Complexity is stifling corporate growth
Kate Tojeiro, August 14, 2012
As human beings, one could be forgiven for thinking we are fixated on complexity.
We may be intuitive and often very simply led, but we are also a melting pot of talent, skills and emotions. We love the simplicity of new digital toys such as Apple's iPads, iPods and iPhones, yet we are fascinated by the complexity of these gadgets.
We tend to operate our businesses in similar complex fashion. Management consultants, Boston Consulting Group in their 15 year study of European and US companies, found that the volume of procedures, vertical layers, interface structures, coordination bodies, and processes requiring decision approvals had increased from between 50% to 350%. Furthermore, in the most complicated organisations, they found that managers spent 40% of their time writing reports and up to 60 percent in coordination meetings. Working under such complexity it's little wonder people feel like they can never get any real work done!
Whilst the majority of us abhor such working practices, many seem incapable of change. It has reached the point where complexity has become one of the greatest challenges facing business leaders in their drive for corporate growth. The development of numerous multilayered structures has become so entrenched that it is a massive task for managers to unravel and simplify. Even where to begin is a challenge in it's own right.
A good place to start is understanding how the complexity developed. To do that you need to go back in time - say ten or fifteen years - and ask the question; "what were we doing then that is different to what we are doing today?" It often starts with processes that were implemented during periods of economic growth; processes that were designed to help management plan and control corporate performance, improve human resources efficiencies, and aid decision making and communications of business issues. Over the succeeding years, they simply got out of control. Business were developing so rapidly and opportunities were in such abundance that management didn't have time to look behind them. Perversely, it takes a recession to sound the wake-up call.
Once a clear understanding of how the organisation became such a complex behemoth, the next step is to plan where and how to strip away the complexity. For good reason, operational procedures should be the first to be targeted. How many vertical layers of management are needed to effectively manage the organisation today? Is it possible for more to be achieved with less? And what of the decision-making processes? How many people need to be involved to make the operation more streamlined?
A good example of streamlining decision making involves a multinational services organisation that is currently stripping out complex multidisciplinary procedures affecting its IT department. Any changes to the firm's IT infrastructure had to be passed through several different divisions across a number of time zones before any concrete decisions could be agreed. Anything from employing new software for a specific division or changes in hardware had to go through this tedious, demoralising and time-consuming process. Years earlier, when the procedure was introduced, the firm was much smaller and decisions could be made rapidly. However, as it grew to become a leader in its market, the complex approvals process also grew, to such a level, that it became almost impossible to change. It proved hugely frustrating for IT managers and their staff. Not only could they not make vital changes to improve systems and procedures within a reasonable timeframe, but those divisions worst affected by inadequate and antiquated systems were making life very difficult for IT personnel. One of the catalysts of change was the decline in well-qualified IT staff and the resulting high costs of outsourcing some of the IT division's activities.
This is a familiar story in many companies, and not just in the IT division. Layer upon layer of management resulting in bottlenecks, which create a detrimental effect not only on the financial operations of the organisation but also for human resources. Of course organisations need rigorous standards and cross-checks in their systems and processes, but they also need room for discretion, innovation, creativity and empathy - that very real human element which makes the most tremendous difference in successful companies.
To reduce complexity, senior management must create an environment in which employees can work with one another to develop creative solutions to complex challenges. Coordination, collaboration and communication are the key elements of radical simplification, and operating nationally or globally should make little difference since the technology is there to achieve these objectives. A positive change in mindset across the entire organisation, not just within departments, is a fundamental requirement for success.
The following will help:
- It is essential to really listen to your staff and customers to understand what is most important for the future;
- Use your instincts, and if something seems to be unnecessarily complex, it probably is. Delegate, hire, eliminate;
- At meetings and strategy sessions, cut through the jargon and non-essential matter so that you can really focus on what's important; and
- Celebrate each milestone reached, irrespective of how big or small, or the form of the progress. It is a positive step that will maintain motivation.
- Reducing corporate complexity to a more simplified, manageable and purposeful organisation will take time and considerable effort, but it's not impossible. It is imperative that the simplicity objective is given the same level of priority as any other corporate strategic objective if companies are to capitalise on the growth opportunities that lie ahead.
Kate Tojeiro, founder of leadership development and executive performance coaching company Xfusion