Simple rules for a world of change: Reflections on “turning a process into a capability”

• Author: Christopher B. Bingham,Kathleen M. Eisenhardt,Nathan R. Furr
• Published date: 01 December 2020
• Date: 01 December 2020
• DOI: http://doi.org/10.1002/sej.1381

REFLECTIVE PIECE

Simple rules for a world of change: Reflections on

“turning a process into a capability”

Nathan R. Furr

1

| Kathleen M. Eisenhardt

2

| Christopher B. Bingham

3

1

INSEAD, Fontainebleau, France

2

Stanford University, Stanford, CA

3

The University of North Carolina, Chapel Hill, NC

When the Covid-19 pandemic brought the world to a standstill, it surfaced a deeper trend that has been building for

decades: an environment of increasing uncertainty, velocity, and complexity. Pandemics, shocks, crises, revolutions,

disruption, and change are not new. But while other shocks like the Spanish flu killed more people, they did not bring

the world to a standstill in the same way or create possibly enduring aftershocks like accelerating digital transforma-

tion, supply chain redesign, industry nationalization, and exacerbated inequality. In this world of change, govern-

ments, companies, and even ordinary citizens need high-performing capabilities to cope.

1|SIMPLE RULES THEN AND NOW

In the article “What Makes a Process a Capability”(2007), we argued that organizational processes are how work gets

done in organizations—whether its hiring, product development, internationalizing, and so forth. Moreover, heuristics

that we now term “simple rules”are at the heart of such high-performing capabilities. That is, they are what turns an

organizational processinto a capability. Simple rules simplyare “efficient yet flexible”rules of thumb. They providesome

guidance on what to do but leave room for adaptation to unique circumstances. What are the alternatives to simple

rules? One is “shoot from the hip”improvisation, which provides lots of flexibility but no guard rails from past experi-

ence. The other is crushing bureaucracy, characteristic of so many established firms, which offers too much guidance

with no room to adjust. So, simple rules are an “optimal point”that balances on an edge of chaos between too much

and too littlestructure (Eisenhardt, Furr,& Bingham, 2010). The article providesevidence that simplerules are central to

capabilities—capabilities that may cope withcrises like limiting the spread of Covid-19and orchestrating personal pro-

tective equipment (PPE)supply chains when it doesor with rapidly changingbusiness situationslike quickly ramping up

hiring atGoogle and parallelproduct experimentation at dronemaker DJI (Bremner & Eisenhardt, 2020).

What is often overlooked are the more subtle aspects of simple rules relevant in times of unexpected crisis and

extreme change. For example, just accumulating experience does not make for a capability. Simple rules do not just

“happen.”Rather, simple rules come from deliberately encoding experience and sharing (Bingham, Howell & Ott,

2019). But to be effective, lessons (good and bad) must be proactively embedded into simple rules (Bingham &

Haleblian, 2012). The contrasting cases of the Covid-19 outbreak in South Korea and the United States (both with

their first case on the same day) are telling. South Korea's efforts to act quickly in developing simple rules to manage

DOI: 10.1002/sej.1381

© 2020 Strategic Management Society

560 Strategic Entrepreneurship Journal. 2020;14:560–562.wileyonlinelibrary.com/journal/sej