The business world would be a lot simpler if a company could make only one product, sell it successfully in one location, to one specific kind of customer. But to survive and thrive in today’s environment, companies must continually expand product lines, broaden services, pursue new platforms, and extend into new and greater geographic and demographic territories. As they do, operations and organizations get a lot more complicated.

Add to this the external factors like the changing marketplace, new industry trends, and an evolving regulatory environment, and the complexity factor rises significantly.

The natural instinct for most organizations is to constantly simplify. In doing so, however, companies can spoil the benefits that complexity – and the ability to manage it effectively – can provide.

How can complexity be beneficial? For one, a broader consumer or geographic reach creates more complexity but promises more value. Going global certainly creates a more complicated operation, but the rewards of a successful effort bring more profits.

Another benefit of complexity is the experience it affords an entire workforce and its management team, which can translate into a competitive advantage that can’t be copied. For instance, the talent and ability to successfully execute high levels of customization efficiently and effectively can create both an enviable market position and an inimitable people capacity.  

The challenge then is to efficiently control more sophisticated processes and systems, and more complicated organizations, alongside all that progress. Rather than eliminating complexity altogether (impossible and unwarranted), companies must reduce it where it matters and manage it where it counts.

Reduce it

Supply chains get messy, databases become unwieldy, and inventories multiply and then multiply some more. Over time, an organization builds lots of complexity into its operations and eventually faces the need to “clean up” processes or systems.

Standardization is a common battle cry to the war on complexity. But if your organization tries to standardize everything, it will be forced to handle hundreds of “exceptions,” and incur the costs of the resulting inefficiencies. Adopting a selective approach to standardization – simplifying those key areas that make the most strategic sense – can be a smarter way to uncover and correct complexity.

Obviously, organizations should want to avoid overcomplicating processes that ensure safety, or procedures that control and manage risk as this could impede performance. But other key areas, those that affect an organization’s value creation, can also be targeted for complexity reduction. For instance, a company should reduce the complexity surrounding those services that aren’t particularly valued by the customer, and aren’t altogether key to performance.

To address unnecessary complexity before it takes root, companies can balance their strategic initiative teams with ongoing, rigorous execution teams. This approach still requires discipline, however, so as not to allow complexity to creep back in. Once the attic has been cleared, so to speak, companies must guard against buildup over time. 

Manage it

Complexity is inherent in serving a diverse base of customers. For many companies, the stronger the customer focus, the wider the product offerings, and the greater the all-around complexity. While product and customer diversity can generate added revenues, it can also hamper productivity unless effectively managed.

Product lifecycle management tools can improve planning and help companies avoid upfront, built-in complexity. They can further help organizations understand when to kill underperforming products, and when to open up space and resources for the next ones.

Ensuring the right involvement from purchasing, operations and supply chain personnel during the early stages of product development can identify issues that drive complexity and prevent decisions that support complexity and increased costs.

Own it

Even the best, most streamlined processes can’t make up for poor accountability, and poor accountability creates the worst kind of complexity – the self-generated kind. By establishing a reliable internal system that determines clear roles and ensures accountability, your operation can put a fundamental key in place to control unnecessary and unwelcome complexity.