Low value work and internal complexity
Internal complexity is visible in Organisations as low value work.
We define Complexity as: “The inefficient and unnecessary waste of time, money and talent on activities which have marginal impact on an Organisation’s Purpose and Strategy.”
Complexity synonyms. You might also see complexity referred to as bullsh*t, bureaucracy, clutter, crap
Why care about Complexity?
We’ve yet to find an organisation which is optimally simple. By that, we mean time, money and talent is optimally deployed to those activities which create the most value in achieving Purpose and driving Strategy.
Organisations are awash with complexity and the low value work this creates. This complexity blocks innovation, slows growth, decreases agility and disengages people.
Complexity creates drag and friction. It distracts time, money and talent. It can be hard to pinpoint and hard to measure, but we all feel it. PWC estimate that 30% of all frontline staff time is spent on non-value adding activity.
The symptoms of internal complexity vary from Organisation to Organisation. But many remain common and consistent:
- Multiple meetings. Many people, little purpose and even less outcome.
- MegaByte. Very similar but altogether different IT Systems.
- Another new initiative. Start but don’t always stick. New things are added without old things being taken away.
- All change. Amended or new policies, procedures, rules and structures.
- Protracted processes. Not easy to get even the most basic things done.
- Busyness. Frustrated, hard-working people spinning wheels.
- Excess email. Overflowing inboxes, with CC’ing, BCC’ing and FYI’ing.
- Analysis Paralysis. Copious KPIs and rambling reports.
- No standard. Different ways of doing the same things.
- Everything’s a priority. Trying to do too many ‘strategic’ things.
- Decisively indecisive. Slow sign-offs and decision-making.
- Status quo conformity. “It’s always been like this”, “We’re just complex”.
If you recognise in these your Organisation, you likely have an internal complexity problem. Your organisation is wasting opportunities to be doing bigger, better things.
The complexity trend is not your friend
The research is unequivocal: complexity is growing. BCG calculated this average increase to be 6.7% a year over the last 50 years.
Specifically, in the last 15 years BCG found:
- Time spent reporting information has increased by 40%
- Number of emails received per day has trebled
- Procedures, management layers, decision approvals and committees has increased by between 50% – 350%
The consequences of complexity
It should be no surprise that such an increase in complexity has consequences:
- Lost productivity. The average company loses 21% of its productive power to time-wasting interactions (Bain & Co and EIU)
- Wasted time. In the most complex organisations, managers can spend 40% of time reporting information and 30% – 60% of time in internal meetings (BCG)
- Lower engagement. Employees in the most complex organisations are three times more likely to be disengaged (BCG)
Complexity creates drag
“Speed is the new currency of any business”. Marc Benioff, Salesforce.com
In a rapidly changing world, speed really matters. The pace of change will never be as slow as it is today. Dropbox, Instagram and Uber are just three examples of billion-dollar businesses setup in the less than 15 years.
Speed allows organisations to innovate more, grow quicker and change faster. But complexity and speed do not co-occur. Complexity is an antonym for speed. Complexity is the drag which slows an object down, or the cholesterol which slowly builds up inside the bloodstream undetected.
Inspired by our friends at The Ready, internal complexity can be viewed as a future tax. If complexity costs the organisation more in time, money or talent than it generates in value – intervention is needed.
A complexity tax has a current cost (time, money or talent to complete the activity) and a future cost (the future value of the highest value activity the organisation could have been doing).
The bigger the organisation, the bigger the complexity tax. Complexity creates diseconomies of scale. The more moving parts there are in an organisation, the more complexity there is.
Complexity is set to get worse
Consistent with BCG’s research, thinking guru Edward de Bono remarked there’s never a natural evolution to simplicity. Without intervention, all organisations, including yours, will naturally become more complex.
If the business case (and common sense) is so obvious, just why does complexity prevail in the Organisations we’re all a part of?
Complex is easier than simple. Complex has become the status quo. In a complex world, our solution to complexity is complexity. Complexity happens automatically, whilst simplicity requires a concerted effort. A bi-product of change and growth is complexity. In fact, complexity can often be a consequence of success.
Organisations are full of people, and people are hardwired to create complexity.
The complexity problem stems from inside, not outside
It would be easy to assume that such an increase in complexity is due to a rapidly changing world. Whilst that’s clearly a factor, BCG found that complexity generated inside organisations is growing six times quicker than complexity generated externally. No wonder 94% of Executives polled by Bain & Co in Organisations with over $5bn in sales say it’s internal complexity which is preventing growth, not competitive threats or a lack of opportunities.
Branding agency Siegel+Gale found that only 1 in 5 employees feel their workplace is simple. However, rather inspiringly, employees in those simple workplaces:
- 95% trust their leaders (vs. 69% in complex organisations)
- 65% will recommend their workplace (vs. 11% in complex organisations)
- 87% feel psychological safety in expressing their opinion (vs. 38% in complex organisations).
Worryingly, and perhaps unsurprisingly, they found only 2% of people in complex workplaces find it easy to innovate.
What causes complexity?
Complexity appears for a multitude of reasons. We group these by contextual, structural and cultural factors.
Contextual factors include the market the organisation plays in, how the organisation has grown or changed through, for example, M&A activity, and whether the industry is regulated.
Structural factors include how the organisation is designed, what technology it uses and what data it has available. Organisation designs are largely unchanged from Frederick Taylor’s time when thinking was separated from doing. The knowledge-based workforce and access to infinite data make these designs less relevant. Changing contexts are addressed with new data, new teams, new processes, and new rules.
However, more often than not, complexity manifests from culture. Complexity is created, usually with good intent, by our human makeup. As a race, we’ve progressed and survived by adapting, adding, advancing, creating and inventing things. Similarly, people have progressed and ‘survived’ in organisations for the same reasons, even if improving things can actually do more harm than good. Specifically, the way people think (mindsets), behave (behaviours) and act (habits) create complexity.
We’ve found mindsets which create complexity to include:
- More creates more: A belief that activity translates to value
- Busy means good: Being busy has become a ‘badge of honour’
- Time is different to money: Time is not discussed, planned or measured in the same way as money
- Everything needs to be perfect: A belief that every activity must be absolutely perfect, regardless of the value it creates
Behaviours which create complexity include:
- Lacking focus: Working on too many priorities. Not clear on how work relates to Purpose and Strategy
- Lacking clarity: Making it difficult to decipher between critical information and noise
- Lacking collaboration: Having the wrong people working on the wrong things
- Lacking courage: Becoming complacent with complexity. Not challenging ourselves, our bosses and our teams to find simpler ways
- Lacking empowerment: Low trust and delegation creates work bottlenecks
Habits which create complexity include:
- Tinkering: Making minor changes that reflect personal preference, even though the end result won’t be substantially better
- Reinventing: Creating a new way of doing something that is already done well enough
- Not saying no: When you agree to do an activity that prevents you from doing something more valuable
- Not questioning why: Doing something you don’t see the value in but not questioning it
We all have a duty to consider how the way we think (mindsets), behave (behaviours) and act (habits) creates complexity. Leaders and Managers set the tone. And there’s work to do. Wharton Business School found that only 27% employees believe the day-to-day actions of senior leaders represented simplicity.