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Use the fewest rules possible
Finding the line
Too many rules, too much process, and too much bureaucracy slow everything down, and people get bummed. Too few rules lead to chaos, which also slows everything down. Innovation at speed and at scale lives on the line between the two, and the job of every leader is to find it, in something like 80 dimensions.
The pricing call
Uber launched cities with 23-year-olds who were told to make something out of nothing, with a playbook that left most things undefined. Nothing launched until the pricing call, because pricing in transportation is the sum of all strategy. It forces the team to work out the regulations, which car type those rules allow, the average wage in the city, how long it takes to get around, and where people are going.
Uber's founder sat in on the pricing call for the first 20 cities. A city like London took eight to ten hours of those calls before launch. Each problem was solved once and then went into the playbook, and by city 20 the call took five minutes.
The one rule was that nobody could launch until he said yes on that call. So each 23-year-old arrived ready to play and organized everything before it around getting the call right.
Why does more process slow teams down?
Frederick Brooks, a computer scientist, noted in his 1975 book The Mythical Man-Month that communication paths grow with the square of team size. A team of 10 has 45 possible pairs of people who must stay in sync, and a team of 20 has 190. Each added rule or approval step adds more of these paths to coordinate. His observation led to Brooks's law: adding people to a late software project makes it later.
Why is pricing so tied to strategy?
A price sits where revenue, cost, and customer demand meet. A McKinsey analysis published in 2003 found that a 1 percent price improvement raised operating profit by about 8.7 percent on average across the large companies studied. That leverage exists because price changes drop straight to profit while costs stay the same. Getting a price right therefore depends on knowing the costs, the competitors, and what customers will pay.
Why do playbooks help newcomers?
In 1935, a prototype Boeing bomber crashed on a test flight at Wright Field in Ohio, and investigators traced the crash to a pilot error on a complex aircraft. Test pilots responded by writing a short checklist of the steps to take before takeoff. That bomber was the Boeing Model 299, which became the B-17. Boeing built more than 12,000 B-17s.
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