Chapter 8 is my favorite from Ridley’s The Rational Optimist. In it, he builds the case that even though many people imagine progress comes from a top-down world, it really emerges from the bottoms up.
This is not a new epiphany. I discovered it myself early in my career as I witnesses a variety of top-down and bottom-up organizations, and experienced some bottom-up organizations become top-down and vice versa.
Before I go further, I think some definition is in order.
In a top-down organization, decision-making is centralized and driven from the leaders (top) down to the lower level associates. In a bottoms-up organization, decision-making is decentralized. Front line associates are given latitude to make decisions that make sense for them and leaders hold them accountable for achieving results.
The easiest way I’ve come to recognize the top-down from a bottom-up organization is by determining what the lower level associates are held accountable to.
In centralized organizations, they’re held accountable to inputs, or doing what the leaders tell them to do . Did you follow my instructions? Did you follow this process? Did you make X number of sales calls?
In decentralized organizations, lower level associates are held accountable for results, or outputs. Did you achieve sales growth? Did you make a new product that customers wanted to buy? Did you do better than your competitors? Was it good?
Several times in my career I’ve asked some managers who were prone to top-down leadership about their thoughts on centralization. Some couldn’t trust people to make the right decisions or they thought decentralization had its place, but they believed they were a good judge for what couldn’t be decentralized.
In truth, these were micro managers and bureaucrats. They envision their role as making procedural decisions and issuing orders. Perhaps that’s the conventional image of a leader society has imprinted on us.
More subtly, these folks are more comfortable issuing orders and determining whether their charges did as they were told than they are at evaluating results and confronting folks about those. Most bureaucrats obtained their roles by pleasing other bureaucrats. They don’t have much experience with output success, so they aren’t good judges in that respect. They cannot articulate what success looks like, beyond executing whatever personal to-do list they have imagined.
Back to Ridley. Many economists (mainly of the Austrian flavor) have written about the knowledge problems that restrain the top-down formation from being as effective as bottom-up. Ridley does a good job of shedding light on this in practice (p. 255):
They [politicians] believe that the recipe for making new ideas is easy: pour public money into science, which is a public good, because nobody will pay for the generation of ideas if the taxpayer does not, and watch new technologies emerge from the downstream end of the pipe. Trouble is, there are two false premises here: first, science is much more like the daughter than the mother of technology; and second, it does not follow that only the taxpayer will pay for ideas in science.
…England had a scientific revolution in the late 1600s…but their influence on what happened in the manufacturing industry in the following century was negligible. The industry that was transformed first and most, cotton spinning and weaving, was of little interest to scientists and vice versa. The jennies, gins, frames, mules and looms that revolutionized the working of cotton were invented by tinkering businessmen, not thinking boffins…
Likewise, of the four men who made the biggest advances in the steam engine…three were utterly ignorant of scientific theories and historians disagree about whether the fourth…derived any influence from theory at all.
Throughout the industrial revolution, scientists were the beneficiaries of new technology, much more than they were the benefactors. Even at the famous Lunar Society, where the industrial entrepreneur Josiah Wedgwood like to rub shoulders with natural philosophers like Erasmus Darwin and Joseph Priestly, he got his best idea — the ‘rose-turning’ lathe — from a fellow factory owner, Matthew Boulton.
Ditto for advances in the the twentieth century.
The inescapable fact is that most technological change comes from attempts to improve existing technology. It happens on the shop floor among apprentices and mechanicals, or in the workplace among users of computer programs, and only rarely as a result of the application and transfer of knowledge from the ivory towers of the intelligentsia.
After making the case for bottom-ups, Ridley describes how the world has gone top-down with the conventional wisdom that government can do all or, as quoted in this post, how bureaucrats come to control organizations and R&D, stifling innovation. But, on page 274, Ridley observes with the advent of open source software, social networking, Wikipedia, etc that…
The world is turning bottom-up again; the top-down years are coming to an end.
I hope he’s right.