Let me say this simply. Complexity is the biggest villain in business. It is

a kill or be killed proposition.  LinkedIn Complexity.jpg

Complexity is more Loki than Bane. It’s sneaky, shifty, and has different forms. It hides in the cracks of your business, growing more disruptive and indelible with every minute people fail to notice.

Complexity kills 10% of profits every year; an estimated $237B annually in just the top 200 companies. That alone should warrant a life sentence.

But it’s more than just money. Complexity kills productivity, free-time, and our sanity.

Perhaps most dangerously, complexity kills innovation. We know what happens to companies that fail to innovate – Polaroid, Blockbuster, Borders. Even though Kodak developed a digital camera in 1975, they feared it would hurt their photographic film business and eventually filed for bankruptcy. Now it’s back with a new strategy that dramatically simplifies its business.

When things go wrong in Valhalla, it’s Thor to the rescue. When Gotham is under siege, Batman saves the day. So who, or what, will save your business from complexity?

First, you need to know your enemy. Complexity is hiding in these three parts of your business.

Reporting lags reality. Because data must be compiled or extracted from systems before it can be acted on, decision makers often feel like they don’t know what is happening at a particular moment in time. And when was the last time you and your team had a consensus view of real time data? Due to this lagging – often fragmented – view, decision makers usually have offline snapshots at different points in time.

Over the last two decades, companies have invested heavily in business process engineering and, as a result, have enjoyed significant improvements in efficiency. Because the “core” systems and processes were considered mature, companies added layers of new applications and processes on top of them, and have not significantly invested in improving the core. In reality, the resulting complex landscape is no longer needed: the merging of transactional and analytical systems coupled with on-the-fly calculations can dramatically simplify business processes.

A staggering two-thirds of most businesses’ IT budget is just to “keep the lights on.” That leaves a paltry one-third of your IT spend for innovation. Seventy-three percent of executives said the complexity of data is the largest IT challenge, according to a Forrester report in 2013. When you kill IT complexity, you can drive innovation in your company. You can improve your customers’ online experience, boost your employees’ morale, and optimize your resources.

Simplicity is better than complexity. This is an established paradigm in psychology, computer science, and design. Simplicity pays in business, too. But only business leaders who identify and understand complexity will be prepared to defeat it. Simple is the answer.

Now that you are armed with facts about the biggest villain in business, I’m interested to hear from you in the comments – what is complex in your business?

Jetta Productions / Getty Images


This article originally appeared on Manage by Walking Around on November 5, 2014.

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2 Comments

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  1. Andy Silvey

    Hi Jonathan,

    as in lots of walks of life, there are vested interests to take into consideration here.

    Complexity is a safety net.

    And put simply, where there’s complexity, there’s cash.

    To go one level further, where there’s chaos there’s cash.

         Put simply

    To confirm, for me, we can replace the word consulting with anybody who has a vested interest in complexity or prolonging problems, this can be internals or externals.

    Therefore, if a company wants to reduce complexity, as you say, they need to know their enemy, and part of knowing the enemy is to understand reasons from all perspectives why the complexity is there. Armed with this understanding, overcoming resistance to reducing the complexity will be easier.

    Great article as usual.

    Andy.

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    1. Jason Lax

      Andy Silvey is spot on and “complexity” creates an industry in itself. 


      Getting rid of complexity means change, and there is going to be resistance to change and simplification when people don’t fully understand how their roles and work processes will be impacted: i.e. “What will I be doing after the change?” or “Will I still have a job?” 


      This becomes a hurdle mainly because people are focused on those insecurities rather than focusing on what new and valuable things they’ll be able to do once their time is freed up from getting rid of complexities. So it’s important to focus on that vision of what things will be like in addition to the process of getting there.


      And, as much as there’s cash in complexity, there’s also plenty of cash in simplification: social media firms and search engines are successful because they simplify, enhance and speed up our interactions and information gathering. For example, Facebook, Instagram and Twitter mean I don’t have to spends hours eMailing family photos and calling family and friends with updates on a regular basis, never mind the challenge of doing this across several time zones.

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