Simple Rules

1. Simple rules tame complexity in an increasingly interconnected world

Complexity arises whenever a system—technical, social, or natural—has multiple interdependent parts.

Increasing interconnectedness. Since the late 20th century, the world has become dramatically more complex and interconnected. This is evident in:

• Global trade: International trade agreements have increased sixfold since 1990
• Travel: Global air traffic has nearly tripled since 1990
• Finance: Correlation between countries' stock markets has more than doubled
• Information: The Internet has revolutionized interconnectedness in a way comparable only to the invention of the printing press

Simple rules as a solution. Simple rules provide a powerful weapon against overwhelming complexity by:

• Conferring flexibility to pursue new opportunities while maintaining consistency
• Producing better decisions when information is limited and time is short
• Allowing members of a community to synchronize their activities on the fly

2. Effective simple rules share four common traits

Capping the number of rules makes them easy to remember and maintains a focus on what matters most.

Four key traits of effective simple rules:

1. Limited in number: Usually a handful of rules, making them easy to remember
2. Tailored to the user: Specific to the person or organization using them
3. Applied to a well-defined activity or decision: Focused on a particular task, not vague platitudes
4. Provide clear guidance while allowing discretion: Offer direction but leave room for judgment

Examples:

• Triage rules for battlefield medics
• Michael Pollan's rules for healthy eating: "Eat food. Not too much. Mostly plants."
• Netflix's expense policy: Four simple rules replaced thick manuals

3. Simple rules work by providing flexibility, improving decisions, and enabling coordination

Simple rules allow people to make quick, reasonably accurate decisions that require less effort than more complicated approaches.

Flexibility. Simple rules provide a threshold level of structure while avoiding rigidity, allowing people to:

• Seize fleeting opportunities
• Adapt to changing circumstances
• Exercise creativity within defined boundaries

Better decisions. Simple rules can outperform complex models by:

• Focusing on key variables and ignoring peripheral ones
• Avoiding overfitting to past data
• Being easier to remember and apply, increasing the likelihood of action

Coordination. Simple rules enable collective behavior by:

• Providing a framework for individuals to synchronize their actions
• Allowing for adaptation to local conditions while maintaining overall coherence
• Working with only local information, not requiring a complete view of the system

Examples:

• Honeybees using simple rules to choose new nest sites
• Improvisational comedians coordinating performances without scripts
• Wikipedia editors collaborating on millions of articles

4. Simple rules come from various sources, including evolution and deliberate design

Just gaining international experience was not enough for a strong performance, and instead the entrepreneurs had to translate that experience into simple rules.

Sources of simple rules:

1. Natural selection: Evolutionary processes over long periods (e.g., butterfly mating behaviors)
2. Codifying personal experience: Reflecting on and distilling lessons from one's own history
3. Drawing on others' experience: Learning from role models, advice, books, and analogies
4. Distilling scientific evidence: Reviewing research to identify consistent findings
5. Negotiating an agreement: Developing rules through discussion among stakeholders

Key learning processes for improving rules:

• Reflecting on experience: Regular meetings to discuss successes and failures
• Varied but related experiences: Exposure to diverse but connected situations
• Multitasking ways to learn: Combining multiple learning approaches

Example: Airbnb's founders improved their rules by:

• Learning from expert advice (Y Combinator dinners)
• On-the-ground experiences with hosts and guests
• Conducting disciplined experiments

5. Boundary rules guide basic yes-or-no decisions

Boundary rules guide the choice of what to do (and not do) without requiring a lot of time, analysis, or information.

Characteristics of boundary rules:

• Help decide between mutually exclusive alternatives
• Useful for screening many options quickly
• Effective when time, convenience, and cost matter

Applications:

• Judges deciding on bail: Three simple rules explain 95% of bail decisions
• Burglars choosing targets: "Avoid houses with a vehicle parked outside"
• DARPA selecting projects: Must further scientific understanding and have practical use

Medical applications:

• Diagnosing serious infections in children
• Identifying clinical depression: Four simple questions with 97% accuracy
• Detecting strokes: Three bedside rules as accurate as MRI scans

Benefits:

• Quick decisions with limited information
• Easy to understand and communicate
• Translate broad policies into practical guidelines

6. Prioritizing rules rank options when resources are limited

Prioritizing rules can help you rank a group of alternatives competing for scarce money, time, or attention.

When to use prioritizing rules:

• Large number of opportunities meet initial criteria
• Resources (time, money, attention) are limited
• Conflicting views on what to prioritize

Examples:

• Venture capital firm ranking investment opportunities
• Hospital triaging patients during mass casualties
• Ancient Romans prioritizing conflicting legal interpretations

Case study: América Latina Logística (ALL)

• Context: Brazilian rail company with limited capital for upgrades
• Challenge: Prioritize investment projects with only $15 million available
• Solution: Simple prioritizing rules developed by management team
  1. Remove bottlenecks to growing revenues
  2. Provide benefits immediately
  3. Minimize up-front expenditures
  4. Reuse existing resources

Results:

• Within 3 years: 50% revenue increase, tripled operating cash flow
• Successful IPO, became Latin America's largest independent logistics company

7. Stopping rules dictate when to reverse a decision or halt an activity

Stopping rules dictate when to reverse a decision.

Importance of stopping rules:

• Help overcome status quo bias and escalation of commitment
• Crucial for decisions involving sequential alternatives
• Particularly valuable in investing and personal behavior change

Examples:

• Female crickets deciding when to stop searching for mates
• Gerald Loeb's 10% investment loss rule: "If an investment loses 10 percent of its initial value, sell it."
• French vs. American eating habits: Internal vs. external cues for stopping meals

Mount Everest disaster case study:

• Context: Deadliest year of climbing in 1996
• Critical stopping rule: "If you aren't on top by two o'clock, it's time to turn around."
• Failure to follow the rule led to multiple deaths
• Lessons:
  1. Importance of adhering to pre-established stopping rules
  2. Dangers of escalating commitment in high-stakes situations
  3. Need for clear, actionable guidelines in complex environments

8. How-to rules guide the basics of executing tasks

How-to rules guide the basics of executing tasks, from playing golf to designing new products.

Characteristics of how-to rules:

• Provide guidance on task execution without prescribing every detail
• Allow for flexibility and adaptation to unexpected situations
• Can stimulate creativity within defined boundaries

Examples:

• Seymour "Lobby" de Lotbiniere's six rules for sports commentary
• U.S. Forest Service rules for fighting dangerous fires
• The White Stripes' album-making rules: No blues, no guitar solos, no slide guitar, no covers, no bass

Creativity and how-to rules:

• Contrary to common belief, constraints can foster creativity
• Simple rules provide a starting point and channel creative energy
• Artists like Claude Monet and Elmore Leonard used self-imposed constraints

Business application: Google's hiring rules

• Look for eccentricity
• Seek strong referrals from other Google employees
• Avoid anyone with even the smallest inaccuracy on their resume
• Re-create grad student offices to foster communication and creativity

9. Coordination rules orchestrate collective behavior

Coordination rules guide interactions among members who intermingle in a complex system.

Key aspects of coordination rules:

• Enable individuals to work together without central direction
• Allow for adaptation to local conditions while maintaining overall coherence
• Often rely only on local information, not a complete view of the system

Natural examples:

• Starling murmurations: Three simple rules for flocking behavior
• Locust swarms: Two rules for transitioning from solitary to collective behavior

Human applications:

• Improvisational comedy: "Yes, and..." rule for building scenes
• Military coordination: "March toward the sound of gunfire"
• Zipcar's rules for car sharing

Benefits of coordination rules:

• Enable collective achievements beyond individual capabilities
• Balance individual interests with group objectives
• Allow for flexible responses to changing circumstances

10. Timing rules provide guidance on when to take action

Timing rules guide when to take actions.

Types of timing rules:

1. Event pacing: Linking actions to specific triggers or events
2. Time pacing: Creating deadlines and rhythms based on clock or calendar

Natural examples:

• Insomnia treatment: Four simple rules for when to sleep and wake
• Dragonfly migration: Rules for when to fly based on temperature and wind conditions

Business applications:

• Pixar's annual movie release cycle
• Start-Up Chile's entrepreneur hosting timeline

Benefits of timing rules:

• Create predictable rhythms and deadlines
• Help synchronize activities across individuals or organizations
• Enable efficient use of resources by setting clear timeframes

11. Simple rules can be systematically improved over time

People improve their simple rules in a predictable pattern, and learning processes and combinations of processes can accelerate improvement.

Pattern of rule improvement:

1. Start with poor or no conscious rules
2. Rules become more strategic and abstract over time
3. Different types of rules are learned in a specific order
4. Number of rules grows, then shrinks and stabilizes

Learning processes for improving rules:

• Reflecting on experience: Regular reviews and discussions
• Varied but related experiences: Exposure to diverse but connected situations
• Multitasking ways to learn: Combining multiple learning approaches

Case study: Shannon Turley, Stanford football strength coach

• Journey from traditional weight-lifting focus to injury prevention and functional training
• Continuous improvement through varied experiences and reflection
• Resulted in dramatic reduction in injuries and improved team performance

12. Breaking and remaking rules is necessary in novel situations

To respond effectively to major change, it is essential to investigate the new situation actively, and create a reimagined vision that utilizes radically different rules.

When to break and remake rules:

• Major disruptions render existing understanding obsolete
• Incremental improvements are insufficient
• Opportunity to proactively change the landscape

Steps for breaking and remaking rules:

1. Recognize the need for fundamental change
2. Deeply investigate the new situation
3. Create a reimagined vision
4. Develop radically different rules
5. Implement change quickly and comprehensively

Examples:

• California gardeners adapting to drought: Shift from temperate to Mediterranean gardening principles
• Oakland Athletics baseball team: "Moneyball" approach and subsequent adaptations
• Netflix's House of Cards: Breaking traditional TV production and distribution rules

Key lessons:

• Avoid superficial responses to major changes
• Be willing to discard deeply ingrained assumptions
• Move quickly to implement new rules once developed

Last updated: September 13, 2024