Complexity Reduction helps companies simplify their strategy, organization, products, processes and information technology. Reduction in any of these areas opens up opportunities for simplification in others. Unwieldy complexity often results from business expansions or bureaucracies that unnecessarily complicate a company’s operating model, leading to sluggish growth, higher costs and poor returns. Complexity Reduction finds inflection points where products or services fully meet customer needs at the lowest costs. By streamlining product lines, for example, companies may be able to simplify organization structures and decision making to serve their core customers better while also reducing demands on business processes and information systems.
Usage and satisfaction among survey respondents
How Complexity Reduction works:
Complexity Reduction requires managers to:
- Understand the sources of complexity and examine trade-offs between operations and variety or customization for customers
- Identify opportunities to simplify products, organization structures, business processes and information systems to save costs while strengthening core capabilities and increasing the focus on customers
- Take steps to stem the return of complexity by reexamining the hurdle rates for new products and other expansion activities
- Simplify decision making by clarifying roles and processes
Complexity Reduction helps reveal hidden costs and allows companies to determine which products are making money, what customers really value and which organizational or process bottlenecks are getting in the way of effective actions, setting the stage for greater growth and increased profits.
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Companies use Complexity Reduction to:
- Identify and strengthen core capabilities
- Build the business around customer needs
- Create a disciplined approach to releasing new products or services and trimming those that customers no longer value
- Design an organizational structure to support critical decisions
- Maximize process efficiency
- Align information systems with business objectives
Five key trends emerged from Bain's survey of 1,268 managers.
Ashkenas, Ron. Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done. Harvard Business School Press, 2009.
Collinson, Simon, and Melvin Jay. From Complexity to Simplicity: Unleash Your Organisation’s Potential. Palgrave Macmillan, 2012.
George, Michael L., and Stephen A. Wilson. Conquering Complexity in Your Business: How Wal-Mart, Toyota, and Other Top Companies Are Breaking Through the Ceiling on Profits and Growth. McGraw-Hill, 2004.
Gottfredson, Mark, and Keith Aspinall. “Innovation Versus Complexity: What Is Too Much of a Good Thing?” Harvard Business Review, November 2005.
Mariotti, John L. The Complexity Crisis: Why Too Many Products, Markets, and Customers Are Crippling Your Company—and What to Do About It. Adams Media, 2008.
Seijts, Gerard, Mary Crossan, and Niels Billou. “Coping with Complexity.” Ivey Business Journal, May/June 2010.