Semler: Rules vs Innovation
Another great section from the book Maverick by Ricardo Semler I've been reading:
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Without rules all answers are suggested by common sense. No, I can't define what common sense is, but I know it when I hear it. Some of our people stay in four-star hotels and others, sometimes with much higher salaries, choose lesser digs. Some people spend $200 a day on meals; others get by on half as much. The point is if we can't trust a manager to use good judgment about such things, we sure as hell shouldn't be sending him off to do business in our name.
A company makes, sells, bills, and, God willing, collects. It doesn't need to know if the taxi ride being claimed by a manager was for business. Or if another manager couldn't have stayed in a hotel with three rather than four stars. With few exceptions, rules and regulations only serve to:
1. Divert attention from a company's objectives.
2. Provide a false sense of security for executives.
3. Create work for bean counters.
4. Teach men to stone dinosaurs and start fires with sticks.
The desire for rules and the need for innovation are, I believe, incompatible. (Remember, Order or Progress.) Rules freeze companies inside a glacier; innovation lets them ride sleighs over it.
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While this may seem counter-intuitive to some, I've often seen this principle in action. For example, when I was working for a startup that was acquired by a multi-billion dollar software company everything seemed to slow down by a factor of about 10X after the acquisition. All of the sudden there were all these rules that needed to be followed - many of them rather pointless. At the startup, we always had free drinks available. The acquiring company decided that we now needed to pay for the drinks - a quarter each. So programmers that were making about $50 an hour were now asked to go find quarters throughout the day for drinks. That means, a programmer making almost $1 per minute was spending several minutes every day worrying about quarters for drinks. I would estimate about $10 lost per day per programmer just to make some bean counter at headquarters feel good about 'saving' money. That is just one of many examples where the company decided on Order over Progress.
Be careful whenever you have the idea of creating a 'money saving' rule, because if you don't think through the non-obvious costs, you could lose a lot more than what it seems you're saving! Semco and Google are great examples of focusing on the real business priorities.
15 Apr 2008 Matt Jaynes