We have to admit that the world has become more and more complex over the past centuries, and it is even truer for the past decades! We are interested in business and it is not less obvious about it. Interaction and interconnectivity between people are a proof of this increasing complexity in today’s business world. Indeed, the first ones who started to think about applying complexity science to management did by the 1990s, which is pretty early. However, technology and systems were not developed enough to be able to manage complexity at this time. Jost Hoppermann, analyst in the technology and market research company Forrester Research, defines business complexity as the fact of having several interdependent and interconnected stakeholders, IT systems and organisation structures. In effect, all these interactions involve many people: employees, suppliers, clients, investors, and even competitors. Besides, organisation structures involve several divisions, subsidiaries, as well as joint ventures, and everything needs to be managed properly, at the same time, by many people who consist the business. Therefore, we have no choice but to admit that complexity is unavoidable and omnipresent in great businesses. However, businesses have to expand themselves and their relationships with other parties if they want to survive against competitors. You can find more about business relationships in Vivek Sood’s book The 5-STAR Business Network (http://bit.ly/5-STARBN), which will teach you a lot about business networks and relationship building. That is the reason why the only solution is to learn how to manage this complexity. Thus, the concept of complexity management appeared. It is a business method, which aims at optimising the complexity in companies, to make it beneficial and profitable. The consequences of complexity appear at every step of the production process and along the value chain. That is the reason why nobody should neglect the effects of complexity. In effect, depending on how you manage complexity, your business can whether be very successful or go bankrupt in very little time. An effective complexity management process along the entire supply chain can increase tremendously the profitability of your production process. Complexity can be good, but its effects have to be anticipated beforehand the implementation of new decisions made. Indeed, as we already know preparation is crucial and the effects of complexity can also explain this. Preparation can avoid many troubles by anticipating this complexity and acting accordingly. To be beneficial, complexity needs support. Thus, systems and processes have to be implemented to support complexity. That is the reason why companies must include them in their strategies. The efficiency of complexity management relies on several pillars that you must pay attention to, but we will see those pillars and complexity management methods in a later article. To conclude this article, let us say that complexity is natural for business that decide to expand and grow in their market, as well as in new markets. The important point to remember here is the importance of its management. In fact, complexity is not a problem itself, but its bad management is. Complexity is essential, and it can be very profitable for your business if you use it properly and through a smart approach.
How to manage complexity while expanding your business
TIME TO READ
January 8, 2019
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