The hidden side of complexity

Many in the business world have a tendency to make things more complex than they need to be, when simple solutions are faster, less expensive and often more desirable. Ron Ashkenas explains how it is up to individuals to break the cycle of complexity.

For thousands of years, civilization has been struggling with the challenge of how to make things work in the simplest possible way. As Confucius noted long ago: ‘Life is really simple, but we insist on making it complicated.’ To counter this complexity in the corporate world, many companies try to include simplicity as part of their image, hoping that if they can give the impression that their products and services are simple, elegant and easy-to-use, it will provide a competitive advantage. Others emphasize simplicity in their vision and value statements, with the idea that they should strive to make it easier for customers to access the firm and for employees to get things done.

Why is it necessary, however, for individuals to be constantly fighting a war against complexity? Why do we continually make things more complex than they need to be, especially when we know that simple solutions are faster, less expensive and often more desirable? As Leonardo da Vinci said: ‘Simplicity is the ultimate sophistication’ – something the late CEO of Apple Steve Jobs and his designers demonstrated over and over. So given this knowledge, why don’t leaders just design simple products and run our organizations more simply from the beginning?

The answer to this question is that everyone, individually and collectively, unconsciously and unintentionally, creates unnecessary complexity – and when society puts together dozens, hundreds and thousands of complexity-creating people in organizations, you end up with companies that struggle to make things simple. However, the good news from this dynamic is that if individuals create complexity, then individuals can do something about it. As the cartoon character Pogo used to say: ‘We have met the enemy and he is us.’ So with this in mind, the purpose of this article is to help managers better understand how they create complexity, both individually and collectively – and what they can do about overcoming it.

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From complicated to complex

To understand managers’ role in creating complexity, it is important to differentiate between the terms ‘complicated’ and ‘complex’. Modern organizations produce complicated products that have thousands of parts, such as jet engines, automobiles or electronics, often with supply chains and distribution networks that stretch across the globe. These products need to be put together in just the right way, often involving many people in different locations. Making this happen is indeed complicated. However, when the parts are put together correctly and everyone follows the prescribed routines, the outcomes are predictable. The engine (or car or electronic device) works and the organization that makes it functions effectively.

Organizations, however, are not machines, but instead are composed of human beings who often do not follow prescribed routines. Sometimes this is because of human error, lack of training or insufficient skill. At other times, a person thinks of a better or different way to get something done. And in other cases, there is no prescribed routine in the first place. In addition, people in the workplace interact with each other in rational and emotional ways, and influence each other’s behaviour, sometimes positively and sometimes not. In other words, when human beings are involved, the outcomes become less predictable – and more complex.

In many ways, the manager’s job is to dampen down and control this human tendency to create complexity, variability and surprise. Organizational structures, rules, procedures and standards are all meant to keep people’s behaviour within certain limits; audits, controls, performance measures and rewards create incentives to behave in defined ways; and tools such as Lean and Six Sigma continuously squeeze behaviour into defined boundaries.

But all of this effort only goes so far because, after all, people are people. They do not always follow rules. They have good days and bad days. They get angry or overly excited. They have new ideas and take initiative. In addition, we live in an environment that is changing faster than ever before in human history, and they have to adapt to these changes. So while many organizational forces push us towards conformity and predictability (which are necessary to produce complicated products and services), their human nature as well as their creative and adaptive response to the changing environment creates unpredictability and complexity. It is a continual balancing game, with pushes and pulls between standardization and uniqueness, controls and innovations, constraints and freedom, simplicity and complexity.

How complexity gets multiplied

What many managers do not realize is that the way they respond to inevitable complexity sometimes, completely unintentionally, creates even more complexity. For example, the CEO of a global consumer products company was concerned about variations in sales performance across different product categories, distribution channels and geographies. To reduce the variation and increase predictability across this far-flung, complex empire, he initiated a monthly operating review for his senior management team. In preparation for this review, hundreds of finance people at the corporate office and across the divisions pulled together performance data and then sliced, diced and analyzed it in every way possible. While useful for a while, eventually the preparation of the monthly operating report became an industry unto itself, with many staff members devoted to it full time; and the monthly meeting became more of a ritual than a discussion. Only when the CEO retired did his successor decide to do away with the process and just review performance exceptions – which freed up hundreds of financial analysts and senior executives to do more productive work.

The point of this story of course is not that the CEO was a bad manager. In fact, the company did very well under his watch. But his approach to controlling and managing the complexity inherent in his business actually multiplied the complexity, increased costs and made it more difficult for people to get things done quickly and efficiently.

Many of the most egregious, wasteful and unnecessarily complex activities in organizations have their origins in wellmeaning attempts to control variability and unpredictability. Many years ago, for example, I saw a lathe operator whose gloves had worn out, turn off his machine and spend two hours securing a new set of safety gloves. The procedure involved going to a different building, filling out forms, showing the worn-out gloves to a procurement clerk, signing out the new gloves and then returning to his machine. When asked why the procedure was so time-consuming and convoluted, he explained that once upon a time a box of gloves had gone missing. So management decided not to trust operators to replace the gloves on their own (and have them controlled, centralized procedure. The result of course was even more complexity, and a minimal saving in lost gloves – offset by major reductions in productivity and morale.

Two years ago, University of Warwick Business School professor Simon Collinson, in conjunction with the Simplicity Partnership in the UK, interviewed 2,000 business leaders from Fortune Global 200 companies about the nature of complexity in their organizations. Their finding was that a certain amount of complexity is not only inevitable, but actually good for performance. This is the complexity that is created in response to changes in the environment, customer requests or competitive threats. In other words, this kind of complexity is adaptive and helps organizations navigate human and external ups and downs. But the study also found that most organizations contain some amount of complexity that is not performance enhancing, but drains value out of the company. Collinson concluded that this type of ‘bad complexity’ reduced profitability (EBITDA) by more than 10% (see figure 1).

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Over the past several years, my colleagues and I have also conducted surveys about the sources of complexity in organizations. Using a web-based instrument in a dozen different companies, we collected the views of more than 1,400 managers about where complexity comes from, using the framework from my previous writings as a starting point. What we discovered when we analyzed 1,602 comments with 2,100 distinct, coded examples of complexity was that the most often-cited source of complexity is managers’ own behaviours, followed by poor processes, changing structures (e.g., reorganizations or too many layers) and too many products/services. In addition, however, the survey respondents noted that complexity also derives from the way managers respond to the complexity of processes, structures and products. We call this ‘behavioural aggravation’ because it amplifies complexity instead of reducing it. For example, in talking about the issue of having too many products, a manager noted: ‘We could support an even broader product portfolio if there was less ambiguity and uncertainty of ownership.’

Similarly, in regard to structural complexity, a manager described how behaviour exacerbates the issues, as follows: ‘The divisional structure has created a range of silos that do not communicate. As a result, there is a lack of clarity as to who is responsible for what. Few people are in a position or capable of taking responsibility and making things happen in an effective manner which will add value across the organization. So the culture is to do nothing and form a committee.”

In short, although complexity comes from a number of sources, the main source is managerial behaviour – most (or all) of which is unintentional. The reality is that most managers try hard to adapt to the changing environment of their firms, and adjust to the individual needs and idiosyncrasies of their people (and themselves). But in doing so, they often create even more complexity (see figure 2).

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Breaking the vicious cycle

There is no easy answer or magic formula to help managers avoid creating complexity. It is part of being human, and we all do it, probably more often than we care to admit. But some managers have an innate ability to cut through complexity, get to the essence of an issue, and find ways of making things simpler and more straightforward. Instead of being ‘complexifiers’, they are predisposed towards simplicity. I call these people ‘simplicity-minded managers’, and they tend to have some or all of the following five characteristics:

  1. Ruthless prioritization:

One of the most common ways that managers create or amplify complexity is to take on too much, which not only makes it difficult to get anything finished, but also makes it difficult for subordinates and partners to know what is really important. In contrast, simplicity-minded managers focus on the few most critical priorities and make sure that all activities contribute directly to their accomplishment.

  1. Ability to say ‘no’:

To stay focused on the critical priorities, simplicity-minded managers do not get distracted by extraneous assignments and opportunities. They are able to push back on people who want to give them other things to do, even when they sound enticing or come from ‘on high’. They know that taking on another task/activity/ meeting will push something else out of the queue, and that therefore it should be a conscious decision, instead of a knee-jerk reaction or something done out of deference. This does not mean that simplifying managers shirk work or do not do their fair share; rather they raise the question about the trade-offs involved in adding something else.

  1. Willingness to iterate:

Complexity – creators tend to be focused on perfection – not wanting to move forward until all of the data is collected, all of the questions answered, all the dots connected and everything is ready to go. Unfortunately, there is almost always some new information out there or a new development that needs to be taken into consideration – so more often than not, complexity-creating managers take a long time to get things done, frustrate people around them, change definitions of what is needed, and do not produce what is needed. But simplifiers embrace imperfection and treat projects like rapid-cycle experiments and start-up ventures. They do ‘just enough’ to move into action, get feedback, learn, modify and improve. They adapt to the constantly changing environment and accept the fact that progress is not always in a straight line.

  1. Communicate the essence:

Complexity-creating managers like a lot of data, and a lot of words. They often try to communicate everything, in great detail, to make sure everyone understands everything. If you have seen PowerPoint slides that look like Word documents, or presentations with dozens of slides, then you know the issue. This kind of over-done communication, while well intentioned, is often driven by the fear of not being able to answer every question or of appearing stupid. So to compensate, complexifying managers will try to address every possible issue in advance – which usually leads to wasted time and effort, and too much information for anyone to absorb. But simplicity-minded managers have a knack for cutting to the chase and conveying what is important, and nothing more. They are also comfortable admitting they do not know everything and may be wrong about some things – which allows communication to be interactive, genuine and effective.

  1. Engage the team:

Since complexity creators try to make things perfect, they often feel no one can do a job better than they can. So instead of delegating work, or reaching out for help and input, they become bottlenecks, making others wait until they have got things right. This is exacerbated by the tendency to take on too much and not prioritize, which is why complexity creators often seem to be overwhelmed, over-worked and frazzled. In contrast, simplicity-minded managers are comfortable engaging others, and letting colleagues and associates find better ways of getting things done. They also have a high degree of self-confidence that allows space for other people to shine, without trying to be the smartest one in the room.

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Not everyone is born with simplification in their bloodstream, which is why most of us struggle with complexity. Managers can learn to develop simplification skills over time and gradually break the vicious cycle of responding to complexity by creating more complexity. To do so, here are three simple (but not necessarily easy) steps:

First, hold a mirror up to yourself and consider the extent to which you create unnecessary complexity. You can use the questionnaire (left) as a starting point, or just do some self-reflection. Try to be as honest with yourself as possible. It is OK to say, “My name is _ and I create complexity.” Second, ask some trusted colleagues, friends or even subordinates to give you feedback about your tendencies to create complexity. Perhaps ask them to fill out the questionnaire and compare their answers with yours. You might even bring this group together and have a collective discussion of ways that you (and they) unintentionally create complexity. The reality is that none of us can see our own patterns in the same ways that others see us. So to make sure the mirror you hold up is not distorted by your own biases, you need to get some help.

Finally, based on what you learn from the self-assessment and feedback, experiment. Select an area where you tend to create complexity and try to approach it more simply. One manager focused on prioritization by getting her team to list all of their activities and projects on Post-it notes, putting them on the wall, and then sorting them to see which ones were directly supporting the department’s key strategies. This led them to eliminate a number of non-critical initiatives and consolidate several others, which simplified everyone’s work. Another manager instituted a “two-slide limit” for presentations to force himself and his team to communicate more simply. A third manager reinforced the use of iteration by having more frequent ten-minute “work in process” updates with her team rather than waiting for formal monthly reviews.

Not everyone is born with the ‘simplicity gene’ and, in fact, many of us respond to the complex world around us by creating more complexity. But it does not have to be that way. By becoming more aware of the ways that you create complexity, and experimenting with ways of countering it, over time you too can become a simplicity-minded manager.

Ron Ashkenas is a member of Duke CE’s global educator network, a senior partner of Schaffer Consulting  and an internationally recognized consultant and speaker on organizational transformation, acquisition, integration,simplification and innovation.

 

Key points

Complexity comes from a number of sources, the main source is managerial behaviour. Most managers try to adapt to the changing environment of their firms, and adjust to the individual needs and idiosyncrasies of their people (and themselves). But in doing so, they often create even more complexity. There is no easy answer or magic formula to help managers avoid creating complexity. But some managers have an innate ability to cut through complexity, get to the essence of an issue, and find ways of making things simpler and more straightforward. Instead of being ‘complexifiers’, they are predisposed towards simplicity.