Business complexity often results from organizations having too many products, too many service offerings, too many ways to do the same thing, and too many ways of getting their products to market — among many other things.
It’s all the noise that was created over time by individual decisions to offer a certain item or do something a certain way, accumulating into one giant, complex mess. These individual decisions are often well-conceived (such as in response to a customer’s request), but, taken collectively, have now created headwinds that will limit your organization’s ability to operate efficiently. So, how do you remove complexity and figure out exactly what balance of products and services you should offer in order to make life better for your company and your customers?
If you think you may be doing too many things for too many people in too many ways, here are some things you can start to think about.
Understand the extent of the complexity
This could be a sign your company needs to work on its brand story and messaging. Employees might communicate what they know but not the full breadth of your company’s capabilities. You need to deliver a strong, focused brand narrative so audiences recognize the value of your entire enterprise and everything it encompasses.
Understand the cost of the problem
In a typical SKU rationalization project, you might just “trim the tail” and eliminate the lowest volume SKUs to reduce your complexity. This will likely be helpful but won’t necessarily address the core drivers of the complexity — the things that are driving inefficiencies in your operation. Rather, look at each of the product attributes you have already identified and work with your business and supply chain teams to understand what is really driving waste. For example, going from two different labels down to one for one of your products might save you the 2-minutes it takes to change labels when switching between them, whereas going from two different formulations down to one might save you the 4-hours it takes to flush all the previous ingredients out of the product line when you switch between them. In this case, eliminating a formulation would drive a much bigger benefit than eliminating a label, and with some help from the finance team, this benefit can be quantified.
Prioritize opportunities with your team
The best way to get the conversation rolling around complexity is to have a workshop or meeting that includes the business, R&D, and supply chain teams. Ideas for items that generate complexity will likely not be in short supply. Your manufacturing team will certainly have a perspective on things that create issues on the plant floor. The business team will be able to represent the customer’s perspective and how difficult a certain change might be to implement. Finally, the R&D team can offer a point of view on how difficult to implement a certain idea may be. Often, certain ideas have been considered before and you’ll hear, “We’ve been trying to get rid of that for years.” The outcome of this workshop should be a prioritized list of opportunities and a roadmap to address them.
Determine the right solution
Once you’ve understood what’s driving your complexity and its costs, you can then figure out if you can eliminate the complexity or charge for the complexity. Answering this question will likely involve working with your customer-facing team, being that the biggest potential downside to this move is making a customer upset by eliminating a product they love. However, being armed with the potential value to be unlocked, it may be possible to make price (or other) concessions to switch to a different product and still come out ahead. Sometimes volume is so low, or the difference between the product eliminated and another is so small that it’s not a big deal. Sometimes, the customer might gladly accept the change because they, too, might be looking to eliminate their own complexity.
Don’t fall back into complexity
Finally, once your complexity is removed, it’s important to put processes in place to avoid getting right back to where you started. “Stage Gate” processes that govern new product, service, or process introductions can work well but may need to be enhanced to consider the longer-term impact of what is being introduced. Another approach is to take a focused look every couple of years and re-balance the portfolio — like you would with your financial investments. As the business changes, demand shifts and things get out of balance, so periodically taking a fresh look and making any necessary changes is a very reasonable approach.
The principles of complexity are not limited to manufacturing; they are crucial to enhancing any organization’s products, services, processes, and even organizational structures. Identifying and addressing inefficiencies, such as excessive meetings, non-value-added activities, and redundant tasks, is essential. A thorough cost/benefit analysis will help you understand the positive impact of reducing complexities in your organization.
With a little time and a little discipline, we can all simplify our businesses and our lives to help us focus on what really matters most.
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