Inside BCG's Smart Simplicity Approach

introducing six simple rules of
smart simplicity®
highlights from a new book by
the boston consulting group
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Challenge conventional wisdom and apply six simple rules.

How do companies
create value and
achieve competitive advantage
in an age of
increasing complexity?

Complexity can be a good thing…
• It affects everyone—so if you can master it, you win.
• The winners will be the companies that can
transform complexity into competitive advantage.
But it’s never good to be complicated…
• Rules, procedures, and structures get in the way
of performance and make organizations worse,
not better.
• Organizations get rigid… and can’t respond, especially
when it comes to making judgments about conflicting
requirements.
• People work harder on activities that add less and
less value… and make less of a difference.

Organizations take one of two approaches—or sometimes both.
And they’re both wrong.
The hard approach: structures, processes, systems, and financial incentives
• This approach assumes that systems are predictable and people are the weak
link in the chain of reliability. Systems are designed to control people.
The soft approach: team building, people initiatives, off-site retreats, focus on
leadership style, and emotional incentives
• This approach assumes that performance depends on interpersonal relationships
and psychology rules. Therefore, if you appeal to people’s psychological needs,
you can control them.
Both of these approaches seek to achieve control. In so doing, they make
organizations complicated—slower, more bureaucratic, bogged down in process,
and, more important, unable to manage the complexity of the environments in
which they operate.
What’s needed is:
• Less-direct control based on the hard and soft approaches
• Fewer systems
• More flexibility
• More autonomy
Such an organization is nimble—and better able to respond to complexity because it
better leverages people’s judgment and energy. It achieves Smart Simplicity®.

Rule One:
Understand What Your People Do
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Find Out
What’s Really Happening
in Your Organization
Know the contexts that shape behaviors—what’s
really happening in your organization. Learn how
your people cooperate, find resources, and solve
problems—or fail to do so.

Key questions to ask your people in order to
understand their contexts:
• What are the most interesting and frustrating aspects
of your job. Why?
• What are the key problems you have to deal with?
• How do you solve them?
• How do you know if your solutions work?
• Who do you have to interact with to do your job?
Keep in mind:
Behaviors are rational solutions in a particular context
• People always have reasons for the things they do
• Every behavior is a solution to a problem

Rule Two:
Reinforce Integrators
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Look for Cooperation.
Hint: You’ll Find It Where
People Are Resented
This is part of knowing the context: Find out how
cooperation happens—and who makes it happen.
Identify the “integrators”—the people and units
who bring others together and drive processes.
Eliminate layers and rulesand give the integrators
the power, authority, and incentives to make
the entire task succeed.

Integrators aren’t coordinators
• An effective integrator has both an interest in making others
cooperate and the power to impel them to do so.
How to identify integrators
• They love or hate their job. This means they are at a nexus where
constraints and requirements meet.
• They are loved or hated by others. This shows they have their
hands on the levers of cooperation and are using this power to
their own advantage.
• They are never met with indifference. Indifference is a sign that
people have no power to ”force the issue” and impel cooperation.
• They are at the center of tension. Tension in this case can be a
good thing. It might mean that people are doing the hard work of
cooperating. A lack of tension might mean that people are
avoiding cooperation.
Turn managers into integrators
• Remove managerial positions if they don’t influence people
to cooperate.
• Minimize rules. Too many rules keep managers from exercising
judgment.
• Rely on judgment over metrics. Cooperation cannot be measured
directly—it’s impossible to say who contributes what. Turn
managers into integrators by relying on their judgment instead of
pseudo-precise metrics.

Rule Three:
Increase the Total Quantity of Power
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More Power to More People!
Power isn’t a zero-sum game. Increasing the total
quantity of power available in the organization allows
managers to think about and act on more performance
requirements. This supports strategy and leadership…
and helps organizations respond to the demands of
complexity. Creating power can be a small matter—
like giving store managers control over staffing—and it
doesn’t necessarily look “strategic.” But it can have
a real impact on performance.

Three myths about power
• Power is an attribute of position. No. Reporting lines are just
formal conventions without any automatic effect.
• Authority is equivalent to power. Wrong. Authority provides the
legitimacy to exercise power, not power itself.
• Power is an attribute of individuals and their leadership style.
Again, not true. Personal attributes and style may be ways to
exercise power but they don’t determine whether an individual has
power in the first place.
Why you must create new power centers
• Power determines the capacity to impel cooperation—and that’s
essential for addressing business complexity.
• Therefore power in the organization needs to be more than a
zero-sum game. If someone always loses power as others gain it,
then, there will always be someone without the power to impel
cooperation.
• New power helps the organization. You can channel the
intelligence of more people against more fronts. The organization
becomes more flexible, adaptive, and effective.
When to add power
• Think about increasing the total quantity of power whenever
you consider changing your organization’s structure, processes
and systems. See if creating new power bases could satisfy more
requirements in dealing with complexity.

Rule Four:
Increase Reciprocity
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Make Cooperation Happen
Work is becoming more interdependent. That means
that people need to rely more on each other—and
cooperate directly instead of relying on dedicated
interfaces, coordination structures, or procedures.
Those things make life complicated—while “reciprocity,”
which ensures that people have a mutual interest in
cooperation (and that their success depends on each
other), makes people cooperate more autonomously
and, therefore, makes organizational life simpler.

How to create reciprocity
• Eliminate internal monopolies. They kill cooperation because they
don’t need to take into account the needs and constraints of others.
• Remove resources. If you take away the extra TVs in a household,
people will have to cooperate to decide what to watch on the one
remaining TV.
• Create “multiplexity”: Networks of interaction. Put people in
situations (such as communities of practice) where they have to
address mutual performance requirements.
Misconceptions about roles and objectives
• The more clarity, the better. No. A certain degree of fuzziness can
be a good thing.
A relay race team works best when some objectives are defined (the
first runner needs to get out of the blocks quickly) but others are left up
to the runners (where exactly on the course to pass the baton to your
teammate).
• Cooperation dilutes personal responsibility. Or, “if everybody is
responsible then nobody is responsible.” But interdependency makes
it impossible to parse the amount of each person’s responsibility.
Two relay racers are jointly responsible in the short distance where
the handoff takes place. If the baton drops, both are at fault.
• Interdependency destroys accountability. “How can I be responsible
for results that depend on the performance of others?” It’s wrong to
think we can be accountable for our work only if we are the sole
authority over it and control all the resources.
Each runner is responsible for the performance of the entire team.

Rule Five:
Extend the Shadow of the Future
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Actions Have Consequences—
and Living the Consequences
Boosts Performance
Increase the importance to people of what happens
tomorrow as a consequence of what they do today.
By making simple changes, you can manage
complex requirements while making the organization
less complicated.

How to extend the shadow of the future:
• Tighten the feedback loop so people feel consequences more
frequently. Have your people interact more frequently with others
whose work is affected by their actions.
• Bring the end point forward. Make sure people’s involvement in
the work continues to the end point of the activity—the point at
which the consequences of their actions show up in collective
results.
• Tie futures together so that success requires contributing to the
success of others.
• Make people walk in the shoes they make for others, so they are
exposed to the problems their current behaviors could create.

Rule Six:
Reward Those Who Cooperate
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People Think Cooperation Is Risky—
Make It Riskier Not to Cooperate
Blame and risk aversion are at the heart of
organizational culture. But smart organizations accept
that problems happen for many reasons, and the only
way to solve them is to reduce the payoff for those who
don’t contribute to a solution. Performance evaluation
and reward systems are the key—but instead of using
them to punish failure, use them instead to punish
failure to help, or to ask for help.

How to reward cooperation
• Don’t punish or blame people for results—but do encourage
in-depth knowledge of how results were obtained, and who
helped out.
• Use managers and feedback loops to capture how each individual
contributes to the effectiveness of others. This makes it more
difficult to pass the buck.
• Ask the right questions. Traditional evaluations make people
defensive: “Why aren’t you hitting your targets?” To get their
people off the defensive, instead ask: “What do people say when
they complain about you?” “What personal risk are you taking in all
this?” “How can I help you get the cooperation you need?” Questions
like these get people focused on cooperation—and encourage
them to cooperate by reassuring them that they have your
support.
• Avoid the influence of vested interests. Set goals for the best
group result, not just the best outcome for your function.
• Refuse escalation. When decisions get pushed to a higher level,
it can mean that peer groups aren’t cooperating. By refusing to
arbitrate, a manager can promote real cooperation—even if that
involves hard work and conflict.

It’s About Performance:
Why You Should Adopt the
Six Simple Rulesce
The primary goal of the simple rules is to create more value
by better managing business complexity. This involves
abandoning the hard and soft approaches. In so doing you also
remove complicatedness and its costs. Simplification is not a
goal in itself, but a valuable by-product of the simple rules.
The simple rules are battle-proven ways to leverage state-of-
the-art thinking and practices from the social sciences to break
the vicious cycle of complicatedness, help companies grow,
create enduring value, and achieve competitive advantage.

Making the Six Simple Rules Work
in Your Organization
The Six Simple Rules are designed to be practical and fast to implement.
These pointers will help you put them to work in your organization…
Use pain points to discover where cooperation is needed:
• “Our on-time performance is too low.”
• “Our occupancy rate is below target.”
• “Our time to market is too long.”
• “Our products aren’t innovative enough.”
Ask your people what they’d do differently if they were cooperating:
• Make sure they talk in specifics: it’s not about “trust” or “responsiveness”;
it’s about having maintenance tell us when the train will be late.
Have them define the difference that cooperation would make
Find out what’s getting in the way of cooperation:
• How do some behaviors lead to other behaviors?
• Learn what goals, resources, and constraints make people do what
they’re doing now—instead of cooperating. Too many resources?
Power that lets them avoid cooperation? Or not enough power to take
the risk of cooperating?

About the authors
Yves Morieux is a senior partner and managing director in the Washington DC
office of The Boston Consulting Group. He is a BCG Fellow and director of the
BCG Institute for Organization.
Peter Tollman is a senior partner and managing director in BCG’s Boston office.
He leads BCG’s People & Organization practice in North America.
To learn more
For additional insights and materials, please visit https://www.bcgperspectives.com/
sixsimplerules. Yves and Peter are available to talk with the press and organizations.
To join the conversation on Six Simple Rules, please use the Twitter hashtag #6simplerules.
Six Simple Rules is published by Harvard Business Review Press and is available everywhere.
Contact:
Frank Lentini
Sommerfield Communications
(212) 255-8386
lentini@sommerfield.com
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading
advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors
in all regions to identify their highest-value opportunities, address their most critical challenges, and
transform their enterprises. Our customized approach combines deep insight into the dynamics of
companies and markets with close collaboration at all levels of the client organization. This ensures that
our clients achieve sustainable competitive advantage, build more capable organizations, and secure
lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries.
For more information, please visit bcg.com.
© The Boston Consulting Group, Inc. 2014. All rights reserved.

Inside BCG's Smart Simplicity Approach

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