Toward Middle-Up-Down Management: Accelerating Information Creation

THE CONCEPTS of “top-down” and “bottom-up” management pervade management research and the popular business literature. Both center on information flow and information processing. Top-down management emphasizes the process of implementing and refining decisions made by top management as they are transmitted to the lower levels of the organization. Bottom-up management emphasizes the influence of information coming up from lower levels on management decision making. The management styles of individual firms are usually seen as located somewhere on the continuum between these two types.

However, organizations must not only process information; they must also create it. If we look closely at R&D activities, we find a pattern in some firms that does not fit on the continuum between top-down and bottom-up. It is a process that resolves the contradiction between the visionary but abstract concepts of top management and the experience-grounded concepts originating on the shopfloor by assigning a more central role to middle managers. This process, which is particularly well suited to the age of fierce market competition and rapid technological change, I call middle-up-down management. The development of the Honda “City” exemplifies this management style.

Development of Honda City

In 1978, the management of Honda Motors was worried that the company was losing its vitality. Its basic models, such as the Civic and the Accord, had reached “middle age” at a time of major generational shift in the Japanese market. For the first time, Japanese born after World War II outnumbered those born before and during the war. Honda’s top management decided to let the younger design engineers develop something for their own generation. The project began with the catch-phrase, Boken o yatte miyo—literally, “Let’s make an adventure.”

The youngest people on Honda’s design staff were selected as members of the City development team. Their average age was only twenty-seven. Former president Kiyoshi Kawashima and other top managers promised there would be no interference with the team’s operation. One of the team members recalls, “It was surprising and wonderful that the company dared to entrust younger staff like us with the design and development of a new model.” Even so, the company did not just abandon them, but rather sought to impress them with a high degree of responsibility.

Mr. Nobuhiko Kawamoto, vice president in charge of R&D, describes how Honda’s top managers approach research projects:

We usually control the tasks of researchers quite tightly, and then loosen the control from time to time.

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References

1. I. Nonaka, Corporate Evolution (in Japanese) (Tokyo: Nikkei Shimbunsha, 1985).

2. M. Polanyi, Tacit Dimension (New York: Doubleday, 1966).

3. I. Janis, Victims of Group Think (Boston: Houghton Mifflin, 1972).

4. T. Kagono, I. Nonaka, K. Sakakibara, and A. Okumura, Strategic vs. Evolutionary Management: A U.S.-Japan Comparison of Strategy and Organization (Amsterdam: North Holland, 1985).

5. I. Nonaka, “Creating Organizational Order out of Chaos: Self-Renewal in Japanese Firms,” California Management Review, forthcoming.

6. H. Takeuchi and I. Nonaka, “The New New Product Development Game,” Harvard Business Review, January–February 1986.

7. K. Imai, I. Nonaka, and H. Takeuchi, “Managing the New Product Development Process: How Japanese Companies Learn and Unlearn,” in K. B. Clark, R. H. Hayes, and C. Lorenz eds., The Uneasy Alliance (Boston: Harvard Business School Press, 1985).

Acknowledgments

The author wishes to acknowledge the assistance of Professor D. Eleanor Westney of M.IT. and of Professor Hirotaka Takeuchi and Tsuyoshi Numagami of Hitotsubashi University.