I love chess. It always amazes me how such simple rules for piece movements can give rise to matches of such extraordinary complexity and drama. Often I see corporate strategy analogized as a chess game. On the surface, that seems right managers adeptly try to outthink their opponents in a rich interplay of competing strategies and asset positions.

However, the cold light of critical analysis casts grave doubt on this analogy. CEOs (or anyone in senior leadership) rarely have the ability to command a direct reaction to a competitive attack in the market, or even to oversee core business transactions (if this was the case we wouldnt need Sarbanes-Oxley). Economists call this the Principal-Agent Problem. What senior leaders really do is set the stage for an enterprise to do its job in the marketplace. In effect, CxOs create structures by which organizations generate their behavior. Going back to our chess analogy, it would work as if our hypothetical CxO would say, OK, lets let Joe handle the Knights and the Rooks. Sally will take care of the Bishops. I want Joe and Sally to huddle every move, especially in cases where their pieces are on the attack. Then Ill have Jim working the pawns meta-chess, if you will.

Jay Forrester, the creator of the discipline of System Dynamics once described the CEO as an organization designer. That is a much better way to describe the role than that of a chess player. Simple rules are the core of what it takes to make an organization work semi-autonomously.

So what are those magic simple rules that will cause an organization to double its stock price? The answer lies in understanding the underlying physics of a given organization different for every firm. Simulation models are an important tool in this regard. If one could abstract the organization into a model, one might test a wide range of simple rules, acted upon by agents, to determine the implications of structure (sets of rules) on aggregate organizational performance.

Its your move.