quinta-feira, dezembro 31, 2020

"Apply simple rules to guide decisions"

"Apply simple rules to guide decisions.


Any complex task is best approached by flattening hierarchies. [Moi ici: Num mundo a ficar cada vez mais complexo há tanta gente a querer controlar isto e aquilo, a querer microgerir] It gets everybody feeling like they’re in the inner circle, so that they develop a sense of ownership.”

The strategy implication here, as throughout market shaping, is distributed leadership. Let as many individuals as possible lead investment decisions and other market development. This minimizes the circle time between your stimulus (or probe) and the market’s response, and so accelerates learning. Now, in complex market systems, total control is impossible; you need another leadership mechanism. 


One attractive option for managing complexity is so-called simple rules. Simple rules are some often quite specific guidelines which help individuals deal with mission-critical processes and situations and enable fast decisions and rapid adaptations to volatile circumstances, while abiding by the overall strategy of the firm. Essentially, simple rules bridge the gap between strategy and execution.

There cannot be too many simple rules and they need to be tailored to the individuals using them and the procedures where they are applied. You should not copy simple rules as they also should differentiate the firm from other actors. They must also give people latitude to exercise discretion.


Specifically, decision rules set boundaries (“we do not acquire firms that have more than 75 employees”), prioritize alternatives (“our manufacturing capacity will be allocated based on a product’s gross margin”), and establish stopping points for when you exit a project (“any project that loses its key member will be stopped”).

By contrast, process rules tell people how to execute tasks or coordinate action (“our R&D staff must rotate through customer service”) and establish the proper timing of tasks (“product development must not take longer than 18 months”).

The appeal of simple rules is manifold. They can be used when recruiting (new people need to agree to the rules). They speed up execution (less haggling about how to prioritize). And they function as sense makers for individuals (“when business becomes complicated, strategy needs to be simple”)."

Trechos retirados de "Conquering Complexity With Simple Rules"

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