SOURCE: The Boston Consulting Group

The Boston Consulting Group

September 02, 2014 10:00 ET

Limiting Resources Can Be an Effective Performance Lever for Smart Managers

People Who Lack Resources Are Forced to Rely on Each Other -- They Cooperate to Solve Problems and Seize Opportunities, Say the Authors of Six Simple Rules, a New Book by The Boston Consulting Group

BOSTON, MA--(Marketwired - Sep 2, 2014) - Savvy managers often hold back on doling out more resources as a reward to employees and teams that have performed well. They recognize that too many resources can lead to so much self-sufficiency that people no longer need to cooperate with each other to solve problems and seize opportunities. That lack of cooperation can make organizations less agile, less responsive, and less competitive.

In fact, some effective managers go so far as to take away resources -- to force their people to rely on each other more. In other words they remove resources from people who are clamoring for more and get good results, according to Boston Consulting Group (BCG) partners Yves Morieux and Peter Tollman, authors of Six Simple Rules: How to Manage Complexity Without Getting Complicated (Harvard Business Review Press, April 2014). 

The rules show managers how to go beyond the traditional management toolkit and instead embrace "smart simplicity" -- a set of principles designed to make people more autonomous, cooperative and better able to solve problems, so that organizations become more competitive. The book argues that autonomy and cooperation are essential if organizations are to respond effectively to the demands of an increasingly complex business environment.

But real cooperation -- where people and groups put aside self-interest to achieve a common goal -- is extremely difficult, and most prefer to avoid it. Removing resources is one way to make cooperation happen, the authors say. "Having fewer resources means people have no choice but to rely on each other, which helps to foster cooperation," Morieux explains. "If you take away all the televisions but one in a household, people are forced to do the difficult, cooperative work of deciding what to watch. The same dynamic plays out in organizations."

The book includes the example of an industrial company that needed to reduce its supply costs. But its purchasing strategists couldn't get along with the buyers who did the actual purchasing, while business units went off on their own to do their own buying. 

"What the company had was a failure to cooperate," Morieux says.

The company responded by slashing the budgets for the business units, who then had no choice but to work with the purchasers. They also created common objectives for the strategists and buyers. A "community of practice" came together -- and purchasing costs fell.

Many workers -- and managers -- resist this approach. "Conventional wisdom says that to accomplish more -- when they have more resources to work with," Tollman says. "But this doesn't necessarily work out in practice. People or groups that are self-sufficient don't need to cooperate. They can split off and work at cross-purposes with others. When they don't have enough resources, they are forced to share -- which makes them recognize that there is reciprocity between them and others, and that they are reliant on each other. Cooperation follows."

"Increase reciprocity" is one of the book's "six rules for smart simplicity." The rules are designed to promote autonomy and cooperation -- qualities that are essential if organizations are to respond effectively to the demands of an increasingly complex business environment, the authors say.

"The business environment is becoming more complex -- and organizations respond by getting complicated," Morieux says. "They add management layers, dedicated functions, processes and 'best practices' -- all of which make the organization clumsy and slow to respond. What's needed is more autonomy and cooperation -- qualities that make companies more agile, flexible, responsive and competitive."

According to Morieux and Tollman, taking away resources to promote reciprocity, like the other rules of "smart simplicity" starts with the reality of how people behave. 

"The basic approach of smart simplicity comes down to this," Tollman says. "Find out what your people are really doing in the organization; remember that whatever they are doing is rational -- for example, they are trying to protect their jobs or avoid punishment -- then give them rational reasons for doing what you need. They will help you identify and solve problems -- if you make it safe and rewarding for them to do so. "

For more information, or to schedule an interview with Yves Morieux or Peter Tollman, contact Frank Lentini, Sommerfield Communications at +1 (212) 255-8386 / Lentini@sommerfield.com.

About the Authors

Yves Morieux is a senior partner in the Washington, DC office of The Boston Consulting Group (BCG). He is a BCG Fellow and director of the BCG Institute for Organization.

Peter Tollman is a senior partner in BCG's Boston office. He leads BCG's People & Organization practice in North America.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.

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