There are two schools of thought when it comes to involvement in forming the strategy. One is that strategy is the realm of the CEO and top management, who have the perspective of the whole firm. The other is that lower managers and employees bring a lot of value to strategy formation, and getting their involvement may increase strategic buy-in. This article explores both sides of the argument – the case for just the CEO and top managers, as well the case for involving employees throughout the firm.
The case for strategy being the realm of the CEO and top managers
The view that strategy formation is something for top management and the CEO is probably the dominant perspective in most companies. Most companies develop their strategies in planning meetings or board meetings without the inclusion of lower management. While there is a case that can be made against this (explored below), some of the justification for developing strategy by an individual or small group of top management include:
The CEO may have a vision for the firm
The first case for the strategy being the realm of the CEO is that coming up with a unique, internally consistent strategy is not something that can be achieved through committee agreement. Just as an artist doesn’t paint through collective decision making, so to strategy can’t be effectively developed by a collective. An argument can be made that someone alone is better placed to come up with something unique than multiple people together.
Top management have the greatest overview of the company
Another case that strategy is best formed by top management is that top management has the best oversight over the whole company. It is important that the strategy is internally consistent – each part reinforcing one another. Having an overview of the whole company is one part of this – without the insight of each part, it is difficult to develop something cohesive.
Strategy decisions are often controversial, and involving others may result in them being swayed by personal considerations
A final reason to think that strategy should be the realm of top management is that it often involves controversial decision-making. Not everyone will benefit from decisions made in forming or adapting a strategy – certain departments may lose importance, and changes may have direct consequences on the roles of individuals in the firm.
The case that strategy formation should involve the whole firm
The alternative school of thought on strategy formation is that there are substantial benefits to including middle and lower-level managers (or even employees) in the formation of strategy. Some of these include:
Increase strategic buy-in
Part of the case for involving employees in strategy formation is that it can increase strategic buy-in. If employees have actively been involved in developing the strategy that they are expected to implement, then they may be more likely to believe in it than if it is something that is simply being imposed on them.
Helps give employees an understanding of the strategy
Beyond increasing buy-in, employees will also be better understand the various components of the strategy if they have been involved in forming it. This can again help in implementation – because the employees understand the strategy, they are better able to make decisions in line with the strategy, potentially making it easier to increase their responsibilities in decision making.
Brings insight from throughout the firm
Another benefit of involving employees in strategy formation is that it helps bring in insight from throughout the firm. Lower employees will likely be closer to the ground, potentially better connected with the latest customer demands. Thus, a case can be made that involving lower managers helps integrate this insight into the strategy formation process, potentially resulting in better decisions than if decisions are made without their involvement.