Six Simple Rules

1. Complexity is an opportunity, complicatedness is the real enemy

The real curse is not complexity so much as "complicatedness," by which we mean the proliferation of cumbersome organizational mechanisms—structures, procedures, rules, and roles—that companies put in place in an effort to deal with the mounting complexity of modern business.

Complexity vs. complicatedness. Business complexity arises from increasing performance requirements companies must meet. This complexity brings challenges but also opportunities for competitive advantage. Complicatedness, on the other hand, refers to the organizational structures and processes companies create to deal with complexity. This complicatedness destroys a company's ability to leverage complexity and get things done.

The complicatedness trap. Over the past 15 years, the number of procedures, layers, and coordination bodies in companies has increased by 6.7% annually, leading to:

• 40-60% of managers' time spent in coordination meetings
• 40-80% of team time wasted on non-value-adding activities
• 3x higher likelihood of employee disengagement

Root causes. Complicatedness stems from two outdated management approaches:

1. The "hard" approach: Relying on structures, processes, and systems to control behavior
2. The "soft" approach: Focusing on interpersonal relationships and emotional factors

2. Understand what people actually do, not what they should do

To understand organizational performance, managers must trace that performance back to what people do and the way their behaviors combine with each other to produce overall results.

Analyze the work context. To understand why people behave as they do, examine their:

• Goals: What they're trying to achieve
• Resources: What they use to solve problems
• Constraints: What hinders or restricts them

Look for anomalies. Pay attention to unexpected behaviors or situations that don't fit your assumptions. These often reveal key insights about the work context and how people actually operate.

Avoid common pitfalls:

• Don't focus on what people fail to do, but on what they actually do
• Don't assume organizational elements (structures, processes) have a direct effect on behavior
• Don't rely on psychological explanations or stereotypes to explain behavior

3. Empower integrators to foster cooperation

When you create power, there has to be enough of it to be used. If the power falls short of this threshold, it is not a resource; it is a constraint.

Integrators vs. coordinators. Integrators are individuals or units that foster cooperation for the company's benefit. Unlike traditional coordinators, integrators:

• Are not dedicated roles, but part of existing jobs
• Are directly involved in cooperation, not just reviewing afterward
• Cannot be ignored due to their power and influence

Identify potential integrators. Look for:

• Those expressing high dissatisfaction (often at nexus of constraints)
• Those resented by others (often have power but use it selfishly)

Reinforce integrators by:

1. Removing useless managerial positions
2. Minimizing rules that hem in managers
3. Relying on judgment over metrics for evaluating cooperation

4. Increase total power in the organization

Power is the possibility for one person to make a difference on issues—or stakes—that matter to someone else.

Understanding power. Power is not about position, authority, or personal traits. It comes from the ability to influence issues that matter to others and control relevant uncertainties.

Create new power bases. Increase the total quantity of power by:

• Adding new stakes that matter to people
• Ensuring stakes relate to company performance requirements
• Giving people influence over issues important to others

Benefits of increasing power:

• Enables more people to take risks and cooperate
• Enhances strategic agility and adaptiveness
• Improves organizational design by balancing power across functions

5. Create reciprocity through rich objectives

Rich objectives stimulate the mutual interest to cooperate by making each person's success depend on the success of others.

Components of rich objectives:

1. Collective output objectives: Ultimate value delivered, dependent on multiple people
2. Individual input objectives: Personal contributions not dependent on others
3. Overlap objectives: Actions that increase others' effectiveness

Reinforce rich objectives by:

• Eliminating internal monopolies
• Reducing resources that fuel self-sufficiency
• Creating multiple networks of interaction (multiplexity)

Benefits of reciprocity:

• Increases accountability without adding complicatedness
• Fosters cooperation without relying on formal structures
• Enables decentralized, flexible control

6. Extend the shadow of the future

By extending the shadow of the future, we make the more-or-less distant horizon—that point at which our present behavior will eventually reveal its consequences—much more important and evident to us now.

Four ways to extend the shadow:

1. Tighten feedback loops: Increase frequency of interactions and result reviews
2. Bring the end point forward: Shorten project durations
3. Tie futures together: Link individual success to others' success
4. Make people walk in the shoes they make for others: Expose people to consequences of their actions

Avoid strategic alignment trap. The standard practice of strategic alignment often leads to:

• A mechanistic approach that creates a "stupid machine" organization
• A linear sequence that ties the organization into knots
• Bad strategies driven by fragmented views of the competitive landscape

Benefits of extending the future shadow:

• Increases engagement by making personal impact more evident
• Fosters innovation and risk-taking balanced with cooperation
• Improves decision-making by considering long-term consequences

7. Reward cooperation, not just individual performance

Blame is not for failure, it is for failing to help or ask for help.

Change evaluation criteria. Focus on:

• Organizational criteria (cooperation) rather than just technical criteria
• Rewarding those who help others or ask for help
• Making transparency about problems a resource, not a constraint

Transform the managerial dialogue. Ask:

1. What will you do to improve performance?
2. What personal risks are you taking?
3. How can I help you get cooperation from others?

Benefits of rewarding cooperation:

• Increases transparency about weaknesses and improvement opportunities
• Fosters a culture of mutual support and collective problem-solving
• Balances risk-taking with organizational resilience

8. Abandon outdated management approaches for smart simplicity

Simplifying in a naive way—by ignoring or discarding business complexity—is a dead end. You have to be smart and play on people's smartness.

Smart simplicity approach:

1. Use pain points to discover interdependencies and cooperation needs
2. Uncover obstacles to cooperation by analyzing behavior and context
3. Change the context using the six simple rules
4. Raise ambitions based on new cooperation possibilities

Benefits of smart simplicity:

• Addresses real issues faster and more effectively
• Depersonalizes problems, reducing resistance to change
• Builds buy-in through collaborative problem-solving

Practical implementation:

• Focus on changing aspects like budgeting, objective setting, career paths, and decision rights
• Use classical organizational building blocks, but only those necessary to deal with complexity
• Maintain an authentic management presence, connecting to the reality of work rather than abstractions

Last updated: September 19, 2024