Complicated Won't Cut It in 2015

Jan. 6, 2015
Coping with a complex business environment can lead to cumbersome new structures in companies. Two veteran management consultants argue companies should instead embrace "smart simplicity" to promote autonomy and cooperation.

Businesses of all kinds ­ manufacturing certainly is no exception ­ grow more complex every year. Managers often respond with complicating structures -- new departments, new management layers and new incentives ­ that make their organizations more cumbersome and less agile when fast response is frequently a competitive necessity.

The answer to this leadership challenge is embracing “smart simplicity,” say Yves Morieux and Peter Tollman, senior partners at Boston Consulting Group. "Smart simplicity" is a set of principles designed to make people more autonomous, cooperative and able to solve problems.

The first rule is straightforward but takes some effort to accomplish: Know what your people are really doing, and why. Since performance problems invariably can be traced to people's actions, problem solving involves understanding why people take those actions in the first place. This is because people are rational actors, so whatever they're doing is necessarily a rational response to their conditions.

“If what people are doing is harming performance, savvy managers will create for their people reasons to do things that help performance,” says Morieux. “By changing conditions, you can give workers both greater autonomy and greater incentive to cooperate to solve problems -- which, in combination, harness people's judgment and energy towards better results and a more competitive organization.”

“Autonomy and cooperation are the secret ingredients of strong organizational performance,” adds Tollman.

The six rules of smart simplicity are the focus of Six Simple Rules: How to Manage Complexity Without Getting Complicated (Harvard Business Review Press, 2014), by Morieux and Tollman. The rules are:

1. Find out what's really happening in the organization. “Learn how and why your people cooperate, find resources and solve problems -- or how and why they fail to do so,” Tollman says. “Since performance problems are the result of people's actions, problem-solving starts with finding out why people do what they do -- and then making changes so they do what you need them to do.”

2. Identify the “integrators” who make cooperation happen, and empower them. “These people are situated at the center of tension caused by opposing interests -- hotel receptionists, for example, who balance the demands of impatient customers with the constraints of other colleagues,” Morieux says. “Their position requires cooperation to get their job done and, if empowered, allows them to 'force the issue.'”

3. Give more people more power. Power is “the possibility for one person to make a difference on issues or stakes that matter to someone else.” It isn't finite, and if managers give more people power to make decisions in the organization, they can think and act on additional performance requirements, solving problems on their own. That can make an organization more agile, responsive and competitive.

4. Take away resources to make people dependent on each other. “Having fewer resources means people have no choice but to rely on each other -- instead of turning to interfaces, coordinated structures or standard procedures,” Morieux says. “This creates mutual interest in cooperation, makes people cooperate autonomously and makes organizational life simpler.”

5. Help your people “live with the consequences.” Workers need to understand that their actions have effects on others and on the organization. One way to do that is to make sure they experience directly the consequences that result from what they do today. Managers can, for example, make sure that people's involvement in work continues until the end point of the activity -- the point at which their actions' consequences appear in collective results.

6. Don't punish failure; instead, punish people who fail to cooperate. “If people are afraid to fail, they will hide problems from you and their peers,” Morieux explains. “Managers should reward people who surface problems -- and punish those who don't come together to help solve them.”

“The problem that businesses will face in 2015 is not that their environment is increasingly complex, but rather that the way they respond leads to excessive complicatedness,” Tollman says. “Managers should start the year by avoiding complication and instead making it rational for their people to work together to solve problems.”

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