Business Briefing: Strategy as Simple Rules

Keywords: Strategy, Simple Rules, Organizational Agility, Strategic Processes, Decision-Making
Source: Harvard Business Review
Link: Read the full article on HBR.org
Authors: Kathleen M. Eisenhardt and Donald N. Sull
Published: January 2001
Est. Read Time (Original): ~28 minutes

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The Core Idea

Eisenhardt and Sull argue that in fast-moving, unpredictable markets, traditional, complex business strategies are ineffective. Instead, successful companies achieve competitive advantage by using "strategy as simple rules." This approach involves forgoing a fixed strategic position in favor of selecting a few key processes (like product innovation or acquisitions) and creating a handful of simple, memorable rules to guide them. These rules provide just enough structure to allow managers to seize fleeting opportunities with speed and discipline, creating a strategy that is flexible yet focused.

Why It Matters for Business Today

This framework is the playbook for any company operating in today's high-velocity environment. It provides a clear alternative to rigid, multi-year strategic plans that are often obsolete before they are fully implemented.

• Enabling Decentralized Speed: Complex strategies require centralized oversight, which creates bottlenecks. Simple rules empower frontline managers to make fast, effective decisions that are aligned with the overall strategy without needing constant approval. It's a framework for disciplined improvisation.

• Focusing on the "How," Not Just the "What": Traditional strategy often focuses on a destination (e.g., "become the market leader"). Simple rules focus on the process of getting there (e.g., "acquire any company with fewer than 75 employees, 75% of whom are engineers"). This process-orientation is far more adaptable to changing market conditions.

• A Practical Toolkit for Agility: The article provides five concrete types of rules that leaders can implement:

  • How-to rules: Define how to execute a key process.

    Boundary rules: Define which opportunities to avoid.

  • Priority rules: Help rank competing opportunities.

  • Timing rules: Set the rhythm and pace for key activities.

  • Exit rules: Define when to abandon past initiatives.

The Strategic Question for Leaders

The authors state that when business becomes complicated, strategy should be simple. Looking at your own organization, which key strategic process would benefit most from replacing complex procedures with a handful of simple, easy-to-follow rules to increase speed and agility?

Share your perspective in the comments below.

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