COMPLEXITY IN BUSINESS - THE INVISIBLE BARRIER?
Article also released on LinkedIn - 14/12/2020
Every Executive knows that Complexity is everywhere. It is part of our life and it is part of every professional business activity and project.
Innovation without a certain amount of complexity will not lead to any results nor technological progress. We need complexity to initiate transformation and technological developments - but there is a complexity for good and also a bad side of complexity.
But despite Complexity is everywhere - why is it so hard to identify and to manage? Why is complexity still the invisible barrier to better cooperation and sustainable success in nearly every company - from tiny start-up to multinational enterprise?
Every company has to grow. This need to growth is the driver to create new products and services, enter new countries, and move into new business segments. As companies expand, they inevitably become more complex. Organisational layers evolve over night, reporting lines become tangled, and employees on all levels of the organisation find it harder to get work done. When working time, energy, and resources are spent on activities and interactions that don’t create value, complexity starts to damage a company’s performance and its future.
But complexity isn’t always bad - it can also initiate value. More successful products or services, more regions, more business partners, more employees and expertise will all increase the level of complexity in your company - as well as helping you to make more money. Managed well, this kind of complexity helps rather than hinders your company’s performance.
Takeaway 1: Complexity isn’t always bad - but it needs to be managed.
What are the factors which are increasing the levels of complexity and potentially destroy value? The amount of regulation in your industry and how quickly it changes; the extent of duplication of activities, roles, and responsibilities in your organisation; the frequency of change in your organisational structure; and the rate of new entry and change of strategy by your competitors all tend to make your company less profitable and more complex.
All these factors can be managed if the company accept that complexity is part of their organisation. Actively managing complexity can create major benefits for the organisation leading to:
Better returns, reduced costs as well as highly improved employee satisfaction since reducing complexity will minimise double work, reduce communication efforts and will speed up decision making processes. From employee perspective reducing complexity removes barriers to getting things done - which should be an anchor point for each complexity reduction project.
The advice is simple: focus on the issues that make it hard for employees to get things done and develop their ability to cope with the complexity in their roles. Assigning clear roles, targets, and accountabilities within an organisation will encourage initiative and cooperation.
Takeaway 2: Focus on the issues that make it hard for employees to get things done
The answer is not to make an organisation as simple as possible, but rather to eliminate the complexity that makes it hard to get things done and creates little value. If complexity can been seen not as a problem to be eliminated but as a challenge to be managed and even exploited, businesses can generate additional sources of profit and competitive advantage.
What leads to the question if there are different perceptions of complexity throughout the company - which can be answered with a clear “sure”!
Managers focus with their complexity views on external and structural factors: the scale and scope of their company, the design of their organisation, and new legislation.
Employees in sales or subject matter experts in charge of clients, projects, or operational units mainly points to barriers such as unclear reporting lines, weakly defined accountabilities, and inefficient internal processes.
Most employees care about the experienced complexity, or “how difficult it is to get work done.”
The complexity as seen by the Management Board seems to be irrelevant for most other people in the organisation; it simply not correlates with what managers and employees experiences in their day-to-day business. That means that any company wanting to tackle complexity must start by looking at how it is experienced throughout the whole organisation to treat the root cause of complexity.
Takeaway 3: The views of ‘why things are complex’ differ throughout the company
If complexity seems to be too high and creates invisible barriers across the organisation, the Management should think about taking people out of a particular process to simplify it, reducing the number of people involved in making key decisions, or moving people with complexity reduction and program management experience into key roles to drive critical transformation programs. Especially in the current pandemic situation with most of the employees have to work from home changes like these can make all the difference, but they don’t usually happen without active support and initiative from the top management.