Unmanaged and unwanted complexity can really wreak havoc in an organization. Most of us have experienced the symptoms of unwanted complexity; things not getting done, important tasks falling through the cracks, confusion, inefficiencies, throwing more people at the complexity, and utter frustration. And, just like a messy room, complexity will always continue to grow, unless proactively reduced and managed.
Complexity is typically an unintended consequence and byproduct of people making decisions. There are the strategic causes of unwanted complexity competing in too many customer segments, markets, or geographies, with too many products, services or pricing options. Complexity can grow from complicated processes, projects, infrastructure, or partnerships. There is the inevitable organizational complexity with unclear and overlapping roles and responsibilities. The combination and permutations of all of these complexities exacerbate complexity. Before you know it, an organization can become a rat’s nest of complexity.
Complexity Reduction requires managers to understand the sources of complexity and examine trade-offs between operations and variety or customization for customers. Companies need to identify opportunities to simplify products, organization structures, business processes and information systems to save costs while strengthening core capabilities and increasing the focus on customers. Managers need to consistently take steps to stem the return of complexity by reexamining the hurdle rates for new products and other expansion activities. Simplifying decision making by clarifying roles and processes will also help tackle complexity.
Complexity Reduction helps reveal hidden costs and allows companies to determine which products are making money, what customers really value and which organizational or process bottlenecks are getting in the way of effective actions, setting the stage for greater growth and increased profits.