“The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”
Buffett has said this particular truth in a number of different ways, but it always has the same impact on me.
Concerning complexity though, have you ever asked yourself why complexity is nowhere near as effective as simple behavior?
The major reason is because the more complex something gets, the less room for error there is. Very few people or companies can run something of such complexity. Not only is it difficult to find those that could understand it, but if something goes wrong, it's even harder to find somebody that can fix it.
When I say "it," I'm not just talking about machinery or complex software, I'm really talking about the various processes that workers will interact with throughout the company.
Look at some of the company manuals that are offered up to try to cover every conceivable circumstance. Nobody really knows what those rules cover. It would be impossible. That's why smart managers have been getting rid of them and replacing them with simple one or two page summaries.
If we hire good people we don't need all that complexity wrapped around them to basically cover our butts when something goes wrong.
And there's one other thing about rules, the more there are, the more people will figure out ways to get around them. What that does is increase the complexity even more as the game of trying to outwit each other and seeing what can be gotten away with begins.
As Buffett says: The more simple something is, the more effective. In the end, effective is what really counts. We need to keep it simple. Buffett has been running Berkshire Hathaway (BRK-A) for years.
Other Buffett Resources:
Warren Buffett: The trouble with being a legend
Warren Buffett: 'I told you so'
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