributed, and implemented much more quickly than decisions that require input from multiple leaders or project stakeholders .

Disadvantages of top-down management

Though top-down methodology has some advantages, there are also drawbacks to consider in how this approach might impact individual team members and overall team morale . Ultimately, top-down management doesn’t work for everyone. It can limit creativity and slow down problem-solving, so it may not be the best choice for teams that require greater flexibility and responsiveness.

More of a strain on leadership

Since all decisions are made at the top, a mismatched project management hire can have a bigger impact on the success of the team. Many process problems are only visible at the lower level, so project managers who fail to solicit feedback from individual team members before making decisions can inadvertently cause significant problems, delays, and losses.

Less creativity

With all communication flowing from leaders to team members with little room for dialogue, the top-down approach allows fewer opportunities for creative collaboration. Less interdepartmental collaboration may also eliminate fresh perspectives and stifle innovation.

Team disengagement

One challenge with the top-down management approach is that it requires proactive work to keep non-leadership team members feeling engaged, connected, and respected. When all decisions are made at the top, the rest of the team might feel that their feedback and opinions aren’t valued.

Greater distance between decision-makers and decisions

While a bottom-up approach allows decisions to be made by the same people who are working directly on a project, the top-down style of management creates distance between that team and decision-makers. This can lead to poorly-informed decisions if leadership doesn’t ask for input or feedback from their project team.  

What does bottom-up management look like?

When approaching project objectives from the bottom up, a team will collaborate across all levels to determine what steps need to be taken to achieve overall goals. The bottom-up approach is newer and more flexible than the more formal top-down strategy, which is why it’s more commonly found in industries where disruption and innovation are a priority. 

Examples of bottom-up management include:

Hybrid OKRs : broader objectives are set at the company level, but KRs (key results) are set by teams and individuals.

Scrum teams : the daily standup meeting brings the entire team together to coordinate collaboratively. 

Democratic management: leaders work with team members to determine what decisions should be made at each level, allowing for better collaboration while also maintaining structure.

Advantages of bottom-up management

The bottom-up style of management solves many of the problems that come with the top-down approach. This approach has advantages that make it a great fit for creative teams and industries where collaboration is key, like software development, product design, and more.

More informed decisions

In collaborative settings, those who work directly on projects and oversee project management can speak to the decisions that will impact their future work. Upper managers work directly with team members to chart a course of action, which prevents potential process blind spots that might otherwise appear when decisions are made without team input.

Better team morale

The bottom-up approach encourages greater buy-in from team members because everyone is given the opportunity to influence decisions regardless of seniority. It also facilitates better relationships between colleagues by offering members of all seniority levels an equal opportunity to influence project outcomes. In doing so, this approach increases the likelihood that all members will be invested in the team’s success.

More room for creativity

In top-down processes, there are fewer opportunities for teams to give input or suggestions. Collaborative approaches like the bottom-up approach, on the other hand, create opportunities for feedback, brainstorming , and constructive criticism that often lead to better systems and outcomes.

Disadvantages of bottom-up management

Of course, there’s a reason that the bottom-up approach hasn’t been more widely adopted: it comes with a number of challenges that make it incompatible with certain types of teams, projects, and industries.

Reduced momentum

A purely bottom-up approach to solving a problem might result in “too many cooks in the kitchen.” When everyone in a group is invited to collaborate, it can be harder to arrive at a decision and, as a result, processes can slow down. 

To avoid this: Consider assigning one to two group leaders who take into consideration all of the input and then make a decision based on feedback. 

Shift in team dynamics

Though it’s important to give team members the opportunity to provide feedback, not everyone is comfortable doing so—especially with leadership in the room. Keep in mind that everyone has different comfort levels and pushing too hard for feedback might stifle honesty or creativity. 

To avoid this: Offer different environments for team members to contribute, like in small group breakout rooms, 1:1 meetings, or quarterly anonymous feedback surveys. Encourage more senior team members to find ways to break the ice with new contributors so everyone feels comfortable participating.

Lack of high-level insight

In many ways, it makes sense for project decisions to be made at the project level. However, projects are still impacted by higher-level factors like company goals, budgeting, forecasting, and metrics that aren’t always available at the team level. Processes designed from the bottom-up can suffer from blind spots that result from a lack of access to insights  from upper management.

To avoid this: Create a communication flow that provides team leads with summaries of information from the company level that may be relevant to project-level decisions. As a team lead, you can pass along information to your team as you see fit to ensure team decisions are aligned with company-wide positions and goals.

Cross-functional team management tips

The key to implementing a management approach that works is to invest in your people as much as you do in your processes. The challenges of the top-down management approach can be alleviated or even eliminated entirely if the people at the top of the process aren’t just good managers, but are leaders too. 

Build relationships outside the management team

Since process-related communication flows top to bottom in top-down companies, it’s easy for individuals and groups to become siloed and eventually feel isolated. Create opportunities for communication across departments, teams, management levels, and even geographical locations to help ensure that your team members can build meaningful relationships with each other.

Facilitate cross-team communication

Whether your team uses a top-down or bottom-up approach, provide purpose-built opportunities for collaboration between teams that don’t normally work together. Though not part of your day-to-day processes, these additional brainstorms can help stimulate creativity, build relationships, and lead to creative solutions that can later be implemented to benefit the greater group.

Supplement with additional forms of feedback

Non-management teammates may feel less invested when their opinions and perspectives aren’t considered by the people making decisions at the top. Build new channels for bottom-up feedback to not only increase buy-in with lower-level team members, but also give decision-makers valuable insight into gaps or issues with processes.

Great management is all about balance

When it comes down to it, effective managers know how to balance the efficiency of the top-down approach with the collaborative and creative advantages that come from the entire team. 

By blending elements of different management styles, you can find an approach that works best for you and your unique team. Once you decide the right approach, you can establish streamlined workflow management. 

Test out Asana’s workflow management software to build and track your team workflows and communication all in one place. 

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Which Management Style Is Right for You: Top-Down or Bottom-Up Approach?

By Kate Eby | June 28, 2018

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The top-down approach relies on higher authority figures to determine larger goals that will filter down to the tasks of lower level employees. In comparison, the bottom-up style of communication features a decision-making process that gives the entire staff a voice in company goals. Each task remains fluid as employees achieve their goals.

Included on this page, we’ll detail the key features of both the top-down approach and bottom-up communication , what the top down bottom up approach looks like in project management , industries that leverage both approaches , and more.

The Purposes of Top-Down and Bottom-Up Management Styles

Both the top-down and bottom-up styles of management offer significant advantages for the companies that leverage each approach. Both styles distinguish between high level and low level work, but how each management styles achieves this process varies widely. As with any business, the goals of each are to appropriately and efficiently think, teach, gain insight, and develop an overall leadership system that works well for the company and generates revenue.

The downward communication approach can spawn many positive business impacts through unique aspects of management, including the following:

• Creating clear lines of authority
• Standardizing products and services
• Facilitating quality control
• Streamlining tasks and achieving goals quickly

By comparison, the bottom-up approach utilizes alternative ways of management to achieve success. These can include the following:

• Forming a unique perception of the company, its goals, and its employees
• Measuring operational risk (in terms of fraud, model, and employee risk)
• Reallocating assets and decision-making power
• Giving voice to all employees

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What Is a Top-Down Policy?

The top-down policy , also referred to as autocratic leadership , is a management process driven by a business’ upper level of executives.

Senior project managers create company-wide decisions that trickle down to lower departments. The decisions are first weighed on variables like frequency and severity, and then made based on the higher or lower levels of such variables. Upper management gathers and acts upon the knowledge, which employees carry out.

This policy type relies on a hierarchy of high versus low rank employees — the high ranking individuals rely on it for the decision of tasks and goals, and the low ranking employees to complete tasks and achieve goals. This structured programming of management leads to neatly defined subsystems of employees and departments. Sometimes referred to as a stepwise design or decomposition , a system and its goals are broken down into compositional sub-systems in order to gain insight into the smaller aspects that make up a larger system. This format is made more specific with the assistance of black boxes , which make the backward-looking approach easier to follow as upper management pushes down decisions. There is a distinct splitting of work between employees in different departments. This delegation of tasks is sometimes referred to as reverse engineering or a big picture outlook because of the way larger goals are fragmented into small tasks that are then handed down to lower level employees.

There are many industries in the workforce that find this business approach especially appealing. In particular, designers, software developers, and engineers are drawn to the top-down policy because reverse product engineering often leads to the best final outcome. Similarly, investors leverage this policy because it is non data-intensive and analyzes the entire economy rather than the ebbs and flows of an individual business or sector of an industry. The top-down style is also leveraged across companies in an effort to budget effectively.

Top-down budgeting assesses the larger budgeting strategies of a company and allots a certain amount to certain departments, events, and employees. Well-known, popularized figureheads who own companies also leverage this approach. For example, the Martha Stewart Living company, owned and managed by lifestyle expert Martha Stewart, utilizes the top-down approach — therefore, Stewart makes the decisions, holds the most equity in the company, and drives the brand awareness due to her worldwide popularity.

The perks of top-down approach make it widely utilized across many industries. These benefits include the following:

• Decreased Risk: Since the highest level of management is also usually the most informed and most knowledgeable about the business, there is a decreased risk involved in the decision-making process when lower level employees are taken out of the equation.
• Strong Management: The upper authorities in a company will be able to determine best practices and reach goals easier with decisions created and enforced at the highest ranks of a business. Should you need to make immediate changes, a top-down change (also known as an executive-driven change ) can come into play to resolve any problems within an organization, bypassing a slower decision making process involving lower level employees.
• Good Organization: Tasks are determined and filtered down company lines without any confusion because business goals are set by upper management and will not be affected by outside opinions.
• Minimized Cost: Lower level employees are free to complete their own tasks unique to their role in the company and aren’t saddled with the responsibility of setting company-wide goals.

Of course, there are also some downfalls to the top-down approach:

• Limited Creativity: Employees are siloed in their responsibilities and are unable to contribute to the overall goals of the company — sometimes leading to frustration and a lack of motivation to perform.
• Dictatorial: The approach can seem oppressive to the employees who aren’t a part of the process.
• Slow Response to Challenges: When a challenge arises as a result of a decision, it can take time for upper management to establish a solution because there are limited minds contributing to decisions.

What Is a Top-Down Approach in Business?

Companies utilize the top-down approach in order to assess, determine, and implement business decisions made by upper executives.

The processes are streamlined and communicated to lower rank employees, who carry out these tasks. Consequentially, projects are more easily managed, and risk is decreased significantly due to strategic decisions created from the top management. This approach relies on the executive level to decide how to prioritize, manage, and conduct everyday processes.

What Is Bottom-Up Communication?

Bottom-up communication revolves around the inclusion of all employees, their ideas, and their perceptions of the business in order to make the most informed decisions.

In this case, a business invites the entire team to participate in the company’s management and decision-making process. Communication and an all-encompassing approach is a vital aspect of this style of management, lending itself to the appropriate name of bottom-up communication.

The bottom-up communication style of business leverages all of its employee’s perceptions of business and ideas for the company. This process allows the company to identify its most targeted — and most appropriate — goals. Bottom-up communication is sometimes referred to as the seed model , as small ideas from each employee grow into complex, organic goals that lead to eventual successes. In a sense, there is a merging of employees and each of their roles into a broader focus dealing with the entire company. This forward-looking approach considers each aspect of a company by taking in the respective employees’ inputs to make a better decision for the entire company.

There are many industries that benefit from this holistic style of business management. These users embody the use of a pieced together system that creates a more informed, complex company with targeted goals. Sometimes known as parsing , businesses analyze a sequence of information in order to determine its overall function and structure, which leads to the most comprehensive view of a project. This gives way to the most appropriate decision. Biologists, pharmacologists, and people involved in the homebuilding industry all use small, pointed pieces of a project or company to generate a targeted goal. Banking companies in particular, like Ernst & Young, use the bottom-up approach to analyze aspects of their company in comparison to the microeconomic variables of the economy. These companies in wide-ranging industries benefit from having a well-rounded perception before jumping to quick decisions that may not have a positive affect.

In practice, this approach is extremely successful and results in many benefits for the companies who utilize it. These pros of practicing bottom-up communication include the following:

• Increased Company-Wide Communication: When every employee actively participates in the decision-making process, the overall communication among members of the organization will increase significantly.
• Build Morale: All members of the business community will feel included and valued, which fosters a supportive and communicative environment where employees can thrive and grow together.
• Share Solutions: A wide hearth of brain power goes into the problems of the company as they arise, which will result in quicker problem solving and more efficient solutions.
• Increased Collaboration: Employees of all levels are granted the opportunity to discuss problems, bounce ideas off of one another, and build trust across departments.

Despite the benefits of the bottom-up communication style, however, there are some potential pitfalls:

• Bogging Down of Employees: When all employees participate in larger decisions (that are typically saved for upper management), they can get bogged down by the sheer responsibility. Employees can be taken away from their own tasks and pulled into larger projects, causing them to lose precious time.
• Slowed Time Creating Plans and Reaching Goals: When many people with varying ideas contribute to the company’s decision-making process, conflicts and disagreements can arise. This can lead to delays in making plans and reaching goals.
• Inaccurate Reflections of Data: A variety of people working on the same projects simultaneously can cause skewed results and inaccurate decisions in the long term.

What Is the Bottom-Up Approach in Budgeting?

Businesses leverage the bottom-up approach in an effort to produce the most comprehensive budget plan for all departments, resources, and employees.

The approach gathers input from all members of the business and allots a certain dollar value to each department that is appropriate for their business needs. As a result of this inclusive approach to budgeting, every aspect of business is considered equally as the budgeting plan is created.

What Is Bottom-Up Approach in Project Management?

The inclusive nature of the bottom-up approach benefits project management. The open communication and shared solutions among all employees ensure that projects remain fluid and goals are achieved in a timely fashion.

As unforeseen events pop up during projects, targets are shifted through the open line of communication between business executive and lower-ranking employees. Collaboration fostered through the bottom-up approach gives businesses the transparency needed to maintain successful processes.

What Is Bottom-Up Leadership Style?

Keeping all employees, business processes, and departments in mind, leaders who adopt the bottom-up approach encourage input from all areas of the organization.

This leadership style allows for communication and continued fluidity as they are able to consider a greater number of opinions when making decisions. Rather than having a singular, overarching leader responsible for decision making, ideas are exchanged across a widespread group.

History of the Top-Down and Bottom-Up Approach

The development of the top-down and bottom-up approaches was a result of trial and error in managing, maintaining, and achieving success in a business. Although there are great differences in the two styles, both were created by developing a system that resulted in the most success, revenue, and employee happiness.

The top-down approach came to be in the 1970s, when IBM researchers Harlan Mills and Niklaus Wirth developed the top-down approach for software development field. Mills created a concept of structured programming that aided in the increased quality and decreased time dedicated to creating a computer program. This process was then successfully tested by Mills in an effort to automate the New York Times morgue index. Similarly, Wirth developed a programming language, named Pascal, that relied on the top-down approach to build this particular system. Wirth went on to write an influential paper on the topic, titled “Program Development by Stepwise Refinement,” that detailed the benefits of leveraging a top-down approach in project management, specifically within the software development field. From these studies completed by both Mills and Wirth, the top-down approach evolved into the popular management style discussed earlier.

The Origins of the Bottom-Up Approach

A more modern management technique, the bottom-up approach developed concurrently with a shift in focus towards Industrial and Organizational Psychology (I/O). Explained by the American Psychological Association (APA), I/O is defined as “the scientific study of human behavior in organizations and the workplace.” As I/O came to be a more widely-recognized study, there was a significant trend upwards in the use of bottom-up management. The field of I/O encourages employers to consistently value their employees and make their contributions to the company a top priority. This approach caused upper management to lessen their hold on decision-making power, and instead, allowed for lower ranking employees to contribute more frequently.

The Hawthorne Experiments, completed as early as 1924, found that employees who were given brighter lights at their work station were more productive than those who received dimmer lights. The belief behind this correlation was that employees were more likely to contribute more to the company when they felt cared for and valued. An advocate for the I/O movement and the bottom-up approach, Elton Mayo added to the human relations movement happening during the mid-20th century. Mayo believed that by improving the social aspects of the workplace, the company would ultimately benefit. Eventually, this led to the development of human resources (HR) departments . HR departments dedicated themselves directly to this newfound engagement to employees and their investment in the company. Even more radical divisions of bottom-up management have come to the surface in later years. One such approach is holacracy , which fully leans in to the bottom-up policy and is founded on ideas like transparent and moveable roles in a company, and a circular structure of authority instead of a vertical platform.

Industries that Use Top-Down and Bottom-Up Approaches

The top-down and bottom-up approaches have gained traction in certain sectors of the workforce. Sometimes a highly authoritative upper management and a delegation of tasks is better than employees with fluid roles and a large say in the decisions of a company, and vice versa. Below is a conclusive list of the industries that embody certain management styles over others.

• Investing/Banking: The top-down approach of banking focuses on how macroeconomic factors of the economy drive the market and stock prices, and then make business decisions accordingly. This approach is sometimes referred to as the big data bottom-up approach because of the large influx of numbers used to make company-wide decisions. The bottom-up approach in banking deals with microeconomic factors, focusing less on market cycles and more on an individual company’s performance in comparison to the larger market. Decisions are made on a case-by-case basis, and there is no dependency between companies.
• Nanotechnology: This industry utilizes both approaches for different purposes. The top-down approach is leveraged when developing molecular manufacturing strategies, whereas the bottom-up approach is ideal for developing conventional manufacturing strategies. In 1989, the Foresight Institute first applied bothy styles to the nanotechnology field.
• Neuroscience & Psychology: The ways in which people process information, and how they consequently analyze it, is part of both the top-down and the bottom-up approaches. Sensory input is thought of as a bottom-up approach because someone takes in information from the environment in order to make an informed decision. Comparatively, higher cognitive processes are thought of as a top-down procedure because these functions are done with little voluntary thought or outside influence.
• Public Health: The top-down approach in public health deals with programs that are run by whole governments of intergovernmental organizations (IGOs) that aid in combating worldwide health-related problems. HIV control and smallpox eradication are two examples of top-down policies in the public health sphere. The bottom-up approach is more plausible when combating local issues, like access to health care clinics. This approach invites the input of community members to deal with issues that affect people in closer proximity.
• Architecture: This category can be broken down based on two schools of art: the Ecole des Beaux-Arts School of Design and the Bauhaus. The former begins designs with a basic drawing plan that outlines a project in full, lending itself to a top-down approach. The latter starts by developing a small-scale system that will eventually become a larger, more architectural piece, making it a bottom-up approach.
• Ecology: There are top-down and bottom-up structures that are part of our natural world. In some ecosystems, top predators control the structure of a population. This is an example of a top-down approach. In comparison, other ecosystems exist on a bottom-up approach. These ecosystems, like some marine ecosystems, rely on the productivity of the primary producer at the lowest level to maintain the functionality of the rest of the population.

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The inside scoop on top-down and bottom-up planning

Jake Ballinger is an experienced SEO and content manager with deep expertise in FP&A and finance topics. He speaks 9 languages and lives in NYC.

For any company, planning is critical.

Whether it's sales forecasting, budgeting, or headcount.

Each requires a firm, data-backed plan.

But where should this data—and the plans that follow it—come from? The top of the company? Or the bottom? 

Let's look at a hypothetical: how forecast planning might work with each approach to give you a clearer idea of the differences between top-down and bottom-up planning methods.

We'll then look at each planning strategy's general advantages and disadvantages.

Jake Ballinger

FP&A Writer, Cube Software

What is top-down planning?

What is the bottom-up planning approach.

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Who uses bottom-up planning?

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Also known as retrograde planning, a top-down approach looks at the big picture—the market layout. 

Management observes market trends, conducts painstaking research, and tries to answer questions like "How can we increase our total market share?" or "How can we differentiate ourselves in this competitive landscape?" 

From there, they devise a sales plan that filters down to the rest of the company. The specifics of achieving goals laid out in the plan would be left to department heads.

So, top-down planning is more of a classic approach—executives create company goals, and the rest of the organization tries to reach them. There's little or no input from below.

When is top-down planning superior to the bottom-up planning method?

Top-down planning aligns the organization around the CEO's (or Board's ) vision for the company. 

As our co-founder and CEO is fond of saying, startups die from indigestion, not starvation. So the top-down approach is great for early-stage startups that must focus on growth.

As we'll see, though, bottom-up planning is not the quickest approach. Therefore, a top-down approach will be the best option when a company must move fast.

The macroeconomic view of top-down planning is better for budgeting when a company needs to cut costs. Management has a clearer view of revenue and understands where finances can reasonably be allocated in a crisis.

Disadvantages of top-down planning

Top-down planning is far from perfect.

Despite its broad outlook, it takes a narrow view. The top of the organizational hierarchy may be out of touch with individual departments and set unrealistic objectives.

This results in lower employee buy-in , less motivation, and less likelihood of meeting targets.

In addition, when the decision-making process involves only one person or a small group of people, it's possible they could be making the wrong decisions .

Also known as progressive planning, the bottom-up approach begins, at a very basic level, at a company's lower levels.

This might include individual department sales, production capacity, and regional details in sales forecasting . You'd begin with the product and end with the market trends in contrast to top-down planning.

Bottom-up planning is much more inward-focused than top-down planning—it concentrates more on the company's internal operations, getting into the nitty-gritty, granular detail.

Because bottom-up planning is based on solid, very focused data, departments can set more achievable, realistic financial projections.

These more precise metrics carry up the organizational hierarchy and inform the company's overall plan.

Advantages of the bottom-up approach

One of the bottom-up approach's primary advantages is higher employee morale. That's thanks to its inclusive nature.

Looking again at sales forecasting, there's higher buy-in when the data that informs the company-wide planning process originates from frontline workers.

Because workers set and understand their goals, they feel more invested in driving sales . The same could be said when departments help devise their budgets, as in bottom-up budget planning.

Compared to top-down planning, bottom-up planning provides a clearer view of a company's overall situation. When departments communicate goals to the top, management better understands the unique position of each subdivision.

The rich data gathered by bottom-up planning also clarifies how money is spent . Companies that need to make cuts more easily know where these cuts should occur.

Arguably, department heads know their hiring and spending needs better than distant executives—bottom-up headcount planning and budgeting can lead to a more efficient allocation of funds.

Finally, interaction and planning between different company levels help foster a culture of cooperation.

What are the disadvantages of bottom-up planning?

One of the biggest disadvantages of a bottom-up planning method is a time sink—analyzing all this data can take a lot of time, especially if the company is large.

Cohesion can also be a problem. Without a clear, overarching directive, things can get messy—think "too many cooks in the kitchen."

The bottom-up technique is an iterative method, meaning it's down to the top level to formulate all these different objectives into a cohesive plan. This takes time and effort—another disadvantage.

Of course, heads of individual departments might not have the same high-level insights executives have. Say the company needs to be cutting costs . If we're doing budgeting or headcount from the bottom-up, more money may be spent than the company can currently manage.

What is an example of bottom-up planning?

Consider a global company with divisions in many different countries for an example of bottom-up planning. 

On average, a top-down approach might see a specific product as the company's bestseller . Executives set a company-wide goal of increasing sales of that product. The problem is they don't necessarily understand each regional market across their very diverse company.

Naturally, no one will understand these better than the local department heads. It could be that the goal imposed from the top is unrealistic—maybe there's a cultural preference that misaligns with the product or unfortunate translations that tank desire in the market.

In a bottom-up planning strategy, that individual department would be free to determine what's best to improve their position and then take action.

Say they're looking at historical data and decide a different item produced by the company would be a much better fit. They set up their marketing budget, made sales, and emerged much stronger than they would have had they been forced to follow an inflexible, company-wide directive.

This is the idea behind bottom-up planning: that each department knows what's best for them regarding growth , where they need to focus their efforts, and so on.

Bottom-up planning techniques are best for industries that require a spark of creativity—those looking to innovate or disrupt.

Think tech companies. Bottom-up planning widens the brainpower pool. Employees at all levels can bounce ideas off each other and refine the company's vision.

Close collaboration between departments—the kind that might not exist if top-down planning were employed—helps tweak different aspects of a product before it heads to market.

Countercurrent Planning

No rule says a company must use only top-down or bottom-up planning. Different circumstances favor different approaches; the best option is sometimes to combine the two methods.

This is known as countercurrent planning.

In a countercurrent procedure, the goals are set by the top. However, each department is permitted to work its own goals into how they achieve the primary goal. 

For example, let's say a division wants to increase its online marketing efforts. In a bottom-up plan, that is what they would do. In a top-down plan, management might require funds to be allocated elsewhere.

In a countercurrent plan, the goal communicated from the top might be: increase profitability from this product.

Through their research, the division has determined they can better sell this product through an online channel. By cutting their previous advertising method and boosting efforts online, they can reduce customer acquisition costs and increase profitability.

With a countercurrent plan, you get the best of both worlds—both goals have been satisfied, and everyone's happy.

Now you know all about bottom-up planning.

The difference between these planning approaches lies in how much control you want over the company's finances and the budgeting and planning process.

So what are you going to do now? Are you going to try bottom-up planning?

If you are, you might wonder how best to pull your actuals (from every department!) into Excel.

And that's where Cube comes in. Cube connects with your ERP and other places where data lives in your business and natively integrates with Excel, so you can pull QuickBooks or NetSuite data into your spreadsheet in a single click.

The best part? It's all been checked and de-duplicated. You don't need to worry about your numbers being corrupted. 

Click on the image below to request a free demo of Cube and see how it works for yourself. 

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Top-Down Vs. Bottom-Up Approach: A Comprehensive Guide

There is no business management approach or even leadership style that fits all.

In the complex world of organizational decision-making, two different methods emerged as crucial players: the top-down approach and the bottom-up approach .

These models shape how businesses create their plans, carry out projects, come to agreements, and even set their overall goals.

In this guide, we’ll first take a deep dive into these two approaches, exploring their core ideas, advantages, drawbacks, and examples that will provide valuable insights.

Then, we’ll explore how to integrate them to harness the strengths of both. Here’s a little teaser:

In a world where most organizations follow a top-down style of management, the key is to foster bottom-up engagement and empower employees to actively contribute to your strategy.

By balancing these two approaches, you’ll be able to bridge the gap between leadership and frontline teams, fostering collaboration, innovation, and ownership for effective strategy execution.

Let’s dive in!

Top-Down Approach

What is the top-down approach.

The top-down approach refers to a method where directives and decisions cascade from the upper management or higher-level leaders and filter down through the organizational structure.

This top-down management approach is often implemented through a top-down model of leadership, where strategies and instructions are formulated by higher-ups and then transmitted for execution at lower levels. Companies that adopt a top-down management approach are essentially choosing an autocratic leadership model.

In this context, the concept of top-down processing comes into play. It revolves around leaders deciding on the big-picture strategy , company goals, metrics, and initiatives that will guide the activities of different departments within the organization. This approach is built on the assumption that leadership possesses the necessary insights to make informed decisions that benefit the organization as a whole.

Advantages of the top-down approach

The top-down approach offers several advantages that can contribute to effective decision-making, streamlined communication, and cohesive implementation .

Clear direction

This approach establishes a unified sense of direction from upper management to all organizational levels. Alignment around common goals, strategies, and objectives minimizes confusion and fosters collective effort.

Efficient decision-making

With decision-making concentrated at the higher level, the top-down approach allows for quicker and more decisive choices. This is especially valuable in time-sensitive situations or during emergencies that require immediate action.

Effective coordination

By channeling information and decisions through a well-defined hierarchy, this model facilitates efficient coordination across different departments and functions. This can lead to smoother workflow and better integration of efforts.

Fast communication

The top-down model allows rapid communication of decisions, updates, and changes. This proves valuable for sharing critical information with a large number of employees in a short period of time.

📚 Recommended read : How to Execute Your Internal Communications Strategy In 8 Steps

Disadvantages of the top-down approach

Now that we’ve seen its advantages, it's time to explore its potential downsides.

Limited employee engagement and ownership

When decisions are made exclusively by upper management, employees at lower levels may feel excluded, leading to reduced motivation and satisfaction. Since they are not empowered as decision-makers, they don’t feel a sense of ownership which may result in a lack of commitment to executing these decisions effectively.

Lack of creativity and innovation

The top-down approach can stifle creativity and innovation , as decisions are primarily driven by a small group of leaders. Innovative ideas from front-line staff may not be considered or implemented, hindering the organization's ability to adapt and evolve.

Limited local knowledge

The executive team may not have a complete understanding of the day-to-day operations and challenges faced by lower-level employees. This lack of local knowledge can result in decisions that are disconnected from the realities of on-the-ground execution.

Reduced adaptability

A top-down management approach might struggle to adapt to rapidly changing environments or unforeseen circumstances since decisions made at the top may overlook emerging trends or unexpected challenges.

📚 Recommended read : Check out our Strategy Report, “You're doomed or you adapt”

When to use the top-down approach?

Taking the pros and cons into account, you’ll find the top-down approach works well in certain situations within an organization.

Crisis management & urgent decision-making

In states of emergency or impossible deadlines, democracy flies out of the window. There is no time to debate the decision, and the leadership team needs to step up and make the call. When inaction is worse than a bad decision, execution becomes a top priority.

Consistency & standardization

For tasks that require consistent processes, such as compliance with industry regulations or maintaining a uniform brand image, the top-down model helps ensure that the same guidelines are followed across the organization.

Large-scale initiatives

When introducing large-scale organizational changes , such as restructuring or implementing new technology systems, this approach can effectively manage the transition by providing a clear roadmap for implementation.

Bottom-Up Approach

What is the bottom-up approach.

In the bottom-up approach, the decision-making originates from individuals at lower levels —such as front-line staff, team members, and lower-level employees— and gradually rises to influence the entire company.

The bottom-up process involves synthesizing individual experiences, expertise, and suggestions to inform higher-level decisions. This approach gives value to the diverse perspectives of employees, acknowledging that those directly engaged in day-to-day operations can provide valuable insights into the strategy.

By adopting a bottom-up management style, leadership fosters open communication, encourages active employee involvement, and promotes the exchange of ideas. Engaging employees in the decision-making process enables organizations to tap into a reservoir of collective knowledge, foster a sense of ownership, and elevate overall employee engagement .

Advantages of the bottom-up approach

The bottom-up approach has its pros and can contribute to increased innovation and improved involvement from teams across the organization.

Diverse perspectives

This model values input from a wide range of employees across different roles and levels. The diversity of perspectives leads to well-rounded decisions that take into account several viewpoints and potential implications.

📚 Recommended read: Why Diversity Matters for Strategic Execution

Fast adaptability

Organizations that embrace the bottom-up model are often more adaptable to change. Employee input helps identify emerging trends and potential disruptions, allowing the organization to respond faster.

Innovation and creativity boost

Employees at the front lines often have unique insights and creative ideas based on their direct experiences. A bottom-up approach encourages the sharing of these ideas, fostering a culture of innovation and continuous improvement.

Increased employee engagement & buy-in

Employees are more likely to support and embrace decisions when they've had a role in shaping them. So, when employees feel that their opinions are valued and their contributions matter, they become more engaged. This leads to smoother implementation and reduces resistance to change.

Effective problem-solving

Lower-level employees often have a deep understanding of operational challenges and can provide practical solutions that might escape the notice of the leadership team. Embracing a bottom-up approach taps into this expertise, enabling effective problem-solving.

Disadvantages of the bottom-up approach

While the bottom-up approach offers various benefits, it also comes with possible disadvantages that need to be considered.

Time-consuming decision-making

Involving a larger number of employees in the decision-making process can be time-consuming. Consensus-building and gathering input from various sources may slow down the decision-making process.

Lack of long-term vision

Bottom-up decisions can sometimes focus on short-term goals and immediate concerns, potentially neglecting long-term strategic objectives. Bottom-up decisions might lack alignment with the bigger picture and the organization's overall strategic goals .

Organizational fragmentation

An excessive bottom-up approach without the right coordination can result in silos since teams might prioritize their own needs without considering the organization as a whole.

Risk of uninformed decisions

Not all lower-level employees have the same level of expertise or access to information. This can lead to uninformed decisions based on partial or limited information.

When to use the bottom-up approach?

The bottom-up model is particularly effective in certain scenarios like the ones below.

Innovation and creativity

When looking for innovative ideas and creative solutions, the bottom-up process allows you to tap into the diverse perspectives of your employees at all levels. This encourages brainstorming, experimentation, and out-of-the-box thinking.

Complex problem-solving

For complex challenges that require a deep understanding of operational intricacies, a bottom-up approach can involve employees who have hands-on experience and expertise in the specific area, leading to more effective solutions.

Localized decision-making

When decisions need to be tailored to specific departments, teams, or regions, the bottom-up model ensures that localized needs and nuances are taken into account, avoiding one-size-fits-all solutions.

Identifying improvement opportunities

A bottom-up approach can uncover hidden inefficiencies and opportunities for optimization since employees at lower levels often identify areas for improvement that might not be apparent to upper management.

Top-Down Vs. Bottom-Up Examples

We often hear that "it's easier said than done." And it’s true...

Let's look into some practical examples that explore both approaches.

Top-down approach examples

Example 1: Company-wide protocol rollout

In a large organization in the healthcare industry , a new patient care protocol is introduced. The executive leadership, led by the Chief Medical Officer and administrative heads, crafts a strategy to enhance patient outcomes. This strategy includes standardized procedures for diagnosis, treatment, and follow-up care. These directives then flow down the hierarchy, ensuring consistent patient care practices across departments and units.

Example 2: Organization-wide restructuring

A well-established manufacturing company decides to implement an organizational restructuring to improve efficiency and agility. The company's executive leadership, including the CEO and senior management, develop a strategic plan that involves merging certain departments, streamlining workflows and processes, and redefining reporting structures. This top-level strategy is then communicated down the hierarchy to department heads and managers.

Bottom-up approach examples

Example 1: Streamlined problem-solving

The development team at Meerkat.app, a software startup , encounters a roadblock in a critical project. Instead of waiting for top-down directives, the team members take the initiative to collaborate and brainstorm solutions. Through open discussions, they identify a more efficient coding methodology that can overcome the obstacle. This innovation is then presented to upper management for approval.

Example 2: Collaborative project planning

A construction company is about to embark on a complex project different from anything they've done before—let's say, constructing a state-of-the-art research facility. To ensure meticulous project planning , they gather the insights of their on-site engineers, project managers, and skilled workers who are intimately familiar with the practical aspects of construction. Through collaborative discussions and workshops, each team member contributes their expertise, estimating task durations, resource needs, and potential challenges. This collective input is then woven into a detailed project plan.

The Key To Success: Driving Bottom-Up Engagement In A Top-Down Organization

Achieving synergy between top-down directives and bottom-up contributions is often the key to successful strategy execution .

By fostering bottom-up engagement within a top-down structure, organizations can tap into the collective intelligence of their teams. This empowers employees to actively contribute their perspectives, solutions, and suggestions, thereby enriching strategies and initiatives.

The result is an organization that not only benefits from the strategic vision of its leadership but also thrives on the ground-level expertise of its diverse team members.

Balancing these two models not only enhances decision-making but also nurtures a culture of ownership, creativity, and adaptability.

How to effectively integrate both approaches?

When it comes to combining top-down and bottom-up models, the possibilities are vast and varied. Here are some suggestions to get you started:

• Enforce leadership's role in empowering employees: Leadership should exemplify active listening and responsiveness, setting a precedent for open communication .
• Open channels for two-way communication: Establish platforms where employees can freely share ideas, concerns, and suggestions with leadership. ‍
• Share your strategy rationale and goals: Foster transparency by sharing not just the strategy and goals but also the rationale behind them. Understanding the "why" behind upper management decisions will boost employee engagement. ‍
• Implement collaborative strategy development: Leverage team inputs and diverse perspectives for strategy formulation, enhancing alignment between departmental goals and the overall strategy. ‍
• Empower frontline teams for decision-making: Encourage autonomy and decision-making at lower levels to nurture a sense of ownership and accountability . ‍
• Promote cross-functional collaboration : Encourage collaboration among teams from different departments, cultivating diverse insights and holistic solutions. ‍
• Recognize and reward employee involvement: Celebrate innovative contributions from all organizational levels to inspire engagement. ‍
• Develop champions of engagement at all levels: Cultivate advocates for engagement across the organization to drive a culture of participation. ‍
• Measure engagement : Define metrics, goals, and KPIs to measure employee participation and ownership. That way, you’ll know what’s working and what needs to improve.

💡 Pro Tip : While these strategies and tactics may help combine both approaches and achieve bottom-up engagement, it’s not a one-time thing... It’s a process that involves a cultural shift. In order to sustain bottom-up engagement over time , you need to integrate engagement practices into your organizational processes and nurture an environment of continuous improvement.

Top-down & bottom-up integration—examples

Example 1: Budget allocation

In an effort to allocate its annual budget effectively, a large organization combines top-down and bottom-up approaches. The executive leadership establishes high-level budgetary goals and strategic priorities, providing a framework for departments. Simultaneously, the finance team collaborates with department heads to gather specific budget requirements based on project needs.

✅ Combining this bottom-up input with the top-down framework creates a comprehensive budget that aligns with strategic goals while accommodating practical departmental needs.

Example 2: Forecasting

A tech company seeks to forecast next year's sales. Combining approaches, the executive team sets high-level sales targets based on trends and growth goals, providing the forecast's direction. Simultaneously, the sales team, with customer insights, offers bottom-up input, estimating potentials in their sectors. Integrating these inputs enriches the forecast with market dynamics.

✅ The approach marries strategic vision with practical insights for an ambitious yet realistic forecast.

Real-life Example: IBM

IBM employs a balanced approach that combines both top-down and bottom-up methods.

At the top-down level, IBM's executive leadership defines the company's overarching strategic direction, setting the stage for its operations and initiatives. This top-down guidance aligns the organization towards specific goals, such as expansion into emerging markets or the development of cutting-edge technologies.

Simultaneously, IBM values bottom-up input to drive innovation. Employees are encouraged to contribute insights and ideas, leveraging their industry knowledge and customer understanding. This input influences the creation of diverse products and services, like cloud solutions and AI platforms. IBM's culture fosters collaboration across teams and geographies, enriching decision-making with varied viewpoints.

✅ This balance of strategic direction and employee-driven innovation empowers IBM to navigate the ever-evolving technology landscape effectively.

📚 Recommended read : How IBM Became A Multinational Giant Through Multiple Business Transformations

Striking The Optimal Balance With Cascade ⚖️

Cascade is the world’s #1 strategy execution platform that helps businesses connect siloed metrics, initiatives, and investments with their realized performance for accelerated decision-making. With Cascade, you gain full visibility of your strategy enabling your organization to cultivate a culture of strategic agility and collaboration.

In the journey to achieve the perfect balance between top-down and bottom-up approaches, Cascade serves as an invaluable ally with features that allow seamless integration of strategic vision and ground-level insights.

Cascade Planner : Navigate your strategic planning process with structure and ease by breaking down the complexity from the big-picture strategy to goal-setting, initiatives, and projects for your frontline employees.

Measures & Metrics : Track your progress and directly link your business data to core initiatives for clear data-driven alignment. Enable employees to update their progress and see how their day-to-day efforts contribute to overall goals.

Alignment & Relationship Maps : Visualize how different organizational plans work together to form your strategy and map dependencies, blockers, and risks that may lie along your journey. Dive deeper into your strategy's horizontal and vertical alignment from the corporate to initiative and even project level.

Dashboards & Reports : Access real-time visualizations of your strategic performance and share them with your stakeholders, suppliers, and contractors. Combine information from different parts of your business and strategy.

👉🏻 Take Cascade for a spin! Sign up today for a free forever plan or book a guided 1:1 tour with one of our Cascade in-house strategy execution experts.

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Top-down vs. bottom-up management: What is the best fit?

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Top-down management

What companies use top-down management, pros and cons of top-down management, bottom-up management, what companies use bottom-up management, pros and cons of bottom-up management.

What is the countercurrent method, and how does it work?

Which approach is best for you?

You’re the boss. Maybe you just became one for the first time or maybe you’ve been managing people for a long time. Either way, whether you’re leading an entire organization or just a team or two, you now have the power, and responsibility, to make decisions and be accountable. 

Your team is looking to you, literally staring at you, for guidance on what to do next.

What do you do? 

Do you start handing out clearly defined tasks with explicit guidelines, deadlines, and steps so that all your employee has to do is execute your plan? After all, you know what needs to be done. If everyone executes as directed, your plan will work and your vision will be realized, and you’ll achieve good results. 

Or, do you start asking questions to understand what people are working on, what challenges they see, and let them define the priorities? The team is closest to the work, after all, and probably has insight into what is or isn’t working. If everyone does what they think is best, their plans should come together and achieve good results. 

These two choices for management represent extreme examples of two approaches, and accompanying mindsets, for managing: top-down management or bottom-up. 

The cliche of the boss-as-tyrant or boss-as-benevolent dictator or boss-as-all-knowing is prevalent for a reason. Most of us are used to top-down management — the traditional approach. The leadership team sets the company’s direction and major projects, and everyone else executes the plan. At the extreme, the employees execute tightly-specified tasks as quickly, consistently — and robotically — as possible.  

Bottom-up management is the opposite — ideas about upcoming goals, projects, and vision are funneled up by the teams and individual contributors. This allows more room for feedback and discussion. Bottom-up management first came about in software development to help teams implement user feedback into the product and to quickly work on iteration after iteration. At the extreme, employees are free agents, following their own direction and optimizing for their own interests. 

Both approaches have advantages and disadvantages. In reality, most managers and organizations will fall somewhere on a spectrum between the two. At the same time, it’s useful to understand the underlying mindset and beliefs, as well as the limitations and what is required to succeed. We’ll dive into them below so that you can decide which one is right for your business. 

Often referred to as command-and-control, top-down management is often the default. In this hierarchical style of management, the power and decision-making generally remain with those at the top (though there might be some input from middle management). Information tends to flow slowly and only in one direction. It’s up to everyone else to implement the vision that’s determined by the leadership team . 

The top-down approach comes with several benefits. First, because the decision-making process is extremely centralized, it leaves little room for ambiguity. With the input of just a few people, it’s easy to provide clarity, and the message doesn’t get muddled or crowded with additional revisions and perspectives. A clearer vision is much easier to implement. 

And that implementation tends to happen quite quickly. Since there isn’t an opportunity to question, discuss, or provide feedback on the message coming from the top, the company saves valuable time by moving rapidly to the execution phase. 

One caveat here: Without the opportunity to hear any feedback, there’s a risk that management might make the wrong decision. Even if they already have a strong pulse on the organization, the needs of customers and the conditions surrounding how a company meets those needs are changing a lot faster now than they used to. A very hierarchical organization will struggle to respond quickly enough to address unexpected problems or pursue new opportunities . 

Company decision-makers also need to make sure they have the respect of other teams and a track record of acting in the company’s best interest. Top-down processing at a company where a new leader has just stepped in, or where there’s a management team who has been known to ignore the needs of other departments, provides fertile ground for problems ahead. 

Finally, in an overly prescriptive work environment where they are expected to execute like robots, people might not find the job satisfying. There isn’t a lot of room for growth and development, except for those chosen for management. Ultimately, the organization also isn’t benefiting from the range of insights or abilities the employees might have to offer. 

If you choose a company at random, there’s a pretty good chance that its approach to management is top-down, especially large organizations. If the company is in a heavily regulated industry or one with severe, irreversible consequences for mistakes, it’s even more likely. The financial sector , for example, has clear rules and strong repercussions when it comes to strategy, process, and execution, leaving little room for error. 

Generally, management has the clearest perspective on how to navigate these regulations. They understand the ins and outs of the sector and have the authority to make sure that all actions and communications are aligned to policy and legal requirements.  

The military has historically been used as the poster-child for command-and-control. Consider the classic drill sergeant scene: “When I say ‘jump,’ you say ‘how high?’” Interestingly, over the past two decades, the military itself has pioneered a less hierarchical, distributed, more agile form of management in response to the less predictable, faster-changing challenges they now face. 

• Most likely to create alignment in the team’s overall goals
• Provides clear goals and expectations for the employees
• Employees are able to focus solely on their work
• Discourages creativity and proactivity
• Can lead to unhappy employees due to lack of autonomy
• Employees may feel disconnected from the company’s values

You might hear about bottom-up management in the software development space or when talking about grassroots movements. Bottom-up management is about both casting a wider net and empowering employees at different levels of the organization. In this approach, the actions and vision for the wider company draw on input from employees across different levels. Teams and individuals have greater autonomy in how they approach the work and are likely to determine at least some of their own outcomes and priorities. 

This approach comes with its own set of benefits, not the least of which is greater employee engagement . When employees know that their voice is being heard and that they’re contributing to the company vision, they’re more motivated and more likely to connect more deeply with their work, showcasing higher levels of engagement and productivity. After all, their work was, in part, determined by them. 

The opportunity to provide feedback to leadership also adds value to the employee’s day-to-day work. It’s through their work and experience that they gain insight into which direction the company might take next. When management requests feedback, employees know that their learnings from their work experience hold value. A bottom-up approach emphasizes the fact that those who are out “in the field” every day can provide significant insights that management, from their perspective a bit higher up, might fail to notice. 

With this approach, organizations can also lessen the risk of surprising teams with any unexpected tasks or processes. Since the direction was set with the team’s input, it should have echoes of the problems and accompanying solutions that were funneled up through the feedback.

Bottom-up management also provides an opportunity to benefit from a diverse group of people across the company, many of whom will have unique perspectives on the business and new approaches to consider. Research has shown that teams and organizations are more innovative when they draw on more diverse perspectives and experiences.

Finally, bottom-up management can create more stretch opportunities for professional growth and development for everyone. Team members are more likely to stay relevant and up-to-date with skills that the company needs for the next strategy. 

The downside of bottom-up is that it can be difficult to dial in the right level of structure and guidance to give people. In addition, because authority isn’t centralized, figuring out who or if there is a signoff needed for a decision can be confusing. 

Generally, a completely hands-off approach to project management will be frustrating and ineffective, potentially leading to as much dissatisfaction as a strict top-down management approach. Starting from an assumption of trust, good intentions and competency doesn’t take into account the reality that many employees might need guidance and supported development to effectively tackle new challenges that they’ve never experienced. In addition, especially with larger organizations, team members and individual contributors might not have enough visibility into company goals or other workstreams to make informed decisions about where they should best focus their own efforts. 

Bottom-up management is commonly seen in start-ups. Often, start-ups have a smaller group of people working for them , which means that many voices can easily be heard and feedback can be taken into consideration. And because more nascent organizations are in quickly evolving industries, start-up employees are usually hired for their ability to take on the work that needs to be done, giving them autonomy to problem-solve and the power to step outside of their role to do so. 

This sense of autonomy offers employees both the ability to be innovative in their own role and to gain a good understanding of what they need from management in order to move forward. 

Journalism is an example of bottom-up management in a more traditional industry. Though the overall direction of the publication is set by those at the top, journalists are often responsible for finding their own stories and pitching ideas to editors. Grassroots movements are also, by definition, bottom-up, using the power of communities and individuals to press for change at the government level. 

• Can lead to better engagement and productivity
• Employees are empowered to share valuable insights
• Team is often better aligned to the big picture and company values
• May create disorganization and frustration
• Employees may be reluctant to share feedback
• Employees may derail the business’s mission with unrelated concerns

What is the countercurrent method, and how does it work? 

Both the top-down and bottom-up approaches have strengths and weaknesses. The countercurrent method attempts to eliminate the downsides by combining both approaches. You could think of it as a direction being set by executive leaders, with the front-line staff determining the best way to achieve each goal along the way.

The countercurrent method is bilateral, with team members sending their plans to the leader for approval before executing them. The big picture, long-term goals, and budgeting are managed and communicated to employees and staff. While this process can feel a little less direct than top-down management, it can actually be easier on large organizations. Each person can contribute within their i ndividual departments , with strategy and vision created through the chain of management. This method can be highly effective, empowering employees to make decisions while managing growth at higher levels.

To get an idea of the approach best for your organization, it’s helpful to think of the current stage of your organization. 

If you’re growing and consider your company more of a start-up, it might be best to start with a bottom-up approach as you continue to learn more about the space and the industry from your employees. Plus, having fewer people makes it much simpler to take everyone’s views into consideration. If you try to employ a top-down approach in a start-up, people who originally had huge areas of responsibility might begin to feel stifled. It’s tough to feel empowered exploring new areas of opportunity with strong directives set from the top. 

If you work in a heavily regulated industry or a much larger company, consider a top-down approach. However, be sure that you have other means of getting a pulse on the company and its challenges so that management is not too separated from what’s happening on the ground. If you need to move quickly, a top-down approach can ensure that people can move swiftly from strategy to execution — so long as leadership truly understands the situation.

Keep in mind that as an organization evolves, its management style should evolve with it. As organizations grow, expand into different areas and new types of leaders arrive, the process of company goal-setting needs to be flexible to accommodate for these changes. 

Of course, these two approaches aren’t mutually exclusive. For example, there might be certain decisions that are best made at the top then filtered down and other areas where management might need to rely heavily on team feedback to make a decision. 

What’s most important is maintaining as much communication and transparency about why you are being more top-down or bottom-up in a decision-making process as possible. You don’t want to seem inconsistent, erratic, or as if you say one thing but do another. Feel free to combine elements of these two approaches until you find the right mix for your situation, your individual company and team goals, and your leadership style.

Allaya Cooks-Campbell

With over 15 years of content experience, Allaya Cooks Campbell has written for outlets such as ScaryMommy, HRzone, and HuffPost. She holds a B.A. in Psychology and is a certified yoga instructor as well as a certified Integrative Wellness & Life Coach. Allaya is passionate about whole-person wellness, yoga, and mental health.

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Top-down vs bottom-up in planning

Leveraging both in an M-shaped approach.

The Coda Team

By The Coda Team

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What is top-down planning?

What is bottom-up planning, m-shaped planning: merging top-down + bottom-up..

1. Reflections on the previous quarter.

• Give all OKRs their final (progress) score. These grades are important for informing any sort of re-calibration of goal planning for the upcoming quarter.
• Use an interactive doc, like a two-way writeup , that can be read asynchronously. This has the nice bonus of documenting all of your lessons learned for future reference. Our companion tutorial doc will also show how to do this in Coda.

2. Top-down guidance from the leadership.

3. bottom-up planning that taps into the full strength of the team., 4. integration that merges top-down guidance and bottom-up plans..

• The leadership team needs to make themselves available to quickly resolve any prioritization conflicts.
• Use Bullpen-style meetings to work through many issues efficiently in parallel without creating calendar nightmares.
• Throughout your planning, make tracking and acknowledging dependencies a priority.

5. A final presentation that brings it all together.

• Strive for short presentations. At Coda, we restrict each team’s time to 5 minutes, plus 3 minutes for Q&A moderated by a Dory .
• Teams should focus on the what and the why. One cheat code is to use pre-recorded presentations to make sure they are on time and re-watchable later on.
• Streamline the final presentation production by keeping your writeups, data visualizations, mockups, and more in your planning doc throughout the previous phases. Keeping everything in one place makes it easier to pull your final presentation together.

Top 3 planning pitfalls to avoid.

• Don’t define and outline the different phases of the planning process. This leads to org-wide confusion on how planning is conducted, where they are in the process, and what is expected of each person.
• Don’t have hard (or realistic) deadlines for the different phases. This leads to teams spending too much time in one phase, then speeding through the others to make up for lost time.
• Leadership doesn’t implement an integration phase. They connect their top-down guidance with the bottom-up plans of individual teams. Or, if the phase takes too long, confusion generates over what’s been prioritized and what’s been cut.

The best of both worlds: Using Coda to combine top-down and bottom-up planning.

Related posts.

Coda’s Head of Engineering, Oliver Heckmann, shares his time-tested insights for better OKR planning.

How OKRs have changed the way teams do their best work.

Best practices for identifying and writing your biggest goals.

More From Forbes

Is your strategy top-down, bottom-up or sideways.

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What drives your strategy impacts your culture and how your company performs. Matching the approach ... [+] to strategy with the end goal is a leadership challenge.

Strategy may be one of the most overused words in business. For fans of Michael Porter, it’s about creating a competitive advantage. But in reality, for most organizations, it can sometimes feel more like planning for business as usual. Therein lies a problem.

Whether or not they are top of mind, we rely on strategies for our businesses to succeed. Strategies are more than plans; they impact our culture, and the approaches we take to manage and lead. Yet all too often, the approach leaders use is whichever is comfortable for them – which doesn’t match the strategy with the needs of the business unit or, more broadly, the organization. Having the ability to match a strategic approach with business challenges is what makes a leader adaptive.

In general, we can group these strategic approaches into three camps: top-down, sideways, and bottom-up. Let’s explore these three approaches, when they work, and when they might not.

Top-down strategies dictate to control

Top-down strategies help keep people aligned toward a common goal - if the path to get there is ... [+] clear.

Traditionally, leadership theory dictates that strategy comes from the top. In certain organizational cultures, this can be effective – particularly when controls are needed to ensure quality or safety. As we slid into this pandemic, top-down strategies were essential. People at all levels needed to know that their employers were going to keep them safe – and what precautions employees would be expected to take. Information had to be communicated quickly and widely to ensure everyone was coordinated. This is when top-down works best.

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A few months ago, in South Korea, a top-down strategy proved essential to saving lives in a recent example . When there was a COVID-19 outbreak in a call center in a Seoul high-rise, a “decisive intervention” was quickly put in place that “included closing the entire building, extensive testing and quarantine of infected people and their contacts.” Coordinating all of the businesses within that building and mapping out the infected and exposed was no easy task. But it proved successful. The spread of the disease was contained to a single floor and the majority of those infected were call center employees who sat near employees who were infected. Decisive action mattered.

There can be drawbacks to this kind of approach. In top-down environments, employees have a mission and vision to focus on. But oftentimes they struggle to see how their current work fits with those goals. In most organizations, if you stopped a random employee and asked to hear the company’s strategy, you’d get a blank stare. Most of your employees don’t know what drives your profitability or how you work to differentiate your offering in the market and keep it that way. They know how to do the job they have been asked to do. In the trenches, that can feel less like strategy and more like process. If the people doing the work don’t know what they are working toward, how effective can your strategy be?

Sideways strategies rely on continual process improvements

Sideways strategies create businesses that are well-oiled machines.

In the late 1980s and 1990s, some manufacturing companies started to change the way they developed their strategies, focusing on the processes and continual process improvement. Toyota became the poster child for this approach, developing what would become the “Lean” model. Geary Rummler and Alan Brache created a related methodology — sometimes referred to as managing sideways. While companies that use this approach still have leaders that make strategic decisions – like creating a new product line – strategic operational decisions are made “on the line” by empowered workers, who can collaborate to create efficient processes. That’s what sideways leadership is: It’s creating a technological competitive advantage (as opposed to revenue or cost) through constant process and managerial improvement. It’s hard work, but pays off.

A few years ago, I led a process improvement project for a large financial services firm. We were asked to look at a significant customer pain points around account registrations. When a customer got divorced, for example, and wanted to split assets between different accounts, it caused internal chaos. Customers would submit a request, it would get passed around the organization (we counted 210 touch points), and nearly one-third of submissions were sent back to the customer saying the information submitted was missing or incorrect. The last thing people getting divorced want is another hassle, more paperwork and the need to re-engage a former spouse. But that was necessary in the process. So, we redesigned it — cutting the touch points down to 30, allowing processing to happen in a fraction of the time, and virtually eliminating the letters sent to customers telling them more information was needed. A win for all.   

Sideways strategies don’t work for everyone, however. On a different project, I worked closely with a performance improvement team attempting to improve the operational processes in a top-down organization. From a process perspective, the company was a disaster. Every process may have started out clean, but over the past few decades, bubble gum and duct tape were added to meet specific requests. The processes had become so reactive and overstretched that the organization had easily twice the staff that would be needed if processes were streamlined. The culture wouldn’t support streamlining the process. Suggestions from perceived outsiders were dismissed. Leadership was afraid of change and losing control. Without the support from the top, even the best sideways strategies can easily flounder.

Bottom-up strategies rely on trust and empowerment

Bottom-up strategies empowers the workers in the trenches to improve the experience of customers and ... [+] associates.

A third approach is more democratic in nature, allowing the strategy to be developed from the bottom-up. It may sound like creating a kingdom without a king, but it isn’t. It does, however, change the role of leaders. Instead of dictating the strategy, leaders empower individuals to maximize the value they create for the firm. Leaders become coaches who question and challenge ideas and opportunities to see if there are holes in the logic or the approach. You find this approach sometimes at tech companies where employees are allowed to create new products and test them online to see if they increase usership or “stickiness.”

W.L. Gore is perhaps the most famous large company to use a model like this . Associates are trusted to do what is right for the business. They have goals and commitments and use a latticed communication structure to get the work done. There is no hierarchy, but it isn’t chaos. The system removes the barriers that bureaucracy creates. The company has been cited as one of the 100 best companies to work for by Fortune magazine 21 times since the rankings began in 1998.

Empowerment, too, comes with its challenges. Not every associate is ready to be empowered. When I managed a data team for a large financial institution, I had an associate on my team whose primary role was to support the needs of the operations team. He had worked in the operations side of the business for nearly two decades, which gave him a wealth of knowledge. He just didn’t know how to use it. He liked to tell people how it was and therefore how it should be. He struggled to stay open-minded and to think differently about how to do work. Employees who prefer not to think about how they work or the opportunities they can create for themselves often struggle with empowerment. They may lack direction and focus. They may not be achievement-oriented, making it harder for them to get motivated intrinsically. With time and training, they can learn to be more confident and comfortable, which will allow them to be empowered and engaged. But that is a significant undertaking for any manager, leader or coach.

Developing your leadership strategy

When thinking about the right leadership strategies for you, the challenge is deciding how, when and where to use them. Not all business units may need to be run in the same way. Think  about the objective or the purpose of that business and where it needs to go in the future.

A top-down approach is great where there is certainty and efficiency is needed, but it doesn’t leave much room for adaptation or innovation. Operational groups are primed for sideways management, but often don’t look to improve if customers or leadership aren’t complaining. A bottom-up strategy empowers employees and can be a great way to innovate, but too many cooks can create redundancy and chaos.

Choosing the approach is just the beginning. Executing it well is how you set yourself apart as a leader.

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Project Management

Top-down vs bottom-up: which is the best approach.

December 11, 2023

What does it take to manage a project well? Leadership? Yes. Team work? Of course! But how do you approach it with balance? 

Imagine running a big project like building a treehouse. Do you start with a master plan from the top, ensuring every detail is in place, or gather the gang, brainstorm ideas, and build from the ground up?

It’s like choosing your management style of managing a new project. Do you go with the bossy top-down plan or the democratic, bottom-up approach? Let’s keep it simple: should the chief be the boss telling everyone what to do, or should the team decide things together?

This article will look at the top-down vs bottom-up approach to project management and see which works better for different situations.

What is a Top-Down Approach?

Benefits of a top-down approach, what is a bottom-up approach, benefits of a bottom-up approach, major differences between top-down vs bottom-up management, choosing the best approach for your team or business, improving your team’s management with clickup, finding the right balance for your project’s success—using clickup.

In project management, the top-down approach is like having a master plan ready before starting the project. Imagine you’re the chief architect, sitting comfortably at the top of the tree, sketching out every detail. You decide on the treehouse design, materials, and where each piece should go.

In practical terms, this means that the project leader or manager takes charge, analyzing the project as a whole and breaking it down into smaller, manageable tasks. Like our chief architect, they set the goals, allocate resources, and define the project’s overall structure. 

The advantage of the top-down approach is clarity. All team members know their role, and the vision (big picture) is crystal clear. There’s a potential downside, though. The top-down approach will miss the creative input and unique ideas the team could bring.

Imagine if, in our treehouse project, the chief architect forgot to ask the kids if they wanted a secret trapdoor or a telescope. Sure, they would have a functional treehouse, but would they be pleased with it? 

While the top-down approach offers a well-organized plan, ensuring that the finer details stay visible, it does not allow collaboration and creativity to flourish.

• Clear direction➡️ : The good thing about top-down is that everyone knows where the team is heading. The leaders (upper management team) set the goals, and the team follows them. This helps avoid confusion and keeps everyone on the same page
• Smart use of resources🛠️ : With top-down, the leaders will use resources wisely because they see the whole picture. They decide where time, money, and people should go to make the project successful
• Easy communication🗣️ : Top-down makes communication simple . The leaders say something, and it goes down the line. This way, everyone knows what’s happening, and there are fewer misunderstandings
• Greater accountability ✅: Since there is an established chain of command and clear allocation of responsibility, the top-down approach makes it easier to hold people accountable. You know who the source is if a problem arises, and fixing it is that much faster 

In project management, the bottom-up approach is akin to gathering the team at the tree’s base, tossing around ideas, and collectively deciding how to build the treehouse. It’s a democratic process where everyone has a say.

In a bottom-up approaches, the team members actively participate in decision-making. They share their insights, skills, and suggestions, and the project gradually takes shape based on their collective input. Each friend suggests a unique feature for our treehouse project, like a rope ladder or a cozy reading nook. The final design emerges through a collaborative effort, with contributions from everyone involved.

The strength of the bottom-up approach lies in its inclusivity and the wealth of diverse ideas it brings. Creativity flourishes since everyone has a voice, reflecting a broader range of perspectives. However, managing this process can be like wrangling playful monkeys in a tree—it might take longer to reach a decision, and the overall structure may need some adjustments.

While the bottom-up approach fosters innovation and team engagement, striking a balance is crucial. Too many ideas without a guiding structure might lead to chaos. It’s like ensuring that while building the treehouse, there’s still a sturdy trunk and branches to support all those exciting additions suggested by the team.

• Creative thinking 🧠 : Embracing the bottom-up management approach lets your team be creative. Team members can share their ideas; some might be smart solutions that leaders didn’t think of. It’s a way to encourage new and innovative thinking
• Happy team 😄 : When the team gets to make decisions, they feel more involved and happy. Everyone feels part of the success, which excites people to work on the project. That’s a crucial advantage in favor of the bottom-up approach in bottom-up vs top-down comparison
• Quick adaptation🏃 : Bottom-up is good at adapting to changes fast. Since the people doing the work make decisions, they quickly adjust plans when things change. This makes the project more flexible and able to handle unexpected situations

Decision-making authority

In the top-down approach, the decision-making authority rests primarily with a central figure, our chief architect in the treehouse scenario. They plan and decide the structure, design, and features, and the team follows their lead.

In the bottom-up approach, the team members share the decision-making process. Each participant has a say in the project, contributing ideas and collectively shaping the final product, much like friends collaborating on the design of a treehouse.

Clarity vs. creativity

The top-down approach provides clarity from the outset. The plan is well-defined, ensuring all team members know their role and the project’s direction. However, this clarity might come at the expense of stifling creative input from the team.

The bottom-up approach encourages creativity and inclusivity. Team members bring diverse ideas to the table, fostering innovation. However, the process may take longer, and managing multiple suggestions could impact the effectiveness of coordination.

Efficiency vs. engagement

The top-down approach can be more efficient in terms of decision-making and execution. With a clear plan, task assignment is quick, and the project progresses seamlessly.

While the bottom-up approach may take more time due to collaborative decision-making, it fosters high team engagement. The sense of ownership and involvement will lead to a more motivated and dedicated team.

Adaptability

When comparing the top-down vs bottom-up approach, the top-down might need help with adaptability. Once the plan is set, making significant changes without disrupting the entire structure is challenging.

On the other hand, the bottom-up approach is inherently adaptable. Since decisions evolve organically, the team quickly adjusts based on real-time feedback and emerging ideas.

The choice between bottom-up vs. top-down approaches boils down to whether you prefer a project where the leader decides on everything or evolves from a collaborative effort, where everyone contributes to the final masterpiece. Each approach has its strengths, and the best choice often depends on the specific needs and dynamics of the project at hand.

The same applies to project management. When looking at the top-down vs bottom-up management styles, you must consider the situation before picking one. How do you do that? Keep reading to find out! 

Deciding on the management approach for your projects is a crucial decision that significantly influences your team’s success. Take Google and Apple, for instance. Both of these tech behemoths follow different approaches to managing their teams. While Apple’s management is more inclined towards the top-down side , Google follows more of a bottom-up approach . 

To make the best decision for your team or business, you must look into some key aspects and develop your approach without getting caught up in the top-down vs bottom-up rivalry.

Understand your team dynamics

Think about your team’s expertise and experience. If your team is skilled and experienced, a bottom-up approach, where everyone contributes ideas, might be great. But if your team is relatively new or lacks specific skills, a top-down approach might be more suitable, with clear guidance and motivation from leaders.

Action steps : Consider conducting a skills assessment within your team to identify strengths and areas needing support. 

Project complexity and flexibility

Consider how complex your project is and how often it might change. For projects with well-defined goals, a top-down approach provides a clear roadmap. However, in fast-paced environments or industries where changes are frequent, a bottom-up approach, allowing for quick decision-making, might be a better fit. 🧩

Action steps : Create a project matrix outlining key variables like timelines, budget constraints, and stakeholder involvement—this will also help you develop better practices to manage that project.

Innovation and problem-solving needs

Think about the role of innovation in your projects. A bottom-up approach encourages creativity from everyone, leveraging diverse perspectives. Conversely, a top-down approach may be necessary for projects where a centralized vision is crucial for innovation.

Action steps : Facilitate regular brainstorming sessions or idea-sharing forums within your team. 

Organizational culture

Reflect on your organization’s culture. If it values collaboration and everyone’s input, a bottom-up approach supports this. A top-down approach might align better if it’s more hierarchical, where decisions come from the top.

Action steps : Conduct surveys or focus group discussions to understand your organization’s culture.

Risk tolerance

Consider how your organization deals with risks. In risk-averse industries, a top-down approach provides stability. Conversely, if your organization is open to experimentation, a bottom-up approach allows more flexibility in navigating risks.

Action steps : Create a risk assessment framework to quantify potential risks associated with your projects.

Combining approaches

Acknowledge the potential benefits of combining elements from both approaches. A hybrid approach offers clear leadership advantages while leveraging front-line employees’ creativity. 

Action steps : Explore case studies from organizations successfully implementing a hybrid approach. 

Continuous evaluation and adaptation

Understand that deciding to go one way or the other is not static. Regularly evaluate the effectiveness of your chosen approach and be prepared to adapt based on team composition, project requirements, or external factors.

Action steps : Implement a feedback loop within your project management framework, for example, regular check-ins, surveys, or retrospective meetings to gather insights on the effectiveness of the chosen approach.

Whether you prefer to lead from the top or believe in empowering your team from the bottom, ClickUp’s Project Management tool is the ultimate weapon you need to make your team more efficient . ClickUp is more than a project management software ; it’s a one-stop platform where all your work, projects, and teams come together without needing multiple apps .

Simplified collaboration and workflow management

ClickUp makes collaborating on projects and managing workflows straightforward. Its hierarchy framework neatly organizes the most complicated projects into tasks and subtasks. Easily switch between different views of your project data in one central place. 

Customizable features for actionable project roadmaps

ClickUp allows you to customize features according to your team’s needs. This means turning your ideas into action and creating project roadmaps around key milestones, all within the same platform, is easy. 🗺️

Integration capabilities for seamless connectivity

ClickUp stands out with its ability to connect with over 1,000 other work tools for free. Whether Slack, Google Drive, Figma, Loom, or more, ClickUp streamlines your project management and brings your team closer to achieving their goals.

In project management, it’s not about picking sides—bottom-up vs top-down—it’s about finding what works best for your team. Top-down management gives clear direction, while bottom-up sparks creativity. Many successful teams mix both, creating a dynamic project space.

Whatever approach you pick, you need to be on top of your game with project management.

Incorporating ClickUp project management software into your project management toolkit boosts efficiency and provides a user-friendly experience. It supports both leadership styles, top-down vs bottom-up, and ensures your team can focus on completing projects. 👉 Check out Clickup’s project management tool today!

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3 Reasons Your Company Should Adopt a Bottom-Up Approach to Planning

BY ChartHop

Do your executives call all the shots? If so, it might be time to switch up your management approach.

Just take it from Navy Captain L. David Marquet , who turned the USS Sante Fe from the worst-ranking submarine for morale, performance, and retention to #1. His secret? Delegating to and empowering the right people. 

In other words, when you flip your management model from top-down to bottom-up, you entrust your people to think, plan, and act. This strategy not only affects the “now” (by increasing engagement, retention, and innovation), but also helps create future leaders for your organization.

What is a Bottom-Up Approach?

A bottom-up approach is when company decisions start from those near the bottom of your org chart: low-to-mid-level employees.

Organizations that use a bottom-up planning style want employees to have a voice in problem-solving and strategy, and therefore welcome feedback (the good, bad, and ugly) throughout the decision-making process.

If you’re looking to transition to this management approach, you’ll need to focus on ways to amplify your people’s voices. To do so, you’ll need help from your middle managers. 

Top-Down vs. Bottom-Up Management Approach

When using a top-down management approach, those at the top of your organization – specifically, the CEO and C-suite – identify issues and make the decisions. Leadership has long favored top-down planning to determine budget, staffing, and org structure because you can make decisions quickly and align teams as necessary.

Unfortunately, top-down planning can result in inaccurate forecasting and poor employee engagement due to the lack of employee feedback and input during the decision-making process. 

Alternatively, bottom-up planning invites employees to offer suggestions and help plan from the get-go, providing immense value to your organization. For example, employee input can help identify training needs so leadership can design professional development that is more impactful and effective . They can also tell you what benefits they really want (goodbye oat milk, hello no-meeting-Fridays). 

When you’re looking at top-down vs. bottom-up management styles, head to your org chart . With it, it’s easy to visualize the hierarchy of your organization and the stakeholders within each approach.

Considering implementing (or doubling-down) on a bottom-up management approach? Read below to discover three benefits to doing so.

3 Benefits of Adopting a Bottom-Up Management Approach

Bottom-up planning benefits your company because it involves managers and their teams from the start. With the right technology and insights, your people can create data-driven plans that not only consider the unique needs of their specific department, but also encourage support and buy-in for overall company goals.

1. You’ll Develop a More-Informed Strategy

Managers play an essential part in the execution of company strategy, initiatives, and vision. After all, they’re the ones interacting with employees on a daily basis. They understand how to communicate with their teams in a way that garners support for senior leadership. Now imagine how much more invested managers would be if they were given the opportunity to help create that strategy .

In fact, a Bain & Company survey found that 79% of managers agreed that leaders must trust and empower their people, and that’s exactly what a bottom-up approach to planning does: It increases manager feedback, morale, and engagement. Simply put, managers feel their input is valued when they are given more agency in making important decisions.

Interestingly, companies that involve more than just senior leadership in strategy and planning see better results than companies that entrust strategy to a centralized group. That’s because a traditional top-down planning model often reflects senior leadership’s limited understanding of what teams or departments need. This kind of approach can lead to unrealistic planning goals, like a low budget or inaccurate headcount, that can end up putting a strain on teams and their resources.

Involving managers therefore invites diverse perspectives and creativity, helping senior leadership avoid a “one size fits all” approach when planning for teams with varying needs and structures. Managers will also have the most insight into how to turn strategy into action.

Ultimately, think of managers as your go-between. They have a wealth of insight from their teams, and they can marry that insight with the needs and goals of the company, as communicated by senior leadership. Because of their constant interaction with their team, your managers are a crucial partner in planning, organizing, and executing strategies and initiatives.

2. Managers Can Provide Context on Your People Data

Managers’ daily observations make them uniquely qualified to offer innovative and growth-minded solutions that support your entire company. That’s because, since they directly supervise around 80% of your total workforce, they understand what’s going on in the day-to-day of your employees and company.

That constant communication and collaboration allows managers to provide additional context to your company’s data reports. For example, if Sarah discovers one of her direct reports is experiencing a family crisis, it’d make sense to witness lagging engagement. However, if Sarah looks at her team metrics and sees low engagement across the board, then there’s something bigger at play. 

And that’s one reason why investing in a people operations platform (that has manager tools ) is critical for your organization’s health : your managers are better able to identify their people’s needs. 

Therefore, equipping your managers with the right technology will:

• Create more meaningful 1:1s. Preconfigured 1:1 questions help capture qualitative feedback so you know how employees really feel. Additionally, constant communication with direct reports can help managers spot skills gaps and determine necessary professional development for their people. 
• Simplify performance and compensation reviews . With the right settings, managers are able to see employment history, current progress plans, and salary bands, which helps streamline the decision-making process come review time.
• Use data to design team decisions. Decisions should never be gut-reactions. When your managers have access to team data, they can make decisions confidently about their people.
• Contribute to DEIB efforts. Managers can visualize their team’s current makeup by gender, race and ethnicity, sexual orientation, disability, and more. These visualizations make it easier for managers to identify gaps and opportunities in hiring, pay equity, and promotions. And taking advantage of the historical data, both leadership and managers can track DEIB efforts over time. It’s a simple but effective way to hold your company accountable to employees and candidates.

With ChartHop, you can slice and dice your data to help managers gain insights about their team and your company.

In short, managers can provide both qualitative and quantitative feedback to leadership to help create thorough, data-driven goals.

3. You Will Have More Buy-In for Company-Wide Initiatives

When you plan from the bottom up, you use ideas from people who experience pain points different from your C-suite. This feedback from your “boots on the ground” employees will help create stronger, more specific initiatives to meet their needs.

Furthermore, requesting and respecting honest feedback creates a psychologically safe environment for your employees. When people’s thoughts are encouraged, managers and other leaders gather key insights and useful information to make the best decisions. And when they’re able to make decisions based on employee input and experiences, those decisions are people-focused and better supported by your workforce.

Since these efforts will be for your people – and from your people – employees are much more likely to buy into company-wide initiatives. Listening to your employees will also lead to a more positive company culture, boost morale, and establish a sense of belonging . 

Ways to Collect Employee Feedback

You know that listening to and acting on employee feedback creates a stronger company culture and promotes buy-in. So how do you collect it?

Besides having managers meet with their direct reports in regular 1:1s, consider: 

• Establishing 360 reviews. 360 reviews allow employees to review peers as well as direct managers. Adding these reviews to your management approach allows you to gather specific feedback anonymously. Therefore, reviews become a valuable tool to grow employees, either through individual, team, or company-wide development opportunities. 
• Analyzing your people data. Your data will help you determine if a problem is a company-wide, department, or individual issue. Looking at your numbers will therefore help you plan and execute your initiatives accordingly.
• Gathering feedback via surveys. Gathering feedback outside of performance cycles lets you identify ways to boost morale and address concerns faster.

Leaders can view their people data through a variety of filters to help support decisions. This example shows employee engagement by department, age, and more.

Stay People-Focused with Bottom-Up Planning

As companies continue to prioritize their people, leaders should re-examine their management approach. If you’re currently using a top-down approach, analyze how it’s affecting your workforce and whether your employee engagement and manager morale are as strong as you’d like. If you choose to switch to a bottom-up approach, you’ll not only help leaders stay more-informed, but also ensure their data-backed initiatives create a significant impact by involving their employees in the planning process.

Alternatively, if you’re already using bottom-up planning, consider if you’re capitalizing on the benefits listed above. Are your managers helping leadership stay connected to the “right now”? Are they seen as strategic business partners in helping plan for the long-term? And how are you generating feedback from employees?

While your approach to planning may not seem like a top priority, it clearly affects multiple aspects of your business. Take the time to dive in and analyze whether a bottom-up approach is right for you. By doing so, you’ll continue to invest in your people by acknowledging their feedback now and empowering them to be effective leaders in the future. 

Your managers can make or break your company. So how do you know if yours are effective? Read HR’s Essential Guide to Assessing Manager Effectiveness to discover how.  

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Top-Down vs. Bottom-up Approach: a 2023 Management Guide

Learn about the top-down and bottom-up approaches to management, including their pros and cons and how to choose which one is right for you.

Am I using the right management style? Could a different approach help my team perform better?

Ever had those thoughts? If so, here’s the good news:

Exploring different leadership styles is the first step to becoming a more effective manager.

One of the most pivotal choices in management is deciding whether to take a top-down or a bottom-up approach. Both have advantages, as well as challenges that could hold your company back.

Implementing the most appropriate management style for your business impacts your employees, customers, and bottom line.

In this post, we’ll define the top-down vs. bottom up-approaches to management. Then, we’ll explore which businesses tend to use which strategy, along with the pros and cons for each to help you find the best fit for you.

Ready to learn more? Let’s go.

What are the top-down and bottom-up approaches to management?

Top-down and bottom-up are two important management styles.

‎The top-down approach starts with upper management. A CEO, senior supervisor, or project manager makes the initial decisions regarding goals, processes, and projects. This information is communicated to the company’s individual departments for fulfillment.

With bottom-up management, team members are involved in all (or most) aspects of decision-making. Each person’s voice carries weight as the team decides on common goals or works together to complete a project.

These two approaches are very different. And the one you choose will substantially impact the way your team functions.

Let’s break down both styles and their pros and cons.

The top-down approach

The top-down approach is also called the “autocratic leadership” style.

This approach can apply to the company’s fundamental procedures and the specifics of its project management.

A few decision-makers drive the top-down approach.

For example, one decision-maker could be the CEO, who establishes goals for the company and outlines the processes needed to achieve them. It could also be a senior project manager who determines the timelines and steps required to  manage a project  successfully.

Once the decisions are made, that information, along with the expectations for completion, is sent to the team for execution.

In a top-down approach, team members are expected to carry out responsibilities with little room for adjustment or collaboration.

When would you use the top-down approach?

The top-down approach is favored by businesses and organizations that thrive with clear leadership and highly structured processes.

• The  military  is a prime example of top-down management. Decisions are made by the highest-ranking officers, and instructions are related to the rank and file. Compliance within a rigid structure is expected.
• The  financial sector  also uses top-down management. Banks, investment firms, and other financial institutions rely on carefully controlled processes for consistency within dynamic markets.
• The  healthcare industry  also widely employs this management style. Upper management implements research-based, standardized processes to support patient health and wellness.
• Large businesses or corporations  often utilize top-down management approaches. Large-scale organizations may need the structure this approach provides to ensure the quality of their operations.

Top-down benefits

Top-down benefits start with strong leadership.

Clear management

In top-down management, roles and responsibilities are defined through a clear hierarchy. As a result, employees know who makes the decisions.

Highly structured

Companies that benefit from an enhanced structure may lean toward a top-down approach. This is because the  goals and objectives , along with clear processes and guidelines for their completion, are established at the top.

Faster implementation

Goals assigned using a top-down approach can be implemented quickly. Neither collaboration nor information gathering is needed, so employees can carry out their tasks and responsibilities immediately.

Processes standardized

Companies that consistently use the top-down approach standardize processes and procedures over time. Employees can rely on consistency and clarity as they set out to achieve their goals.

While the top-down approach is efficient, there are several disadvantages of the top-down approach that might impact your decision.

Less creativity and innovation

Decisions made by top leadership allow for little collaborative or creative input.

Businesses with rigid structures may have difficulty  adapting to change , which negatively impacts innovation.

Decreased employee engagement

Employees who are unable to contribute ideas may not be invested in their positions. As a result, they might start to feel disengaged.

Impacts of leadership

Strong leadership is important to an effective top-down approach, as it encourages company growth and contributes to a positive culture. Conversely, poor leadership often leads to weaknesses in goal-setting, process establishment, and company morale.

Limited opportunities for feedback

Limited opportunities for collaboration also lead to limitations with feedback. As management drives the decisions, it may take some time for them to hear concerns and adapt to challenges.

The bottom-up approach

Companies that employ the bottom-up management style start making decisions and formulating ideas at the ground level. While upper-level management or senior leaders might come up with the original goal or project, the company’s various teams work together to create the systems, processes, and steps for its completion.

When would you use a bottom-up approach?

Businesses that place a premium on creativity and innovation benefit from bottom-up management.

• Journalism  thrives with ongoing collaboration and input from team members to deliver a highly accurate, quality product.
• Grassroots organizations  tend to use a bottom-up approach. Smaller groups turn their collective ideas into plans of action to influence significant societal or cultural change.
• Software companies  rely on innovation. A bottom-up approach ensures all members contribute to product development and advances.
• Start-ups  are sometimes known as disruptors in their respective industries, and with good reason — they are attempting to innovate and add value to the market. As such, they often implement a bottom-up approach that encompasses high levels of collaboration.

Benefits to going bottom-up

For some businesses, the benefits of the bottom-up approach are hard to ignore.

Elevated creativity and innovation

The bottom-up approach provides more opportunities for creativity. Different perspectives allow for added depth to process development and improved problem-solving strategies.

Innovation is valued, so members are encouraged to offer suggestions and take risks with their ideas.

Increased engagement and productivity

Employees who know their ideas will be considered are more likely to offer them in the first place. Increases in engagement can lead to an  18% increase in productivity .

Stronger employee morale

Increased engagement leads to stronger employee morale. Employees who can provide input tend to feel more positive about their roles, responsibilities, and assignments.

Greater collaboration and investment

Among high-performing teams,  55% report  a high value on cross-collaboration and communication among members. Not only does the bottom-up approach support high collaboration, but it also encourages it across the rest of the organization.

Drawbacks of bottom-up

Before switching your management style to this creativity-driving approach consider whether the following disadvantages of bottom-up management would negatively influence your business:

Lack of high-level input

Team members who are charged with goal setting and processes may not always have the broad understanding that comes from higher management levels. As a result, they might not make the most strategic or practical decisions.

Employees who are unaware of over-arching company goals, budgetary issues, and performance metrics cannot apply them to their plans and processes moving forward.

Slowed momentum

The more people collaborating on a project, the slower it may progress. More input and ideas slow momentum, especially if members cannot come to a decision.

Decreased clarity

If all team members provide equal input, it might be challenging to determine an outcome. In addition, a lack of clear leadership can lead to confusion about assignments, project steps, and deadlines.

Increased mistakes

When decisions are spread across all members, there’s usually less organization. It also might not be clear where final-approved information lives and how to access it. Mistakes can happen more frequently and without clear accountability.

Which style is right for you?

Both of these management styles offer clear advantages and disadvantages.

As you decide which one to adopt for your business, here are some additional factors to keep in mind:

• Consider your culture . If you value high levels of creativity and innovation, a bottom-up approach will serve your business better.

If your business depends on highly structured processes to deliver products and outcomes, then you might lean toward the top-down style instead.

• Think about your size . If you are a start-up with plans to scale, you might want each member’s input and collaboration as you grow.

Larger organizations, however, may need consistent and refined processes to keep multiple teams on track and in sync.

• Remember your goals and objectives . Go back to the basics. What are you seeking to do? What products are you delivering? How quickly do you need to innovate?

Consider your baseline goals and objectives to determine if you need an autocratic top-down or collaborative bottom-up approach to deliver.

• Consider going hybrid . No rule states you  must  choose one management approach or the other.

Maybe you’re interested in a combination. If you need a clear leadership structure from the top-down approach, implement it. But then, build opportunities for team member collaboration and feedback where you can. Regular feedback will ensure you hear about new perspectives and ideas for problem-solving. If you prefer the collaborative, integrated, bottom-up approach, go for it. But assign one or two members for leadership roles within the project. Ensure your company goals and objectives are readily available when members plan projects and develop the next steps.

Approach your management style with confidence

Now you know more about the top-down vs. bottom approaches to management.

You know the different types of organizations that employ these styles and why, as well as the benefits and drawbacks of each.

Now it’s time to decide which option is right for you.

Do you own a smaller business or start-up?

Do you manage employees who thrive with collaboration and creativity?

Do you need to set clear guidelines with little opportunity for input or debate?

Maybe you need some of both.

Take what you’ve learned about each of these approaches to see how you might apply them to your business.

Use  Motion  to help you. Motion provides the tools you need to build your schedule and manage your projects in one easy place, no what management style you use.

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Top-down vs. bottom-up strategic and operational planning explained

What are the differences between top-down and bottom-up planning, and why should they go hand in hand to help your organization achieve more of its goals with less effort and complexity .

Written by: James Milsom, Head of Marketing

Any successful company relies heavily on planning. Planning is the fundamental trait that not only helps maintain business operations, but it allows decision-makers to take their strategies from a vision into a plan of action.

But, should planning come from the corporate level, communicated down to the rest of the organization for its execution, or should front-line staff, closer to their markets, products, and people, create plans based on the goals they have carved out with the c-suite?

It's common to find people viewing top-down and bottom-up approaches as opposites.

With a top-down approach, the company focuses on general endeavors to create specific goals for success. On the other hand, the bottom-up approach aims to synchronize the specific strategies in the workplace to a general framework.

Read on to discover the differences between top-down and bottom-up planning, and why they should go hand in hand to help your organization achieve more of its goals with less effort and complexity.

Top-down planning

Top-down planning keeps the decision-making process at the senior level.

Critics of this model would point to the assumption that senior management knows better than frontline workers.

With planning to start at the top of the company's hierarchy, typically in the c-suite, these attendees would be expected to contribute to the long term strategy of the organization:

• Chief Executive Officer
• Chief Financial Officer
• Chief Revenue Officer
• Chief Strategy Officer
• Chief Operational Officer
• Chief Marketing Officer

Here, the c-suite look at a three-to-five-year roadmap of where they want their organization to be.

The management team will develop an all-framework that is essential for the success of business processes, choosing the likes of Hoshin Kanri, OKR, and OGSM to translate the strategy into a coherent plan.

Depending on the size of the organization, however, it is entirely possible that a large consultancy firm would present a strategy to the c-suite, for their approval.

However, this route is even more removed from a c-suite formulated strategy, and while taps into the skills of experts in strategic planning, it is certainly detached from the organization’s people.

From there, goals are set and then trickle down to lower levels.

Typically, you will find all the company goals and quotas made without consultation or guidance from lower levels.

After making such decisions, they will communicate through the chain of command to everyone involved in the operations.

The frontline workers must work on the specifics of achieving their target. The planning takes a keen interest in the macroeconomics of the current market.

Therefore, it will eliminate the need for checking details to achieve objectives.

Bottom-up planning

Bottom-up planning starts with the frontline workers. Instead of the decision being communicated down from the senior management, individual departments are given a chance to be involved.

With front-line workers contributing to the formulation of plans, it ensures that each unique area of expertise can contribute, using their appreciation of the details of their markets, products, and people.

Individual departments make the goals they want to achieve, then communicate them to the senior levels for approval. Each division has a unique potential and opportunity for growth.

The philosophy used in the bottom-up approach is that every sector in the company has a different workflow and can develop more meaningful and achievable targets given a chance.

The goals communicated to the management will require analysis and then created into a cohesive plan for implementation by the whole company.

The planning focuses on the microeconomics of each department in the company.

Therefore, it will follow each division's current and future trends to create growth opportunities.

The strategic plan will not constrict workers to abstract or intangible company goals. It empowers every division to define its goals according to its needs.

A top-down approach can often being seen as non-inclusive

Which approach should you use?

It would be best to plan properly according to your business procedures and culture.

Both top-down and bottom-up planning may look different, but they play crucial roles in a company's success.

The bottom-up approach applies to companies often in the early stages of development, where a smaller headcount often dictates this model. In contrast, the top-down approach is more likely to appear in an established business.

The top-down approach will steer your company in the right direction, aligning you to market demand. The bottom-up planning enables you to gain detailed guides on optimizing the operations of every department.

Pros for top-down planning

1. It doesn't waste time

By involving only a few people in making decisions, you can make them easier and faster. No time is wasted rallying various departments and frontline workers and then analyzing their performance to make a decision.

2. It takes less effort

The plans and directives come from the top of the organization so the message is received uniformly by all employees. No extra effort is needed to realign the objectives and endeavors of each unit or department.

3. It is common

Most companies use the top-down model. That means when you get new hires, you won't need to spend resources on teaching them how it works because they are likely to come from a company that uses the same structure.

4. Greater clarity

All decisions come from one place, and communication flows in one direction. This results in fewer misunderstandings and mix-ups, so everyone is in line with the goals of the company.

5. More accountability

It is easy to trace where a problem or inefficiency arises from when the teams are clearly defined and have their own responsibilities.

Cons for top-down planning

1. The goals may not be accepted company-wide

As the decision comes from only a select few, it is common for some departments to not agree with the plans.

2. It places more strain on leadership

All the decisions that affect even the lower-level employees come from the top. Leadership has to go through lots of research to be able to plan for all the levels. Failing to do so can cause significant problems.

3. It results in less creativity

The employees aren't challenged, stifling innovation and eliminating fresh perspectives.

4. It results in poorly informed decisions

There are some problems and material facts that only people who actively handle them can see. Top-down planning without soliciting feedback could lead to impractical and unattainable goals.

Pros for bottom-up planning

Some advantages to bottom-up management make it a proper fit for some businesses. These are:

1. Higher chance of meeting targets

Because all the department creates their own meaningful goals, they are more likely to meet them.

2. More informed decisions

Decisions coming from people who actually do the work consider all the details. Some important details are only visible to frontline workers.

3. Higher employee morale

The higher the morale of your employees, the higher their productivity. Feeling that they matter and their decisions are valuable increases their likelihood of being invested in the success of the team.

4. Employees get more room for creativity

Feedback, brainstorming, and criticism challenge the employees to grow and become more creative, improving the whole system.

Cons for bottom-up planning

Many companies don’t adopt the bottom-up approach in their company for reasons such as:

1. Time wastage

Simple decisions that require the involvement of various departments can take too long to be implemented.

2. Lack of high-level insight

Most projects and business decisions are influenced by various high-level factors such as funding, budgeting, and forecasting. Without understanding these metrics, plans from departments may not be practical.

3. The "I" in team

If there are employees who have their own interests, they may influence decisions that benefit them at the expense of others.

Moving forward with your planning practices

The decision on which to implement depends on which trade-off between the pros and cons of the two is more balanced for you.

However, it is important to be able to adapt your plans if you want to be successful in this fast-changing business environment. No one knows your business better than the people who have their ears on the ground.

But you don't have to make the choice, there is a way to integrate them. If you would like to know how to bring the two together to improve your ability to execute your strategic plan, watch our Hoshin Kanri webinar boxset to get some ideas.

Learn more about improving your strategy execution

Continue exploring how to improve your strategy delivery by visiting our hoshin kanri knowledge hub , or with any of the below:

• 4 ways to align corporate and functional plans : Realizing your goals means coordinating a great deal across your organization. Here are four ways to link corporate and functional strategic plans.
• Download our k ey to strategy execution eBook : Read how companies like Danaher and HP have mastered strategy execution and what you can learn from them.
• What does it mean to be an agile business?:   Take the leap into the future of strategic planning and execution with this fascinating insight.

About the author

Here at i-nexus, I want to help you develop and find easier, more effective ways to deliver more of your goals, with less effort. As part of that, I'm passionate about creating the best content to overcome your challenges. Ask me about Hoshin Kanri and operational excellence guides for free copies. If you’d like to talk more about strategy execution, reach out to me at [email protected] or   connect with me on LinkedIn   for the latest insights.

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Top Down vs. Bottom Up Management: What’s the Difference?

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It’s best to have a management style in place before attempting to carve out a piece of the marketplace or execute a big project. Two of the most popular approaches are top-down and bottom-up management, both of which provide a good introduction to the tenets of management.

When it comes to choosing a management style, there are many things to consider. For instance, what is the culture of the company, the personality of the executives and the business environment? What kind of project management tools do you use; are they collaborative or planning-based? Choosing a management style is a personal decision, one of great import. Your decision will influence every aspect of your business, project and team.

Let’s take a deep dive into top-down vs bottom-up management to get to a fair conclusion. From there you can narrow the field and make the appropriate choice.

What’s Top-Down Management?

Also called autocratic leadership, top-down management is the most common form of management. It is hierarchical, with a chief executive office (CEO) who sets the course for the entire company. Their leadership is then carried out through a succession of executives, middle management and finally down to the bottom of the totem pole.

In top-down management, everything from the workplace to the business systems is all determined by upper management, and then it’s passed down the chain of command. Each role is responsible for carrying out the mission as stated by the higher-ups, without much room for comment or criticism. While some lower-level managers might join the decision-making process, ultimately the final decision rests with the C-level executives.

Examples of Top-Down Organizations

As noted, most organizations use top-down team management. Any company with an executive ladder (with a CEO on top, then middle management, then team leaders directing team members) is structured in such a way.

Obvious examples are the Trump Organization, Helmsley Hotels and Martha Stewart Living. Regardless of your opinion of the people leading these companies, they all have strong personalities, which become the faces of their respective companies.

Pros and Cons of Top-Down Management

The pros of top-down management aren’t always immediately clear to low-level employees, but they are there.

Clarity if the Leader Knows their Stuff

One of the advantages of top-down management is that it sets clear goals and expectations, as goals are delivered by one person, and that message is not diluted by committee or multiple voices. Because the law is laid down from on high, the employees don’t have to be distracted by participating in the process of decision-making . This gives them more time to focus on their tasks.

The top-down management style requires a strong leader, and there are benefits to this type of leadership. It makes it easier for middle management; they have direct orders and can act on them quickly without second-guessing or trying to decipher mixed signals.

This isn’t to say a top-down leader should be simply shooting from the hip. These types of management structures work best when the leader has done due diligence, researched and considered all angles of how the decision will impact business and employees .

Lack of Buy-In if the Leader is Weak or Dictatorial

On the downside, the idea of a powerful personality leading the company can veer from thoughtful and careful stewardship to something more dictatorial. If that happens, buy-in from employees suffers and morale sinks, which in turn impacts the ability for the business to stay competitive and be successful.

Related: Why Isn’t My Team Listening to Me?

Furthermore, if the CEO of the company is not a strong personality, then they’ll be less likely to take on the necessary responsibilities, and the business will pay the price. Therefore, this type of management approach is not for every organization, especially those that are looking for more creativity to help them reposition themselves.

What’s Bottom-Up Management?

The idea that “two heads are better than one” is the primary reason that some companies don’t apply a top-down management approach. There could be a lot of talent in the ranks, which would be wasted in a top-down environment. Or, the leadership is not skilled and knowledgeable enough to lead decisively. In these cases, bottom-up management is recommended.

The broad definition of bottom-up management is it’s a structure where the whole organization participates in the process of leading the organization. This collaborative method gives employees a say in how to accomplish the overall goals and objectives of a business. Bottom-up management utilizes their unique perspective from the front lines of the work.

Teams are autonomous and are assembled by skills and experiences, which are then trusted by managers. These teams are self-directed and decide on the best way to accomplish their tasks, rather than receive orders and only then act on them.

Related: 6 Tips for Developing Cross-Functional Teams

Examples of Bottom-Up Organizations

While still in the minority, more companies are embracing the bottom-up style of management. The approach is seen in the way some businesses are approaching projects, if not in their overall administrative process.

For example, The New York Times and even staid businesses like Ernst & Young and IBM have all tried the bottom-up management approach at the team level. Everyone should be a part of the decision-making process, at least in the subsets of the organizations. As these experiments prove fruitful, more companies will come on board and even adopt the style for their full administration.

Pros and Cons of Bottom-Up Management

The advantages of bottom-up management are clear to people who are not employed at the top tier of an organization.

Gets the Most Out of a Team’s Talents and Dedication

One advantage is that bottom-up management can retain talent, keep morale high and get project buy-in since it gives lower-level employees a voice. Because the whole organization feels part of the process, the company is more likely to improve productivity. If everyone feels ownership in the overall goals and objectives of the company, they will likely be more dedicated to its cause.

Furthermore, the ability to get the most out of an employee is one of the great benefits of bottom-up management: it allows for the full talents of employees to be used. Those employees who are lower down the corporate ladder are often the ones who are interfacing with customers and dealing with the nuts and bolts of what a company does. Therefore, their input, which is not considered in a top-down management approach, is a competitive edge in bottom-up management. Sometimes this even leads to business process improvement .

Too Many Voices & Ideas Slow Business Agility

In terms of disadvantages, having employees a part of the decision-making process can slow things down or have the company follow unproven ideas that dead end. This can cost precious time, losing time to market, allowing the competition to take advantage.

A glut of ideas is not always the best way for maintaining high business agility . Given the high number of choices, it can be difficult to discern the best one. This may require more time for research in order to make an educated choice. Or, once a decision is made, that choice might not be followed consistently, causing the company to pivot without rhyme or reason.

There’s also the issue of ego. If everyone is vying to get heard, they might be motivated by self-interest rather than the overall goal of the project and company. This creates division and conflicts that are not good for business.

How ProjectManager Helps Whatever Style You Use

ProjectManager is award-winning software that is used to help organize projects by tens of thousands of teams, including Volvo, the US Postal Service and NASA. What’s unique about our software is its flexibility. It can help manage your marketing plan or project, whether your company’s style is top-down or bottom-up.

Traditional Tools for Top-Down Teams

Our software is designed to work in more traditional environments, where the plan comes from the top and is structured in clear phases from start to finish. Our Gantt chart project view collects all your tasks on a timeline, breaks up the larger project into manageable phases with milestones and links dependent tasks to prevent bottlenecks down the line.

The view gives a lot of control to the manager of the project, who can then assign specific tasks to their team.

Tools for Agile Teams, Too

If your company likes a more agile framework , with self-directed teams working collaboratively in short bursts, then our software can easily cater to your needs. For example, our kanban board is a great way to collect backlog items and then plan sprints, giving teams the reins to manage themselves, while managers still get transparency into the process.

Whatever way your business is organized, you’re going to want data to track progress and make sure your initiatives are moving forward as planned. We have several ways to monitor your project. Our cloud-based software delivers real-time data to a dashboard that automatically charts several project metrics, and one-click reporting prepares you to relay the latest info to your team.

Dashboard charts and reports can be easily shared, so top-down organizations can keep their stakeholders in the loop and bottom-up organizations are able to keep everyone on the same page. We have the features to suit any management style.

The Choice is Yours

The differences between top-down and bottom-up management are significant, each with their pros and cons. The decision, of course, is up to you. Now that you know about these two opposing leadership structures, which will you choose?

Leadership knows that productivity can increase with dynamic software, regardless of the management style. ProjectManager is a cloud-based project management software with online Gantt charts for project planning, kanban boards for team collaboration and real-time reports for better decision making. Whatever type of leader you are, try it today for free with this 30-day trial.

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When to Use Both Approaches

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Top-Down vs. Bottom-Up: What's the Difference?

Top-Down vs. Bottom-Up: An Overview

Top-down and bottom-up approaches are methods used to analyze and choose securities. However, the terms also appear in many other areas of business, finance, investing, and economics. While the two schemes are common terms, many investors get them confused or don't fully understand the differences between the approaches.

Each approach can be quite simple — the top-down approach goes from the general to the specific, and the bottom-up approach begins at the specific and moves to the general. These methods are possible approaches for a wide range of endeavors, such as goal setting, budgeting, and forecasting . In the financial world, analysts or whole companies may be tasked with focusing on one over the other, so understanding the nuances of both is important.

Key Takeaways

• Top-down usually encompasses a vast universe of macro variables while bottom-up is more narrowly focused.
• Top-down investing strategies typically focus on exploiting opportunities that follow market cycles.
• Bottom-up approaches start with local or company-specific variables and then expand outward.
• Fundamental analysis is an example of a bottom-up investment approach.
• While top-down and bottom-up are distinctly different, they are often used in conjunction with one another.

Top-down analysis generally refers to using comprehensive factors as a basis for decision-making. The top-down approach seeks to identify the big picture and all of its components. These components are usually the driving force for the end goal.

Top-down is commonly associated with the word "macro" or macroeconomics . Macroeconomics itself is an area of economics that looks at the biggest factors affecting the economy as a whole. These factors often include things like the federal funds rate, unemployment rates, global and country-specific gross domestic product, and inflation rates.

An analyst seeking a top-down perspective wants to look at how systematic factors affect an outcome. In corporate finance, this can mean understanding how big-picture trends are affecting the entire industry. In budgeting, goal setting, and forecasting, the same concept can also apply to understand and manage the macro factors.

Top-Down Investing

In the investing world, top-down investors or investment strategies focus on the macroeconomic environment and cycle. These types of investors usually want to balance consumer discretionary investing against staples depending on the current economy. Historically, discretionary stocks are known to follow economic cycles, with consumers buying more discretionary goods and services in expansions and less in contractions.

Consumer staples tend to offer viable investment opportunities through all types of economic cycles since they include goods and services that remain in demand regardless of the economy’s movement. When an economy is expanding, discretionary overweight can be relied on to produce returns. Alternatively, when an economy is contracting or in a recession, top-down investors usually overweight safe havens like consumer staples.

Investment management firms and investment managers can focus an entire investment strategy on top-down management that identifies investment trading opportunities purely based on top-down macroeconomic variables. These funds can have a global or domestic focus, which also increases the complexity of the scope.

Typically, these funds are called macro funds . They make portfolio decisions by looking at global, then country-level economics. They further refine the view to a particular sector, and then to the individual companies within that sector.

Top-down investing strategies typically focus on profiting from opportunities that follow market cycles while bottom-up approaches are more fundamental in nature.

The bottom-up analysis takes a completely different approach. Generally, the bottom-up approach focuses its analysis on specific characteristics and micro attributes of an individual stock. In bottom-up investing concentration is on business-by-business or sector-by-sector fundamentals . This analysis seeks to identify profitable opportunities through the idiosyncrasies of a company’s attributes and its valuations in comparison to the market.

Bottom-up investing begins its research at the company level but does not stop there. These analyses weigh company fundamentals heavily but also look at the sector, and microeconomic factors as well. As such, bottom-up investing can be somewhat broad across an entire industry or laser-focused on identifying key attributes.

Bottom-Up Investors

Most often, bottom-up investors are buy-and-hold investors who have a deep understanding of a company's fundamentals. Fund managers may also use a bottom-up methodology.

For example, a portfolio team may be tasked with a bottom-up investing approach within a specified sector like technology. They are required to find the best investments using a fundamental approach that identifies the companies with the best fundamental ratios or industry-leading attributes. They would then investigate those stocks in regard to macro and global influences.

Metric-focused smart-beta index funds are another example of bottom-up investing. Funds like the AAM S&P 500 High Dividend Value ETF (SPDV) and the Schwab Fundamental U.S. Large Company Index ETF (FNDX) focus on specific fundamental bottom-up attributes that are expected to be key performance drivers.

Generally, while top-down and bottom-up can be very distinctly different both are often used in all types of  financial approaches  like checks and balances. For example, while a top-down investment fund might primarily focus on investing according to macro trends, it will still look at the fundamentals of its investments before making an investing decision.

Vice versa, while a bottom-up approach focuses on the fundamentals of investments, investors still want to consider systematic effects on individual holdings before making a decision.

What Is the Main Difference Between a Top-Down and Bottom-Up Approach?

A top-down approach starts with the broader economy, analyzes the macroeconomic factors, and targets specific industries that perform well against the economic backdrop. From there, the top-down investor selects companies within the industry. A bottom-up approach, on the other hand, looks at the fundamental and qualitative metrics of multiple companies and picks the company with the best prospects for the future—the more microeconomic factors. Both approaches are valid and should be considered when designing a balanced investment portfolio.

Which Is Easier: Top-Down or Bottom Up Investing?

Top-down investing is often easier for new investors who are less experienced at reading a company's financial statements and for those who don't have the time to analyze those financials.

What Is a Limitation of a Top-Down Approach?

A top-down approach is more generalized, and so may miss out on a number of potentially good opportunities by eliminating specific companies that don't fall into its criteria.

Top-down analysis begins at the macro level, looking at things like national economic data (e.g., GDP or unemployment) and then homing in on more micro variables. A bottom-up approach is the opposite, beginning micro (e.g. looking at a single company's financial statements) and then broadening out. In the end, there is no single best approach to investing, and every approach has its own pros and cons. A robust strategy is to employ features from both top-down and bottom-up together.

Charles Schwab. " FNDX Schwab Fundamental U.S. Large Company Index ETF ."

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Bottom-Up SaaS Business Strategy Explained

Think about the last software application that you used for work. Whose idea was it to buy it? Did it come from the management or employees? If it’s the latter, then you’ve already experienced what bottom-up SaaS is!

Our guide explains what exactly bottom-up SaaS is and covers the main growth strategies and tactics used by bottom-up companies.

Let’s dive right in!

• In the bottom-up model, a SaaS company promotes the product to individual end-users and teams . Once they adopt the product, they champion it within the organization.
• Product-led growth is a well-known bottom-up approach that relies on the product for customer acquisition and revenue expansion.
• Free trials and freemium enable the users to explore the product and experience its value to convert them into paying customers . For this approach to work, a trial or free plan mustn’t satisfy user needs entirely.
• The self-service model enables users to buy (or cancel) the subscription, implement the product, learn how to use it, and access support without talking to customer services teams. This approach is becoming increasingly popular, even for the enterprise client.
• Word-of-mouth marketing relies on product virality and network effects. To encourage satisfied users to promote the product in their social and professional networks, companies use referral and loyalty schemes.
• Account expansion through upsells and cross-sells increases customer lifetime value without elevating CAC . This is best done through contextual in-app messages highlighting the benefits of the additional/premium features.
• Want to find out how Userpilot can help you leverage the bottom-up SaaS model? Book the demo!

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What is bottom-up SaaS?

Bottom-up SaaS is a growth strategy used by B2B SaaS companies that focuses on individual users or teams to drive customer acquisition.

In a nutshell, by enabling end-users to experience the product value , the bottom-up SaaS model turns them into product advocates who promote it from within the organization. This means product adoption starts with small teams and gradually spreads across the entire company.

How is it different from the top-down business model?

The latter is less user-centric and relies on the sales team targeting the key decision-makers and nurturing them with sales pitches, presentations, and demos , to secure an enterprise deal for the whole organization.

Different approaches used in bottom-up SaaS companies

How does the bottom-up business model work in practice? Let’s have a look at a few common approaches to implement it.

Product-led growth

Product-led growth is a business model and go-to-market strategy that uses the product as the main driver of customer acquisition , revenue, and account expansion .

Instead of taking money from customers upfront, PLG enables users to experience value . Only when they’re satisfied with how the product satisfies their needs and desires , may users upgrade to a paid plan. In the long run, they might also play a role in new customer acquisition.

This reduces the role of the marketing and sales teams (but doesn’t eliminate them).

Product-led growth playbook

Here’s how to implement PLG:

• Offer a free plan or trial . This ensures a constant flow of new customers and allows them to experience the value.
• Create a frictionless sign-up flow to smoothly let users inside the product.
• Provide onboarding experiences personalized to unique user needs to reduce time-to-value .
• Use contextual in-app messages to introduce new features .
• Gather customer insights on how to improve the customer experience via surveys , interviews, and reviews.
• Leverage product analytics to enable data-driven decision-making.
• Ensure on-demand access to support to both free and paying users.
• Cultivate an organizational culture that fosters customer-centricity, innovation , and cross-functional collaboration.

Freemium or free trial

Freemium and free trial are the main two bottom-up customer acquisition models.

In freemium , the user gets access to limited functionality for free. There’s no restriction on how long they can use the product, but there might be a usage cap, like limited storage or data.

In the free trial , the user gets access to full functionality but for a limited time.

In both instances, the users get a chance to experience value but cannot use it to achieve all their goals because of the limits.

Free trial playbook for improving conversions

The measure of freemium or free trial success is how well they convert users into paying customers .

Here are a few tactics to boost conversions:

• Analyze user behavior to discover the most valuable features and the time to activation.
• Based on the insights, determine the ideal length of the free trial period. Make it only long enough to activate.
• In your free plan, restrict access to the most valuable features to incentivize free users to upgrade.
• Use a reverse free trial to allow users to discover the value of the premium features.
• Drive upgrades with contextual in-app messages, such as when the user is about to use a premium feature or is near the end of the trial.
• Create a sense of urgency and FOMO for users on free trials.

Self-service

The self-service model reduces the dependence of the SaaS company on the customer service teams.

That’s because users can onboard , use, manage, and troubleshoot a product without their direct assistance. This reduces customer support costs considerably and gives users independence.

Self-service isn’t only about the support but also sales: most users purchase the product or renew their subscriptions online and pay by card . This includes enterprise sales, which traditionally used to be very top-down.

Self-service playbook for improving customer experience

• Ensure your product is intuitive to navigate so that users can find features easily.
• Incorporate accessibility features like localization to accommodate all users.
• Develop a detailed knowledge base covering all aspects of your product.
• Produce step-by-step video guides for visual learners.
• Set up a moderated community forum where users can ask questions, share experiences, and offer help to each other.
• Implement AI-powered chatbots that can answer common questions, guide users through troubleshooting processes, and escalate issues when necessary.
• Offer a self-service portal where users can manage their accounts, subscriptions, and billing information.
• Actively collect and analyze feedback on your self-service resources to identify areas for improvement.

Word-of-Mouth Marketing

Word-of-Mouth (WOM) is believed to be the most effective and efficient marketing channel because it drives organic customer acquisition.

Think about it:

Prospective customers are more likely to trust their friends and colleagues than marketing campaigns . As you acquire more customers while spending less on marketing, it also reduces the customer acquisition cost (CAC) .

WoM playbook

How do you turn your customers into product advocates ?

• Prioritize onboarding to activate new users .
• Constantly innovate and develop the product to satisfy evolving user needs and stay ahead of the competition.
• Set up loyalty schemes to reward customers.
• Leverage product virality and network effects to drive organic growth.
• Regularly monitor user sentiment via NPS surveys .
• Always act on customer feedback and close the feedback loop .
• Use analytics and feedback to identify power users .
• Collaborate with successful customers on case studies .
• Create ambassador programs.
• Ask your most loyal users for testimonials.
• Set up referral schemes.

Expansion and upselling

Account expansion facilitates revenue growth through cross-sells and upsells .

By selling additional services or upgrades to existing customers, a SaaS company increases customer lifetime value while keeping the customer acquisition costs constant . This translates into higher profitability.

Playbook of expansion tactics

• Segment users based on their use cases and map their user journeys .
• Conduct user journey analytics to identify the key moments with expansion opportunities.
• Collect and analyze feedback regularly to understand customer sentiment and areas for improvement.
• Align your product development efforts with the evolving needs of your customers and market trends to create new upsell and cross-sell opportunities.
• Tailor your messaging for various user segments to highlight the advantages and benefits of relevant features.
• Trigger upsell messages contextually to maximize their impact.
• Make it easy for users to purchase add-ons and upgrade inside the app.

The bottom-up SaaS business strategy turns the traditional sales process upside down. It’s not the C-suite execs who decide what tools to buy. Instead, the initiatives come from the actual user.

To achieve this, SaaS companies promote the product to its end-users. The goal is to show them the product value and gradually turn them into product champions who promote it from within.

If you’d like to see how Userpilot can help you implement the bottom-up strategy, book the demo!

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Top-Down Vs. Bottom-Up Approach for Demand Planning

In today’s dynamic world, there are several factors that influence the demand levels for a business. It is vital to have a fresh approach to ascertain demand levels throughout the supply chain to enable accurate demand sensing . Traditionally, demand planners analyzed the data at a top-level and broke it down into smaller quantities as they moved down the supply chain. But is it time to rethink this approach? Let’s find out how we can make demand forecasting better.

Top-Down Approach for Demand Forecasting

In the top-down approach, the predictions are made by the demand planners at the highest level, and then individual demands are calculated according to a percentage of the total for each category + warehouse + channel + store/dark store + SKU level. These demand forecasting methods fail to take into account the events at the granular levels of the supply chain. A major issue with this approach is that even if the high-level predictions are accurate, inventory operations will not improve unless granular levels of predictions are made accurately. Moreover, the proportions themselves may change, especially if one product starts to sell at a faster rate than others either because of changes in demand trends or because of promotions. 

Bottom-Up Approach for Demand Forecasting

In the bottom-up strategy, the forecasts are made based on the data collected at more granular levels. For an E-commerce/Quick-Commerce company, the most granular levels will be SKU + dark store level, while the granularity for a DTC company will be SKU+ Channel + Depot levels. Demand is predicted at such granularity and is then aggregated up for overall demand forecasts. In this approach, demand is predicted as close to the customer as possible and then rolled up to the top for more accurate demand prediction numbers. A bottom-up approach is a more pragmatic approach with lesser chances of human bias or error.

Why is the Top-Down approach for Demand Predictions a failure?

Let us assume a scenario in which demand forecasting is done for a beverage company named ABC Beverages Inc. with two products A and B. 

Case 1: Change in SKU demand trends

ABC Inc. is a beverage company that follows a top-down approach to demand planning. Their historical sales dictate that there is a 60-40 split between SKUs B and A and thus aggregate demand is broken down in the same ratio. In recent weeks there has been a change in the demand trends. Demand for SKU A has gone up and demand for SKU B has gone down. A top-down approach fails to capture these trends as it focuses on demand proportions derived from high-level prediction instead of granular levels. This is one of the mistakes demand planners should avoid .

Due to this, there will be a gap in the predicted demand and actual demand for both SKU A and SKU B at week 0 which will result in stockout scenarios for SKU A and excess inventory for SKU B in the coming weeks.  

Now let us explore a bottom-up approach to demand prediction. As stated earlier in this article, a bottom-up approach for demand forecasting focuses on estimating demand at the most granular levels, which in this case is the SKU level, and aggregates the demand for each SKU to arrive at the aggregate demand. The illustration clearly showcases that the demand prediction factors in for changing demand trends to arrive at more precise demand predictions.

Case 2: Case of Promotions

ABC beverages regularly runs a week-long promotional campaign for its beverages category. The beverages category comprises two SKUs A and B. Their historical sales dictate that there is a 60-40 split between SKUs B and A and thus aggregate demand is broken down in the same ratio. Nevertheless, in promotion planning periods, the demand for SKU A exceeds that of SKU B. Now as we know that in a top-down approach the high-level demand is broken down into SKU forecasts based primarily on historical proportions, the predictions for future promotional events will be incorrect. 

Now let us explore a bottom-up approach to demand prediction. As stated earlier in this article, a bottom-up approach to demand prediction focuses on estimating demand at the most granular levels. In this method, demand forecasting for future promotion planning periods will be done by factoring in the previous promotional events data to arrive at a number where SKU A is higher than SKU B.

These two cases clearly showcase that the bottom-up approach for demand prediction is far superior to the top-down approach.

Kronoscope with its bottom-up approach offers unmatched demand forecasting accuracy by capturing real-time events that occur at the most granular level of the supply chain including SKUs and stores/dark stores. It factors in important influencing parameters including historical trends, seasonal effects, cyclicity, outlier corrections, changes in pricing, promotional events, holidays, and even weather. With more accurate predictions, businesses can proactively plan for shortcomings, solve promotional uplift challenges and have a more agile approach to their inventory planning.

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Advantages and Disadvantages of Bottom Up Planning

Looking for advantages and disadvantages of Bottom Up Planning?

We have collected some solid points that will help you understand the pros and cons of Bottom Up Planning in detail.

But first, let’s understand the topic:

What is Bottom Up Planning?

Bottom-up planning is when each part of an organization or group gives ideas and details to create a plan. It starts with the workers and moves up to the top leaders, like building a tower from the ground up.

What are the advantages and disadvantages of Bottom Up Planning

The following are the advantages and disadvantages of Bottom Up Planning:

Advantages of Bottom Up Planning

• Empowers team members – Giving power to team members makes them feel important and responsible for their work, leading to better engagement and performance.
• Encourages creative solutions – When team members come up with their own ideas, they often find new and better ways to solve problems.
• Improves employee morale – When people at work are happy and feel valued, they tend to do a better job and have a positive attitude.
• Enhances detail focus – Paying attention to the small things helps to make sure nothing is missed, leading to more thorough and well-thought-out plans.
• Supports flexible adjustments – Being able to change plans easily when new information comes in or when things change helps to keep projects moving smoothly and efficiently.

Disadvantages of Bottom Up Planning

• Time-consuming and slow – Bottom up planning often takes a lot of time because it involves many people, which can slow down decision-making.
• Less strategic overview – Without a bird’s-eye view, this approach might miss out on big-picture strategies that align with overall company goals.
• Possible goal misalignment – Teams may focus on their own objectives, which can lead to different departments not working towards the same company-wide goals.
• Resource allocation can be inefficient – When every team decides how to use resources, it can lead to waste or not enough resources where they’re really needed.
• Limited top management insight – Leaders at the top might not get enough information about what’s happening on the ground, making it hard for them to steer the company effectively.
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