Are you a bottom-up or a top-down thinker?

It’s such a cliché that entrepreneurship and innovation is dependent on creativity. Personally I think creativity is a good thing, but generally I think people attribute the success wrongly to creativity. What’s really the reason that creative thinkers succeed, it seems to me at least, is not so much their creativity but what causes it. Creative thinkers are relentless bottom-up thinkers and it’s this bottom-up thinking that causes them to be both successful and creative.

So what is this notion of bottom-up and top-down thinking? Well, imagine that you are writing your business plan and you come to the part where you need to estimate sales, this should be a well known situation for most entrepreneurs. A top-down thinker will start at the top, he will say something like, well, the market for my product is a $4 billion market, and if I get 1 % of that I’ll make $40 millions. A bottom-up thinker will start at the bottom, he will say something like, I know I can sell my product to these 15 companies, which means I’ll make $2 million. Then when I have those as references I believe I can get those other 100 companies, and then I’ll get those 1000 over there.

This is a mindset that works in many situations. In product development the top-down thinker will start by looking at what the product will look like when it’s done. The bottom-up thinker will start by looking at what is at his disposal, and then try to see what can be achieved. A similar notion has been termed effectual reasoning versus causal reasoning. Causal reasoning is the kind of reasoning thought in business schools. Student’s get to start with pre-determined goals, often set in the text of an assignment and some knowledge or assumptions that they are given, from this point they need to navigate their way, using theory, to the correct answer. The sad part is that causal reasoning is also thought in elementary schools and up, so by the time we get to university level most remnants of effectual thinking has disappeared. Is this why entrepreneurs such as Richard Branson, Steve jobs, Michael Dell, Coco Channel, Walt Disney, Henry Ford, Bill Gates and Ty Warner all dropped out of school?

Effectual thinkers don’t necessarily start with a predetermined goal, they start with what’s available to them and look at what they can achieve using those resources. When you think like that you also become more creative. A good example is an assignment some students got at Stanford. They were divided in to 14 groups and each group received an envelope with $5 in seed capital in it, they were told that the assignment was to make as much money as possible until next week’s class. They could plan as much as they wanted, but when they opened the envelope they would only have two hours to complete the task. Interestingly, none of the three top groups used the seed funding. But that’s another story. The winning group made $600 in 2 hours. Such an assignment, though it had a predefined goal of making money, is a practice in effectual thinking because they had no limitations on what to do. The students were only given the resources ($5 and an Ivy League education) and had to come up with ideas as to how to act themselves.

I see way too little of this kind of thinking going around. Business managers do stay away from this kind of reasoning, and in many situations rightly so. I wonder however if there is a way to switch between the two sets and use whatever is appropriate for the situation? The really sad part is that we don’t teach our children and our future leaders to think bottom-up or effectually. In fact we teach them not to. The ideal thinking in the civilized world is causal and top-down, firmly founded in the scientific method. Maybe it’s time to see what would happen if we let children talk back and challenge our ideas? Maybe we would be surprised, and maybe they would turn in to decent human beings anyway? Well, I’m digressing, but in any case I think that we need to rethink. The lesson from this was meant to have you think about what kind of thinker you are. In many cases it seems to me that each way of thinking has its pros and cons, but if we can learn to use both sets of thinking we can surely be much better thinkers.

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