Complexity Management is the process of delivering value while simultaneously identifying and executing the actions necessary to reduce complexity over time. This brings significant benefits in a relatively short time.
Determine your zero-complexity costs and then assess the costs of adding variety back in. You can also assess the benefits of innovation and determine the focal point where a given innovation overshoots what most customers want and are willing to pay for.
Organizations get the best results by attacking product complexity first and organizational complexity next and only then focusing on process complexity. The reason is: complex processes often reflect unnecessary product variety or poor organizational design. If you attempt to simplify a process without changing product or organizational complexity, you find even more complexity cropping up in some other process area. It's like trying to make a balloon smaller by squeezing one part of it- another part just gets bigger.
Unnecessary product complexity means offering products, services or options that relatively few customers want. Most organizations like to give their customers choices. But managers often overestimate buyers' wants and willingness to pay for all those choices. Sometimes, indeed, it's obvious that companies have carried innovation too far.
As a company expands, products vary or it moves into new markets, managers are likely to add organizational complexity. They may try both to maximize scale and stay close to the customer. Pursuing both these objectives often leads to complex matrix structures, duplicated costs at different levels and a lack of clear accountabilities. Each decision to add an organizational layer may make sense, but few companies in good times assess the overall impact of these decisions.
Companies that do attempt to manage complexity usually begin with processes, often through efforts such as Lean Six Sigma. However, reducing process complexity should be a company's last step, not its first.
Managing process complexity helps in controlling overspending and tracking performance more effectively.
All these complexity management efforts help a company become lean and flexible.Contact CRM expert
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