The Bane of Complexity Part 4: Individual vs. Institutional Perspectives

By Kevin Meyer

While experiencing and exploring the waste of unnecessary complexity, I came across a good article (believe it or not) in the latest McKinsey Quarterly.  The reason it was more interesting that a typical MQ article was because it focused on how employees and managers view complexity from different perspectives – something we should be aware of as we try to enhance respect for people.

Despite widespread agreement that organizational complexity creates big problems by making it hard to get things done, few executives have a realistic understanding of how complexity actually affects their own companies. When pressed, many leaders cite the institutional manifestations of complexity they personally experience: the number of countries the company operates in, for instance, or the number of brands or people they manage. By contrast, relatively few executives consider the forms of individual complexity that the vast majority of their employees face—for example poor processes, confusing role definitions, or unclear accountabilities.

This is not a trivial difference in perception. Our experience suggests that such a disconnect highlights a blind spot many executives have when it comes to managing complexity effectively.

So think about that.  Many of us are in leadership roles and we're dealing with imposed complexities of customer and supplier relationships, financial relationships, and the like.  At the same time we're in positions where we operate within a very small subset, or perhaps even above, the rules and processes that govern our workforce.  Do we really understand their world?

What is the impact of the individual complexity that our folks experience, how does that diminish our desire to promote the oft-forgotten respect for people pillar of lean, and how does it diminish the value we try to create for our customers?

To better understand the issue the authors use a case study of a growing manufacturing operation.

Executives at the manufacturer knew they had a problem with complexity.
Rapid growth in the company’s Australasia region was requiring
significant management attention and travel time and, consequently, was
making it difficult for the senior team to manage effectively there and
across the company’s two other regions.

For most employees, however, such institutional complexity didn’t
matter. They struggled instead with forms of individual complexity—for
example, processes that had initially been effective but over time had
become increasingly bureaucratic. Many employees, for instance, were
frustrated both with how long it took for decisions to filter through to
the front line and the amount of work required to implement them. Duplicated roles and unclear role definitions, which left several groups accountable for
sales forecasting and other key activities, only exacerbated the
problems. The result was too much time spent on managing internal
processes and not enough on understanding customers’ needs.

So what did they do? 

To take stock of the situation, the manufacturer launched a survey that
asked employees about the clarity of roles and accountabilities across
the company, whether systems and processes were linked effectively, how
much coordination individual jobs required and how predictable they
were, and, very simply, how hard it was for individuals to get things
done and to make decisions.

Armed with the survey data, the manufacturer constructed several “heat
maps” to help senior managers pinpoint where, and why, complexity was
causing trouble for employees. Each map showed a particular breakdown—a
region or function, for example—and how much complexity of various kinds
was occurring there, as well as the level of coping skills employees
possessed.

Generally I'm skeptical of such efforts, especially since the results are rarely interpreted well and even if they are little action is taken.  But we can still learn something from the author's analysis of the activity.  For example, the four forms of complexity:

• Imposed complexity includes laws, industry
  regulations, and interventions by nongovernmental organizations. It is
  not typically manageable by companies.
• Inherent complexity is intrinsic to the business,
  and can only be jettisoned by exiting a portion of the business.
• Designed complexity results from choices about
  where the business operates, what it sells, to whom, and how. Companies
  can remove it, but this could mean simplifying valuable wrinkles in
  their business model.
• Unnecessary complexity arises from growing
  misalignment between the needs of the organization and the processes
  supporting it. It is easily managed once identified.

Without quoting a huge amount of detail from the article, here are a handful of specific actions the company took to reduce complexity.

For example, to tackle the confusion that had arisen between company
headquarters and the country office, the manufacturer redrew its
functional boundaries so that marketing and other groups served either
the country office or corporate headquarters—but not both.

To improve sales and forecasting processes, the manufacturer zeroed in
on the information its marketing employees needed most: insights on
likely sales volumes given customer needs and the competitive situation.

Meanwhile, the company simplified the sign-off process by building it
into its regular business-planning activities, thereby providing more
regularity and clarity around the timing of decisions.

Finally, to tackle the HR problems, the manufacturer put in place a
consistent talent review process across the business that focused much
more on performance-management conversations and developmental
discussions.

An interesting final point: people react to complexity differently.  Some actually thrive on it.  So developing and implementing programs to reduce complexity can have some strange effects.

Whenever companies tackle complexity, they will ultimately find some
individuals who seem less troubled by it than others. This is not
surprising. People are different: some freeze like deer in the
headlights in the face of ambiguity, uncertainty, complex roles, and
unclear accountabilities; others are able to get their work done
regardless. Companies need to locate the pockets of individual strength
and weakness in order to respond intelligently.

The lesson: how you perceive complexity may not be how others in your organization perceive it.  Perception depends on context and role.