Today, I spoke to Ron Ashkenas, who is a Managing Partner of RHS&A, and an internationally recognized consultant and speaker on organizational transformation and post-merger integration. His latest book is called Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done. In this interview, Ron talks about why companies are so complex right now, how managers can start simplifying processes at work, the four causes of complexity, and more.
Why are organizations so complex now? Does the economy have anything to do with it?
The increased complexity of organizations today has less to do with the state of the economy and more to do with the state of the world. Over the past 20 years the pace of technological and social change has accelerated and the world has become truly global, with communications and information technology that connects people on a 24/7 basis. While these developments present incredible opportunities, they also have changed the way that organizations and individual work.
For example, organizations are now more networked, both inside and outside; managers and employees have access to much more information than ever before, and are expected to absorb and deal with it in real time, across many time zones; customers now expect instantaneous responses to their issues; new technologies are being introduced at an accelerating pace; and new issues (e.g. sustainability, cyber-security, terrorism, environment, etc.) are emerging every day. Most of our traditional organizational structures and management processes are not equipped to handle all of these new developments. The result is increasing complexity as managers try to keep up with all of the new demands.
How can a manager stop making things complex and start simplifying their processes?
First of all, most managers are not trying to make things more complex. Instead, as they respond to the changing world described above, they are modifying processes and adding new requirements — without taking very much away — so that the net result is an organizational system that becomes unwieldy and difficult to understand. To counter this unintentional creation of complexity, managers need to make “proactive simplification” a conscious and deliberate part of their job so that it is just as important as strategic planning, budgeting, and performance management.
For example, in a pharmaceutical research organization, the desire to have more cross-functional participation in project teams, and engage more disciplines in the discovery process, led to huge project teams that included 40-50 people, all of whom were invited to meetings, sent information, and wanted to be involved in key decisions. For the project managers, the complexity was overwhelming and not very productive. To counter this complexity — which was completely unintentional — the senior leaders instituted a “fit for purpose” team process by which “active” team membership shifted during different stages of the project. This made it much simpler for the project managers who could work with small core teams, while still engaging the right people when needed.
- First is what I call “structural mitosis” — the tendency to add organizational units, locations and layers. Managers often respond to business issues by changing the organizational structure. And as more pieces are added to the structure, it becomes more complex to navigate. To prevent this, managers should make sure that the structure truly supports the business strategy; that similar functions are consolidated either physically or through common management direction; and that hierarchical layers are at a minimum.
- The second cause of complexity is “product proliferation” — which is when companies add new products and services (or variations) without eliminating old ones. As a result of product proliferation, companies spend excess resources supporting low-margin or low-volume products; sales people are less knowledgeable about core products; and customers find it more difficult to understand what the company is really offering. To prevent this type of complexity, managers should periodically assess and streamline their product or service portfolio; establish sunset guidelines for products and services; and get continual input from customers about what products and services are most needed.
- The third complexity-producer is “process evolution” — the continual shifting of the way that work is done. Most processes start off as “standard” and then go through ongoing changes due to new conditions, new ideas, responses to problems, etc. Some parts of the organization — such as manufacturing — have the discipline to constantly document and communicate any key changes. Most other processes — particularly corporate processes such as budgeting, planning, and the like — are not subject to these disciplines and end up growing and morphing in ways that make them overly complex. Managers can prevent this by periodically engaging in end-to-end process mapping; sharing and implementing best practices; and employing tools such as Work-Out and Six Sigma to non-manufacturing challenges.
- The fourth cause of complexity is “managerial behaviors” — the unintentional ways that managers communicate, give assignments, run meetings, and deal with people that creates complexity. Managers need to look at themselves in the mirror — or work with colleagues — to get feedback about what they may be doing to create complexity — and then set their own goals for what they can do differently to prevent this.
What strategies do major companies have that reduce complexity?
If a company wants to reduce complexity on a broad scale, the starting point is to make complexity-reduction a business imperative, and not just a nice slogan or part of a vision statement. Companies such as ConAgra Foods, The Nielsen Company, Proctor & Gamble and others that have done this and made simplification a key goal for every manager. In addition, these companies have employed the strategies described above to simplify the structure, streamline the product portfolio, reduce process variation, and improve managerial discipline. However, because they see complexity reduction as a business issue, these strategies are repeated over and over again so that they become a core competence both of the company and of its managers.
Should a manager be demoted or fired for making things more complex (costing the company more money/time)?
I would put it in a more positive frame: Managers should be rewarded and promoted for making things simpler. As I’ve said, simplification should be an ongoing managerial competence, and should indeed be part of a manager’s performance evaluation. Otherwise simplification won’t have “teeth” and won’t be taken seriously as a driver of business success.
Ron Ashkenas is a Managing Partner of RHS&A and an internationally recognized consultant and speaker on organizational transformation and post-merger integration. Ron was part of the original team that collaborated with then-CEO Jack Welch to develop GE’s Work-Out approach for creating a faster, simpler, and more nimble organization. He is also the co-author of The GE Work-Out (McGraw-Hill, 2002). Ron’s clients have included J.P Morgan Chase, Cisco Systems, and Pfizer. In addition to The GE Work-Out, his books include The Boundaryless Organization (co-authored with Dave Ulrich, Todd Jick, and Steve Kerr) which was published by Jossey-Bass in 1995, and was named one of the best business books of that year. His latest book is called Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done (Harvard Business Press 2009). He has been on the faculty of executive education programs at major universities including Stanford Business School, the Kellogg School at Northwestern, and the Weatherhead School of Management at Case Western Reserve.