COMPLEXITY REDUCTION

“That’s been one of my mantras — focus and simplicity. Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

– Steve Jobs

Unmanaged and unwanted complexity can really wreak havoc in an organization. Most of us have experienced the symptoms of unwanted complexity; things not getting done, important tasks falling through the cracks, confusion, inefficiencies, throwing more people at the complexity, and utter frustration. And, just like a messy room, complexity will always continue to grow, unless proactively reduced and managed.

What is Complexity?

Unwanted complexity is typically defined as complicated and wasteful connections between elements. Complexity can grow extremely quickly with the addition of more elements. Take a look at the chart below. There is only 1 1-to-1 relationship between 2 elements, but with 8 elements, there are 28 1-to-1 relationships. And, with 8 elements there are 40,320 permutations or ways those 8 elements can be arranged in order. Crazy!

So, where does complexity come from? Complexity is typically an unintended consequence and byproduct of people making decisions. Let’s use the analogy of a business model is like a house. Every time there is a decision in a business, it is like adding a new addition to the house, with new fixtures, electrical wiring, plumbing, 2x4s, rugs, and a coat of paint. Not only is it a new addition, but also often designed by a different architect, built by a different contractor, with little appreciation or thought of the existing house, architecture, and design. And, after a few years of this, the business becomes one of the most complex, dysfunctional, ugliest, and expensive mansions on the market.

Now, there is always inherently some complexity in an organization, and sometimes it can even be a competitive advantage in a business model. Think about Google’s search engine, which has massive complexity in its algorithms, parsing engines, bots combing websites, ad networks, operations, network optimization, caching sites around the world, etc. The difference is Google manages the complexity. The complexity I’m talking about is the unwanted complexity, the complexity that is hidden and is mucking up an organization.

There are the strategic causes of unwanted complexity competing in too many customer segments, markets, or geographies, with too many products, services, or pricing options. Complexity can grow from complicated processes, projects, infrastructure, or partnerships. There is the inevitable organizational complexity with unclear and overlapping roles and responsibilities. The combination and permutations of all of these complexities exacerbate complexity. Before you know it, an organization can become a rat’s nest of complexity.

How do you reduce complexity?

I’ve had direct experience with a few multi-billion dollar companies choking on their self-created complexity. It was painful to talk to person after person, with the same high level of confusion and frustration. They had complexity building up in every facet of the business model, unchecked for decades. Just like a tangled ball of yarn, where do you start?

Focus & Simplicity

Continuous focus & simplicity is the cure for unwanted complexity. a is the centering of energy and activities on a particular purpose or subject. While, simplicity is being direct, clear, and easy, with few parts.

Evolution did not condition the human brain to run after every squirrel, bird, and rabbit it saw. It was conditioned to focus on the big kill. In many organizations, the majority of people are getting whiplash as they change their direction or are interrupted a few dozen times a day. Task switching is the #1 factor in low productivity. The brain takes 20-25 minutes adequately, and 50% of the time people don’t get back to the original task after being interrupted.

Only in simplifying can focus happen. In strategy lore, there is the story of how a company significantly increased toothpaste sales. The toothpaste company had a big competition on how to increase sales of toothpaste. Every idea imaginable was submitted, including new formulations, new marketing slogans, and new promotions, but what won? The simplest idea, widen the mouth of the toothpaste cap.

Being simple is how most things get done right. Simple strategy, simple to use products, simple processes, simple metrics, simple initiatives, simple instructions, simple, simple, simple. Everyone raves about Apple, yet they were ten years behind the first MP3 player and 20 years behind the first cell phone. So, what is their magic? Focus and simplicity. They focus thousands of people’s efforts on a small portfolio of products. And, they make products so simple that even a three-year-old can navigate through and use them.

How do you focus and make things simple?

At the highest level, to drive focus and simplicity, focus and simplify your strategy. Focus your mission, your target customer, market, geographies, product and service portfolio, pricing, marketing, sales, distribution, organizational structure, roles, etc. A focused and simple business model strategy will eliminate a majority of complexity. Focus and simplification can also be done by eliminating, segmenting, modularizing, standardizing, combining, rearranging, and automating activities and elements of a business model.

Eliminate

Typically the easiest lever to pull is reducing and managing complexity. Eliminating can pertain to any activity or element that doesn’t provide value or has an opportunity cost due to not focusing on other more important activities and elements of a business model.

Segment

Complexity can be reduced or managed by segmenting elements or activities. The goal of segmenting customers, markets, products, services, or infrastructure is to drive efficiency and effectiveness of processes by focusing effort on the needs of a particular segment.

Modularize

One of the least understood, yet most powerful tools to reduce and manage complexity is modularizing activities and elements of a business model. Modularizing is subdividing activities and elements into smaller parts so that they can be tested, changed, and used in other activities and elements. Modularity discretely decouples activities and elements with defined inputs and outputs, which allows them to seamlessly interoperate and “snap in” with other activities and elements in a system. A well-designed process is modular with discrete inputs and outputs. Well-designed software systems are modular, with separate services or components designed for use in different systems. Agile teams are modular if their output is well defined and integrated with the output of other teams.

Standardize

One of the easiest and best returns on investment tools in reducing and managing complexity is standardization, which is driving consistency and conformity within activities and elements. Standard operating procedures standardize processes. Standardized components in a product eliminates multiple options and conforms to one standard, reducing costs and complexity. Standardizing on one IT platform, where once there were many, reduces complexity, costs, and capital.

Combine

Sometimes, the best solution to managing complexity is to combine activities or elements of a business model. Combining certain activities into a particular team or function is sometimes the answer. Or, combining multiple services into one is the answer. Combining should occur when there are similar or complementary activities or elements, that if combined will create cost, capital, or revenue synergies, and in doing so will reduce complexity.

Rearrange

When activities seem wasteful in their sequence often rearranging the activities will reduce waste and complexity. Rearranging office space, a factory floor, or a warehouse can reduce complexity. You can reduce complexity by rearranging the governance processes and meetings of an organization, starting with top-level meetings, and cascading lower-level meetings to a later time so that priorities and information can efficiently flow throughout the organization.

Automate

Automation eliminates the complexity of manual processes. Just be sure to simplify the manual process before automating, since automating a complex process, still makes it complex.

Other best practices in reducing and managing complexity:

Be diligent about creating unwanted complexity

Complexity is an unintended consequence of decision-making. When decisions are being made, think through the potential complexity that may be created, debate it, and figure out ways to potentially mitigate it.

Use the 80/20 Rule

The 80/20 rule states that typically 80% of the benefit comes from 20% of the work. Focus on the important 20% and get 80% of the value.

Simplify to execute

I learned this one from a former boss and mentor. If you want something actually executed, you’ve got to simplify it. Get it down to the bare minimum.

Clean house every once in a while

Do you know that deep-breath feeling when you clean a messy area? Well, try to feel the same way in your organization. Every once in a while clean your house. Are there processes, procedures, policies, accountabilities, etc. that can be eliminated, combined, rearranged, and ultimately simplified? Organizations get messy and complicated, and it takes a good cleaning to bring it back to a level of simplicity and Zen!

Decentralize organizations with standards

Decentralized organizations can be efficient, innovative, and agile, but they can also create a lot of complexity, if not managed. Decentralized organizations need to have many of the complexity tools in place, especially standardization, modularization, and automation. They also need to focus on reuse, open communication, and coordinated governance.

Other best practices for focus?

Focus is somewhat of its own beast. While focus involves the elimination of activities and elements, it is important to have some best practices to utilize on a day-to-day basis.

Organizational Focus

It’s all about the mission

A mission is a guidepost and filter for an organization to ensure the activities and projects they take on are meaningful. If you have a mission, use it, celebrate it, and challenge people to make sure what they do is focused on the mission.

A clear strategic vision

Through a clear strategic vision, strategic leaders can align, coordinate and focus people’s efforts on making the vision a reality.

Team focus

Align everyone on the big picture and projects

The quickest way to turn a team around is to focus on big-picture stuff and big projects. For a marketing department, it is focusing them on big campaigns, and aligning everyone’s efforts as part of the campaign. For a product development team, it is focusing on significant products and the product roadmap. Big things allow teams to say no to all the low-value little things.

Look up at the scoreboard

For many teams, focusing on achieving key metrics, output, or wins, can focus the efforts of the team. Imagine a football game without a scoreboard; it probably wouldn’t be much of a game. It is the same way with teams; they need to focus on a scoreboard. For a retail team, the scoreboard includes the store metrics of sales and service scores. For a sales team, the scoreboard includes pipeline metrics, including the number of prospects, customer close rates, sales, etc.

Individual Focus

Create and focus on a task or project list

Create a daily task or project list to work on and continually update and reprioritize it. You can also share it with your manager to ensure you are on the same page.

Batch emails

Are you one of those phone gunslingers, always reaching for it as it electroshocks you with a new email beep or buzz every minute and a half? Try something that will make you really uncomfortable. Only check and process your emails 2-4 times a day. Give yourself nice 2-4 hour chunks of time to get the important stuff done. And, tell people, if it is urgent, to call you. It will change your life.

Don’t sweat the small stuff

The most productive people are typically the ones that focus on the big things to get done. The things that will drive progress and improvement. That is where the focus should be. Then there are those that focus on all the small, little things, that won’t actually drive improvement, but do make people look really busy.

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