SOURCE: The Boston Consulting Group

The Boston Consulting Group

March 18, 2014 09:01 ET

When Attempting to Cope With Business Complexity, Managers Make a Fundamental Mistake: They Fail to Find Out What Their People Actually Do

As Business Grows More Complex Every Year, Management "Best Practices" Generally Wind Up Hurting Performance by Making Things More Complicated; Managers Should Embrace "Smart Simplicity" to Understand and Change Employee Behavior, According to Six Simple Rules, a New Book From The Boston Consulting Group

BOSTON, MA--(Marketwired - Mar 18, 2014) - Managers make a fundamental mistake when trying to conquer complex business challenges: They don't find out what their people actually do. Instead, managers fall into abstraction, creating new departments, new management layers and new incentives that make their organizations even more complicated, cumbersome and unable to respond to the severe demands of an increasingly complex business environment.

Managers need to abandon traditional solutions and instead embrace "smart simplicity" -- a set of principles designed to make people more autonomous, cooperative and able to solve problems -- so that organizations become more agile, competitive and responsive.

That's the lesson of Six Simple Rules - How to Manage Complexity Without Getting Complicated, a forthcoming book by Boston Consulting Group (BCG) senior partners Yves Morieux and Peter Tollman. It will be published in April 2014 by the Harvard Business Review Press.

According to Morieux and Tollman, "smart simplicity" starts with the reality of how people behave.

"Managers may think they know what their people are doing, but in fact they probably don't," Mr. Morieux said. "Managers leap instinctively into abstract 'best practices' -- for example, trying to improve reliability by creating a Reliability Department. But that just creates new layers and procedures, and makes the organization more complicated. What they should do is to find out why employees are behaving in a way that makes products unreliable -- hiding problems, or not sharing resources, or focusing too much on other, conflicting goals such as cost or time-to-market."

"What matters in an organization is behavior," Mr. Tollman said. "Structure influences behavior, but doesn't directly determine it."

Putting "smart simplicity" into action involves three basic steps:

1. Find out what people do. "Performance is what it is because people do what they do," Mr. Morieux says. "Behaviors are performance in the making." Most performance problems can be traced to people's actions. Are they cooperating, finding resources and solving problems, or are they protecting their turf? Look at these issues before you adopt standard management "fixes."

2. Remember they have reasons for doing what they do.  "People are rational actors -- they will act to further their interests and achieve their goals," says Mr. Tollman. "So whatever your people are doing is a rational solution. It's a response to conditions that you have created -- but that you typically fail to understand."

3. Give them reasons for doing what you need. "If the things that they're doing harm performance, then you need to change the conditions so that it becomes rational for them to do what you need them to do," Mr. Tollman says. Changes might involve taking away resources so that people are forced to cooperate, giving people more power to make decisions, or rewarding people who help solve a problem, instead of handing out punishment because the problem happened.

"The problem that businesses face is not that their environment is complex, but rather that the way they respond leads to complicatedness," Mr. Morieux says. "The goal of 'smart simplicity' is to avoid such complicating responses and instead -- simply -- make it rational for your people to work together to solve your problems."

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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