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Managing complexity

January 27, 2011

complex

Complexity has become an excuse for some businesspeople to preserve the status quo, to abandon thinking ahead and to push strategy to one side, because they don’t believe it can be flexible and responsive enough to help them in a rapidly changing world.

KPMG recently asked 1,400 corporate decision makers in 22 countries about the issue of complexity and its impact on their business.

Here are some of the key findings:

1. 94% agreed that managing complexity is important to company success

2. 70% agreed that increasing complexity is one of the biggest challenges their company faces

3. Some businesses are facing more complexity than others- finance and technology stand out in this respect as having faced considerable complexity over the past couple of years and see more of it coming in the future. The energy, diversified industrials and consumer sectors all believe business is going to become more complex in the next couple of year.

4. The biggest factor causing business complexity is regulation, followed by information management. Increased pace of innovation is ranked 4th, but executives see it becoming a much more important factor.

5. As the chart above shows, complexity isn’t all about challenges, it’s also about opportunity, well for 74% of senior execs. Complexity can be the catalyst to gain competitive advantage, create better strategies, expand into new markets, make the company more efficient, create new products and focus the existing business strategy.

6. The most important approaches to dealing with complexity and significantly ahead of the others, were improving information management and business reorganization. New approaches to HR, geographic expansion, influencing policy, mergers and acquistions and outsourcing followed.

7. The actions taken to manage complexity have met with mixed success- with only around 40% of senior executives rating one action as very effective.

The study seems to suggest that complexity is already something business takes seriously.

However, there are some things companies need to be doing better like, understanding what’s driving the complexity in their business and how to challenge it today and deal with it for the future.

Posted by Ed Cotton

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