However, I always get a bit frustrated when trying to answer it, because I know that it is really not the right question to be asking.
When I ask these questions it is to interview you (or, really, the company). What is the company implicitly and explicitly teaching it's employees about how decisions get made?
In other words, I already know the answer, I'm seeing if you do!
That being said, I would guess that the more inexperienced you are, the more earnest the question asker is about the question.
You're precisely right - I've asked it myself in order to see if the company operates in a reasonable manner or not :)
Your second point is spot on as well - it mostly comes from more junior candidates (which, numerically, is the bulk of the people we hire), and from the follow-ups I get, it does often seem to be asked in earnest from that population.
The plans are made at the lower levels of the company, and basically rubber-stamped by senior leadership
While this might be true in a healthy company, it's not true in every company and companies where the senior leadership makes decisions while ignoring the lower levels are unpleasant to work in.
I think the original post is missing exactly this. Decisions are made in very different ways in different organisations, and the process and outcomes for those decisions directly affects everyone who works there.
Asking this question is not missing the point or assuming any world-view. It's asking how your company does this very important thing.
Whilst I mostly agree, I think this is overstated.
For example at Google, whilst a lot of the technical decisions are made lower down, the strategic decisions about which markets to really focus on are made at much higher levels. Around a quarter of Googles workforce is in cloud - an area where they're still losing money! A decision to make that kind of investment in such a competitive market is driven by grand master plans at the C level, not by organic decision making further down.
At the scale of the startup, even the most fantastic product wont make money if it doesn't have a suitable target audience. The job of the high level employees at the startup is to identify which target audience makes the most economic sense to target, and tell the lower level employees to focus on the needs of those customers over the needs of others. They certainly shouldn't micromanage how this is done, but it's important that everyone on the company is clear on what the strategic focus is, and what's peripheral.
I liked this post. I will say it looks like the Facebook/Google+ example is pretty understated here: the story of the article is that Google leadership met in secret to produce documents and reorgs in a dedicated strategy to confront Facebook, whereas the Facebook people just, well, Facebook'd:
And what was everyone working on?
For those in the user-facing side of Facebook, it meant thinking twice on a code change amid the constant, hell-for-leather dash to ship some new product bell or whistle, so we wouldn’t look like the half-assed, thrown-together, social-media Frankenstein we occasionally were.
For us in the Ads team, it was mostly corporate solidarity that made us join the weekend-working mob.
Importantly though, it looks in retrospect like Google+ was dead on arrival. No one ever actually used it for anything. Facebook's counter-move was to stay the course. Granted, this is not a trivial task in the face of possible upheaval.
I completely agree that execution and a culture of effective execution make a huge difference, but the "visionary" strategic stuff gets written about.
But is there a distinction to be made here between high-level strategy/direction vs. mid-level planning and low-level execution? It's hard for me to imagine that senior leadership of a company w/ > 50 people just rubber stamps ideas from below.
For example, senior leadership might say, "this year we're going to grow fruit" and they may accept proposals from below for bananas or oranges or apples. But they wouldn't accept proposals to manufacture cars.
For sure, different companies have different gradations of freedom for mid to lower level employees to engage in decision-making and planning, but it's always a slider and upper level leadership would always hold tightly to the top end of the slider, no?
You're right - the reason they review it at all is to retain the power to reject unreasonable proposals (and sometimes to make slight tweaks based on information only they possess). Sometimes they make the goals more ambitious, too.
90% of the time, though (and 100% of the time in my company's short existence), the proposals coming from below are almost exactly what they wanted - the communication outside of strategic planning exercises is sufficient to ensure that.
I work at a tech startup, and part of my job is to talk to job candidates and answer their questions about the company. One of the questions I often get asked is, "How do prioritization decisions get made? Who decides what should be worked on and what shouldn't be? How are the goals of the company determined?"
On the one hand, this question is eminently reasonable - people's work has to be assigned somehow or other, and it's natural to be curious how that happens.
However, I always get a bit frustrated when trying to answer it, because I know that it is really not the right question to be asking. It's based on a flawed model of how and why companies succeed, the model hammered into their worldview by big institutions and the MBAs that write about them.
This model tells them to expect grand councils of grand leaders, looking into the future and charting a course through the competitive landscape, having civilized debates or furious shouting matches, eventually coalescing on a top-secret plan detailing a strategy which will determine the future of the company.
I know for sure that this model is far from the truth at my company:
Furthermore, I believe (though I'm less sure about this) that these ideas generalize beyond just my company and represent a superior way of operating than the one most people intuitively think of.
To elaborate on each:
The plans are made at the lower levels of the company, and basically rubber-stamped by senior leadership
So, then, what is the point of senior leadership?
Joel Spolsky explains this better than I can:
When you’re trying to get a team all working in the same direction, we’ve seen that Command and Control management (military-style) and Econ 101 management (pay for performance) both fail pretty badly in high tech, knowledge- oriented teams. That leaves a technique that I’m going to have to call The Identity Method. The goal here is to manage by making people identify with the goals you’re trying to achieve... The Identity Method is a way to create intrinsic motivation.
Senior leadership doesn't mainly create plans and strategies - they create dreams, identities, loyalties, desires. If you have an organization of smart people who believe in the high-level mission of the organization (the actual mission as expressed through the culture of the company, not the one that they put on the wall), that's the ballgame right there - any quarter's strategy document pales in comparison.
As it is written: "Culture eats strategy for breakfast."
One example: Mark Zuckerberg's leadership when Google Plus was launched: every Facebook employee worked 7 days a week and did not leave the office (their families came to visit them).
En route to work one Sunday morning, I skipped the Palo Alto exit on the 101 and got off in Mountain View instead. Down Shoreline I went and into the sprawling Google campus. The multicolored Google logo was everywhere, and clunky Google-colored bikes littered the courtyards. I had visited friends here before and knew where to find the engineering buildings. I made my way there and contemplated the parking lot.
It was empty. Completely empty.
I got back on the 101 North and drove to Facebook.
At the California Avenue building, I had to hunt for a parking spot. The lot was full.
It was clear which company was fighting to the death. This was total war.
Zuckerberg didn't make a grand strategy document to look 5 years ahead. He instead called in a massive surge of short-term focus and dedication, based on the loyalty people felt to Facebook's mission.
What exactly did the people do there 7 days a week? This is where my next point comes in: "The success or failure of the company is not impacted much at all by strategy documents." What is it impacted by? Mainly the speed and quality of execution. The communication, problem-solving, and raw talent of the people on the front lines - what they do. The doing matters more than the thinking. Picture an Olympic swimming event - there is no strategy except "swim faster", and what determines the winner is the raw physical capabilities.
Likewise, the playbook for a company involves things like "build an incredible product, and ship improvements to it very quickly", and "build an efficient sales/marketing organization to achieve low customer acquisition cost". These are similar to "swim faster" in that the high-level goal is dead-obvious, but the path to achieving it is full of ingenuity, clever hacks, exquisite technique, and also just raw willingness to put in the hours.
The question I wish these candidates would ask is: "Why is your company able to out-execute everyone else? What processes do you have to ensure you move fast?" Because that's the main factor that will determine the success or failure of the company.
There are a few good ideas in the literature of corporate competitive strategy, but they are not that hard to re-derive from a basic understanding of economics, and with a high-performing team you can create exceptions to them. The economic equivalent of "don't fight a land war in Asia" and "don't invade Russia in the winter." Thus, our competitors are not the main focus.
As it is written: "startups don't die of murder, only suicide". (Even Netscape, which famously sued Microsoft in federal court for breach of antitrust laws - when you read about them, you see that the true cause of death was suicide - some people cite their decision to do a full rewrite of their code, others cite their disastrous acquisition of Collabra.)
So - how do plans get made and work distributed?
The famous "plans are useless, planning is indispensable" quote hits the nail on the head here: it's important for the people with the most information to regularly discuss what they're seeing and what should be done about it. But this is extremely different from the grand strategy meetings envisioned earlier. These planning processes are deeply and fundamentally tactical. Picture Churchill's war room, filled with maps with detailed troop movements and live-updated radar reports.
The planning process is one of information-sharing and tactical problem-solving.
Whether ad-hoc or on a regular basis - we look at the situation in front of us today - we have smart people with good information - we just think about it for a bit, and the answer is obvious for any given set of facts. And when we're not sure whether A is more important than B but we agree they're pretty important, we can just flip a coin... if you have good execution, getting that decision wrong will have negligible consequences.