5 Rational Heuristics: The "Simple Rules" That Leaders Use to Simplify Complexity | part of Productive Tensions: How Every Leader Can Tackle Innovation's Toughest Trade-Offs | MIT Press books | IEEE Xplore

5 Rational Heuristics: The "Simple Rules" That Leaders Use to Simplify Complexity

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Chapter Abstract:

Complexity, in the technical sense of the term, exists whenever a system has multiple interdependent parts. A two-person startup is less complex than a ten-person team an...Show More

Chapter Abstract:

Complexity, in the technical sense of the term, exists whenever a system has multiple interdependent parts. A two-person startup is less complex than a ten-person team and a ten-person team is less complex than a two hundred-person organization. As organizations evolve, and complexity inevitably grows, leaders adopt policies and procedures to impose order and increase efficiency. The problem is that, over time, the accumulation of such structure further increases complexity. Think of the compliance departments of large firms in regulated industries or the layers of policies and procedures that a typical university administrator must understand and navigate. Increased complexity stemming from the natural accretion of structure also makes organizations less flexible and more bureaucratic—a distressingly common state of affairs. Indeed, nearly two-thirds of respondents to a survey by Harvard Business Review reported that their organizations had become more bureaucratic in recent years.1 To counteract drift toward increased bureaucracy—a particularly serious problem for organizations in fast-moving, uncertain environments that require agility and adaptation—savvy leaders employ heuristics. Heuristics are simple rules of thumb that individuals can rely on, in preference to comprehensive information and analysis, to streamline decision-making. We find that these heuristics are deliberately created by organizational members based on experience and then used as condensed statements of strategy.
Page(s): 57 - 69
Copyright Year: 2022
Electronic ISBN:9780262369909