Share the Rules, Not the Outcome, & Realise Potential

One of the remarkable discoveries of the field of study called complex systems is how order, or what physicists call a lack of entropy, can be created out of seeming randomness by individuals or agents following a small number of very simple local rules. Such systems are said to be self-organising or self-assembling, and often have so-called emergent properties that were not part of any of the rules. The study of these emergent properties teaches us that it is the local rules themselves, not the finished product, that natural selection or some other selective products sculpted to make the finished product. – Mark Paget, Wired for Culture

Management loves order.  That desire for order translates to efforts to plan and specify all the outcomes in the system. Instead, we need to leverage the potential of our organisations by allowing autonomy with simple rules.

The Deadly Entropy of Specifications

Specifying everything in a complex system calcifies the ability of the system to adapt to change. This is when management becomes bureaucracy. If there is only one predetermined process and one predetermined outcome, then individual employees are just cogs in a machine of work to achieve that outcome. However, we rarely find the expected efficiency in that machine. To start, the complexity of the machine prevents us from specifying our outcomes as clearly as we would like. 

In addition, people are not machines and the world is not static or predictable. People can do more. They want to help and they want to respond to their environment. They learn more, change things, interpret, and reorganise things locally. However, our fixed system of outcomes won’t allow it. We find other people and a changing environment rarely enable us to execute the outcomes as simply as we believed.

All our effort to impose order accelerate chaos. Disconnected employees, disconnected processes, silos, poor design and mismatches to the environment accelerate entropy. Our system is not broken. It is working exactly as we intended it just doesn’t prove to be effective enough for a changing competitive environment.

The chaos of disruption is just the force of our environment selecting another organisation that is more effective. The chaos of decay sets in as our predetermined outcomes fall short of the require effectiveness of those who make the selection decisions: 

  • our employees who can work elsewhere
  • our customers who can buy elsewhere
  • our communities who can support other businesses (with infrastructure, regulation, licenses to operate and valuable reputation); and 
  • our investors who can seek better returns elsewhere.

An Alternative: Share Simple Rules & More Potential

Most managers use a few simple pragmatic rules (or heuristics) to do their job. The challenge in organisations is that these heuristic rules aren’t discussed. Manager’s rules are all slightly different in their effectiveness. Some of these rules will survive by promotion and be shared by role modelling, but many won’t surface, simply becoming the mystery of high performance. If nobody shares their rules, there is little ability to learn from more effective rules.

Managers should focus on fostering discussion around these simple rules and encouraging people to adopt the more effective ones.  Working out loud is a great vehicle to foster these discussions as it surfaces the how of work in progress.  More formally, organisations are experimenting with approaches like holocracy that force the organisation to surface these conversations about the effectiveness of rules, responsibilities and approaches.  In time, as these experiments continue we will discover better ways to work and to manage.

Allowing people to operate within the bounds of simple rules enables them to exercise their potential, their local information and the judgment to make the organisation more effective. Simple rules tested for effectiveness are a great bureaucracy killer. For years, Nordstrom had an enviable reputation for customer service by having the simple guideline of “Use your good judgement in all situations.” 

Importantly, focusing on simple local rules allows each part of a system to play its role as it sees fit without needing to align to a fixed objective or a higher set of instructions. Employees are challenged to bring their best potential and to be more human, not cogs in a machine.

The focus of this approach is to create enduring effectiveness and a competitive advantage in the organisation based in some simple expectations of the local rules of behaviour. Culture like that represents a critical competitive advantage.

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