Just published: Simple Rules: How to Thrive in a Complex World by Donald Sull and Kathleen Eisenhardt.
“Complexity surrounds us. We have too much email, juggle multiple remotes, and hack through thickets of regulations from phone contracts to health plans. But complexity isn’t destiny. Sull and Eisenhardt argue there’s a better way. By developing a few simple yet effective rules, people can best even the most complex problems.”
“The authors illustrate the six kinds o f rules that really matter – for helping artists find creativity and the Federal Reserve set interest rates, for keeping birds on track and Zipcar members organized, and for how insomniacs can sleep and mountain climbers stay safe.”
The Wall Street Journal interviewed Sull, a lecturer at the Sloan School of Management at the Massachusetts Institute of Technology who has also worked for McKinsey & Co. and Clayton, Dubilier & Rice LLC.
Sull points to Alex Behring who took over America Latina Logistica, the Brazilian railway and logistics company, as a CEO who follows the approach outlined in his book:
“With a budget of $15 million, how do you choose among $200 million of investment requests, all of which are valid? The textbook business-school answer to this is that you run the NPV (net present value) test on each project and rank-order them by NPV. Alex Behring knows this. He was at the top of the class at Harvard Business School.
“But instead, he decided what the most important goals were. You can’t achieve everything at once. In their case, their priorities were removing bottlenecks on growing revenues and minimizing upfront expenditure. So when allocating money, they had a bias for projects that both addressed the bottleneck problem and, for example, used existing tracks and trains.”
“Similarly, the global-health arm of the Gates Foundation gets many, many funding requests. But since they know that their goal is to have the most impact worldwide, they focus on projects in developing countries because that’s where the money will stretch farther.”
The Harvard Business Review has more on both the book and the above example.