Reduce Complexity and Rise Your EBIT!

AT Kearney has published a remarkable report on complexity: Easy to understand and unfortunately not so easy to implement! However, it is worthwhile the effort to look into this, as it could lead to an EBIT rise of 3 to 5%. Even more important: Improper complexity inhibits growth!

AT Kearney identifies 4 steps to implement complexity reduction:

1. Introduce a complexity control regime driven from a strategic perspective.
2. Control it by making complexity cost transparent and measurable.
3. Contain complexity, value AND cost, across the extended value chain.
4. Embed complexity control in control and governance processes.

Some additional guidelines:

• Maximize the value creating variety of your products.
• Minimize the non-value adding complexity.
• Maximize resource usage.

And that is all. So now it is your turn, and have fun! Perhaps I can provide you with some ideas how to take it from here. In an earlier blog I discussed the most important business trends according to McKinsey. These trends can help you, and provide you with concrete ideas:

1. Reduce interaction in your business processes.
2. Turn information into business.
3. Make use of smarter ICT solutions.

The Results2Match solution MyInformationVault helps you with just these 3 aspects.

And more important, as AT Kearney observes, complexity has no business owner. That implies nobody is responsible for reducing complexity. And if nobody stands up, then it automatically is a concern of the Chief Executive Officer (CEO). With the help of a capable and knowledgeable adviser he can do it: All necessary ingredients are mentioned in this blog! How about your growth inhibiting business complexity?

This blog is also part of a series on operational performance improvement. Other issues:

1. The benefits of an aligned supply chain (and how to realize that) (this blog)
2. Reduce complexity, and rise your EBIT
3. How many customers did you re-win this year
4. Food for thought: AMR Research presents the major risks for 2008
5. What benefits can I expect from a business process implementation

Results2Match has a strong vision on strategy, and how to link strategy to performance. That is how we deliver result driven implementations!

This blog is written by Hans Lodder. Hans is a very experienced change management consultant and interim manager. You can contact Hans through his Results2Match email address.