Rules Sets Create Systems; Systems Create Outcomes

Following on Tom Barnett's provocation about rule sets, I've been thinking about the purpose of rules in a business context.

At first blush, we think that rules are designed to exercise control over the actions of those subject to them. And, that's certainly true. But think about rules in games. While they're established to control behavior, at a deeper level they're designed to create a world, a place within which the game can be played. Rule sets enable/encourage some actions and disable/discourage others; rule sets make some things easy, other things hard; reward some behaviors, punish others. Rule sets, then, create systems.

So, if you were setting out to develop a set of rules, one of the keys would be to determine what kind of world you're trying to design; what "game" you're playing; what you'd want to enable and what you'd try to discourage; make easy, or punish. You'd want to create rules that produced lots of the kinds of outcomes you want your system to create.

Well, what kinds of outcomes do early 21st century businesses want to create? How about, profitable ones, for starters! OK, that's great, but "profit" is a "what," a result, and rules are about the "how," the process by which results are delivered. This can be a little disconcerting for some, because the word "process" has taken on a bureaucratic tinge; "just do it!" is much more appealing. But, we're trying to design rule sets, and rule sets govern process, so it's impossible to avoid the question. Maybe, the better question might be, "how do you want your system to behave in order to maximize the prospects of it producing profit? What must it be able to do well to deliver profit in your business?"

That's a question each business leader must answer for herself, given the particulars of her industry, market position, product mix, company history, and so on. But, given all that, are there are some system outcomes that are more likely than others to produce profit in the early 21st century economic context? Is there a modern "theory of the case" for designing profitable business systems? If so, what are the characteristics of the best such systems? How about these?

• Innovative
• Agile
• Effective
• Efficient
• Permeable
• Joyous

I'm sure there are more, but let's start with those.

So, the question becomes, what kind of rule sets will create systems characterized by the behavior in this list? How do you encourage people to be innovative, agile, effective, efficient, permeable, joyous?

Now we're getting somewhere...

Comments

[Jon Husband]

talking about rule sets .. there's quiet little one that's in place almost everywhere in organizations all around the world, that is so dry and boring that it garners almost no attention, adn its right atthe centre of things, really .. and it has changed very very little since the early 1950's.

If you believe that "language creates reality", then go take a look at the definitions in job evaluation methodologies. Talk about rule sets - there's only about four methodologies used in organizations around the world .. the Hay method, the Aiken Plan, the Watson Wyatt JFQ and the Towers Perrin plan. They're all more-or-less the same. The only different one, and it's not all that different,and in much less widespread use is Elliott jaques Time-Band Decision Making Method, and it still produces results relatively similar to the others.

Talk about a rule set !