In MIT’s Sloan Management Review Julian Birkinshaw and Suzanne Heywood miss an opportunity at a fun knock-out title, so I’ll take it. However, the content is an excellent view into how complexity can negatively impact a business’s ability to function effectively.
Let’s follow the trail…
- If your company is too big to manage, then by default it is unmanaged.
- If your company is unmanaged, its survival relies on chance (good luck or bad).
- If your company has bad luck then it fails.
- Thus, if your company is too big to manage, it is too big to succeed. (Of course, your company could have good luck. Good luck with that plan.)
After interviewing executives at 900 companies Birkinshaw and Heywood found complexity caused problems,
“…from weak customer responsiveness and inefficient processes to high levels of confusion and stress among employees.”
As a customer advocate let me hone in on how complexity can hurt customers.
- Lost Customers – Organization complexity can mean that customers don’t know who to contact to receive support. Companies are so complicated that they need to hire gate-keepers. These gate-keepers are a source of knowledge but only of the organization type. Their domain expertise is to know who to contact for what. They are the yellow pages of complex companies.
- Expensive Products – Complex products hinder product implementation, thus adoption, thus any chance at realizing ROI (whether ROI is measured in dollars or happiness). How much positive word of mouth marketing should you expect to garner when the product can’t be used?
- Slow Responses – Complexity can reduce the speed in getting answers to simple questions which may open the door to competitors. When do customers welcome slow service when the competition can provide the same service faster?
- Stuck in Neutral – Customers can’t purchase a product they need when they need it. Complex processes delay or prevent sales from being completed. How many times has a contract been so convoluted that the customer did not know to what they were agreeing?
The pivot point is that when complexity gets in the way of satisfying customers, big problems are on the horizon… unless you’re fortunate enough to receive a federal bailout. Then, even if your company is “too big to manage” and indeed, “too big to fail”, it may also be “too big to succeed”, which in the end is just “too bad for customers.”