In unpredictable times, use simple rules to make quick decisions and stay focused on business opportunities.
Companies find themselves in a turbulent business environment. The global pandemic, climate change, war, and energy shortages mean markets and consumer practices are changing constantly. Sudden changes require quick decision not only to avoid loss but also to capture emerging opportunities.
Due to unpreparedness or inflexibility, many companies get bogged down in long meetings with endless discussions and little or no concrete action to follow.
During the pandemic, a subsidiary of the global tool retailer Würth managed to avoid this trap, and, moreover, to expand its network of stores twice as fast as they had previously.
The secret to their success seems deceptively easy: using simple rules to avoid lengthy discussions and speed-up decision-making.
“We don’t want to have to re-invent ourselves every single time.” … with simple rules … “we immediately knew what to do.” – Würth Manager
Regardless of your business or what the next crisis will be, here are some key steps to designing simple rules that help you succeed in alignment with your strategy.
Keep simple rules simple by choosing a few strategic bottlenecks. For example, a challenge for Würth was the selection of stores due to varying sizes and locations.
To simplify, they formulated the rules:
Ask all employees working with the strategic bottleneck to share what makes them fail and what makes them succeed. Remember that the people working on the frontline have rich experience from inside and outside the company.
Use your in-depth knowledge about the company to develop simple rules in alignment with the corporate strategy.
Remember that simple rules do not implement themselves. Once you have formulated them you need to constantly communicate them via different channels them and ensure that people use them.
It is challenging to keep the simple rules relevant over time. When necessary, you should be prepared to adapt them to new situations. Keep your eyes and ears open, keep learning, and don’t hesitate to change, remove, or add a rule.
For example, due to the increasing density of stores, Würth customers were no longer making full use of the product range in every store. It became clear that the market was saturated with large stores, and the maximum size for new stores was decreased to 450 m2.
“Complexity evolves by itself. There are enough occasions that produce complexity. Hence, using simple rules provide us with orientation and shift our attention to the important topics” – Würth Manager
Simple rules are concrete, simple statements that are easy to remember. They serve as rules of thumb to make decisions quickly before a situation or problem changes while staying in alignment with the company strategy.
The concept is explained in more detail by Donald Sull and Kathleen Eisenhardt: “Simple Rules for a Complex World” in Harvard Business Review.
Published 25. January 2023