Monday, August 09, 2010

How possible is for Simlicity to Manage Complexity?

Globalization, a process that is still going on, has lowered the barrier for large organizations to expand and hire the right resources irrespective of their location. The employees and the customers are now culturally diverse and are challenging the ‘ethno centric’ corporate culture. Due to these new emerging realities the complexity and unpredictability for IT development and the implementation has increased exponentially.
Ashby’s law of requisite variety, states that the internal complexity of an organization should match the complexity of the external environment. Large Global Organizations seem to have taken Ashby’s law to their heart and have instituted overly complex business processes and well as complex hierarchal and matrix organizational structure. The downside of adding layers of complexity to an organization is that it slows down the process of decision making. Everyone in the organization wants to do the right thing and more resources are spent to systematize analysis process that aids decision making. These check and balances create an organization culture that penalizes ‘off the cuff risk taking mentality’. Large organizations get muddled in ‘analysis paralyses’ and are not willing to take quick decisions. Hence organizations become slower as they become global.  
Globalization is a double edged sword. Accelerated globalization has lowered the barriers to entry and new competitors emerge at a faster rate. Keeping track of new and emerging competitors by the established companies is becoming an impossible task. Just a few years back, none of the motor companies in Detroit or in Japan would have anticipated a competition from India. Tata Motor Company is that company. It is in an advanced negotiation phase with Ford Motor Company to buy beleaguered Land Rover and Jaguar arm from them. Tata also recently released world’s cheapest car. Because of accelerated competition due to globalization organization cannot afford to move at a slower pace. Their products and priorities should be constantly shifting to take advantage of emerging trends and customer preferences just to survive.
So, even though Globalization magnifies complexity, the global organization cannot deal with that complexity by creating more complexity within. That will slow them down. The managers and executive need to go against the conventional wisdom of Ashby’s law and simplify business process and simplify decision making processes. Granted some level of complexity is required. I am not disputing Ashby’s law is flawed, but the focus should not be to overly complicate everything. The new focus by the organization should be on Simplicity – Problems once identified should be attacked directly.

Organizations as they gets larger, add layers of complexity to their organization structure to deal with increasing complex external landscape (Also read my other blog titled Globalization and Managaing Complexity)
Ron Ashkenas in his HBR article “Simplicity Minded Management” writes on how to strip complexity out of organizations. He says that a simplification strategy must also be treated as a business imperative, not a soft, “nice to have” virtue but a key contributor to bottom-line success. One way to do it according to the author is to engage employees across the organization in process simplification, particularly at the grassroots level. “Complexity can and does hold back business innovation, create confusion and cause employee frustration,” Ron says. “With increasing demands on business performance and tight labor markets, no company can afford unnecessary complexity slowing down their business and causing unnecessary pressure during the talent war.”
Check out the author’s simplicity checklist
Make simplification a goal, not a virtue
• Include simplicity as a theme of the organization’s strategy
• Set specific targets for reducing complexity
• Create performance incentives that reward simplicity
Simplify the organizational structure
• Reduce levels and layers
• Increase spans of controls
• Consolidate similar functions
Prune and simplify products and services
• Employ product portfolio strategy
• Eliminate, phase out, or sell low-value products
• Counter feature creep
Discipline business and governance processes
• Create well-defined decision structures (councils, committees)
• Streamline operating processes (planning, budgeting, and so on)
• Involve employees at the grassroots level
Simplify personal patterns
• Counter communication overload
• Manage meeting time
• Facilitate collaboration across organizational boundaries
For me, the most interesting observation the author makes is that in every organization the complexity begins with the individuals. What that means is ‘you and I’ are responsible for the complexity around us at work! We are part of the problem. Ron says that one way to create simplicity is to seek feedback from colleagues, managers and peers at work. Ask them how is your task creating complexity for them. Seek suggestions to simplify work for them. I am going to take this advice to heart starting right now!
Click here to take a survey on an interactive tool to find out if your organization is too complex and listen to the interview with Ron Ashkenas.

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