What Is Complexity Reduction?

Complexity Reduction is a process to help companies simplify their strategy, organization, products, processes, and technology. Reducing complexity in any of these areas creates opportunities for simplification in others. Unwieldy complexity often comes from business expansions or bureaucracies that unnecessarily complicate a company’s operating model. This may lead to sluggish growth, higher costs, and poorer returns. Complexity Reduction finds inflection points where products or services meet customer needs at the lowest costs. For example, companies that streamline product lines may be able to simplify organizational structures and decision making. This results in better service to their core customers, with reduced demands on business processes and information systems.

How Is Complexity Reduction Implemented?

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, organizational structures, business processes, and information systems to save costs while strengthening core capabilities and increasing customer focus
• 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.

Related Topics

• Portfolio & Product Line Simplification

• Business Process Reengineering

• Spans and Layers

 

What Are the Common Uses for Complexity Reduction?

Companies typically use Complexity Reduction to:

• Identify and strengthen core capabilities
• Build the business around customer needs
• Create a disciplined approach for 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 technology with business objectives

• Selected references (click to expand)

  Ashkenas, Ron. Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done. Harvard Business School Press, 2010.

  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.

  Mocker, Martin, and Jeanne W. Ross.  “The Problem with Product Proliferation.”  Harvard Business Review, May–June 2017.

  Perumal, Andrei, and Stephen Wilson. Growth in the Age of Complexity: Steering Your Company to Innovation, Productivity, and Profits in the New Era of Competition. McGraw Hill, 2018

  Seijts, Gerard, Mary Crossan, and Niels Billou. “Coping with Complexity.” Ivey Business Journal, May–June 2010.

  Zook, Chris, and James Allen. Repeatability: Build Enduring Businesses for a World of Constant Change. Harvard Business Review Press, 2012.

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