Advisor insights from the field

Sources of Business Complexity

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The 2010 IBM Global CEO Study Capitalizing on Complexity included the following quote: “Today’s complexity is only expected to rise, and more than half of CEOs doubt their ability to manage it.  Seventy-nine percent of CEOs anticipate even greater complexity ahead.”

Undoubtedly, complexity is a key issue for organizations.  Indeed, complexity is one of the primary underlying issues that prevents or stymies organizational growth.  Over the years, I have come across a number of resources that identify various sources of complexity.  Here is a conglomerated (though not exhaustive) list:

  1. Growth in customers – both the number of customers served and the geographic service area.
  2. Growth in the number of suppliers
  3. Extended geographic area of operations, facilities and personnel (think different time zones)
  4. More options for products and services
  5. Increase in personnel
  6. Technology acceleration and fragmentation – an increase in technology advances as well as the number of different technology platforms (that often don’t easily integrate data)
  7. Added regulation – greater reporting and compliance monitoring requirements
  8. Growth in management organizations (layers, departments, and information)
  9. Increased development of the global competitive environment

A common response to increasing complexity is to burden the organization with extra processes that really only serve as temporary fixes.  The larger bureaucracy increases cost.  Business leaders must be disciplined in their approach to these new challenges so as not to compound the complexity from without by increasing the complexity within.

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