Feeling overwhelmed by complexity and ever wondered why?

Today’s businesses are growing ever more complex. Most are inclined to agree that as any business matures, it will grow more complex. Things start simple – the business appoints paperclip monitors to deal with it’s supply. The next a head of paper-clip department is calling compulsory meetings. The plot thickens yet if the business grows into a multi-national. This is particularly exacerbated by recent developments in technology and cross-border growth of businesses.

Businesses deploy matrix-management structures to deal with globalisation, appoint project teams to examine new technology and consequently ever longer meetings. Management consultants at Bain & Company  term this growing complexity as a “silent killer” of  modern enterprise.

To counterbalance this growing complexity, I’m going to turn to the theme of the “cult of simplicity”. To illustrate this, let’s start with an example that we all know:

Lego

There are 75 pieces of lego for every person on this planet. And for those who are familar with it’s founding history, you would know that it began in the workshops of a Danish carptenter Ole Kirk Kristiansen in the midst of a “GFC” back in 1932. The rest as they say is “history”. But by the mid 90’s, they have expanded to feverishly into what is termed as “adjacencies” by management theorists: TV shows, clothes, watches, learning labs and theme parks. After multiple years to dismal performance, Lego installed a new boss and their actions? Returning Lego to its roots – making of plastic bricks..

This is not to say that Lego is no longer an innovative company – one can now go online and make custom designs for sets and order the bricks required to build it. This is a matter of them just returning to their glory days of making colourful, plastic bricks – producing hours of delight for children and adults alike.

Repeatability

Management gurus love to pitch the idea of “reinventing yourself” – but recent “success case-studies” have not be very forth-coming.  So where does the answer lie?

Management consultants at Bain & Company claims this would come from a “simplify and repeat formula” citing Lego as both a metaphor and a case study for 3 virtues that successful companies share:

1. have a highly distinctive core business
2. make great efforts to keep their business models simple
3. and they apply this relentlessly to new opportunities

Further examples cited include: Apple  – cutting through the confusing consumer electronics with its steady line-up of iProducts (for those that still recall iPod used to come in multiple capacities – but now we are just down to one), IKEA – it’s flat packs and McDonald’s with its Burger chains.

Bain believes that there are (again) 3 ways to apply this repeatability model:

1. Nike applies its “swoosh” model to one sport after another :new markets
2. American Express target ever more precise groups of customers :niche
3. Danaher (an American manufacturing company) applies the “lean” management system across all its businesses :broad

 The Takeaway

Ironically applying simplicity to a business is no simple task. Businesses need to keep hammering at the mantra of simplicity. Tim Cook, Apple’s new CEO, preaches simplicity: “We believe in the simple, not the complex,” and “We believe in saying no to thousands of projects so that we can really focus on the few.” Companies also need to have “non-negotiable” business practices which ensure that their model is repeated. McDonald’s demands that all its employees must start on the till or in the kitchen.

But is simplicity the answer to all corporate challenges?

Consider another theme: “disruptive innovation”. In recent years we have seen many corporate champions flop not because of complexity – but they were crushed by the “next big thing”. Nokia had all the ingredients of a “repeatability champion” back in the 90’s- a defined business model: the commitment to sell handsets to everyone – budget, geography. Nokia’s credit rating is now junk status (and yes I know they then got acquired by Microsoft and market share of those devices have remained fairly dismal). Further examples include: Blockbuster, Kodak, Xerox and Kmart.

But what’s for certain is successful companies survive sudden shifts in competitive environments by understanding which parts of their business is core and which parts could be axed. They are also more likely to survive these sudden shifts if they are not distracted by unnecessary complexity.

So- how many heads of paper-clip departments does your business have?