It is present in every organisation, but if it spreads uncontrollably, it will make you less efficient, less effective and less scalable. On the other hand: Believing that you can create and lead an organisation completely without it is naive. It is there. And it has to be managed.
Size is often confused with complexity. “We have grown so big that it has become really complex”. Not so. We all want size – if it is value generating in terms of profits or other metrics. And “bigger” does not need to be more complex than “smaller”. It’s just bigger. Period. It only becomes complex if we don’t manage it.
Undue complexity has many detrimental effects on your business:
- First and foremost – it slows you down. Because you need to manage the complexity. And because decisions are hard to make, as there are no clear “good” or “bad” answers. It’s all interlinked. Complex! In a world where agility is hailed, this is hardly a good thing.
- Secondly, it destroys your profitability. Because It is hard to make the clear-cut decisions (above) and because it costs you money to manage the complexity in terms of managerial time, duplicate accountabilities, ripple effects of incidents, etc.
- Thirdly, it hampers your growth. Because complex businesses are hard to scale. They are slower. They are less competitive. They are less responsive – and hence they are less attractive to customers.
- And finally, it negatively impacts your employee satisfaction. Who is responsible for what? Why can’t we decide? Why is this process suddenly not performing? Guess what – it’s the managements fault!
MAKE COMPLEXITY MANAGEMENT YOUR PRIORITY
Managing organisational complexity should be a prioritised task on your agenda – because your organisation will over time mutate towards more and more complexity – if not managed. And the task is on you.
So here are my two cents on how to reduce complexity in your organisation:
1.Look to reduce complexity at all levels
a. Reduce strategic complexity
i. Are you serving too many segments/geographies/customers – and are constraints in one dimension impacting another? Are you e.g. in a situation where you cannot de-select an unprofitable market – because one of your global accounts is also present there?
b. Business model complexity
i. How many business models are you employing simultaneously? And are you equally good at them all? Do they hamper each other? Are you doing product sales, project sales, service sales, subscription sales – all at once? Reduce the number of models you apply – and reduce inter-dependency between them.
c. Operational complexity
i. Have a hard look at your value chain. Do we need to do all the things we do currently? Do we need to do them ourselves? How can we design our processes, systems and products so that they are simple and robust? So there are no ripple effects when errors occur one place.
2. Look for gaps between intent, design and reality
a. We do things with a purpose. Our products, processes, strategies and systems have been designed with a specific intent in mind. Have a hard look at these elements and check if the designs mirror your intent – and nothing more than that. More often than not, you will find that your designs (the organisational design, the system design, etc.) are overengineered compared to what we really, fundamentally wanted these designs to do. Simplify these designs.
b. Look for discrepancies between your design and what is actually happening in your organisation. You designed an organisation to be simple, self-explanatory and unambiguous. But maybe, it is really a mess with confused decision-making, blurred lines of authority, etc. If this is the case, you don’t have a design problem but an execution problem. And execution problems are not solved with a drawing board or procedure writing – it is solved with leadership, change leadership and education. In short, behavioural stimuli.
MANAGE YOUR COMPLEXITY ACROSS ALL DIMENSTIONS… AND LIVE WITH IT
Complexity can destroy your business if left to grow uncontrollably. It has to be managed – strategically, tactically and operationally. And it has to be managed across all of its dimensions – in your products, your organisational structure, your managerial controls. We cannot avoid complexity. But we can minimise it!