The rules are based on the premise that the key to managing complexity is the combination of autonomy and cooperation. These are two words that people rarely think of as going together, but it is precisely the combination of the two that is required to handle complexity without complicatedness. Individual autonomy harnesses people’s flexibility and agility; meanwhile, cooperation brings synergy so that everyone’s efforts are multiplied in the most effective way for the group.
The purpose of the simple rules is to create situations in which each person’s autonomy—in using judgment and energy—is made more effective by the rest of the group, and in which people put their autonomy in the service of the group. The rules are designed to create an organizational context in which cooperation becomes the best choice for each individual. In other words, these rules help organize and manage in a way that makes cooperation an individually useful behavior—a “rational strategy”—for people. The simple rules do not aim at controlling employees by imposing formal guidelines and processes; rather, they create an environment in which employees work together to develop creative solutions to complex challenges.13 The cooperation achieved thanks to the simple rules is such that, at any time, people are mutually advantaged and impelled by others to come up with the right solutions to deal with performance requirements, even if what is right cannot be specified in advance.14 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. You have to recognize business complexity and simplify in a way that leverages people’s intelligence and judgment. The combination of autonomy and cooperation allows you to do this.
THE SIX SIMPLE RULES OVERVIEW
1 Understand what your people do. This rule is about getting a true understanding of performance—what people actually do and why they do it—and avoiding the smokescreen of the hard and soft approaches. With this understanding, you can then use the other simple rules to intervene.
2 Reinforce integrators. This rule involves giving to units and individuals the power and interest to foster cooperation; integrators, when reinforced, allow each one to benefit from the cooperation of others.
3 Increase the total quantity of power. This rule shows how to create new power—not just shift existing power—so that the organization is able to effectively mobilize people to satisfy the multiple performance requirements of complexity.
4 Increase reciprocity. This rule and rules five and six shift from creating the conditions for effective autonomy to ensuring that people put their autonomy in the service of the group to deal with complexity; rule four achieves this through rich objectives, the elimination of internal monopolies, and the removal of some resources.
5 Extend the shadow of the future. This rule harnesses the natural power of time—rather than the use of supervision, metrics, and incentives—to create direct feedback loops that impel people to do their own work today in a way that also contributes to the satisfaction of performance requirements that matter in the future.
6 Reward those who cooperate. This rule radically changes the managerial dialogue—covering the entire spectrum from target setting to evaluation—in a way that makes transparency, innovation, and ambitious aspirations become the best choice for individuals and teams.
Why not fewer than six rules? We know that the six rules cannot be boiled down to fewer rules because no rule can be deducted from the five others. None of the six rules is superfluous. Vice versa, we have never encountered a situation in which the solution would not be a combination of some of the six rules. It is not necessary to add another rule. Together the six rules constitute a minimum sufficient set to confront complexity.
The first three rules are designed to give people an advantage in the way they mobilize their intelligence and energy at work by providing them with relevant knowledge, room for maneuver, power, and the resource of cooperation. The first simple rule is about understanding what people do and why they do it. The second rule is about the utilization of power to foster cooperation. The third rule is about the production of power. These first three rules create the conditions for individual autonomy so that its effectiveness can be multiplied through cooperation from others.
Simple rules four, five, and six are designed to impel people to confront complexity and to use their autonomy to cooperate with others, by embedding feedback loops that expose them as directly as possible to the consequences of their actions, without the need for extra supervision and structure or for the bureaucracy of compliance metrics and incentives. The fourth and fifth rules create direct feedback loops that are intrinsically embedded into work processes and activities. The direct feedback loops created by the fourth rule are based on interdependencies—space, so to speak. The feedback loops of the fifth rule are based on time, directly gratifying or penalizing people depending on how well they do today for tomorrow. When work processes do not allow for direct feedback loops, management intervention is needed as a last resort to close them, through evaluation. This is the role of the sixth rule.
In summary, the first three rules use the group effect to give people’s autonomy an advantage in best using their energy and judgment, while the last three rules impel people to put their autonomy in the best service of the group. Whenever people apply their full energy and intelligence to the greater range of possible solutions that arises from cooperation, they are bound to reach superior solutions to those predefined or hard-wired in procedures and structures and to the loose compromises of collaboration within informal, consensus-seeking groups.
By calling the rules “simple,” we don’t mean to imply that they are necessarily easy to put into practice. Using them requires managers to think differently and work differently. Nor do we mean that managers should pursue simplification as a goal in itself.15 What we do mean, however, is that these rules allow executives to create competitive advantage by exploiting complexity without getting complicated.
The Scientific Basis of the Six Simple Rules
The six rules are based on fundamental developments in the social sciences that can be traced back to the work of Herbert Simon and Thomas Schelling. Simon received the Nobel Prize in 1978 for his study of decision making, and Schelling in 2005 for his game-theoretic work on conflicts and cooperation. Simon’s research brought a radically new perspective on cognitive processes, how the individual decides and acts, while Schelling’s helped us better understand interactions between individuals and the effect of these interactions on overall results, which can be very different from their individual intent. Other important intellectual contributors are Michel Crozier and Robert Axelrod. Crozier started his career by studying labor movements in the United States after World War II and then created a new approach called the strategic analysis of organizations. Axelrod is a political scientist who has helped us better understand cooperation as an evolutionary process and also coined concepts we have used to name some of the simple rules.16
These developments have led to a variety of new perspectives on organizations and to useful insights about human behavior that are extremely relevant to how organizations manage complexity. For example:
Human behavior is strategic. People adapt to their environment strategically (in the sense that game theory uses the term) in order to fulfill certain objectives or goals. They may be more or less conscious of those goals, but the goals can be identified by studying carefully how they act. In this respect, human behavior can always be analyzed as a rational strategy in an individual’s context; there are always “good reasons” (in the sense of reasons with explanatory power) for how people behave.17
Formal rules and procedures don’t have a predetermined effect on people’s behavior. Rather, people actively interpret rules and use them as a resource to fulfill their goals. What matters are not the rules, but the ways people use them.
Cooperation isn’t just some taken-for-granted value or goal (the desire that people “work together as a team”). It is a complex social process, hard to create and easy to destroy. Organizations have to create the right context for cooperation.
Power