Bottoms Up and End to End: Apply the Wisdom of Crowds to Businesses

Democracies and markets outcompete command economies, or so the 20th century taught us. The decades from 1920 on were an extended struggle between nations that had adopted open, distributed, bottoms-up economic and political systems like democracy and capitalism versus countries that had closed, top-down economies and authoritarian governments.

Top-down authoritarian nations have strong leaders. Powerful, CEO-like figures who make important decisions. Important committees that analyze data and pick new directions. Five-year plans that rationally lay out investment areas and economic returns to be gained. Rigid control systems from top to bottom. They’re organized, in other words, like corporations.

Bottoms-up countries, on the other hand, look messy and chaotic. The president or prime minister of a market democracy can’t set the price of bread or dictate the production quotas to the major industries. He or she wields less direct power over the nation’s citizens, factories, and businesses than any Soviet party chief ever did. And as a result, a modern democracy and market economy often looks like it has no central plan at all. Instead, millions of poorly informed, possibly irrational, frequently impulsive, and generally not-fully-in-agreement citizens make small local decisions that somehow add up to a greater whole.

And then a miracle happens. Those millions of individuals making their short-sighted decisions do a better job than the central state planners. They form a kind of distributed brain, where every individual works like a neuron, taking in signals and passing them on to their neighbors, co-workers, customers, suppliers, and more. And that brain is just plain smarter and more nimble than the slow, clunky, mainframe-like contemplation of the central state. Throughout the 20th century, market democracies outpaced command economies in economic growth, in innovation, in the quality and diversity of products they produced, and in the happiness and well being of their citizens. On a global scale, the Wisdom of Crowds beat the Wisdom of the CEO.

So why do our corporations look like command economies? Could they be better, faster, more innovative, more attractive to employees, and more profitable if they adopted a more bottoms up approach? And if the answer is Yes, how do we get there?

This talk will present five ideas of how to organize our companies in a more bottoms up way to better leverage our employees intelligence.

1. Encourage the Three A’s: Local Action, Autonomy, and Accountability

2. Experiment, and Let Data Decide

3. Embrace Internal Capitalism

4. Put the Inmates in Charge of the Asylum (Embrace Internal Democracy)

5. Use Top-down to Drive the Why: the Goals, Vision, and Principles of Your Organization