study of life
HBR Shape Strategy With Simple Rules, Not Complex Frameworks by Donald Sull and Kathleen M. Eisenhardt | 10:00 AM September 27, 2012
Successful companies shape their high-level strategies by relying not on complicated frameworks but on simple rules of thumb. Managers in these organizations translate corporate objectives into a few straightforward guidelines that help employees make on-the-spot decisions and adapt to constantly shifting environments, while keeping the big picture in mind.
Take the story of América Latina Logística (ALL). It illustrates how simple rules can help companies shape strategy in an uncertain environment. It also demonstrates that this approach can be useful in almost any setting, even a dilapidated freight railway in southern Brazil.
In the late 1990s the government of Brazil privatized the country's freight lines. After decades of neglect, the nation's freight-rail infrastructure was run-down: Half the bridges needed repair; a fifth were on the verge of collapse. Twenty steam locomotives that were decades out-of-date were still in use. Rail accounted for only 20% of long-haul shipments in Brazil, compared with 80% in most countries.
ALL was spun off from the Brazilian railway authority in 1997 to manage one of the country's eight freight lines. Its new management team took over an organization that was bureaucratic, overstaffed, and bleeding cash. Transport on the line was so unreliable that crops in the areas it served were routinely left to rot in the fields during the harvest season. Middle managers were confused about what to do, and many pushed their local agendas at the expense of the company's overall best interests.
The team decided to adopt a simple-rules approach to the work ahead. This helped ALL's executives do four things: achieve alignment, adapt to local circumstances, foster coordination across units, and make better decisions.
Aligning activities with corporate objectives. To set a clear direction, the senior
Successful companies shape their high-level strategies by relying not on complicated frameworks but on simple rules of thumb. Managers in these organizations translate corporate objectives into a few straightforward guidelines that help employees make on-the-spot decisions and adapt to constantly shifting environments, while keeping the big picture in mind.
Take the story of América Latina Logística (ALL). It illustrates how simple rules can help companies shape strategy in an uncertain environment. It also demonstrates that this approach can be useful in almost any setting, even a dilapidated freight railway in southern Brazil.
In the late 1990s the government of Brazil privatized the country's freight lines. After decades of neglect, the nation's freight-rail infrastructure was run-down: Half the bridges needed repair; a fifth were on the verge of collapse. Twenty steam locomotives that were decades out-of-date were still in use. Rail accounted for only 20% of long-haul shipments in Brazil, compared with 80% in most countries.
ALL was spun off from the Brazilian railway authority in 1997 to manage one of the country's eight freight lines. Its new management team took over an organization that was bureaucratic, overstaffed, and bleeding cash. Transport on the line was so unreliable that crops in the areas it served were routinely left to rot in the fields during the harvest season. Middle managers were confused about what to do, and many pushed their local agendas at the expense of the company's overall best interests.
The team decided to adopt a simple-rules approach to the work ahead. This helped ALL's executives do four things: achieve alignment, adapt to local circumstances, foster coordination across units, and make better decisions.
Aligning activities with corporate objectives. To set a clear direction, the senior