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A random walk through management theory with the occasional intercultural critique.






Friday, June 20, 2014

Reducing Complexity

The Boston Consulting Group (BCG) created an “index of complicatedness,” based on surveys of more than 100 U.S. and European listed companies. Measuring this over the past 15 years showed the amount of “procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed in each of those firms has increased by anywhere from 50% to 350%.” This according to Yves Morieux as published in his TED talk and “5 Rules for CEOs to Simplify Their Job,” in CEO Briefing Newsletter on ChiefExecutive.net (17.3.2014).
According to BCG analysis over a longer time horizon, “complicatedness” has increased by an average of 6.7% a year over the past five decades. In such complexity, apparently managers spend 40% of their time writing reports and 30% - 60% of it in meetings. With little time for teamwork, employees are often misdirected and end up being disengaged and dissatisfied. Such low levels of engagement lead to less productivity. Complexity appears to be a problem, so how can leaders help reduce it and/or reduce the effects of complexity?
Here’s how to reduce complexity followed by further considerations (“et alors”)
Reducing Complexity
Referring to “smart simplicity” the author proposes five rules to reduce complexity, increase engagement and hence productivity:
Understand what others do
Understanding what others do can have far-reaching implications for the organization. The author cites the example of engineers building machines that are subsequently hard to maintain; whereas it would be better during the build to understand what the maintenance people might need to do...
Reinforce integrators
“Integrators are existing managers that you as a leader must reinforce so that they have power and motivation to make others cooperate.” It is not more rules and procedures, but delegation that makes an organization more effective. Unless you empower people, they will withdraw.
Create feedback loops
The consequences of peoples’ actions are often invisible in a large organization. To improve, the author cites the example of a car manufacturer which rotates the design engineers to become maintenance engineers 3 years after the launch of the car: they become part of a very effective feedback loop.
Increase reciprocity
Reciprocity leads to cooperation: reward those who do and blame those who don’t. Lego Group CEO says “blame is not for failure, it is for failing to help or ask for help.” This makes it in everyone’s interest to be transparent and ask for help before a potential problem becomes an actual problem.
Human Resources
The author’s fifth point is to actually apply the first four points to HR management! It is not creating more complexity, it applying the simplicity of the above four points to all HR processes. In a sense, it is embedding the principles in everything the organization does.
Et alors
The above can be distilled into one key word: “leadership.” Without it, complexity tends to “take over” in large organizations… Leadership is the counterweight, the balance to level out the complexity. Even senior executives in large companies can sometimes “withdraw” to management: organizing, controlling, checking details, and reviewing (or even blaming). Essentially, “management” from such a senior level can exacerbate the complexity in the organization. What is needed is leadership: setting strategies rather than just organizing; communicating visions and missions rather than just controlling; constantly reviewing the big picture rather than checking details; and rewarding rather than just reviewing.


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