Products, customers, competitors, subsidiaries, countries, and partners, all increasing: are they making your business too complex?

Every company wants to improve its results, and to do so, they can use very different ways. The most common ways they use to achieve this goal are whether improvement of the quality or the reduction of their costs. How do they do? What methods do they use? They want to sell more products, in more many locations, to target more customers and achieve better results. business-discussionOn the other hand, they also want to cut their costs and that is the reason why they implement subsidiaries in many different locations and countries because they think it is always a good solution. However, sometimes (if it is not often), they happen to be wrong about their evaluation and analysis about the process they chose to carry out. However, this article is not about preparation and wrong analysis of opportunities, but it aims at proving that complexity is the only result they get through these decisions. First of all, what is complexity? Complexus (Latin) means “twisted together”, which is quite a good definition of this concept. According to Wikipedia, “Definitions of complexity often depend on the concept of a “system” – a set of parts or elements that have relationships among them differentiated from relationships with other elements outside the relational regime. Many definitions tend to postulate or assume that complexity expresses a condition of many elements in a system and many forms of relationships among the elements.” Therefore, complexity appears through tremendous numbers of interactions between the numerous parts of a system. In fact, complexity keeps increasing while have more and more parts, which makes sense obviously. A very small business does not imply complexity because interactions and relationships are limited to a few numbers of parties and people. However, there might not be enough complexity in those businesses because it also means that results will not be as good as for bigger businesses. Obviously, we are talking about profit here. Consequently, it is very logical that companies want to grow, in order to improve their results and beat their competitors in the market. However, at some point, companies that cannot stop increasing anymore can end very badly, and this is because of over complexity. Beyond a certain point, expansion involves complications and the turnover starts to decrease, as well as profitability. Therefore, every CEO should have a look at its entire business, and the parties and relationships that consist it. In effect, your business might be becoming over complex because of useless interactions that make the business go down instead of helping it improve. All the content of this article can be summarised by the complexity curve below: complexity vs performance To conclude, we have no choice but to accept that the more complex your business become, the less money you will earn. Thus, CEOs must pay more attention to what is happening when expanding a business. In effect, management has to evolve while your business is expanding and that is the reason why it is important to take into account all the consequences that can appear every time you make a decision. Complexity can be unstoppable and make your business go bankrupt if you do not act before it is too late. If you want to understand more about growing businesses, you can read Vivek Sood’s book, The 5-STAR Business Network (http://bit.ly/5-STARBN).

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  • Claire says:

    Yes, it is agreed that the more complex your business become the less money you will earn and now everyone wants to improve their result so they need to make their business less complex.

  • Ruby says:

    Make Your Work More Meaningful by Killing Complexity
    Complexity is a danger to all organizations. According to me, if your company operates with complexity, it cannot operate with speed. So newer organizations, who provide simpler answers for customers can swoop in and take your business because you’re too slow and too busy working on reports.

    Don’t believe me? All you need to do is look at the success of companies like Uber (simplified rides), Airbnb (simplified hotels), and Netflix (simplified media streaming), and compare them to all the complex and slower to change businesses they left in their wake: taxis, hotels, and movie rental shops.

    See what I have found three simple ways to streamline your business to make your work more meaningful.

    1. Identify areas to simplify.
    Bodell advises employees and leadership to start killing complexity by making a list. Write down what tasks you do each day; then circle the most important (and meaningful tasks). When you look at the list, there will most likely only be a few things circled. The uncircled masses that surround your meaningful tasks are where you can start reducing needless work.

    2. Kill a stupid rule.
    Too many regulations stifle a business. In fact, much of what you do and how you do it isn’t even a regulation–it’s an assumption or a process at your company “we’ve always done this way.” These rules (or assumptions) are usually the processes that make work much more complex and fill it with meaningless tasks. With your co-workers, come up with a list of stupid rules (or assumptions) you can get rid of to simplify the work process.

    3. Empower decision-making.
    Finally, as organizations grow, the decision-making becomes more complex and layered. You become slower to respond to change and are prone to be bypassed by younger and simpler companies. By empowering employees to make their own decisions, you will need fewer meetings, which take away from meaningful work.

    Bodell suggests tasking team members with making two decisions a week without you (within parameters of the budget and what’s permissible by law, of course). Two great customer service companies–Zappos and Ritz-Carlton– do this all the time, empowering their employees to take ownership of satisfying the customer.

    As time goes on, increase the employee empowerment to make decisions. You will find your company responds quicker to events with more empowerment.

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