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Simplicity: The next big thing?
"Any fool can make things bigger, more complex, and more violent
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"Any fool can make things bigger, more complex, and more violent. It takes a touch of genius-and a lot of courage-to move in the opposite direction."- Albert Einstein
We believe this quote touches on the key aspect of complexity versus. simplicity. They highlight the power of making things simpler as opposed to the trend of complicating the way we work for reasons of either lack of attention or the need to appear smarter because only "we" understand.
Have you brought additional products or services into your business in the past few years? Have they delivered the increase in profitability you were expecting?
What about your customer base? Have you grown this but found your profitability has stagnated or even gone down although your total sales have gone up?
You're not alone. The business world is waking up to the fact that providing more products, managing more suppliers, introducing more improvements without regularly refocusing on the few high return activities is sucking up hard-earned profits.
In today's business, complexity is killing profits! Perhaps now is the time to consider simplicity.
This is not a new management fad. Our experience from the early 1990s as well as evidence from as far back as the 1940s, shows that businesses with simpler structures, processes and priorities deliver more profit and sustainability through all the economic ups and downs.
Prof. Moss Kanter of Harvard Business School recently cited the global financial crisis and General Motors as examples where complexity has led to major problems or failure. In Indonesia we have seen a combination of complex and sometimes contradictory regulations as well as complicated geographical and logistics based challenges magnify the trend toward a more complicated business response to this environment.
The complexity of the Indonesian environment is also demonstrated by the experience of some of the conglomerates and larger domestic firms over the past decade. Complexity has been compounded by unsound financial structures, sharp increases in corporate leverage, reliance on external debt, and the availing of riskier business strategies in attempt to achieve greater success through higher-risk projects and activities.
We have seen that often Indonesian businesses believe the best response to the inherent complexity of the business environment is to add to this complexity by developing and implementing complicated business systems, structures, processes, planning and decision-making to "meet the challenge head on".
Clearly, the list of failures from complex businesses is getting longer throughout the region and across the globe.
On the other hand, there have been some wonderful examples of comparatively simple businesses achieving great success.
So why don't people seek simplicity in business? Perhaps it's because we've been conditioned to believe that business has to get more complicated as management and technology get more sophisticated.
Nothing could be farther from the truth! It doesn't matter the type of market you're in, the track record shows that "uncomplicating" your business multiplies your performance and your profits. It can revitalize the morale of your employees and make their work more satisfying. Ultimately it is about increasing the sustainability of your business.
What this means for you is that taking out some of the complications in your business will help you survive and thrive against your competitors and give you alternatives to staff retrenchments as the way to cut costs.
What sorts of things do owners and managers simplify? The main things are the business focus, its structure and processes, and the number of products, services, customers, suppliers, projects and plans. But we can also reduce the amount we write in reports, plans, submissions, justifications, etc in our businesses by following the simple Now-Where-How approach to business communication.
Our research identified five key principles for simpler, better business:
1. Always base improvement on the universal 80/20 rule where 80 percent of the benefits come from just 20 percent of the things you can do.
2. Get everyone to learn and use a simple and consistent problem- solving technique, such as the Now-Where-How method
or similar.
3. Define customer value by asking
"what makes our customers more successful" and get everyone
focused on the answer.
4. Look for the few key "constraints"
in your business processes and
remove these to make work easier
for everyone.
5. Before automating anything, firstly simplify it!
By following these principles your business will get better and simpler. They are backed up by international research showing that smarter, simpler businesses outperform more complex ones.
Managers need ideas, techniques and products to help them de-clutter their business life and maximize the rewards.
Tools are available now for simple problem solving and to handle business situations from 10-year plans to 10-hour crises.
Once managers have the right tools, the best part about making a business simpler is that it's as much about not doing things as it is about trying to achieve more.
Delaying the decision to start to simplify your business is to accept higher costs and lower profits. Please act now to put yourself in the best position to thrive-just a small step for you, but a giant leap forward for your business.
The writer is a senior advisor with The Apex Consulting Group, a Jakarta-based management consulting firm (www.apex-cg.com). He can be reached at simon@apex-cg.com.
