Reduce Complexity and Rise Your EBIT!Submitted by Hans Lodder on Thu, 08/05/2008 - 08:00
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:
- Introduce a complexity control regime driven from a strategic perspective.
- Control it by making complexity cost transparent and measurable.
- Contain complexity, value AND cost, across the extended value chain.
- 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:
- Reduce interaction in your business processes.
- Turn information into business.
- 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:
- The benefits of an aligned supply chain (and how to realize that) (this blog)
- Reduce complexity, and rise your EBIT
- How many customers did you re-win this year
- Food for thought: AMR Research presents the major risks for 2008
- 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!
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