Conquering Complexity - Executive Insight
The continuous rise in customer power, coupled with rapid technology advances, has driven an explosion of offerings in the marketplace: more products and services appearing faster and faster. Based on our recent survey of over 400 businesses, the average company's number of offerings has grown by 50% in the last five years.
These factors, combined with the inability to understand the "true profitability" of services and products has left many businesses with over-inflated portfolios destroying shareholder value. In fact, in most companies over 50% of Invested Capital is deployed in areas that are destroying shareholder value.
The advantage of conquering complexity is clear. Market leaders Toyota, Wal-Mart, Southwest Airlines, Capital One, and Dell have all conquered complexity. Each understands their customer needs deeply, strips out unnecessary complexity to provide an offering that is exactly what the customer is willing to pay for OR has taken advantage of an opportunity to deliver extreme levels of variety to the market cost effectively.
To address business complexity, you must follow three key rules:
- Rule #1 - Eliminate complexity that customers will not pay for
- Rule #2 - Increase the complexity (variety) that customers will pay for
- Rule #3 - Minimize the costs of the complexity you offer
Business leaders have told us, "I know complexity is a problem, but we don't know how much it is costing us or how to bring it under control." Complexity cannot be conquered through guesswork. To make any progress implementing the three rules above you need the analysis to be able to definitively determine:
- Where is complexity (or, conversely, the lack of variety) eroding Economic Profit?
- How will addressing the issue provide competitive advantage?
- What is it worth financially to address the problem? (This is a critical question and typically the most challenging to answer definitively.)
- How will you translate from the strategic questions to rapid execution?
Because the stakes are high and the issues are not always clear, your ability to gain the value from these three rules will be dependent on the analysis that answers these key questions.
Our unique approach is the only true method that provides a quantitative understanding of what complexity is costing your organization and rapidly drive execution that gets results:
Our complexity diagnostic brings together the critical elements of strategy, shareholder value, voice of customer, deep process knowledge and a patented analytical method to provide a completely unique, fresh point of view on the problem.
We leverage the most experienced team members with diverse backgrounds in strategy and operations to help you get from a strategic understanding into execution of solutions very quickly.
We are not just specialists in solving business complexity issues, but also bring powerful new solutions to drive Fast Innovation and in building world-class Lean Six Sigma operations capability. |
