Leadership is problem-solving. And, there are two styles: bottom-up and top-down.
Top-down is when the leader solves all the problems. This style is authoritarian and is often used by clerics, parents and teachers. Bottom-up is when the followers solve the problems. This style is enlightened and is often used in science, sport, the arts and parts of the military. Most CEOs are top-down leaders.
However, there is a small number of celebrated CEOs of businesses—like GE, Toyota and Google—who know that the secret of creating shareholder value through enterprise problem-solving and innovation is … bottom-up! They create shareholder value by engaging their employees in bottom-up problem-solving. Bottom-up innovation. Bottom-up cost-savings. Bottom-up sales revenues.
These successful CEOs know that when it comes to adding value ten heads are better than one. They have found ways to engage their employees (paid thinkers) to transform their enterprise through x10 thinking.
They maximise cost-savings from bottom-up innovation because these dollars go straight to the bottom-line. They create new products and services to stay ahead of their competitors.
Other CEOs have watched these x10 thought-leaders and are now adopting this clever productivity strategy in their own business. The ROI is unusually high, is sustainable, and can be fully proof-tested in just one business quarter.
What is the bottom-up strategy? Bottom-up is when the customers are king. The employees are second only to the customers because they are there to serve the customer. Management is there to serve the employees and the leadership role of the CEO is to create a climate to help multiply the business by ten.
That’s the logic and the physics of the bottom-up philosophy.
To draw attention to this insight I have stated The Rule of Bottom Up Innovation: Bottom-up innovation creates ten times the value of top-down.
There are two main reasons why this is a strategic rule: 1. Because bottom up innovation has ten times the brainpower of top-down innovation, and 2. because 85-90% of all productivity gains occur at the bottom local group level of paid thinkers leaving only 10-15% potential gains for top-down management intervention.
This contrarian insight has been one of the great secrets of successful business leadership. x10 CEOs know this. Jack Welch of GE knew this in the 80s. Larry Page of Google knows this today.