Why use Simple Rules in your Business?

A decade ago, a study on high-tech companies that thrived with the internet boom, showed a surprising fact. When creating high-level strategies, these companies relied on simple rules, not the expected complicated frameworks. All this was in the context of a thriving, challenging and dynamic new industry.

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Simplicity was not the only rule, specificity was the most important. For example, if a company had to grow on new acquisitions or develop a new allocation of capital, managers had to point out critical items of this process and craft guidelines to manage the process to detail. In this way, all the procedures were simplified and the gap between strategy and execution was shortened. On the spot decisions and adaptability was the new center of attention since critical points became, actually, simplified points. All this took place while the big picture remained on sight at all times.

Now that these strategies have been proven, we have a richer understanding of why they are effective and how to use them.

The rules are quite simple as the main idea suggests:

Align activities with a corporate objective.

This means to set a clear direction. Decide which are the company´s priorities and assemble a team to develop simple rules and align key decisions with corporate objectives. Translate broad priorities into guidelines and individual tasks.

Adapt to local circumstances.

Once main rules are understood, this will create an environment where employees can come up with innovative proposals of their own, according to the circumstances and adapt their task to the main framework in a more efficient way. The ground-up approach will increase adaptability beyond expectations.

Foster Coordination.

In order to avoid pitfalls in execution, fostering coordination is a must. If strategies do not match, it is easy to have different world-views between business units, functions or subsidiaries. If every unit has its own agenda without being coordinated, errors will be made. That is why a cross-functional team would allow all the departments to be coordinated under the same rules, the same decisions and criteria.

Identify bottleneck that is both specific and strategic.

The bottlenecks that are keeping the organization from achieving its major objectives must be singled out. It may be a process where the whole system slows down, loses power or momentum. Sometimes the bottleneck may be a sub-step in a broader process. Identifying and deconstructing them is imperative to find new solutions.

Avoid vague goals.

Set well-defined process, not a broad goal. Terms like “improve quality” are achieved slowly without clear goals. Make explicit rules such as “invest in this kind of project” or “coordinate Monday meetings to keep track of sector´s priorities”.

Data should be more important than opinions.

Although opinions must be listened to, before creating rules for the tasks ahead, gather data and analyze it in order to create these rules. The best rules are always drawn by paying enough attention to company´s historical experiences. In many cases, a company will have strategic events to conduct a statistical analysis with a small sample size in case comparisons and look for what worked and what did not and why. This will also allow teams to learn from cases beyond their direct experiences and a broad palette of these very same experiences will be part of the company´s culture.

Users make the rules.

The people who will apply the rules are best able to craft them and they can also test these rules in real time to evaluate if they are vague, limiting or cumbersome. A manager such as a CEO often assumes, given his position, that he has a better knowledge to create the rules. But the people who are hands on the activity are better prepared to make up the rules.

Rules should be concrete.

These kinds of rules often translate into simple yes-or-no criteria. As said before, be aware of abstract language. Also, avoid rules that appear to be simple but hide a massive amount of analysis.

Rules should evolve.

Once the company and the managers gain a richer understanding of the practices and strategies, fostering their evolution is part of the company´s natural development. Building periodic checkpoints, choices and possible outcomes will improve the dynamics of the organization. As teams become more experienced, they will want to add rules to obtain new knowledge and because of this, old rules must be discarded. This fact will create a new pace of work and broader understanding of new possibilities. New projects will come to the surface, new ideas will be discussed and new priorities will be set.

Now is the time to ask where this strategy would apply to our organization. Remember that simple rules can be the leading force of a company. In a world of hard decisions, this is one of the few ways that managers and employees have to align answers, adapt to the dynamic environment and coordinate efforts to focus on the company´s evolution.

Further reading on project management on our blog Stop Using Your Customers as Alarm Points! that wonders: What if CSPs could see what customers are experiencing with their networks?

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