Six Simple Rules: How to Manage Complexity Without Getting Complicated

So who's this book for? "Six Simple Rules" has a really broad appeal, as its suggestions apply to anyone who manages teams of people or is in charge of employee procedures or outputs. This could be at CEO level, as a sales manager of a global team, or on a smaller scale.

The authors' tips can also help individuals handle their relationships with co-workers in a way that's mutually beneficial and produces great results. "Six Simple Rules" is about getting organizations of all sizes across all industries working in a more productive, functional way.

It's about creating a more satisfied and engaged workforce that's not hamstrung by bureaucracy or complicated systems. And, it's about being able to compete better with rivals, because we're not competing against ourselves. If that sounds relevant to your work, this book's for you.

"Six Simple Rules" condenses the lessons the authors have learned helping organizations around the world manage complexity and gain competitive advantage. Both authors work for the Boston Consulting Group (BCG), a global management consulting firm. Yves Morieux is a senior partner and director in the group's Washington, DC, office. Peter Tollman is a senior partner and managing director in the group's Boston Office. He leads BCG's people and organization practice in North America.

So, keep listening to hear how to understand exactly what your people do, how to get managers to foster cooperation so everyone wins, and how to ensure employees work together well right through the end of a project.

If complexity saps morale and disengages employees, it's not surprising modern workforces are dissatisfied and unproductive. Business complexity has increased sixfold in the past half century, according to research by the BCG Institute for Organization. The institute created what it calls the complexity index, by tracking how performance requirements have evolved at U.S. and European companies between 1955 and 2010.

In the early years, companies typically committed to between four and seven performance targets. Now it's between 25 and 40. Companies may be tasked to offer high-quality goods at rock bottom prices, or to create supply chains that are longer but faster than before. As many as 50 percent of performance requirements today are contradictory, while hardly any were in the 1950s.

The institute also found the number of structures, processes, scorecards, vertical layers, coordinating bodies, and so forth had increased as much as 35-fold over the same period. This is what the authors call organizational complicatedness.

Because of this, managers at the most complicated organizations spend more than 40 percent of their time writing reports, and between 30 and 60 percent of their work hours in coordination meetings. If you work for a big organization, this may sound familiar. If not, perhaps you're worried your business is heading that way.

At the root of the problem are two approaches the authors say are obsolete. One is the "hard" approach to management, which champions structures, processes, and systems. The idea is that rigid rules have a direct, predictable effect on performance, and that people themselves are the least reliable link in the chain.

The second obsolete approach is the "soft" approach, which is all about getting people to like each other and work better together through practices like team building, off-site retreats, and so forth.

The hard approach creates complicated, multilayered structures, and procedures that block cooperation, while the soft approach creates an overly friendly environment in which people avoid the tough trade-offs that are sometimes needed for an organization to function effectively.

The authors' solution is to create environments in which cooperation becomes the best choice for each person – because it's a rational, useful strategy for them. This is different from trying to force employees to adopt a certain behavior. When cooperation is clearly the best way forward, employees will work together to find creative solutions to complex challenges as a matter of course. This approach recognizes people's autonomy, intelligence, and judgment.

The authors' six rules for achieving this are: understand what your people do; reinforce integrators, which means giving managers the power and incentives to persuade others to cooperate; increase the total quantity of power, rather than giving power to someone at the expense of someone else; increase reciprocity, so cooperation is of mutual interest; extend the shadow of the future, so employees have an incentive to cooperate right to the end; and reward those who cooperate.

Before we continue, a quick point on language. There's a fair amount of management-speak or jargon in this book, which might be off-putting if you're not familiar with it. But the authors also do a really good job of bringing their theories to life through case studies of companies they've worked with. They've changed the companies' names for confidentiality, but they've kept the detail.

So, you'll read how a travel and tourism chain, a mobile phone business, a train company, and a supermarket group all applied the authors' rules with success. This is really effective, as it showcases the authors' experience in the field as well as making the theory easier to digest.

Let's now take a closer look at a few of the rules for managing complexity, starting with the first one: understand what your people do. To address any problem, you need to have a really good appreciation of your employees' reality – their goals, their resources, and the constraints on their work.

The authors provide a really useful survey to use with employees, which includes questions like, "Whom do you have to interact with to do your job?" "Which interactions are the most difficult or involve the most conflict and why?" "Whom do you depend on?" and "What is it they do that affects your ability to do well?"

We particularly liked the authors' explanation of so-called "adjustment costs." When two people cooperate, each has to move into a position that isn't ideal for either, but is beneficial for the organization as a whole. Each pays a price, which could be professional, emotional, reputational, or financial. This is what the authors call "adjustment costs." It's important for managers to be aware of these, because they can affect performance on an individual and organizational level.

The authors back up their arguments with the example of InterLodge, a travel and tourism company that had tried and failed to improve performance, lower costs, and boost profitability at its hotel unit using hard and soft approaches. The occupancy rate and the average price per room were below target, and customer satisfaction was poor.

Working with the authors, InterLodge conducted a thorough analysis of what its people did and why. They found hotel receptionists were bearing the brunt of customer dissatisfaction, because maintenance and housekeeping staff weren't working together to highlight and fix problems in the rooms. The housekeepers were too busy meeting their productivity targets to alert maintenance to faults, and by the time a hotel guest discovered a problem, maintenance had gone home.

That left the front-of-house staff to cope alone with dissatisfied customers. Receptionists felt overloaded with complaints, so they didn't give the best customer service, and there was high staff turnover because their work was unpleasant. Front-of-house staff also held back empty rooms so they could offer them to angry guests, and they offered discounts, impacting the chain's bottom line.

Armed with this information, the company took steps to address the problem. It eliminated hard and soft initiatives like training programs and financial incentives that had failed to improve room occupancy. It made the promotion of managers dependent on having worked in more than one function within the hotel chain – ensuring they got first-hand experience of other roles and how one role related to another. And, the company gave receptionists some power over housekeeping and maintenance to promote cooperation, so they wouldn't have to hold back rooms, or offer big discounts to dissatisfied guests.

This final measure is perhaps the most important and it ties in with the authors' second rule, which is to reinforce integrators. An integrator has the interest and power to make others cooperate for the good of the group. Integrators can be existing managers, but they don't have to be.

At InterLodge, management identified hotel receptionists as integrators and gave them a say in the performance evaluations and promotion of housekeeping and maintenance staff. The receptionists' opinion suddenly carried weight, and housekeepers and maintenance workers had an incentive to cooperate with each other and with reception.

Housekeepers immediately alerted the maintenance staff to faulty equipment as they cleaned, and the maintenance team got on the job straight away. The result was greater customer satisfaction, higher average room rates because of fewer discounts, higher occupancy rates, and lower staff turnover. It also made organizational processes less complicated, because management scrapped counterproductive training efforts and incentives for receptionists.

We like the InterLodge case study, because it demonstrates how easy it is to misdiagnose a problem and try to fix it with complicated solutions that don't work. It also shows the authors' rules in action in a context that's easy to understand.

The authors' fifth rule is another one of our favorites. The phrase "to extend the shadow of the future" comes from game theory, and describes the relationship between today's actions and tomorrow's consequences. The idea is that by extending the shadow of the future into the present, people become more aware of the significance of their actions today.

You can extend the shadow of the future within your organization by holding more regular progress reviews – say every two weeks, or two months, rather than every six months. This means people have to interact more frequently with those whose work is affected by what they do.

You can also bring the end point of a project forward to ensure people are involved right until the close – the point at which the consequences of their work show up in collective results. Too often, people have moved on to a new project or switched departments by the time a product goes to market or work is sent to a client. This gives them less incentive to cooperate. You can change this by shortening a project's duration (although this isn't always possible, of course).

You can also tie futures together to increase cooperation. We like the example of the mining company that has a novel way of developing the next generation of leaders. In this company, individuals are only promoted if they can name at least two qualified candidates to take over the job they are leaving. This way, managers are impelled to develop their successors.

Finally, we can make people walk in the shoes they've made for others. The authors use the story of MotorFleet, a vehicle manufacturer. MotorFleet made its mechanical and electrical engineers work in the company's after-sales garages following the launch of a model they'd designed.

The engineers were charged with managing the warranty budget, and if it exploded because their designs were hard to repair, they'd have to face the consequences. This had a much more powerful effect on the quality of the engineers' work than performance requirements and metrics.

While the authors' tips are certainly useful, we'd have liked to hear more about the possible downsides of some of these initiatives – say, the additional time needed for extra review meetings, or the cost of moving engineers to after-sales roles, as well as the potential complexity this may add. The authors clearly believe the pros outweigh the cons, but it would have been good to hear some of the cons for balance.

This applies to other parts of the book, too. The authors have no time for the hard or soft approach, but we think there must be some saving graces to both of them.

And, there's virtually no discussion of what could go wrong with the six simple rules, or instances in which they might not apply. A mention of the potential negatives would have added more depth and credibility, although the authors do make a very convincing argument for their approach, which is borne out by detailed case studies.

Those criticisms aside, we think this book will bring relief to people who are drowning under the weight of countless performance requirements or multi-layered management structures, who are tired of team-building exercises and personality tests, or who are wondering why none of their initiatives have worked. It offers them a clear way forward. Many organizations need to simplify to reengage their employees and these six simple rules are a great way to do that.

"Six Simple Rules" by Yves Morieux and Peter Tollman is published by Harvard Business Review Press.

That's the end of this episode of Book Insights. Thanks for listening.