A new study has examined how top CEOs summarise the wisdom of their experiences into simple rules that act as powerful tools for managing and leading, providing a blueprint for those looking to provide a fresh and concise approach to leadership in the new year.
Jeff Bezos famously coined a proverb-like simple rule to guide the internal structure of Amazon, the famous two-pizza rule: “Every internal team must be small enough so that it can be fed with two pizzas”. He also used to season his annual letters to the shareholders with simple (but unnervingly precise) rules for decision-making: “Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow”. But how do people like Bezos create their simple rules?
A new paper, published in the Journal of Management Studies, aims to answer this question. The researchers interviewed 31 top CEOs, gathered from them a repository of 202 simple rules that summarised the lessons they had learned from experience, and then analysed how such rules were created and shaped.
While these rules may seem simple, they are in fact powerful tools for managing and leading. Some of their power yields exactly from their simplicity; one respondent said that the simple form helps him “be concise and inspirational,” while another pointed to the advantages of brevity: “The shorter the rule, the better it is accepted; if you explain for 10 minutes, you give opportunity for doubt.”
Simple rules are born in pairs after a triple insight from negative experiences
All the simple rules documented were the direct result of a negative experience, be that a big failure (e.g. a big-budget project closing half-way through), or just an ongoing bad situation (a constant stream of employees leaving for slightly bigger salaries). After a longer period of intense thinking, during which the problem kept running in the CEO’s mind, simple rules appeared, during “aha” moments or even “aha periods,” as the result of a triple insight: (1) what flawed assumption led to the problem? (2) what is true instead? and (3) what to do about it?
- What flawed assumption led to the problem? The first insight leads to the flawed assumption being clearly acknowledged and unlearned: “We thought that a client’s creditworthiness can be financially calculated, but during the crisis, usual client appraisal methods failed. I realised that you cannot assess a client from a distance, by looking at numbers”.
- What is true instead? The second insight leads to a new principle, that replaces the old belief and is encapsulated in a conceptual simple rule: “I realised that the person is more important than numbers.”
- What to do about it? The third insight helps translate the principle into daily behaviour, yielding the operative simple rule: “We don’t send offers; we meet people face to face.”
This triple insight gives birth not to one, but to a pair of simple rules, a conceptual one that outlines the newly learned principle, and an operative one that helps enact this principle in daily behaviour.
The fact that simple rules are born in pairs is a key finding of the research. Below are some examples of such pairs of simple rules:
| Conceptual simple rule | Operative simple rule |
| Don’t hire for skills, hire for attitude | I hire together with my team |
| Developers need to take ownership and responsibility for what they code | Every time someone writes code, they must sign “Coded by X”. |
| The person is more important than numbers | We don’t send offers; we meet people face to face |
| My roles of owner and CEO should not be mixed up | I ask myself weekly if I, as owner, would hire myself as manager |
| Don’t let clients’ peaks of enthusiasm pass | Email back immediately |
New year, new rules: How to use these findings to turbo-charge the start of the year
Despite considering them valuable, managers acknowledge, articulate, and share their simple rules less often than they wish. This led the researchers to propose a simple framework for managers to encode their own past experiences into simple rules and consists of writing down the lessons they learned in a format that maps the triple insight:
“Previously, I thought that (…),
but then I realised that (…).
Now, I/we (…).”
This simple framework can be used to acknowledge and articulate past lessons into an ever-growing personal portfolio of simple rules. Give it a try!
To arrange interviews with the researchers, contact Harry O'Neill at Insight Media: harry@insightm.co.uk