Six
Simple
Rules
How to Manage Complexity without Getting Complicated
YVES MORIEUX
PETER TOLLMAN
HARVARD BUSINESS REVIEW PRESS
BOSTON, MASSACHUSETTS
Copyright 2014 The Boston Consulting Group, Inc.
All rights reserved
Printed in the United States of America
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Library of Congress Cataloging-in-Publication Data
Morieux, Yves, 1960-
Six simple rules : how to manage complexity without getting complicated / Yves Morieux, Peter Tollman.
pages cm
ISBN 978-1-4221-9055-5 (alk. paper)
1. Complex organizations—Management. 2. Organizational effectiveness. 3. Organizational behavior. 4. Management. I. Tollman, Peter. II. Title.
HD31.M6292 2014
658—dc23
2013045502
Contents
INTRODUCTION
Why Managers Need the Six Simple Rules
1. SIMPLE RULE ONE
Understand What Your People Do
2. SIMPLE RULE TWO
Reinforce Integrators
3. SIMPLE RULE THREE
Increase the Total Quantity of Power
4. SIMPLE RULE FOUR
Increase Reciprocity
5. SIMPLE RULE FIVE
Extend the Shadow of the Future
6. SIMPLE RULE SIX
Reward Those Who Cooperate
CONCLUSION
Notes
Acknowledgments
About the Authors
Introduction
Why Managers Need the Six Simple Rules
How do companies create value and achieve competitive advantage in an age of great complexity? This is a question we constantly ask ourselves as we go about our work of helping chief executives and their leadership teams build successful businesses.
When we reflect on our work with the companies we have helped over the years—five hundred or more in all kinds of industries in more than forty countries—what we remember most vividly is rarely the specific problem that caused a business leader to call us in. Rather what comes to mind is the people—an airline maintenance worker, a head of R&D, a hotel receptionist, a sales director, a train driver, a CEO—all of whom were facing more or less the same situation. They confronted a challenge that seemed impossible: increased complexity in their business. We’ll discuss complexity in greater detail further along, but briefly, we mean that companies face an increasing number of performance requirements; the number can be in the range of twenty-five to forty different requirements, far more than twenty or even ten years ago. Often the requirements are contradictory in nature, such as the need to produce goods of high quality that can sell at low prices, or for services to be globally consistent yet also responsive to local demands (see the sidebar “The Complexity Challenge and Opportunity”).
To meet the challenges of complexity, the people we remember so well had tried applying the “best” management thinking and following the “best practices” of the day—including, as we’ll see, both structural fixes and people-oriented approaches—and those practices had failed to bring them success in their efforts in creating value. They were working hard and, when they failed to achieve the results they wanted, they worked harder. But they didn’t have much hope the outcome would be any different. They felt overwhelmed, trapped, and often misunderstood and unsupported by their teams, bosses, and boards.
What’s striking is how poorly served these people were by the conventional wisdom in management—the management theories, models, and practices developed over the past one hundred years. Instead of helping these people manage the growing complexity of business, all the supposed solutions only seemed to make things worse. There had to be a better way, and through on-the-ground work with these people and their organizations, we have battle tested the approach that we describe in this book. We call this approach smart simplicity and it hinges on the six simple rules.1
Yves comes at the issue as director of the Institute for Organization at The Boston Consulting Group (BCG), where he brings economics and social sciences to bear on the strategic and organizational challenges of companies and their executive teams—especially as they relate to complexity. Yves formulated the smart simplicity approach to managing complexity, based on his background in research and theoretical inquiry, as well as his extensive work with clients in the United States, Europe, and Asia-Pacific. As head of the firm’s People and Organization Practice in North America, Peter has partnered with Yves to implement the six rules of the smart simplicity approach, drawing on his long experience working with some of the world’s most prominent companies.
Through our client work and continued research, we have continuously refined the rules so that they offer a theoretical framework and a set of practicable management tools. We are actively working together, and with our BCG colleagues, to successfully apply the simple rules—helping companies around the world grow, create enduring value, and achieve competitive advantage.
How Complexity Leads to Complicatedness
To understand the power of the simple rules and why they are so essential in business, let’s start by defining the problem. Today, companies have to deal with greater business complexity than ever before. This complexity arises from the requirements companies must meet to create value for their stakeholders. These requirements have become more numerous, are changing faster, and, what’s more, are often in conflict with one another. We have actually measured this evolution and created what we call the BCG Complexity Index. It shows that business complexity has multiplied sixfold since 1955.2
THE
