(by Donald Sull, Kathleen M. Eisenhardt)

### Introduction

Effective simple rules share four common traits:

• They are limited to a handful

• Tailored to the person or organization using them

• Apply to a well-defined activity or decision

• Provide clear guidance while conferring the latitude to exercise discretion

"Weaver argued that simple and uncertain problems have largely been solved, and that the greatest challenges of the future would be problems of complexity. … At the personal level, many of us struggle to manage complexity every day. We have to call a teenager to navigate the three remote controls required to turn on ESPN, an accountant to fill out our tax forms, and the IT help desk for guidance every time Microsoft introduces a new version of its software." (p 10/Kindle location 143)

"People often attempt to address complex problems with complex solutions. … Meeting complexity with complexity can create more confusion than it resolves. [US tax code example]" (p11/Kloc161)

"Applying complicated solutions to complex problems is an understandable approach, but flawed. The parts of a complex system can interact with one another in many different ways, which quickly overwhelms our ability to envision all possible outcomes. … How many ways can you combine six Lego blocks? For one block, the answer is trivial: 1. With some work, most people can calculate that two blocks combine 24 ways, but by three blocks the calculation becomes tricky (the correct answer is 1,560). When you get to six blocks, the number of possible combinations is daunting. For decades, the commonly accepted answer for six blocks was 103 million combinations, until two mathematicians revisited the problem with some massive computer power and discovered 915 million combinations." (p13/Kloc 178)

### Why Simple Rules Work

Four common traits:

• Simple rules consist of a handful of guidelines applied to a specific activity or decision. Keeping the number of rules to a handful forces you to focus on what matters most. To be used, rules have to be remembered, and limited the number to a handful makes this possible.

• Simple rules are tailored to the situations of the particular people who will use them.

• Simple rules are applied to a single well-defined activity or decision.

• Simple rules give concrete guidance without being overly prescriptive. Simple rules leave room to exercise creativity and pursue unanticipated opportunities.

#### Simple rules to seize opportunities

Jesuit order’s success; the "Formula":

• carry out whatever task they were assigned

• favor education

• released Jesuits from their obligation to recite their daily prayers in unison

To be effective, simple rules must fit the task at hand. Simple rules work best when flexibility matters more than consistency. … Both flexibility and consistency have their advantages, but increasing one reduces the other. Detailed rules are particularly useful for avoiding catastrophic errors, such as plane crashes; pilots are fond of saying that "checklists are written in blood". Detailed rules enhance efficiency in executing routine activities; McDonald’s requires that each franchisee follow the 386-page operating manual. This detailed rule book reduces discretion to a bare minimum, and tips the balance to consistency to ensure predictability, efficiency, and few mistakes.

#### Simple rules produce better decisions

By using simple rules, people can function without constantly stopping to rethink every aspect of a decision every time they make it.

There are some situations where simple rules are not just quick and easy mental shortcuts, they also produce surprisingly accurate decisions. This is especially true in situations when the links between cause and effect are poorly understood, when important variables are highly correlated, when a few factors matter most, and when a gap exists between knowing what to do and actually doing it. Simple rules do not trump complicated models every time, but they do so more often than you might think.

• Simple rules can avoid "overfitting" (fitting a model to closely to historical data hardwires error into the model)

• Simple rules can focus only on the most critical variables. By ignoring peripheral factors and tenuous correlations, rules of thumb eliminate a great deal of noise.

• Simple rules also capture correlated information about context. … Psychologists have found that people tend to overweigh peripheral variables at the expense of critical ones when they try to take all factors into account. Simple rules minimize the risk of overweighing peripheral considerations by focusing on the criteria most crucial for making good decisions.

• Simple rules also make it more likely that people will act on their decisions, because they are easy to remember and less cumbersome to follow than complex guidelines for action.

Simple rules not only trigger people to act, they also keep them from abandoning a decision once they have made it. Willpower, it turns out, is more like a reservoir than a river. If we deploy willpower on one decision, we have less self-control available for our next decision. But research finds that people in periods of low willpower can [make good decisions], provided they follow a simple rule.

#### Simple rules promote collective behavior

Example: honeybees and how they select their new home; "Bees achieve this impressive feat of coordination by following simple rules, such as "Dance longer for better sites", "Follow the first dancer you bump into", and "Head-butt scouts promoting other sites". The rules provide individual scouts with guidance on what to do, while leaving them the freedom to explore unexpected opportunities." (p40/Kloc 433)

Simple rules impose a minimal level of coordination, while leaving ample room for individuals to pursue their own objectives. Zipper uses six simple rules for members sharing a car: (1) report damage, (2) keep it clean, (3) no smoking, (4) fill 'er up, (5) return on time, and (6) pets in carriers. When the rules that guide collective behavior are simple and clear, members of a community can monitor one another and sanction anyone who violates the social norms.

Simple rules work because they do three things well:

• They allow for flexibility in the pursuit of new opportunities, avoiding the rigidity of too many rules and the chaos of none at all. They are particularly effective when the situation is in flux, flexibility trumps consistency, and the benefits of seizing opportunities exceed the cost of making mistakes.

• Simple rules can produce decisions that match or outperform more sophisticated decision models across a wide variety of possible scenarios, and do so quickly, with limited data requirements, and when cause and effect are imperfectly understood.

• Collective action, like the honeybees’ choice of nest, can emerge from simple rules even when individuals’ mental capacity is limited and no one member understands the situation in its entirety. By following a few simple rules, members of a community can produce results, like the choice of a safe nest or the protection of intellectual property, far better than what individuals could do on their own.

### Making Better Decisions (Rules for Decisions)

[Bail decisions]

Boundary rules help you decide between two mutually exclusive alternatives. Boundary rules also help you pick which opportunities to pursue and which to reject when faced with a large number of alternatives. Prioritizing rules rank options to decide which alternatives will receive limited resources, such as medical care during battle or cash in a startup. Prioritizing rules are particularly useful when you lack sufficient resources or time to do everything, or when people hold conflicting views about what to do. Stopping rules dictate when to reverse a decision. They provide guidance, for example, on when to sell a stock, end the search for a mate, or descend from a treacherous mountaintop.

#### Boundary rules

Because these rules define the boundaries of inclusion or exclusion, they sometimes take the form of negative prohibitions, like the "thou shalt nots" of the Commandments. … Boundary rules narrow down the alternatives, helping people decide which opportunities to pursue in the face of an overwhelming number of choices. Boundary rules provide a quick screen to select the most promising targets based on readily available information which is highly correlated with what makes an opportunity attractive.

Example: DARPA’s research initiatives; two boundary rules: the project must further the quest for fundamental scientific understanding, and second, it must have a practical use.

Example: clinical depression; four boundary rules: Have you cried more than usual within the last week? Have you been disappointed in yourself or hated yourself within the last week? Have you felt discouraged about the future within the last week? Have you felt that you failed in your life within the last week? Patients who answer yes to all four questions are likely to be clinically depressed, and the rules correctly classified depressed patients over 97% of the time.

Boundary rules are also easier to understand and communicate than the results of complicated statistical studies. … Complex models, which make simple statistical problems like [the breast cancer calculation percentage] look like child’s play, are difficult to understand and explain, leading to dangerous misunderstandings. Boundary rules can translate statistical findings into easy-to-use decision aids.

Boundary rules can also translate broad policies into practical guidelines. [Example: Obama’s three rules for drone strikes.]

Boundary rules guide the choice of what to do (and not do) without requiring a lot of time, analysis or information. Boundary rules work well for categorial choices, like a judge’s yes-or-no decision on a defendant’s bail, and decisions requiring many potential opportunities to be screened quickly. These rules also come in handy when time, convenience, and cost matter. Boundary rules cover the basics of what to do.

#### Prioritizing rules

Prioritizing rules can help you rank a group of alternatives competing for scarce money, time, or attention. Prioritizing rules are also relevant in our personal lives for guiding everything from deciding how we spend our limited free time to ranking home-improvement projects. Prioritizing rules are useful when a large number of opportunities meet the threshold of the boundary rules, but resources are limited.

[Example: Brazilian rail system decisions]

[Example: Valentinian III, providing guidance on how to resolve Rome’s massive conflicting set of laws and interpretations, issues the Law of Citations: first specified a rule that limited the use of historical opinions to those written by five jurists widely acknowledged to be the greatest legal thinkers Rome had ever produced; then laid out four prioritizing rules that further clarified what judges should do: (1) when the jurists unanimously agreed on the issue, the judge was to follow their opinion; (2) if there was disagreement, the judge should follow the majority; (3) if the historical opinions were divided evenly, the judge should follow the opinion of Papinian; (4) if there was a tie among jurists and Papinian did not express an opinion, the judge could rely on his own discretion to decide the matter.]

Stopping rules

[Example: Crickets choosing mates] "Choose a mate who meets your quality threshold" is known as the fixed-threshold strategy; lowering the bar if they do not run across enough high-quality options adhere to what is known as the variable-threshold strategy.

Whenever alternatives present themselves sequentially (as opposed to all at once), the question of when to stop searching and make a choice arises. Knowing when to stop searching is a thorny problem. Continuing the quest costs time, effort, and opportunity—you forgo listening to a good song while trying to find a great one. But the next tune might be worth the wait. You just don’t know. These are stopping rules. "Nobel Prize-winning economist Herbert A. Simon argued that individuals lack the information, time, and brainpower to determine the single best option when faced with a sequence of alternatives. Instead, like crickets, they rely on a rule of thumb to stop searching when they find an alternative that is good enough. Simon called this rule satisficing, an inelegant but descriptive combination of "satisfy" and "suffice"." (p64/Kloc829)

A well-documented tendency among human decision makers, known as the status quo bias, leads individuals to hold 'em when they should fold 'em across a range of decisions.

[Example: Loeb’s investing strategy rule: "If an investment loses 10 percent of its initial value, sell it."]

[Example: Chicago diners vs Paris eaters; Parisians used rules like "Stop eating when I start feeling full", whereas Chicago were more likely to follow rules linked to external factors, such as "Stop eating when I run out of a beverage" or "Stop eating when the TV show I’m watching is over".]

Stopping rules are particularly critical in situations when people tend to double down on a losing hand. ... Several factors increase the odds of this error, such as proximity to completion, the desire to save face, reluctance to write off sunk costs, and the fear of living with regret of not trying.

[Example: Mt Everest climbing disaster]

### Doing Things Better (Rules for Actions)

[Example: Jack’s bar, author-as-bouncer; simple rules for keeping the peace: "Don’t let trouble in the door"; "Stay sober until the last patron leaves"; "Double up for heavy metal, ska, and punk bands"; "Keep the bikers on your side"]

Process rules are more about how to do things better, and center on getting the job at hand done. Process rules work because they steer a middle path between the chaos of too few rules that can result in confusion and mistakes, and the rigidity of so many rules that there is little ability to adapt to the unexpected or take advantage of new opportunities. Simple put, process rules are useful whenever flexibility trumps consistency.

How-to rules guide the basics of executing tasks; coordination rules center on getting something done when multiple actors—people, organizations or nations—have to work together; timing rules center on getting things done in situations where temporal factors such as rhythms, sequences and deadlines are relevant.

#### How-to rules

• How-to rules can provide robust guidance.

[Example: sports announcing; Seymour Joly de Lotbiniere, the "Lenin of the commentary revolution". A good commenter should: (1) set the scene, (2) describe the action, (3) give the score or results, regularly and succinctly, (4) explain, without interrupting, the stadium’s reaction to the game’s event, (5) share "homework", such as historical facts and figures or personal information, and (6) assess the significance of the occasion and key moments.]

• How-to rules are particularly helpful when there is extreme pressure and severe time constraint.

[Example: the Mann Gulch tragedy; four simple rules for how to deal with out-of-control fires: (1) start an escape fire in the path of the advancing fire if possible; (2) go to where the fuel is thinner; (3) turn toward the fire and try to work through it; (4) don’t let the fire choose the spot where it hits you]

• How-to rules can also foster artistic creativity.

"At first glance, this seems counterintuitive, because following the rules and being creative are often viewed as antithetical. The reality is, however, that a blank canvas and no rules on how to fill it can overwhelm an artist with too many degrees of freedom."

[Examples of Chinese creativity: first group was simply given the assignment; second group received "Please try to be creative"; third group received simple rules on how to complete the activity, such as "Fold or tear the stickers to vary the shape and size of the materials".]

Simple rules are not just for beginners, but rather can also stimulate the creativity of master artists.

"Patricia Stokes, a painter and psychologist at Columbia University, studied how influential artists like Claude Monet, William Motherwell, and Piet Mondrian produced their groundbreaking work. She argues that truly original artists work by imposing constraints on themselves, in terms of the subjects they paint, materials they use, and artists they draw upon for inspiration. Monet, for example, purposefully limited his subjects, repeatedly painting pictures, by the dozens, of subjects like grain stacks and water lilies. This self-imposed constraint allowed him to focus on exploring how light changes, and his exploration helped spark a transition in the art world from representation to impressionism, setting the stage for twentieth-century artists like Picasso. By constraining the infinite possibilities, simple rules allow creativity to flourish, less from thinking outside the box and more from deciding how to draw the box in the first place." (p77/Kloc 1000)

• How-to rules can also accelerate creativity.

[Example: White Stripes album. Five rules: (1) no blues; (2) no guitar solos; (3) no slide guitar; (4) no covers; (5) no bass. 18 songs in 10 days.) "By restricting their creative process, how-to rules freed the White Stripes to follow a short, clear path to their favorite patch of creativity.

Simple rules can help balance novelty and continuity and add a dash of efficiency to the creative process.

[Example: Elmore Leonard’s forty-six novels. "Avoid prologues", "Never use a verb other than 'said’ to carry dialogue", "Try to leave out the part that readers tend to skip".]

How-to rules address the basics of getting things done without prescribing every detail of what to do. They work well in situations where the unexpected is the expected. They can stimulate creativity, shape action when there is no time to plan, and create structure that allows entrepreneurs to grow their company.

#### Coordination rules

[Example: flocking behavior of starlings and other birds; Craig Reynolds avian avatar flocking rules: (1) avoid collisions; (2) head in the same direction as your nearest neighbors; (3) stay close to your nearest neighbors.]

• Coordination rules work by clarifying what to do in relation to others.

[Example: locust swarms: When the density of locusts exceeds a threshold, they begin to sneak up behind others to bit them. When forced into tight quarters, they follow two simple rules: (1) flee from the locusts chasing you from behind, and (2) try to eat the locust in front of you if it gets too close.]

[Example: improv comedy]

• Coordination rules can be followed by using only local information. Coordination rules also allow for adaptation to local conditions while still recognizing the group objectives.

[Example: Combat. Napoleon: "march toward the sound of gunfire"]

• Coordination rules delineate what to do, and likewise what others should do, so that collective objectives can be achieved. Coordination rules do not deal with when to do something.

#### Timing rules

[Example: insomnia. Four simple rules: (1) get up at the same time every morning; (2) avoid going to bed until you feel sleepy; (3) do not stay in bed if you are not sleeping; (4) reduce the time spent in bed.]

Timing rules sometimes taking action when some triggering event happens; event pacing, this kind of rule links actions to events. Other timing rules call for action at a particular time on the clock or calendar—time pacing, creating deadlines and rhythms. Timing rules clarify when to do something and work best when temporal considerations like deadlines, rhythms, and sequences are relevant.

[Example: dragonfly migration: (1) fly only when the nighttime temp falls for two consecutive nights; (2) stay put on windy days.]

Time pacing rules dictate acting at a particular time on the clock or the calendar, and thereby create rhythms and deadlines.

[Example: Pixar studios put into place timing rules: release a new movie every year; release movies at Thanksgiving.]

Timing rules are particularly relevant in competitive situations when rivals go out of their way to disrupt their opponents.

[Example: Riitta Katila has studied the global robotics industry. Finds that the best firms purposefully stay out of sync with their rivals. They stay ahead by introducing their newest products before their competitors, but they also stay behind by exploiting well-known technology to the fullest, and avoid releasing products when their rivals do.]

[Example: Rothschild’s investing rule: "Buy when there is blood in the streets, even if that blood is your own."]

Timing rules can also guide activities that follow predictable patterns or sequences.

### Where Simple Rules Come From

[Example: "Hilltopping"--butterfly orgies; (a) "Fly uphill most of the time", (b) "Fly toward the highest slope in sight", (c) "Pause to check out local peaks, even if they are not the highest, but leave if you do not get lucky right away", (d) "Periodically make a random movement"]

#### Natural selection

Simple rules evolve in communities much as they do in societies as a whole; standup comedians and "Don't steal jokes"; "Rules evolve to address the most pressing issues in communities." "While evolved rules benefit from legitimacy and relevance, they also have weaknesses. Evolved rules are often implicit and deeply entrenched, making it difficult to examine them critically when circumstances change, or abandon them when they become dysfunctional. ... Without a guiding hand, rules often take on a life of their own." (p101/Kloc 1298)

Four approaches that people commonly use to formulate rules:

• People can develop their rules through thoughtful engagement with their own experience, a particularly effective approach for those with lots of relevant history

• People can also develop their rules by adopting the experiences of others, as conveyed through firsthand advice, books and analogies

• When high-quality scientific evidence exists, distilling it into simple rules can be the best approach

• Simple rules can arise through negotiation, when diverse stakeholders have divergent aims and views of what to do

#### Codifying personal experience

[Example: Tina Fey's nine rules for managing a comedy show; (4) states, "When hiring, mix Harvard nerds with Chicago improvisers and stir"; (9) is "Never tell a crazy person he's crazy".]

Values are another source of rules that often arise from personal experience. Personal values can dictate what is correct and even essential to do. "By drawing on their own experience, people are more likely to create relevant rules and to understand where the rules came from and why they matter. When people develop rules themselves and base them on values that matter to them, they also feel a greater ownership over their rules. People are more likely to use rules devised by themselves, reflecting their own values, rather than those imposed on them by someone else. Moreover, when people invest the time to reflect on their experience and codify it into rules, they typically do so with some goal that matters deeply to them." (p.103/Kloc 1333)

[Example: UMichigan study looking at team of 45 employees looking to design a laser printer; need for engineering flow time leads to rules making sure engineers are uninterrupted]

#### Drawing on the experience of others

Advice from experienced people about how to ..., whether given directly or conveyed through a book or magazine article, can prove useful in formulating one's own approach.

#### Personal observation is another effective way to learn what works for others.

We also use analogies, finding similarities between our own experience and others', which can streamline the process of devising our own rules. ... Analogies involve three elements: (a) a new situation, (b) a prior example that is similar in important respects to the new situation, and (c) rules that can be transferred from the prior example to the current situation.

Analogies to existing companies and other competitive domains like sports and battle are a favorite approach of entrepreneurs looking for guidance in attacking new opportunities. ... Analogies can be a powerful source of rules even when the comparison involves two very different domains.

It's possible to be misled by superficial features when deciding when an analogy works. [Example: fictitious scenario involving conflict between small democratic country and large totalitarian one--red herring similarities to WW2 and Vietnam highly color the participants' results.]

#### Distilling scientific evidence

Scientific knowledge accumulates over time as researchers conduct diverse studies looking at complex phenomena from unique vantage points and with distinctive methodologies. Scientific evidence, however, is not inherently simple. The resulting knowledge is often full of qualifications and contingencies that hold under some circumstances, but not others. One way to develop simple rules is to review a body of scientific research, sort through to determine the most consistent findings across studies, and distill these findings into a few simple rules.

[Example: Doctors distilling rules of infection for children.]

[Example: Scientists distilling data for rules around sea life.]

Distilling the evidence works when there is sufficient, high-quality evidence and when stakeholders view the situation in similar ways.

#### Negotiating an agreement

[Example: Author's experience with Executive Education at London Business School] "The key to moving past the political impasse was shifting the debate from, "Which programs should we run?" to "What simple rules should we use to decide which programs to run?" The Executive Education team met with faculty members, explaining the financial situation and drop in rankings, and asked the professors what guidelines they would suggest to manage the program portfolio. The team emphasized that they were aiming for a general set of rules that would apply to every program. The professors argued with one another, but ultimately converged on a handful of robust rules that would work across many situations. ... Of course, individual professors were not pleased when their own programs were cut. But since they had actively participated in negotiating the rules, they were much less likely to oppose the change." (p114/Kloc 1474)

Negotiating simple rules works particularly well when it is cumbersome or impossible to resolve conflicts by escalating them to a higher authority. James Buchanan ... argued that when there are competing interests, it is critical for stakeholders to negotiate decision rules before haggling over specific decisions. An agreed set of rules provides a clear framework for settling contentious issues. When negotiating rules to guide future decisions, stakeholders cannot anticipate every situation or what their interests might be in every case. Since they cannot forecast every contingency, they are more likely to converge on general rules that a wide range of stakeholders can live with and consider fair across a broad set of choices.

Negotiation can be a helpful approach even if there is a higher authority, when multiple interest groups are involved, their values conflict, and some facts are hard to come by. [Example: whale-watching rules]

### Strategy as Simple Rules

[Example: eToro going from currency trading game platform to social network for traders]

### Studying simple rules in action

"The best way to understand something is to try to change it."

"Developing a strategy and implementing it are often viewed as two distinct activities--first you come up with the perfect plan and then you worry about how to make it happen. This approach, common though it is, creates a disconnect between what a company is trying to accomplish and what employees do on a day-to-day basis. ... Strategy and execution, in our view, cannot be separated, because they represent two sides of the same coin. ... 'Strategy as Simple Rules' argued that companies can close the gap between strategic intent and day-to-day action by adopting a strategy of simple rules, applying a handful of guidelines to critical activity or decision within the organization. A strategy of simple rules provides the flexibility to seize opportunities, produce good decisions when data and time are scarce, and help the various parts of the organization coordinate their activities to achieve common objectives." (p121/Kloc 1554)

#### Strategic process:

• Figure out what will move the needles: identify the critical choices that will drive a wedge between revenues and costs to increase profits and sustain them over time

• Choose a bottleneck: identify a bottleneck, a decision or activity that is preventing the company from achieving profitability

In nearly every case, the company's goals were misunderstood, and top executives disagreed on what mattered most for the company's success. ... Without a clear understanding of what their company is trying to achieve, executives struggle to identify where to apply simple rules, let alone what the rules should be.

The best bottlenecks to focus on share three characteristics: (a) they have a direct and significant impact on value creation--what moves the needles will vary from company to company and so should the chosen bottleneck; (b) chosen bottlenecks should represent recurrent decisions (rather than one-off choices), so the rules can be tested, refined, and used many times; (c) bottlenecks, as their name implies, arise when opportunities exceed available resources

"The how from a who, what, how analysis is often a good place to start, and often points in the right direction. ... A company's how will often point to a broad process, such as marketing and sales or new-product development, crucial to creating economic value. These overarching processes consist of several discrete steps, each of which is a candidate for simple rules."

"When searching for the right bottleneck, it helps to look for a critical activity where the number of opportunities exceeds the available resources, such as when sales opportunities outstrip a company's ability to meet demand. ... Choosing external partners is another bottleneck where opportunities often exceed a firm's capacity to pursue them. ... Decisions that require coordination across different departments or teams are another good place to look for bottlenecks."

"When it comes to deciding where to apply simple rules, the most obvious activity is not always the right answer."

• Craft the rules: a set of simple rules that, when applied to the bottleneck, improves profitability

Developing rules from the top down is a big mistake. When leaders rely on their gut instincts, they overemphasize recent events, build in their personal biases, and ignore data that doesn't fit with their preconceived notions. It is much better to involve a team (4-8 members) and use a structured process to harness members' diverse insights and points of view. When drafting the team to develop simple rules, it is critical to include some of the people who will be using them on a day-to-day basis. ... Having users make the rules confers several advantages: (a) they are closest to the facts on the ground and best positioned to codify experience into usable rules; (b) because they will make decisions based on the rules, they can strike the right balance between guidance and discretion, avoiding rules that are overly vague or restrictive; (c) users can also phrase the rules in language that resonates for them, rather than relying on business jargon; (d) by actively participating in the process, users are more likely to buy into the final rules and therefore apply them in practice; (e) firsthand knowledge also makes it easier to explain the rules, and their underlying rationale, to colleagues who did not participate in the process.

It is critical to test your first-cut rules in a rigorous fashion, and refine them in light of your findings.

### Getting Personal

[Applying the above three-step process to personal goals; same process, different scope; fill in any details later]

[Example: dating]

[Example: managing depression]

[Example: winning friends and influencing people]

### Conclusion

Overcoming the barriers to simplicity

The effort required to develop simple rules.

The people who benefit from complexity.

The "myth of requisite complexity".

Whether simple rules or detailed regulations are more effective is ultimately an empirical question that should be resolved by testing them to see which works better in the real world. ... Often, complex rules and regulations arise out of a distrust of human nature. If people cannot be trusted to do the right thing, detailed regulations are necessary to prevent malfeasance. [Example: Netflix's HR policies. "After studying their human resources policies, Netflix determined that 97% of their employees were trustworthy. ... Rather than continue to produce binders of detailed regulations, Netflix executives concentrated on not hiring people who would cause problems, and removing them quickly when hiring mistakes were made. This change allowed the company to replace thick manuals with simple rules. The company's policy for expenses, travel, gifts, and conducting personal business at work, for example, was reduced to four rules: (1) expense what you would not otherwise spend, (2) travel as if it were your own money, (3) disclose nontrivial gifts from vendors, and (4) do personal stuff at work when it is inefficient not to." (p227/Kloc2924)

Rules to liberate

Rules enable as well as constrain. They provide a threshold level of structure while leaving ample scope to exercise discretion. ... Close to the facts on the ground, individuals can draw on their judgment and creativity to manage risk and seize unexpected opportunities. The latitude to exercise discretion not only makes simple rules effective, it makes them attractive. People thrive when given the opportunity to apply their judgment and creativity to situations they face from day to day. And if they benefit from simple rules, they are more likely to use them and use them well.

Tags: reading   books   thinking   psychology   management

Last modified 02 June 2023