Organisational complexity is a topic on which executives too often just throw up their hands, feeling its burden but assuming there’s nothing they can do except struggle on. However, a recent Economist Intelligence Unit (EIU) survey, sponsored by SAP, suggests that in this case the truism that “what gets measured gets managed” is very much applicable, and worthwhile. One benefit: cutting the time executives spend managing complexity in half could save those in the US alone as much as 45 minutes a day, we estimate.
We surveyed 331 executives from around the world, all at companies with at least $500 million in annual revenue. Forty-four percent of them said that their company was both somewhat or very complex and that it was somewhat or very hard to get things done there. They’d tried almost everything to reduce complexity, even slowing their own growth. But when we asked those who had tried each tactic which were most useful, the highest share finding anything useful was 56%—in other words, nothing had worked very well.
A lack of committed, consistent leadership is the key reason the survey suggests for those failures. Some data point to a contributing factor: a mismatch between the tactics companies pursue and the metrics they use to set their goals for reducing complexity. Two of the top three tactics, for example, are aimed at increasing collaboration—39% of respondents said their company had promoted a culture of collaboration and 30% said they’d created cross-functional roles to facilitate it. But only 17% and 14%, respectively, said that when setting goals for reducing complexity their companies measured the share of time managers spend collaborating with other managers or the share of time employees spend collaborating outside their department.
Of course, a measure of collaboration is the right metric only if increasing collaboration is one of your tactics. The key to using metrics as part of your campaign to reduce complexity is to find the tactics that will best help your company reduce complexity, find a few metrics that align with them, ensure those metrics are simple to apply and understand—and then use progress against those metrics relentlessly to report progress. Other examples of fairly common metrics are reduced layers of hierarchy, reduced number of steps in an approval process and reduced number of technologies to accomplish a single task—and there are many, many others.
When metrics are more aligned with tactics, corporate leaders trying to reduce complexity—who also have to be inspiring, make the case for change, role-model collaboration and promote process changes (along with doing their day jobs)—have at least a few hard numbers to rely on as they do all the rest. And as any change management expert can testify, showing progress with hard numbers builds morale and buy in for change.
The attention to detail is worth it, because, as the survey points out, complexity reduces profits at more than half of companies, and just cutting complexity in half would improve both corporate and individual productivity. Remember, for the average American executive that would free up 45 minutes every day.
Download the full report Taming organisational complexity, here.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
