The following is an excerpt from the introduction to Six Simple Rules. The book is available for purchase here.
How do companies create value and achieve competitive advantage in an age of great complexity? This is a question we constantly ask ourselves as we go about our work of helping chief executives and their leadership teams build successful businesses.
When we reflect on our work with the companies we have helped over the years—five hundred or more in all kinds of industries in more than forty countries—what we remember most vividly is rarely the specific problem that caused a business leader to call us in. Rather what comes to mind is the people—an airline maintenance worker, a head of R&D, a hotel receptionist, a sales director, a train driver, a CEO—all of whom were facing more or less the same situation. They confronted a challenge that seemed impossible: increased complexity in their business. We’ll discuss complexity in greater detail further along, but briefly, we mean that companies face an increasing number of performance requirements; the number can be in the range of twenty-five to forty different requirements, far more than twenty or even ten years ago. Often the requirements are contradictory in nature, such as the need to produce goods of high quality that can sell at low prices, or for services to be globally consistent yet also responsive to local demands.
To meet the challenges of complexity, the people we remember so well had tried applying the “best” management thinking and following the “best practices” of the day—including, as we’ll see, both structural fixes and people-oriented approaches—and those practices had failed to bring them success in their efforts in creating value. They were working hard and, when they failed to achieve the results they wanted, they worked harder. But they didn’t have much hope the outcome would be any different. They felt overwhelmed, trapped, and often misunderstood and unsupported by their teams, bosses, and boards.
What’s striking is how poorly served these people were by the conventional wisdom in management—the management theories, models, and practices developed over the past one hundred years. Instead of helping these people manage the growing complexity of business, all the supposed solutions only seemed to make things worse. There had to be a better way, and through on-the-ground work with these people and their organizations, we have battle tested the approach that we describe in this book. We call this approach smart simplicity and it hinges on the six simple rules.
Yves comes at the issue as director of the Institute for Organization at The Boston Consulting Group (BCG), where he brings economics and social sciences to bear on the strategic and organizational challenges of companies and their executive teams—especially as they relate to complexity. Yves formulated the smart simplicity approach to managing complexity, based on his background in research and theoretical inquiry, as well as his extensive work with clients in the United States, Europe, and Asia-Pacific. As head of the firm’s People and Organization Practice in North America, Peter has partnered with Yves to implement the six rules of the smart simplicity approach, drawing on his long experience working with some of the world’s most prominent companies.
Through our client work and continued research, we have continuously refined the rules so that they offer a theoretical framework and a set of practicable management tools. We are actively working together, and with our BCG colleagues, to successfully apply the simple rules—helping companies around the world grow, create enduring value, and achieve competitive advantage.
Reprinted by permission of Harvard Business Review Press. Excerpted from Six Simple Rules: How to Manage Complexity Without Getting Complicated. Copyright 2014 The Boston Consulting Group, Inc. All rights reserved.
Yves Morieux is a senior partner and managing director in the Washington office of The Boston Consulting Group. As a BCG Fellow and the director of the BCG Institute for Organization, he divides his time between leading research and advising senior executives of multinational corporations and public-sector entities in the U.S., Europe, and Asia-Pacific on their strategies and organizational transformations.
Yves has contributed to the development of organization theory relating to the behavioral and structural conditions for economic value creation and competitive advantage. Turning these insights into practice with the simple rules, he has helped CEOs with their most critical challenges, for instance, moving their companies from quasi bankruptcy to industry leadership, or transforming the business model and culture to reach new heights, or successfully managing groundbreaking innovations.
Yves serves on the managerial advisory board of Social Business: An Interdisciplinary Journal and the advisory board of the Journal of Customer Behaviour, has spoken at more than 100 industry conferences, and lectured on economics and organizational sociology at various universities worldwide. He has published several book chapters, edited a book on strategy and technology, and written articles in peer-reviewed as well as business journals. He has been interviewed and quoted extensively on television and in global publications, including The Economist, which cited him as an expert on the evolution of organizations. He is frequently sought out by national media in mature or rapidly developing economies to explain the implications of his work for their own companies.
Yves holds a PhD in industrial marketing from the University of Strathclyde in Scotland and a DEA in decision analysis and organizational sociology from the Paris Institute of Political Science (Sciences Po). He also attended Skema Business School in Scotland and the Salzburg Seminar in American Studies. He lives in the Washington, D.C., area.
Peter Tollman is a Boston-based senior partner and managing director at The Boston Consulting Group, which he joined in 1989. He leads BCG’s People and Organization Practice in North America. His prior leadership roles have included global leadership of BCG's biopharmaceuticals sector and the firm’s R&D topic. He holds a PhD in engineering from the University of Cape Town, South Africa, and an MBA with distinction from Columbia Business School. As one of BCG’s most experienced client-service partners, Peter has helped many of the world’s leading corporations improve the competitiveness and performance of their organizations. His work has spanned the globe and involved a wide range of engagements including: organization restructurings, governance redesigns, culture change, workforce engagement, shareholder value and growth-enhancement initiatives, improvements to operational effectiveness and key processes, postmerger integrations, enterprisewide transformations, and coaching CEOs and other senior leaders through leadership transitions. He has helped clients gain insight from and successfully apply the Simple Rules across many of these efforts.
Peter is an invited speaker at many company and industry conferences and has authored a number of works including, Debunking the Myths of the First 100 Days: The Right Way and the Wrong Way for New CEOs to Approach Their Role; Creating People Advantage 2012: Mastering HR Challenges in a Two-Speed World; Can R&D be Fixed? Lessons from Biopharma Outliers; “Does Size Matter in R&D Productivity? If Not, What Does?”; and “Cascading Change.”
In addition to his BCG work, Peter was a founding managing director of MPM Capital, a health care investment company. He sits on the Board of Governors of the Jerusalem Academy of Music and Dance at the Hebrew University and is a trustee of Walnut Hill School for the Arts. Peter lives in the Boston area with his wife, Linda Kaplan, MD, and their two college-age daughters, Jessica and Sarah.
“Applying the rules of this book will help those looking to increase cooperation while also removing complicatedness in their organizations.”
—Lamberto Andreotti, CEO, Bristol-Myers Squibb Company
"We do not want best practices; they are not good enough for us. We want the next practices, and that is what the six simple rules are about.”
—Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited
“This book will prove seminal. It shows the essential contribution that good empirical social sciences can bring to management, how social sciences can be used to seriously analyze and change what people do at work, and the amazing results you can then produce.”
—Erhard Friedberg, Professor DDr, h.c. emeritus, Sciences Po, Paris; Professor and Senior Advisor, School of Government and Public Policy (SGPP-Indonesia)
“What the authors call ‘complicatedness’ is the plague of modern corporations. To simplify is easy, but the cure may be even worse than the disease. What matters is to simplify without ignoring the new complexity of business. You can do it, thanks to the simple rules.”
—Jørgen Vig Knudstorp, CEO, LEGO Group