How Complicated Is Your Company? Summary

Emir Zecovic | Posted on July 16, 2018 |

5 min read ⌚

Not satisfied with how productive your employees are?

Willing to restructure processes in order to make them more efficient?

Well, authors Reinhard Messenböck, Yves Morieux, Jaap Backx, and Donat Wunderlich from the Boston Consulting Group believe that you should start with a simple question:

“How Complicated is Your Company?”

Who Should Read “How Complicated Is Your Company?”? And Why?

As a rule of thumb, the more complicated your company is, the less productive and satisfied your employees are.

However, going simple is not as easy as it sounds.

Hence, this article should be a must for every owner, CEO, upper-level manager and leader of a company who knows he/she should keep things simple but doesn’t know how to do that.

About Reinhard Messenböck, Yves Morieux, Jaap Backx, and Donat Wunderlich

Reinhard Messenböck and Yves Morieux are both involved in several projects at the Boston Consulting Group as senior managers.

Jaap Backx is currently one of the leading partners of the organization where Donat Wunderlick absorbs the role of a principal.

“How Complicated Is Your Company? PDF Summary”

In the words of Nobel laureate Paul Krugman, “productivity isn’t everything, but in the long run, it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”

Now, many factors can influence productivity – everything from erratic political instability to predictable business cycles – but, none of them have been found to properly explain the global economic decline of late.

in the opinion of Reinhard Messenböck, Yves Morieux, Jaap Backx, and Donat Wunderlich – global management consultants at the Boston Consulting Group – “the underlying cause of the recent slowdown has been the ongoing, long-term rise of complicatedness.”

Its definition?

Complicatedness is… the increase in organizational structures, processes, procedures, decision rights, metrics, scorecards, and committees that companies impose to manage the escalating complexity of their external business environment.

A wide-ranging survey of executives and employees at over 1,000 companies led the authors of “How Complicated Is Your Company?” to few interesting conclusions.

First of all, that complicatedness can be found in eight different dimensions and that, consequently, there are at least eight ways to simplify an organization.

#1. Leadership
#2. Strategy and Transformation Agenda
#3. Structure
#4. Activities and Roles
#5. Processes, Systems, and IT
#6. Decision Making
#7. Performance Management
#8. People and Interactions

Leadership is, by far, the most crucial dimension, since it “binds together and affects each of the other areas.”

Leaders often create complex procedures and structures which seriously affect productivity.

If you want to simplify, the best way to do this is via leading by example when hiring, promoting and firing. This reinforces desired behaviors in your employees and inspires cooperation and transparency.

In the area of strategy and transformation, the key objective is to “translate strategy into concrete must-win initiatives,” since that’s the only way to ensure consistency between overall goals and lower-level initiatives.

As far as the company’s structure is concerned the solution one should be a no-brainer: simply remove unnecessary layers.

This streamlines top-to-down communication and, moreover, it gives low-level managers just enough freedom, empowering them to make minor decisions quickly and independently.

Eliminate duplication of activities and roles: be sure that each and everyone of this adds value to your company by itself.

It’s the 21st century, so it should be fairly easy for you to completely abolish handoffs between departments and streamline processes and systems via IT.

This simplifies and speeds up communication and boosts end-to-end responsibility.

Give each and every one of your managers strictly delineated area of responsibilities and mandates so that you are able to take decision making back to first principles.

Not only this promotes understanding and cooperation, but it also eliminates conflicts and accelerates the workflow.

So that you can help your managers lead and ensure appropriate recognition for the most cooperative employees, you must master the art of performance management.

Introduce proper collaboration-fostering KPIs should be a great start!

If you want to maximize the output of your employees, then silo mentality is one of your worst enemies!

So, to simplify things in the people and interactions dimensions, try eradicating silos altogether, by creating an unhostile work environment.

The key word – if you ask us – is fun.

In conclusion,

Rooting out complicatedness is possible but only with a structured and focused simplification effort. Business leaders following this road will harvest the fruits of improved productivity and gain a competitive advantage for their companies.

Key Lessons from “How Complicated Is Your Company?”

1. Productivity Is Stifled by Excessive Complicatedness
2. Complicatedness Can Be Found in Eight Dimensions
3. The Simplified Four-Step Simplification Solution

Productivity Is Stifled by Excessive Complicatedness

Even though many factors can affect productivity, it seems that one of the most important ones – if not “the underlying cause” – in relation to the recent economic falloff is the growing complicatedness of companies.

It’s easy to blame external factors, but a survey of the executives and employees of over 1,000 companies has pinpointed complicatedness as the main obstacle to faster growth.

And this is especially true for companies which operate in regulated environments, such as the healthcare industry and the public sector.

Those in the IT world are much simpler and, consequently, agiler.

Complicatedness Can Be Found in Eight Dimensions

Complicatedness can take root in any of eight different dimensions: leadership; strategy and transformation agenda; structure; activities and roles; processes, systems and IT; decision making; performance management; and people and interactions.

The Simplified Four-Step Simplification Solution

The authors recommend “a four-step approach to implementing a lasting solution” for complicatedness-related problems:

#1. Smart Start. Identify the complicatedness dimensions which need to be remedied by, for example, conducting belief audits.

#2. Diagnosis. In-depth employee interviews should help you understand the root causes of unproductive behavior.

#3. Solution Design. Develop appropriate interventions which address the root causes. We’ve gone over some sample actions in the summary above to help you understand how this part works.

#4. Implementation. Now, apply the interventions.

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