6 Rules for Solving Complexity in Small Businesses

Two years ago I was experiencing a common issue most small businesses face.

My business had become incredibly complex as it had grown.

As the owner, I didn’t know, what I didn’t know. I was approaching a bigger business the same way I approached a small business. Making mistakes and learning the hard way.

I didn’t have a group of people around me who were a stones throw ahead of me on the journey to take advice from. So I turned to books and believe it of not, Youtube, to find a starting point.

One of the most valuable pieces of information I found was a TED talk by Yves Morieux about complexity in organisations.

It immediately changed how I thought and behaved. And today I want to share my notes with you.

His rules for managing complexity are built on two pillars:

Autonomy 

Cooperation

Individual autonomy harnesses people’s flexibility and agility. 

Cooperation brings alignment so everyone’s efforts multiply in the most effective way for the group.

There are two points underpinning the book that are the basis of knowledge about human behaviour:

Human behaviour is strategic — there are always ‘good’ reasons for how people behave and you just have to understand them. 

Formal rules and procedures don’t have an effect on people’s behaviour. It’s the ways people use these rules and the behaviour it drives. 

Let’s dive into his 6 rules:

1. Understand What Your Employees Actually Do. 

“Most management approaches pay less attention to the day-to-day reality of how people behave and why, and instead add unnecessary functions and procedures.” - Yves Morieux.

The central insight is that people act rationally, even if their actions create problems for the organisation. They are trying to look after their own interests. 

He says we must understand that, and then change the conditions inside the organisation so their interests align with what you need them to do.

So, I started to interview my team to find out what was driving them. It helped me to link our goals to behaviours that produce a good outcome for them and the business.

2. Find Your Fighters.

Not all conflict in an organisation is bad. It can be a sign that people are actually doing the hard work of cooperating. Sometimes this can be difficult and create tension and resentment.

But the people who are resented might be the glue that holds cooperation together.

Yves calls them ‘Integrators’. I love the word Integrator instead of Managers!

They’re often not in positions of formal power and instead sit at the intersection of two groups. They are motivated by outcomes of cooperation and hold the power to orchestrate collaboration.

It’s easy to spot Integrators in a company because they force others to make hard choices making them both loved and hated. These strong feelings are obvious. 

Give Integrators the power, incentives and authority to succeed.

3. Give More People More Power.

The key to building high-performance teams inside companies is combining cooperation with autonomy.

Easier said than done. But growing businesses make it hard for themselves by following a standard approach. As the business gets more complex, they create new layers, processes and systems.

These added layers come at the cost of people’s autonomy and result in huge inefficiencies. And this is exactly what happened to us mid-2021.

I continue to learn this lesson:

You must give people enough power to take the risk of interpreting rules, and use their judgment and intelligence.

More recently, we’ve pushed hard to encourage our team to solve their own problems by forcing cooperation. We debrief daily, and openly share mistakes so others can learn from them.

4. Don’t Punish Failure. Punish The Failure to Cooperate.

My biggest take on this is, if people are afraid to fail, they will hide problems from you and your peers.

So reward people who surface problems, and punish those who don’t come together to help solve them.

5. Increase Reciprocity.

One advantage we have as small business owners is having fewer resources.

It means people have no choice but to rely on each other which helps to foster cooperation.

Yves puts is like this: "Think of a household with several people living in it. If those people own multiple televisions, there is no need for them to cooperate about what to watch. But if you take away all the televisions except one, they will have to cooperate. Do they want to watch baseball or Shakespeare?”

As we grew we gave each team their other equipment which increased efficienciy but decreased cooperation. This meant we had to build it in somewhere else.

6. Make Sure Your Team Eat Their Own Cooking.

People work better when they have to live with the consequences of their actions.

A car company’s products were famously hard to repair. Then the company sent its Engineers to work in repairs part of the company. Confronted with the repair problems themselves, they quickly found solutions to make cars easier to fix.

Small businesses don't have the budget for this so instead look to build a team of all-rounders. People who can move throughout your company doing most functions at a high level.

They could also turn out to be your Integrators.

That's it for today!

I really hope it helps you think about simplifying your business as it grows.