Bottom-up vs. Top-down: Don’t put all your eggs in one basket

This is the 3rd post in this series. Here are posts 1 and 2.

In post 1 of this series, I explained what I think are the key differences between top-down and bottom-up organizations and why it’s helpful to think in those terms, rather than other common organization characterizations like government vs. private sector.

At the end of post 1, I listed three reasons why I think bottom-up systems work better than top-down. In Post 1, I elaborated on the first reason. In this post, I elaborate on the second: No single point of failure.

This has been conventional wisdom for a long-time and you may know it better as the phrase, Don’t put all your eggs in one basket.

Why? Because you might drop the basket. This sage advice helps reduce the risk of breaking all the eggs should you drop that basket.

We use this advice when investing. No matter how much homework we do on a company, there are no sure bets. Best not to bet everything on one company.

We consider the advice when planning careers. We train for one career path, but we know it could be automated or outsourced, so it’s best to have backups.

Sports teams try not to bank too much on a single player. Great players are good to have, but they can get injured.

Engineers try to avoid single points of failure when designing systems. Bridges are designed with redundant supports, so they won’t fall if a single support fails. Systems without single points of failure save lives.

Bottom-up systems do not have single points of failure. Baskets can be dropped in such systems. Eggs will be broken, but there are plenty of other baskets to go around.

Why is this good? Because failure happens and it happens more often than success. We live in a trial-and-error universe.

Capitalism is a good example of a bottom-up system. When one business fails, there are others to take its place. It doesn’t take down the whole system. We survived Enron’s collapse, for example. It was not ‘too big to fail’.

Local government is also a good example of a bottom-up system. Local governments can and do fail. Detroit is failing, but it’s not bringing down the whole system. There are thousands more cities, counties and townships. 

School districts don’t yet have a single point of failure. Failing school districts do not bring down the whole system.

Though, school districts have moved toward becoming more top-down over the past few decades as a small group of folks in DC use taxpayer dollars to encourage school districts to deliver on what the folks in DC think is a good education.

This has moved accountability away from parents toward a central point of failure, the ‘common core’ curriculum.

Of course, ‘too big to fail’ is code for ‘single point of failure.’ If it is true that some organization has become ‘too big to fail’ (though I don’t think that was the case in the financial crisis), we should spend more time thinking about how we let a single point of failure crawl into our lives, much the same way the common core curriculum is doing now.

Bottom-up systems are not painless. Failure can be painful. But, bottom-up systems deal with pain and failure better than top-down systems.

Attempting to avoid pain and failure is one reason people advocate for top-down systems. Unfortunately, they soon learn that was a fairy tale.

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That’s not ‘top-down’

I saw a Barack Obama campaign ad while watching the Olympics the other night.

He said we have a choice to make in a few months. It was something like a choice between cutting taxes for the wealthy and hoping that works its way down to the rest of us, which is more top-down. We tried that. It didn’t work. Or we can invest in education, research, etc.

I thought this was funny for two reasons.

First, spending ourselves silly hasn’t worked either.

Second, letting folks keep what they earned isn’t top-down. In fact, it’s the opposite. That’s bottoms-up. What he says he wants to do in the commercial — tax and spend and direct money into the things he sees fit like education and research — is ‘top-down’.

Politicians love to redefine words. They redefined “reduced rate of growth” as a “spending cut” long ago. If your raise wasn’t as much as last year, do you ask your boss why your salary was cut? Probably not. You would look stupid.

‘Top-down’ refers to a system that is micromanaged by the folks in charge. ‘Bottoms-up’ is the opposite.

Washington DC taxing away more of your earnings so bureaucrats can decide how to spend it (e.g. grant to crazy in CO) is top-down. Letting us keep more of our earnings so we can decide how to use it is bottoms-up.

So, not only did Obama get the definition of top-down wrong, but he immediately said he wants to do more of the very thing that he said we should stop doing. Hmmm.

Speaking of crazy in CO, I’ve heard the fact that he was receiving taxpayer dollars mentioned on the news. I haven’t yet seen any aspiring investigative journalists go after the folks who dispense those dollars to hold them accountable.

What if it turned out that the Koch Bros. were funding crazy’s research and education? A 24/7 encampment of reporters would camp at their doorstep asking how they could be so irresponsible and where’s their accountability and what they owe to make amends?

Why hasn’t anyone followed that same trail through the government? Who approved the subsidy? How often is it reviewed? Why didn’t he stop receiving it as soon as he notified the school that he dropped out?

Which makes a key point about Obama’s desired (but lets not call it) top-down management — it doesn’t work because there is no accountability.