I want to start out with a story.

This is a story about a sergeant in the Army, Edwin Montoya,

and he was stationed in Iraq.

It was just before Christmastime.

And he was in the mess line getting some dessert, in fact it was cheesecake.

And as he is sort of standing there grabbing his cheesecake about to start eating,

there's a major explosion, a huge explosion.

A terrorist has set himself off and blown up the mess hall.

And Sergeant Montoya dives under a table.

When the noise deadens he comes out, takes a look, and he's okay.

But he's a medic, and around him is a carnage of people.

All sorts of people, some not so badly injured, others very badly injured.

And as a medic, his job is to think about who am I going to treat,

and who am I going to really not be able to help

or who can make it on their own at least for a little while?

And so he's faced with that enormous complexity and enormous uncertainty,

and what does he do?

And what he does is he does what a number of people do

ranging from that grandmotherly Janet Yellen to crickets to Mark Zuckerberg.

He faces complexity with simplicity, and in particular simple rules.

And Sergeant Montoya invokes the simple rules of medical triage,

in his case Janet Yellen facing some of the complexity of the federal reserve,

the US economy, the global economy.

Actually has some relatively simple rules around interest rates that revolve around a number for inflation.

It's got to be over 2% and a number for unemployment,

it's got to be below 5% before she'll raise rates.

Mark Zuckerberg is also facing some complexity,

has some simple rules especially around hiring.

And crickets, you're probably wondering why crickets are in the picture.

Well, if you're a cricket, you've got a really short life span and

you've got a really small brain, you have to keep it simple if you're a cricket.

什麼是簡單的規則？So they're definitely into simple rules.

What is a simple rule?

Simple rules are shortcut strategies that save time and

effort by focusing your attention and simplifying how we think.

So basically a simple rule is a rule of thumb.

Maybe get a little more granular though because you might have already

thought of that.

This is 1.0 on simple rules.

First of all simple rules are simple.

That means of all things, simple rules are two to five rules.

Not a lot of rules, two to five, something you could remember.

Second thing is simple rules depend on the person and situation.

So the rules that you have might not necessarily be my rules.

And then thirdly, simple rules relate to a specific activity.

There are not platitudes like, be nice to your mother, or

the customer comes first kind of platitudes.

Let me give you a few more specifics.

Some rules are simple.

So the three food rules of Michael Pollan.

Many of you know or have probably read Michael Pollan's book.

Michael Pollan is the Is the well-known University of California Berkeley

professor who wrote the Botany of Desire, The Omnivore's Dilemma, books like that.

On many refrigerators around the world, people have posted

Michael Pollan's rules for eating, and his rules are pretty simple.

Eat real food that your grandmother would recognize.

So if your grandmother wouldn't know what it is, don't eat it.

Small portions and eat mostly plants.

Now, if you think about within that, that's real easy to remember, and

yet you can eat cantaloupe, kale, blueberries, fish and

meat occasionally, lots and lots of plants, but not too much.

So fairly simple, yet it doesn't really restrict you all that much.

Second idea, several rules depend on the person's situation.

The skinny middle aged guy is Michael Pollan.

He has one set of rules.

The other people are Stanford football players.

They actually have their own eating rules.

Stanford football team's eating rules are, eat breakfast because they're students,

and if you recall your student days you stay up late, and get up late and

often skip your breakfast.

Eat your breakfast is the first rule.

The second rule is stay hydrated,

because these are active young guys and they tend to get dehydrated and

that's not good for your body, so they're supposed to drink water.

And the third rule of the Stanford football team for eating is,

eat as much as you want, as long as you can pick it, pluck it or kill it.

If you think about that and it's got some similarity to Michael Pollan right?

Your grandmother would recognize anything you can pick, pluck and kill so

basically an emphasis on non-processed foods, but

beyond that, the rules are pretty different.

Stanford football players are not into portion control.

They're into eating as much as you want.

Stanford football players are not into mostly plants.

They eat a lot of protein and they need a lot of protein.

They're growing people who need to build muscle.

So the point is, simple rules depend on the situation, they depend on the person.

Giving that we're sitting here in the business school,

let me give you more of a business example.

This is a comparison between Indiegogo and

Kickstarter, the two crowdfunding platforms.

Indiegogo has a set of rules around which kind of projects can be on Indiegogo.

The rule is pretty simple, it's anything goes as long as it's legal.

So, you can fund your root canal, you can fund your trip to Europe, you can

fund your business, your movie, your Jamaican bobsled team, whatever you like.

Or you at least attempt to fund it on Indiegogo, as long as it's legal.

By contrast, Kickstarter has many more rules.

In particular,

Kickstarter has some rules around that you have to fit in certain project categories,

typically around the arts, although they do have some business categories.

But you have to fit into about 13 categories, and Kickstarter over

the years has kicked out about 25% of the projects that are submitted to it.

And it's also curated by real people who are looking for the merit of the project.

So what's the point here?

The point here is the same activity, picking Crowdfunding projects,

different rules.

Why the different rules?

I think it partly reflects the background of the founders.

Indiegogo is founded by a of people, actually Berkley people

and it's an egalitarian philosophy.

Essentially the idea is, who are we to tell who can be on the internet?

The internet's for everybody and we're not going to be gatekeepers.

Everybody deserves the opportunity to grab a rich uncle off the internet.

In contrast, Kickstarter is coming out of a background out of the arts.

In fact one of the founders explicitly was thinking about Kickstarter

as a way to publicly fund the arts.

The arts are as a curation model and

they were simply picking up on the curation model of the arts.

So same process, different rules, different people.

Finally, simple rules refer to a specific activity that you do repeatedly.

So, for example, choosing foods.

You choose foods everyday, specific activity.

If you're Kickstarter or Indiegogo you pick projects everyday.

So these are repeated things that you do everyday, focused activities.

What are they not?

What they're not, is for example, they're not simple rules for who to marry.

One assumes that you only marry once or twice or maybe three times.

>> [LAUGH] >> But, it's not a repeated activity.

[LAUGH] So, there's no simple rules for eating.

As I said before, simple rules are not about some

massive opportunity or platitude.

So, for example, there aren't civil rules for curing world hunger,

that's too complex a project.

So, it's focused on particular activities that you do often.

Okay, that's the beginning of the story, simple rules 1.0.

Simple rules 2.0 is telling you a little bit about types of rules.

It turns out that there are different kinds of rules.

And that's relevant for a couple of reasons.

One is, some rules are easier to learn than other rules.

So some are easy, some are hard to learn.

Secondly, somewhat ironically,

harder learn to rules tend to be more high performing, lead to higher performance.

So learning the harder to learn rules is more related to high performance.

And the final reason it's important to learn the different kinds of rules is

because having a repertoire of rules is also more

effective than just having one kind.

So, that's why we're going to talk a little bit about kinds rules.

First rule I mentioned to you was a boundary rule.

A boundary rule people use when deciding yes or no.

For example, you're a judge and you want to design yes or no on bail for

someone who's under arrest.

Or which alternative do you choose among a lot of alternatives?

So most, two kinds of situations.

So whenever you have mutually exclusive alternatives or

you just have too many alternatives and you've gotta pick one.

Give you an example out of Google.

When Google was less complex than it is now there were some problems

around trying to get product development projects done quickly.

How to keep up with search features, for example.

And there was some thinking about how do you actually develop products faster?

And maybe we should reorganize the way we do product development.

A number of other ideas.

Finally came up with the idea what was really stopping them and

slowing them down was their hiring.

And they decided the key was, how do we hire top computer scientists faster?

Because in general, top computer scientists are way more productive than

not so top computer scientists, average computer scientists.

So how do we get those people?

And so they came up with a couple of rules.

Some of it was around, just go to top schools and look for

people with good grades and that was sort of something you would do.

But the other rules were more subtle.

One of the rules was look for people who are eccentric,

people who've ridden unicycles, or gone to the Himalayas for

six months, or been a stay at home dad or something that was out of the norm,

although maybe stay at home dads getting more popular.

But, in general, it was people had done something you had never seen before.

The idea behind that was they found that people who were unusual,

were also creative and that's the kind of person they wanted.

The second rule was favor, people who'd been referred to them by

other Googlers so, Googlers referring future Googlers.

And there the idea was that a Googler knows what a good Googler is, and

by the way they also want to work with good Googlers.

They'll be a good source.

And then the third rule was if you see any inaccuracy in the resume or

that comes out during the process, don't hire that person.

We want high integrity people,

any fudging any inaccuracies on your resume and you're out.

Within that then you can hire who you wanted but

it cut down the number of people that they were focusing on, and

they started to focus on the people they really wanted.

Another example of that is a company that we did some work with called

Frontier Dental.

They had an innovative products around dentistry, around in lace crowns.

That sort of thing.

And their problem was they thought they had a great product.

The industry, media thought they had a great product.

But it wasn't selling.

And they were going to dentists and maybe they'd call 100 dentists and maybe two or

three would talk to them and maybe one of them might buy it.

So, they were spending a lot of,

spinning their wheels a lot of times trying to sell the product.

What'd they do?

Whey went back and started looking at who had actually bought their product and

was using it.

They also thought about what their ideal dentist was and

then came up with some rules.

The initial rules weren't very good.

They were things like, the ideal dentist is between 35 and 50.

Well it turns out it's really hard to tell how old somebody is.

So what they ended up doing was going to really something very simple.

We'll call on dentists with innovative websites, because that's a signal that

that dentist has money and that dentist is forward looking.

So they looked at how innovative the website was.