**Original Question “Should we use Simple Rulesto run our business?”*The Correct Question - “Simple Rules is a GreatConcept but very tricky to implement right.Lets understand what’s involved and how andwhy to do what. Shall we?”
**To allow quick moves in dynamic markets*Focus on pursue of opportunities by increasingflexibility in decision taking*Just enough guidance and structure by a limited set(<10) of simple and unique rules regarding keyprocesses*Rules mainly experience-based, important toneither set rules too broad nor too vague*Challenge to balance long-term perspective and toadapt rules to changing conditions
**How-to rules, guiding execution of key processes(How!)*Boundary rules, limiting range of opportunities(company scope) (What!)*Priority rules, setting priorities for resource allocation(What!)*Timing rules, adapting internal schedules to the paceof markets (What! & When!)*Exit rules, defining criteria to exit opportunities in thelight of unpredictable developments (What! & When!)*** Ref: Chiligum strategies, Slideshare
**They Serve 3 Purposes*Co-ordination*Agility (Avoiding Paralysis)*Complexity & Dimensional Reduction*But they are Suboptimal!!!*The Golden Rule is – First Use Data & Facts (to getan Optimal Solution). In Absence of which use TheSimple Rules*Need a procedure for Quick Disambiguation!!!*Bottom Up Procedure!!! Keep the Bureaucracyaway!
**Simple Rules are normally Top Down*But if transparent they can be Bottom Up*Simple Rules can be based on*Heuristics/Experience, or*Data & Facts (Better!)*They are Primarily a DECISION MAKING Frameworkfor Execution!*In a Strategy by Design or Emergent Strategy (Both!)Paradigm*They are the Ground Rules!!! Within the Company
** The 3M Board has very simple rules to decide on product investments* Can we make it?* Will they buy it?* Can we make reasonable profit from it?* 3M gets it right almost always because this is not the only thing they do to take decisions. But if you copied these 3simple rules from 3M and did just that for all your product investment decisions.* They will work most of the times… giving an illusion of it working* But when applied blindly across the horizon will be strategically grossly sub-optimal* The 3 Rules* Will not work in GreenField Projects, Blue Ocean Strategies, Radical and Disruptive Offerings* They will limit future 3M offerings around their core areas/segments where predictions and projections are easily possible* 3M will not launch new products iteratively or experiment with product launches or markets because profitability andbuying estimate is a pre condition.* 3M will limit its future products to what it can make reasonably within the current state of their technology* The rules will necessitate the existence of SuperHeroes who persist besides rejections till the time projections andestimates worked out with reasonable assurance and technology risks minimized in a mostly tech risk averse company (Notin reality but within the context of the rules and our discussion)* Ofcourse 3M does a lot of things to overcome those shortcomings. But your firm using those Simple Rules copiedfrom 3M will not be able to overcome those shortcomings and strategic sub-optimalities.* Exercise: Now its upto you to see how these simple rules need to be modified in 3 Application Scenarios mentionedin the previous slide.