How Companies Are Taming Complexity – And Why It’s Not Enough

David Ludlow

Are you frustrated by complexity’s grip on your organization? According to the latest global research from the Economist Intelligence Unit (EIU), you are not alone. More than half (55%) of all surveyed executives have watched complexity cut into their profits over the last three years and steal between 16% and 50% of their productive time.

No matter a company’s size, culture, data management practices, decision-making process, pace of innovation, or organizational structure, complexity will inevitably emerge. No one sets out to purposely create complexity.  However, as new ideas are introduced to support growth and expansion, traditional practices are sometimes never fully replaced. And in the end, that means unnecessary layers are added rather than just creating an improved approach.

Particularly sensitive to complexity’s influence is the HR function. The EIU study pointed out that half of executives blame complexity for interfering with their efforts in retaining employees and in helping the workforce understand the organization’s strategy. However, for 40% of those surveyed, complexity’s impact goes much further – declining employee morale, inability to collaborate across the organizations, and difficulty training talent.

It is commonly believed that technology simplifies processes and organizations. Unfortunately, the opposite is often true – they too often just replicate the old ways of work in new technology. The result is predictable: Wasted resources that accomplish nothing except move old processes into new technology.

Are businesses doing enough to combat complexity?

Given complexity’s widespread impact, companies worldwide are taking a variety of approaches to reduce it. In the EIU study, the most popular strategy is creating cross-functional roles to facilitate collaboration (39%) – with the implementation of new technologies, tools, or infrastructure (33%) and decision-making processes (30%) following close behind.

Unfortunately, these simplification efforts have not been foolproof. The EIU uncovered that only a little more than half of all executives who tried these tactics have decreased the impact of complexity’s symptoms – including decision-making inefficiency, misaligned communication, and low customer satisfaction. Yet this does not mean that the main problem, complexity, does not still persist.

Why aren’t these initiatives more successful? In his blog The Time For Simplification Is Now: Why It’s Important And How You Can Get Started Today, Jeff Woods states, “There’s no doubt that change (especially simplification) must come from the top in both words and action. Executives need to take charge, embody, and own simplification – conveying its importance, planning effective programs, measuring success, and rewarding progress.”

Why HR is the missing link in your simplification initiatives

At the end of the day, failure to simplify the business falls on senior leadership. For the CHRO, this is an opportunity to partner with every line-of-business executive. By helping senior leadership take ownership and serve as a living example of how everyone benefits from simplification, individual employees and line managers are more likely to adopt the principles of simplification.

Therefore, it is imperative for CHROs to enact an effective simplification strategy that includes these four critical steps:

  1. Drive simplification from the top. To promote a culture that favors collaboration, executives must demonstrate it themselves in how they conduct business. Plus, they must use and distribute the tools, technologies, and best practices that enable it.
  1. Embed simplification as part of the workplace culture. It is highly unlikely that unnecessary complexity can be removed within six months. Although substantial progress may be achieved in that time, companies must remain vigilant in fighting complexity as the business continues to evolve as it addresses changing market dynamics and consumer behaviors.
  1. Measure the value of complexity-reduction efforts. No effort is successful without the ability to measure its progress – and fighting complexity is no exception to this rule. By using metrics that are relevant to each organization and the overall business, executives can pinpoint where complexity still resides and potentially its cause.
  1. Change mindsets and behaviors to create long-term awareness. Complexity is not just an item on the CEO’s agenda – it is everyone’s problem. With sound management, all employees will adopt practices that will help ensure that simplification takes root and thrive over the long term.

To read more about the EIU study, please see:

David Ludlow is group vice president of SAP Labs. Follow him on Twitter: @dHRludlow.

 

 


David Ludlow

About David Ludlow

David Ludlow is the Group Vice President at SAP Labs. His areas of expertise include product management, enterprise software, portfolio management, ERP, go-to-market strategy, business intelligence and cloud computing.