 Conquering Complexity in Your Business
Michael L. George and Stephen A. Wilson
McGraw-Hill, 2004
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Overview
Over the past two decades, my colleagues and I have helped many businesses create genuine economic value primarily through process improvement. But we often found that clients who restricted their efforts to Lean and/or Six Sigma would hit a ceiling in profit generation: though progress was significant, there was only so much they could accomplish through these process improvements.
Where did this ceiling come from? Our most recent research and our experience over the last few years led us to a startling conclusion: that there is an entirely separate dimension to operating improvement that presents the single largest opportunity for cost reduction and the most significant hurdle to profitable growth in most companies.
What is this mysterious force? Product and service complexity.
Every business we've seen has too much complexity in something - more product offerings than their customers want, more services than the market can support with positive economic profit, too many ways of accomplishing the same output, etc. (All of this results in huge non-value-add costs that are hidden in overhead by GAAP accounting.) A few businesses we've seen have too little offering complexity: they're missing growth opportunities by not having enough variety in their products or services.
In recent years, we've discovered we weren't alone in appreciating the need to conquer complexity: In fact, every CEO and senior executive who has seen the data presented in this book has responded "We know we have complexity. We know it's a big problem. We want to know more." Supplying the "more" is one purpose of this book. The primary goal, however, is to provide you with the tools you need to conquer complexity in your own business. We'll show you how to:
- Identify the offering and process complexity in your business
- Quantify the cost impact of that complexity
- Decide which complexity you want to keep and exploit, and which you should eliminate
- Select specific approaches to eliminate different kinds of complexity
Together, this knowledge will enable significant improvement in your ability to grow profit, revenue, and shareholder value.
Corporate Leadership on Conquering Complexity in Your Business
"I am really intrigued with the idea of measuring the impact of complexity, and then BEING Able TO DO SOMETHING ABOUT IT! I have long recognized that complexity is a big problem, but those units with the biggest problem act like Gordian knots. It would be terrific to have a new approach to solving these problems."
Lou Giuliano, Chairman, President and CEO
ITT Industries
"As we tackle the most resistant issues in the company, it is clear that complexity is a key causal. For companies like Xerox who have aggressively reduced cost, the cost of complexity is the next big opportunity. The challenge is getting our arms around the cost of complexity. Being able to size the opportunity creates a compelling call to action."
Anne Mulcahy, Chairman and CEO
Xerox
"It has become apparent there is a large contributing source of the waste called complexity. While I have known this intuitively, it is critical that the study and analysis you and the George Group have done gets out to a wider audience on how this complexity occurs and more importantly, how to both attack it and prevent it."
Chris Cool, Vice President
Northrop-Grumman |
Conquering Complexity in Your Business