Simple Rules

Simple Rules Plot Summary

Introduction

In an increasingly complex world, how can individuals and organizations make effective decisions without being overwhelmed by information overload? This question becomes more pressing as we face environments characterized by rapid change, uncertainty, and intricate interdependencies. The solution lies not in creating equally complex systems or frameworks, but rather in developing simple rules that can guide decision-making and action. Simple rules represent a powerful approach to managing complexity through focused guidelines that capture essential priorities while allowing flexibility in execution. They work by directing attention to what matters most, enabling quick decisions with limited information, and fostering coordinated action across people and groups. The theory demonstrates how a small set of tailored rules can help navigate unpredictable environments more effectively than detailed plans or rigid protocols. Throughout the following chapters, we'll explore how simple rules function across domains ranging from business strategy to personal life choices, examining their structure, application, and improvement over time.

Chapter 1: Why Simple Rules Work: Power Through Flexibility and Focus

Simple rules derive their effectiveness from striking a balance between structure and flexibility. Unlike comprehensive regulations or detailed playbooks that attempt to address every possible scenario, simple rules provide just enough guidance to focus attention and decision-making without restricting adaptability. They establish guardrails rather than railroad tracks, allowing people to exercise judgment within boundaries while maintaining consistency across decisions or actions. The power of simple rules lies in their ability to handle complexity without requiring complex solutions. When facing intricate challenges—whether in business, medicine, or daily life—people often resort to elaborate frameworks that attempt to account for every variable. However, research shows that in many situations, particularly those characterized by uncertainty and time constraints, simple approaches often outperform complicated ones. This occurs because simple rules filter out noise and focus on the critical variables that truly influence outcomes, avoiding the trap of "overfitting" that plagues more detailed models. Simple rules work particularly well in three situations. First, they excel when flexibility matters more than consistency, enabling organizations and individuals to seize fleeting opportunities while maintaining coherence. Second, they improve decision quality by focusing attention on what matters most, especially when information is limited and time is short. Studies across domains from medicine to finance demonstrate that simple heuristics can match or exceed the accuracy of sophisticated algorithms while requiring less data and computation. The third advantage of simple rules appears in collective settings, where they allow individuals to coordinate their activities without centralized control. Consider the mesmerizing movements of starling flocks, which emerge from birds following just three rules: avoid collisions, fly in the same direction as neighbors, and stay close to them. Similar principles apply to human groups, from improvisation comedy troupes to open-source software communities, where simple coordination rules enable complex collective behaviors without micromanagement. This phenomenon explains how organizations like Wikipedia can produce sophisticated outcomes through distributed efforts guided by shared principles. In everyday application, effective simple rules share four characteristics: they remain limited in number (typically between two and five), they are tailored to the specific situation and people using them, they address a well-defined activity or decision rather than trying to cover everything, and they provide concrete guidance while leaving room for interpretation and judgment. These features make simple rules both memorable enough to influence behavior and flexible enough to adapt to changing circumstances.

Chapter 2: Making Better Decisions: Boundary, Prioritizing and Stopping Rules

Decision rules represent the first major category of simple rules, focusing on what to do or not do in specific situations. These rules come in three distinct varieties, each addressing different decision challenges: boundary rules determine whether to pursue opportunities, prioritizing rules rank competing options, and stopping rules indicate when to reverse course or cease an activity. Together, they provide a framework for making better choices without requiring exhaustive analysis. Boundary rules establish clear criteria for deciding which opportunities to pursue and which to reject. They function as filters, creating a binary "yes or no" mechanism that narrows down alternatives quickly. Emergency room physicians use boundary rules to determine whether a patient is having a stroke, burglars employ them to identify unoccupied houses, and organizations like DARPA use them to select which research projects to fund. Effective boundary rules concentrate on a few critical factors strongly correlated with success while ignoring peripheral considerations. For example, a Silicon Valley technology company might use the boundary rule "only hire candidates referred by current employees" to screen potential recruits efficiently. Prioritizing rules address situations where multiple opportunities pass the boundary criteria, but resources limit how many can be pursued. These rules establish a ranking system to allocate scarce time, attention, or capital to the most promising alternatives. América Latina Logística, a Brazilian railway company, once faced severe infrastructure deterioration but had limited funds for repairs. Rather than attempting complex financial analyses of hundreds of proposed projects, management developed simple prioritizing rules like "favor projects that remove bottlenecks to revenue growth" and "prioritize initiatives with immediate benefits over long-term payoffs." These guidelines allowed the company to make consistent decisions while focusing investments where they would have the greatest impact. Stopping rules, the third type of decision rule, provide guidance on when to reverse course or cease an activity. They combat our natural tendency to persist with failing endeavors due to sunk costs or emotional attachment. Gerald Loeb, a Wall Street investor who successfully navigated the 1929 crash, famously advised, "If an investment loses 10 percent of its initial value, sell it." Similarly, mountain climbers follow the rule "turn back by 2:00 PM regardless of proximity to the summit" to avoid dangerous nighttime descents. Research comparing French and American eating habits revealed that French diners use internal stopping rules ("stop when I feel full"), while Americans often rely on external cues ("stop when the plate is empty" or "when the TV show ends"), contributing to different outcomes in weight management. While these decision rules appear straightforward, they represent distilled wisdom that can significantly improve choices across domains. Their simplicity makes them easy to remember and apply, especially under pressure or when information is limited. Most importantly, they acknowledge the reality that perfect optimization is often impossible in complex environments, offering instead practical guidelines that balance analytical rigor with real-world constraints.

Chapter 3: Doing Things Better: How-to, Coordination and Timing Rules

Process rules, the second major category of simple rules, focus on improving how activities are performed rather than what decisions are made. These rules guide execution across three dimensions: how-to rules structure basic task performance, coordination rules facilitate interaction among multiple actors, and timing rules establish when activities should occur. Unlike decision rules, process rules emphasize action rather than choice. How-to rules provide guidelines for executing specific tasks effectively. They establish minimal structure while preserving flexibility to adapt to circumstances. The British Broadcasting Corporation pioneered this approach in sports commentary, developing six rules that included "set the scene," "describe the action," and "regularly give the score." These guidelines ensured consistent quality while allowing individual announcers to develop their distinctive styles. Similarly, creative organizations like the White Stripes crafted how-to rules to accelerate their artistic process, including "no blues," "no guitar solos," and "no covers." Contrary to intuition, such constraints often enhance creativity by eliminating paralysis from too many options and focusing energy within productive boundaries. Coordination rules guide interactions when multiple participants must work together without centralized control. These rules enable collective behavior to emerge from individual actions, similar to how starlings create mesmerizing flight patterns by following three simple rules about position relative to neighboring birds. Human organizations utilize coordination rules to achieve complex outcomes without micromanagement. Improvisation comedy troupes, for instance, follow principles like "yes, and..." (build on others' contributions) and "make your scene partners look good" to create coherent performances without scripts. In military contexts, Napoleon's instruction to "march toward the sound of gunfire" allowed units to coordinate their movements across chaotic battlefields without detailed orders or communication. Timing rules address when actions should occur, establishing rhythms, sequences, and deadlines that shape temporal patterns. Some timing rules are event-based, triggering actions in response to specific conditions, while others follow clock or calendar schedules. Insomniacs improve sleep quality with timing rules like "get up at the same time every morning" and "only go to bed when feeling sleepy," which reset disrupted sleep patterns. Organizations also benefit from timing rules: Pixar Animation Studios follows the principle of releasing one film annually at Thanksgiving, creating a production rhythm that ensures continuous creative output while maximizing holiday audiences. Investment strategies often incorporate timing rules as well, like Nathan Rothschild's contrarian advice to "buy when there is blood in the streets," which guides investors to purchase assets during market panics when prices are artificially depressed. The effectiveness of process rules stems from their ability to provide just enough structure to guide action without constraining adaptation to changing circumstances. They work best in situations requiring flexibility, creativity, and coordinated effort across individuals or groups. By establishing common understanding about how activities should unfold, these rules reduce the cognitive load of routine decisions while preserving bandwidth for addressing unique challenges that require judgment and innovation.

Chapter 4: Creating Your Own Rules: Sources and Development Methods

Simple rules don't materialize spontaneously—they emerge through various pathways and development processes. Understanding these origins helps individuals and organizations craft effective rules tailored to their specific challenges rather than blindly adopting generic guidelines. Four primary sources of simple rules include evolutionary processes, personal experience, learning from others, and formal development methods. Many simple rules evolve organically through trial and error over time. Just as butterflies developed "hilltopping" behavior to find mates by gradually refining their flying patterns across generations, human communities often generate unwritten rules through repeated interactions. The norms governing standup comedy exemplify this process—comedians progressively developed principles like "don't steal jokes" and "the person who created the premise owns the joke" without central coordination. These evolved rules effectively protect intellectual property in an industry where formal copyright offers little protection. While naturally evolved rules benefit from deep relevance to their context, they can become so implicit that people follow them without understanding why, making adaptation difficult when circumstances change. Personal experience provides another rich source of simple rules. People naturally distill lessons from their successes and failures, converting tacit knowledge into explicit guidelines. Tina Fey, for instance, extracted management principles from her experience leading Saturday Night Live's writing team, including "when hiring, mix Harvard nerds with Chicago improvisers" and "never tell a crazy person he's crazy." Similarly, individuals develop personal values-based rules that reflect their priorities, such as parenting guidelines or ethical frameworks. The advantage of experience-based rules lies in their authenticity and alignment with the user's values, increasing the likelihood they'll be followed consistently. Learning from others—through advice, observation, or analogy—offers a third pathway to developing simple rules. This approach leverages the experience of those who have already navigated similar terrain. Engineers designing Tokyo's commuter rail system, for example, studied slime mold's efficient network-building behavior to inform their design principles. While this biological analogy might seem strange, it allowed designers to incorporate millions of years of evolutionary optimization into their planning process. The challenge with borrowed rules lies in distinguishing superficial similarities from meaningful patterns—what works in one context may fail in another without careful adaptation. Formal development methods provide structured approaches to creating simple rules when intuition or evolution proves insufficient. Scientific research can be systematically distilled into actionable guidelines, as when medical researchers analyzed thousands of studies to develop simple diagnostic rules for identifying serious infections in children. Similarly, negotiation among stakeholders with different perspectives can produce rules acceptable to all parties, as occurred when wildlife authorities developed regulations for whale watching that balanced ecological protection with tourism interests. These formal approaches typically follow a three-step process: clarify objectives, identify bottlenecks where rules would have the greatest impact, and collaboratively craft guidelines tailored to the specific situation. The most effective simple rules often combine elements from multiple sources, incorporating evolutionary wisdom, personal experience, borrowed insights, and structured development. Regardless of origin, successful rules remain focused on critical activities, limited in number, tailored to their users, and specific enough to guide action while flexible enough to accommodate judgment. This balance ensures rules remain both useful and adaptable as circumstances evolve.

Chapter 5: Applying Simple Rules: Strategy for Organizations and Individuals

Simple rules find powerful application in both organizational strategy and personal development, providing focused guidance while preserving adaptability in complex environments. For organizations, simple rules translate strategic intent into everyday actions; for individuals, they convert aspirations into consistent behaviors that produce desired outcomes over time. In organizational contexts, simple rules bridge the gap between high-level strategic objectives and day-to-day decision making. Traditional approaches often separate strategy formulation from implementation, resulting in disconnect between executive vision and frontline execution. Simple rules address this problem by embedding strategic priorities into guidelines that shape critical activities. The process begins by identifying what will "move the needles" of economic value—increasing customers' willingness to pay or reducing costs in sustainable ways. Next, leaders pinpoint bottlenecks where focused guidance would have the greatest impact, such as customer selection, product development, or market entry. Finally, they craft concise rules tailored to these bottlenecks that provide sufficient structure while preserving flexibility. The effectiveness of this approach appears across diverse organizations. A financial services company struggling with low win rates on proposals developed simple boundary rules to determine which opportunities warranted investment of time and resources. These rules—addressing factors like relationship strength and technical fit—increased their success rate from 10 to 50 percent within a year. Similarly, a dental laboratory created prioritizing rules to identify the most promising potential customers, boosting sales by 42 percent despite a declining market. The power of simple rules lies in their ability to guide consistent action while remaining adaptable to changing circumstances and local conditions. For individuals, simple rules offer a framework for personal growth and behavior change. The development process parallels organizational application: identify personal objectives that would most improve well-being, pinpoint specific activities or decisions that impede progress, and develop tailored rules to address these bottlenecks. A person struggling with depression, for example, might identify negative thought patterns as a critical bottleneck and develop timing rules for when to apply cognitive behavioral techniques. Similarly, someone seeking more meaningful relationships might create boundary rules for evaluating potential dating partners or coordination rules for balancing personal and professional commitments. Effective personal rules often address activities where willpower fails or complexity overwhelms. Dieters might establish stopping rules like "only eat from a plate, never from packages" to manage mindless snacking, while investors might follow boundary rules like "never invest more than 5% of assets in a single stock" to maintain diversification despite emotional impulses. The key lies in focusing on specific bottlenecks rather than attempting to regulate every aspect of life, which quickly becomes overwhelming and unsustainable. Whether in organizations or personal contexts, simple rules work by establishing a "minimum effective dose" of structure—enough guidance to ensure consistency without stifling adaptation or creativity. They acknowledge the reality that neither rigid plans nor complete freedom produce optimal results in complex environments. Instead, simple rules create what scholars call "semi-structures" that enable purposeful improvisation: consistent enough to maintain direction but flexible enough to seize unexpected opportunities and navigate changing circumstances.

Chapter 6: Improving and Breaking Rules: Learning and Adapting Over Time

Simple rules aren't static prescriptions but rather evolving guidelines that improve through experience and occasionally require fundamental reinvention. Understanding how rules develop over time—and when they should be broken—represents the final dimension of mastering this approach to complexity. Rules typically improve through predictable patterns of refinement. Initial rules often reflect obvious, convenient, or superficial considerations, but with experience they become more strategic and abstract. Shannon Turley, Stanford University's acclaimed football strength coach, began his career with conventional rules focused on weight-room records and maximum lifting. Over time, he developed more sophisticated guidelines emphasizing injury prevention and functional performance that better served athletes' actual needs. Similarly, research on international business expansion shows that companies initially use simplistic rules like "enter familiar markets first" before developing more strategic principles based on market size or growth potential. This improvement process accelerates through specific learning approaches. Reflection represents the most fundamental method—regularly reviewing outcomes and explicitly updating rules based on experience. Entrepreneurs who held weekly meetings to discuss their international expansion experiences improved their rules more rapidly than those who didn't engage in structured reflection. Varied but related experiences provide another powerful learning catalyst. A study comparing strategies for improving performance found that alternating between related activities (like different board games requiring similar skills) produced faster learning than either specialized practice or completely unrelated activities. Finally, combining multiple learning approaches—as when Airbnb's founders simultaneously gathered customer feedback, received expert coaching, and conducted systematic experiments—creates the most potent environment for rule improvement. Occasionally, however, incremental improvement proves insufficient when fundamental disruptions render existing rules obsolete. These situations demand breaking rather than refining rules. The Oakland Athletics baseball team, for instance, developed innovative "moneyball" principles that valued on-base percentage over traditional statistics. When competitors copied these rules, the team had to reinvent its approach, developing new principles focused on exploiting player specialization through platoons. Similarly, individuals facing major life transitions—like health diagnoses or career changes—often need to replace rather than refine their existing rules. Breaking rules effectively requires three elements: recognizing when fundamental change is necessary, developing deep understanding of the new context, and quickly implementing comprehensive rather than gradual changes. When California experienced severe drought, gardeners who most successfully adapted didn't merely reduce watering but completely reimagined their approach based on Mediterranean climate principles. They recognized that their region naturally experienced wet winters and dry summers—the opposite of temperate climates—and developed new rules for plant selection, irrigation timing, and maintenance that embraced rather than fought these conditions. The ability to distinguish between situations requiring incremental improvement versus fundamental reinvention represents the highest level of mastery in working with simple rules. This discernment allows individuals and organizations to maintain stability through gradual refinement during periods of relative continuity while pivoting decisively when disruptive changes render existing approaches ineffective. By viewing rules as dynamic rather than static—tools to be sharpened or replaced as circumstances demand—we transform them from rigid constraints into adaptable instruments for navigating complexity.

Summary

At its core, the theory of simple rules offers a powerful paradigm: complexity doesn't require complicated solutions. A handful of well-crafted guidelines—focused on critical activities, tailored to specific contexts, and balancing structure with flexibility—can enable better decisions and actions than elaborate frameworks or complete freedom. This approach works because it directs attention to what matters most while preserving adaptability to changing circumstances. The significance of this perspective extends beyond immediate practical applications. In a world increasingly characterized by complexity, uncertainty, and rapid change, simple rules provide a sustainable approach to navigation without overwhelm. They offer an alternative to both rigid planning that breaks down in unpredictable environments and chaotic reactivity that sacrifices coherence. For individuals, organizations, and societies facing unprecedented challenges—from technological disruption to climate change—simple rules represent not just a tactical approach but a philosophical stance: that human judgment, guided by focused principles and liberated from excessive constraints, remains our most powerful tool for thriving amid complexity.

About Author

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Donald Sull

Donald Sull is a Senior Lecturer at the MIT Sloan School of Management. He is a global authority on managing in turbulent markets, and directs a week-long course on effectively executing strategy in volatile markets. He has been identified as a leading management thinker by The Economist, the Financial Times, and Fortune which named him among the ten new management gurus to know. The Economist listed his theory of active inertia among the ideas that shaped business management over the past century.Sull has published five books, including The Upside of Turbulence (2009). His book Made in China was namedone of the top eight business books of 2005 by the Financial Times and his book Why Good Companies Go Bad was a finalist for the Academy of Management’s Outstanding Management Book Award. Sull has also written more than 100 book chapters, case studies, and articles, including several best-selling Harvard Business Review articles.As a consultant and management educator, Sull has worked with companies including Mars, Oracle, PIMCO, Royal Bank of Canada, Standard Chartered Bank, Emirates Airline, Baker & McKenzie, Burberry, and Schneider Electric. He speaks regularly at leading management conferences, such as Microsoft’s CEO Summit and the McKinsey Strategy Summit.Prior to academia, he worked as a consultant with McKinsey & Company, and a management-investor with the leveraged buyout firm Clayton & Dubilier on the Uniroyal-Goodrich Tire Company deal. Sull received his AB, MBA, and doctorate from Harvard University, where he taught entrepreneurship at the Harvard Business School before rejoining the London Business School faculty as a professor of management practice in strategy and entrepreneurship. Sull has won teaching awards at both London Business School and Harvard University. He remains active in private equity as an investor and advisor to start-up companies.

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