SUMMARY
Senior management teams are constantly tasked to make the business faster and more efficient. Wouldn’t it be great to quickly get rid of unnecessary complexity that inhibits better performance? Approaches might include adjustment of cost structures, customer propositions, processes and flows in the business. Getting there is easier said than done.
There are five factors that provide a clear roadmap to approach business simplification:
- Setting clear ambitions
- Connecting to value
- Using best practice frameworks
- Managing change diligently and
- Incentivising simplification
With the right level of ambition, team expertise and tools at hand, the removal of non-value adding complexity will deliver efficiency, speed and agility.
The big idea: Remove non-value-adding complexity
With access to global markets, acquisitions, rapid advances in technology and networks of outsourcing partners, the level of complexity in many organisations has increased. Not all of that complexity translates into value-adding activities. Large product portfolios, layers of processes, long decision-making processes, lack of transparency and data create complexity that needs to be managed well to achieve the objectives of the business.
High levels of non-value adding complexity impact can impact results in many ways:
- Low effectiveness and efficiency
- Lack of transparency
- Lack of responsiveness and agility
- Unnecessary waste: Duplication of processes, extra process layers, process gaps. This includes the occurrence of multiple process variations, where it is not clear if the value of the variation exists
- Low ability to capture digitalization opportunities, as processes are not ready for automation
- Reduced ability to integrate strategic acquisitions
Wouldn’t it be great to quickly remove non-value-adding complexity before it starts slowing the business down?
The change roadmap: Clear ambitions and connecting back to value
When Senior Managers talk about reducing complexity, their scope typically involves addressing one or more of these challenges:
- Cost reduction: Identifying ways to reduce the cost of producing goods or providing services.
- Customer proposition simplification: Identifying ways to offer products and services in a simpler and faster way.
- Value stream and process simplification: Identifying ways to standardize, harmonize or unify processes across the business to gain speed and to reduce inefficiencies in the daily business conduct.
Process simplification is one tactic to achieve the specific objectives. However, it is easier said than done. It requires a clear roadmap for change. Based on various client projects and continuous research efforts, we see several success factors to capture value from business simplification.
The most important factor is defining a clear roadmap that describes the path to success:
- Define ambition and scope properly: What we see in our business simplification work with clients is that initially the ambitions and scope of the project were ambiguous. Without clearly defined ambition and scope, it is difficult for the teams to get the right interest and leverage for the activity across the organisation.
- Connect back to the dimensions of value: Many attempts to simplify the business start at the Business Process or IT Systems level. While this is indeed the place where the ‘day-to-day business’ is happening, it is often difficult for managers to connect the simplification activities with the value it creates for the business. Simplification, Harmonization or Unification of Processes and Systems don’t make sense in isolation. To have a way to prioritise simplification opportunities they need to be ‘connected to value’, which means tying them back to the strategic objectives and key performance indicators of the company.
Getting to results: Use reference frameworks, empathy and reward the teams
Prepared with the right level of ambition, a cross-functional team and tools at hand, the removal of non-value adding complexity can deliver efficiency, speed and agility.
To get started, 3 success factors are critical:
- Use a best practice framework as a catalyst to get started – Use a process framework like the Supply Chain Operations Reference (SCOR) model to simplify supply chain processes. The standardized process descriptions, definitions and metrics are a good lever to move from opinions to facts during the simplification process. Reference models and best practices are typically the results of many years of improvement and shared learning across the community of practice.
- Manage change carefully – Business complexity is an abstract concept for most employees in a company. While individually employees can articulate what they would like to get simplified, not everyone in the organization is able to apply process thinking or understanding root causes of complexity. It is hence important the team that is tasked to simplify the business is able to articulate how people, processes and systems are contributing to the complexity and how changes in behaviour will help to simplify the business.
- Reward efforts to simplify – Simplifying the business should not be a one-off effort or ‘a project’. The best companies are able to create a culture of simplicity, often incentivising all employees to constantly identify and implement opportunities to simplify the business.
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