Complexity as the enemy is a popular catch cry.
So what creates complexity in organisations and should strategies that generate complexity be avoided?
Here’s a quick summary of what is typically described as making organisations more complex.
People; more staff, more staff locations, multiple lines of accountability and responsibility, role duplication, diversity of workforce, more relationships with third parties / business partners / vendors.
Operating environment: more and diverse regulatory environments, more competitive markets, greater volatility in markets.
Operations: more products and services, more customers, diversity of customer experiences and expectations, layers and connectivity of systems of work, layers and numbers of nodes of decision making, multiple disparate sources of information and knowledge.
A diverse workforce, growth in customers, growth in products and services, and market expansion sound more like positives, likely to result in significant value creation for organisations. Examples of how these are achieved include mergers and acquisitions, geographic expansion, entering new markets, and reinventing the core purpose of the organisation as a survival tactic in response to the decline, competitiveness or volatility of their core market.
If creating complexity and value are not always mutually exclusive, implementing strategies than predominantly focus on ease of operation and simplification may lead to missed opportunities, those that add complexity but generate an overall benefit for an organisation. And this is where assessing and understanding complexity is key to inform which growth strategies are right for an organisation. Leading to the question does increasing complexity within organisations through growth strategies such as a merger and for example, create risk?
The complexity a strategy may add to an organisation isn’t the risk, the real risk is not understanding and therefore adequately responding to how best manage that complexity. When calculating the total value a growth strategy creates for an organisation, it’s important to factor in any operational cost and effort associated with added complexity.
Assessing and responding to the level of complexity involved in implementing strategies is a topic for another post!
