Dealing with complexity has always been one of the Achilles heels of running an effective business – and it certainly is today. From dealing with legacy software to handling regulatory complexity, from all kinds of sub-optimisation in organisational silos to complex global supply chains, insufficient data management, duplication of work or ‘pseudo-work’ and operating models that lack transparency and accountability.
Although complexity is hard to completely eliminate, in these times of massive disruptive forces in operating models and technology, there are many reasons to simplify:
- Reduction of operational costs: Simple workflows require less re-working, and allow for higher levels of automation.
- Reduction of risks: A simpler organisation provides more transparency, reducing risks of omitting regulatory requirements
- Positive financial implications: A simple, leaner operating model allows for increased financial transparency, better cash management and strengthened accountability.
- Increased robustness: If operations are interrupted, a simple operating model allows an organisation to understand and quickly identify the problem and efficiently fix it.
- Increased speed to adjust to new market trends/allow for strategic flexibility: A simple business and operating model should include simple and quick decision-making processes as well as a fully modularised process and IT landscape, which should remain flexible and allow for quick adjustments.
- Improved customer experience: A simplified product portfolio is easier for the customer to understand and choose from, and triggers less complaints.
- Reduced portfolio management effort: Portfolio managers, and also sales and customer care agents and marketing professionals, spend less administrative and management effort on a less complex product and services portfolio.
Succeeding with simplification
There are surely many paths to simplification whether you are dealing with supply chain, operating model, customers, core systems, IT infrastructure or any other component of strategic transformation; however, here are four general steps to start the journey of identifying and addressing the simplification potential:
Step 1: Blueprinting the root cause for complexity areas
Before diving into developing a solution, it is essential for the root causes to be properly understood and mapped out. Therefore, it is important to create a blueprint of the complexities to determine these root causes and enable simplification. For instance, COOs will have to ask themselves some key questions about the focus areas:
- Why has the complexity area developed in the way it did?
- Have triggers for this changed over time, and are they going to continue increasing for some time to come?
- Which root causes will result in greatest impact if solved?
- Which additional root causes are easy to solve?
Step 2: Identifying and prioritising simplification opportunities in your organisation
To adequately build on the blueprint of root causes, it is key to define focus areas for your organisation’s simplification target. Start by determining the simplification criteria, which will be applied when assessing potential simplification opportunities.
Consider, for example, whether the primary focus of the simplification outcome should be cost reductions, ease-of-use, quicker lifecycle management, customer or employee satisfaction, supply chain optimisation, organisational resilience, digital readiness etc. This is important as, depending on what one wants to achieve with the simplification efforts, the initiatives and chosen focus areas might differ.
Of course, when zooming in on any part of an organisation, it is likely that simplification or efficiency improvements can be found everywhere, but the key here is to identify the areas that will have the greatest impact. This is also why starting from a top-down approach is advisable as it encourages a holistic view of the entire organisation instead of one of its separate parts. Additionally, dependencies and integrated solution opportunities will also be considered when they might otherwise be overlooked.
Step 3: Decreasing or resolving complexity in the most sustainable manner
Once it is clear what the simplification opportunities in your organisation are, it is time to turn towards solution development and implementing the most effective solution. There are several simplification programmes that one could apply. An interesting approach to get to the best solution for your problem would be a combination of business case development and conceptual design thinking to test solutions before opting for the most effective one.
For example, business cases can confirm whether the strategic, financial, operational and social benefits of a particular simplification solution will align with the simplification purpose.
Step 4: Optimising simplification benefits for the long run
Once simplification initiatives have been implemented, the achieved results should be sustained in the long term.
Evidently the approach to achieve this varies on a case by case basis. However, it is worth considering the following points:
- Does the initiative/solution address the identified root causes?
- Does the initiative/solution meet the defined simplification criteria?
- Is the initiative/solution in line with the strategic direction set out by the organisation and with further planned or envisioned change initiatives?
- Are there clearly defined success metrics that enable evaluation and monitoring of the outcome of the initiative/solution and, if necessary, drive the definition of required adjustments?
Simplicity should never be a rule, but a guiding principle that should always be leveraged and used as a criterion for business decisions as it will allow us to challenge each process and approach to identify which is the most efficient and best suited for its particular purpose. Doing so effectively, businesses can overcome the threat of increasing complexity, which is far too often the root cause of operational challenges, lack of transparency and transformational power and thus a factor that limits an organisation’s success.
Forfatter spotlight
Tore Christian Jensen
As a part of the Strategy & Operations practice Tore has worked with analysis, development and implementation of operational strategies. Tore has deep experience with aligning business models to changing market demands through optimisation of business processes and aligning systems, organisation and governance accordingly. He has industry experience from manufacturing, transportation, consumer products and energy. His main focus is on on the operational core processes but he also covers administrative support processes. As a program manager Tore has been leading transformation projects for international clients heading multiple parallel projects and reporting directly to executive committee members. His responsibilities cover everything from initiating assessments, identifying opportunities for improvement to building business cases and following up by designing solutions and driving teams through implementation.