Strategy, Legal & Operations
How can business leaders manage complexity in an evolving world?
Growth has always been a traditional marker of business success. It’s crucial to long-term survival, with the expansion of a company resulting in an increase of its market presence and profitability.
However, with growth comes complexity, especially in an interconnected global business environment.
To grow, your business needs to cope with different markets, increasing product and service categories, compliance challenges, and numerous customer segments and channels. And this is why you and your C-suite team has to manage complexity to achieve that goal.
The continued pressure for growth inevitably leads to complexity, which can be detrimental to some of the qualities that may have made your business work – whether that’s decision-making, productivity, customer service or innovation.
How can your business manage complexity and what are the factors behind it?
The complexity issues business leaders must solve
When an organisation gets larger, business processes and IT can get to a point where employees, customers and partners need to jump through a lot of hoops to find what they need.
When a business becomes more complex, it can become siloed. This results in employees concentrating on their own jobs and failing to collaborate in ways that can benefit the whole organisation.
Particularly problematic is the fact that complexity hinders innovation, which is crucial to businesses that want to create new product and revenue streams. Complexity kills collaboration and the ability of businesses to share information across teams.
It can also impact other functions such as the supply chain, HR, product development, and customer service. Products will take longer to get to market, opportunities could be lost, and businesses could rapidly lose the competitive advantages they began with.
Issues with complexity are particularly true in uncertain economic times, whether dealing with regulation, geopolitical uncertainty, exchange rate volatility, or even the availability of key skills.
Pressures that lead to complexity for medium and large businesses and that you should be aware of include:
Mergers and acquisitions
These are a key driver of business growth but will increase complexity with the addition of new data centres, applications and environments.
As businesses get larger, they may decentralise, with certain business units making their own technology decisions and running separate systems and applications.
This will cause problems for organisations looking to present a single source of financial or performance truth, or meet international compliance needs.
Greater business needs and demands
The digital technology that businesses need can put pressure on creaking IT infrastructure, which might not be in the position to handle the real-time decision-making, speed and agility that organisations require to handle changing and challenging business conditions.
Businesses might also be under pressure to support new products and services quickly. Servitisation, which means companies are offering new bespoke services, is becoming a factor. Some are even looking at changing their business models to differentiate themselves.
Disparate systems and changing requirements
Often systems will have been implemented at different times, which means connecting them up can be a complex job. Over the years, business needs may have changed, due to the introduction of new products and services.
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How can your business manage complexity?
Here are two opportunities where your business can manage complexity through technology.
1. Build in flexibility and agility to change business processes where needed
To successfully innovate, you should look at building fluid business and technology functions, with the simpler deployment, integration, and use of IT. There are a number of ways you can look at doing this as part of a digital transformation programme:
- Consolidating and rationalising applications, systems and data centres. Reducing a physical IT footprint could make it easier for your staff to manage, leaving them with more time to spend on innovation. Converging and integrating systems could also reduce complexity.
- Application modernisation and the replacement of legacy applications. Replacing your legacy applications can simplify IT and reduce the time spent on management. There is also the opportunity to use cloud-based applications.
- The unification of operating systems to a single environment. Streamlining an environment rather than dealing with multiple systems will reduce complexity.
- Outsourcing to third parties and cloud computing providers. Outsourcing complexity to managed service and cloud providers such as Amazon Web Services (AWS) can help your business eliminate complexity.
- Deploying automation and artificial intelligence (AI) tools and technologies. In all industries, there is the opportunity to increase productivity and efficiency through automation and AI tools and technology. Robotic Process Automation (RPA) is already used widely in a number of industries.
- The creation of a rich ecosystem. Allowing for the ready adoption of new technologies.
Embarking on digital transformation initiatives? You might consider replacing your existing enterprise resource planning (ERP) system with a business management solution to develop a flexible and agile core that can underpin and support your strategy.
Business management solutions have system-of-record capabilities, which makes up the essential core of a digital business. A solid digital core could be crucial in building differentiated and innovative solutions.
2. Connect the business in real time, making use of and monetising big data
Data has become a strategic asset that can be sold and exchange, creating a new economy. It is accessible to businesses that have the capability to use it and monetise data, turning it into profit and value.
It’s long been understood that data analytics can be used as a competitive advantage. But this can seem a complex undertaking, with the sheer volume, types and sources of data available.
That’s why you need to look at simplifying the process.
Take a look at how your company can seamlessly move data across the business and share it with your partners. This will need a platform that allows you to draw out the insights to create the new revenue streams that point the way forward.
Understand that complexity is not just a technology problem
It’s important for you to realise that complexity is not simply a technology problem. Corporate cultures, organisations and even the way people work can block efforts to address complexity.
Issues that your C-suite will need to solve include:
Weak IT governance
A lack of effective IT governance could lead to a number of problems. The use of too many disparate systems is certainly a big one, while they could also lead to the failure of IT-related projects, seriously impacting your business.
There is also a risk that initiatives are only deployed within your IT department, without alignment to overall business objectives. Expectations need to be managed. As a C-suite leader, you need to clearly articulate what’s possible, pick the right battles, and make regular small wins over time.
Resistance to change
Employees and senior management, especially if they’ve worked a certain way for many years, may be resistant to changes in their workflow or fearful about the impact of new technology.
This is understandable but if your business is to move forward, there must be acceptance – whether that’s in the form of a culture change or simply through training.
Final thoughts on managing complexity
Too much complexity is bad for business – don’t let it hamper your customer service offering, lower productivity or impact growth.
For example, all industries can get value from digital tools, offering fantastic opportunities to create value. But there’s always the risk that complicated applications and systems can hurt the business if you don’t make the right technology decisions.
The solution? Simplify your technology and processes, and empower your teams to be the best they can be.
The C-suite guide to digital business transformation
C-level executives need to invest time and effort in digital business transformation. Read this guide to find out why and discover the five tips that will help your business make it a reality.
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