Strategy & Leadership

New global survey highlights the hard costs of organisational complexity—and suggests some ways to mitigate it

October 19, 2015

Global

  • 55% of all executives surveyed say their organisation is very or extremely complex; only 1% say it’s not complex at all
  • 44% say both that their organisation is very or extremely complex and that it’s very or somewhat difficult to get things done
  • 55% of executives say that organisational complexity has cut into their profits over the last three years
  • Respondents highlight a few tactics for reducing complexity as more successful than others—most of them rely on consistent, long-term executive leadership to succeed

The Economist Intelligence Unit (EIU) has today (October 19th) published the results of a new study: . The report, sponsored by SAP, explores organisational complexity’s causes and effects as well as ways to mitigate it. Executives reported they spend an average of 21% of their time managing complexity instead of undertaking more productive tasks. If that share of time could be cut in half, the EIU estimates that 8.6 million hours could be spent more productively every week by executives in the US alone—that is 45 minutes per day per executive. 

These are among the results of a survey of 331 executives drawn from companies across all regions and industries and with more than $500 million in annual revenue.

The most successful ways to reduce complexity cited by executives were to create cross-functional roles, implement new decision making processes and implement new technology. However, the most successful approach—creating cross-functional roles—was only found helpful by 56% of respondents whose companies had tried it. The most commonly cited reasons when efforts to reduce complexity failed entirely were poor change management, a culture resistant to change, lack of buy-in across the enterprise and too much data or information to manage.

Both the successful tactics and the reasons for failure appear to relate to leaders making decisions to reduce complexity and following through on them—or not. In that context it is notable that 24% of C-level respondents, compared with 9% of other respondents, said it is easy to get things done at their organisation.

Josselyn Simpson, senior editor at the EIU, said:

“The survey results suggest that consistent leadership is crucial to reducing complexity, but that most senior leaders see less pain from it than other employees. This may be one reason that so many companies are slow to address complexity.”

 

The report is available to download .

 

Press enquiries:

Mathew Hanratty, corporate communications manager
+44 (0)20 7576 8546

Josselyn Simpson, senior editor
+01 212 698-9728

 

Notes to editors

The report is based on a global survey of 331 senior-level executives in July and August 2015. Respondents

were drawn from a range of industries, including 13% from financial services and 11% from each of IT and manufacturing. Thirty-two percent were from companies with annual revenue of $10b or more; 19% from companies with annual revenue of $5b-$10b; 31% from companies with annual revenue of $1b-$5b; and 18% from companies with annual revenue of $500m to $1b. On a regional basis, 16% of respondents were from China; 20% from the rest of Asia; 33% from Europe and the Middle East; 15% from North America; and 16% from Latin America.

 

About The Economist Intelligence Unit

The Economist Intelligence Unit is the world leader in global business intelligence. It is the business-to-business arm of The Economist Group, which publishes The Economist newspaper. The Economist Intelligence Unit helps executives make better decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies. More information can be found at or .

 

SAP (NYSE: SAP), and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. See for additional trademark information and notices. All other product and service names mentioned are the trademarks of their respective companies.

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