Companies have become complex organisms, or are they actually (too) complicated? Simplicity can be achieved by redefining the way in which decisions are made.

For years there have been good reasons for companies to focus on complexity. On the one hand, it appears that the ‘world’ is becoming increasingly more complex: globalization, the proliferation of marketing channels, technological advances, changes in user preferences, free access to information, among other factors, account for this idea of complexity. And it is only logical that, if companies intend to deal with a more chaotic world, they must be equally complex in order to remain competitive.

On the other hand, and perhaps as a consequence of this, speaking about complexity has become very trendy, a way of attesting to the difficulties of managing our business and of setting us apart from our competitors. Mentioning Heisenberg, Prigogine or Lorenz positioned made us stand out in any discussion and also granted us permission to blame the fall of stock prices on the light fluttering of butterfly wings.

Although these reasons may not be exhaustive, and there might be other causes of the current state of affairs, the truth is that nowadays many companies have become ‘complicated’, rather than complex. Multidimensional structures, multiple cross-reporting, new cultural change management projects every two years, too vertical and centralized decision-making processes, excessive bureaucracy, and an excessive number of meetings are some examples of this.

The big question is whether a company has the proper amount of sophistication or if, on the contrary, it has generated an unnecessary and excessive internal chaos, delaying the response time to the demands of an ever- changing market, and resulting in a company caught in its own clutter.

Supplying simplicity

Paradoxically, while this is happening within many companies, the markets are increasingly demanding a just amount of sophistication (and no more than that) but with a ‘simple’ experience. Examples abound –Apple and its products with simple designs, Amazon’s simple shopping site where you can find almost anything, and Google’s simple web navigator with access to practically all the information of the world.

Nowadays numerous companies are working on improving their service by providing a simpler and user-friendlier experience. They have realized that a good experience makes clients and customers willing to pay more for a product or service while it fosters brand loyalty. Companies are monitoring a number of simplicity indexes (for brands, products, user experience, etc) and using the information to take corrective actions and implement improvements.

A search for perfect balance within the organization.

Since many have already taken care of the ‘external’ simplicity, let us focus again on the internal aspect within companies. This excessive complexity described at the beginning comes with a high price for companies, and it is no longer trendy. It is hard to conceive that a highly complex company could offer the simplicity customers are demanding. In addition to this, complexity leads to higher costs associated to inefficiency and loss of human talent, who value agility and autonomy and agility, but not obstacles.

A key factor that needs to be taken into account when analyzing the degree of complexity v. simplicity is related to the decision-making process. It seems reasonable enough to assume that if making timely and informed decisions becomes too difficult, we are dealing with an excessively complex company.

Therefore, if the goal is to gain organizational simplicity, it is crucial to understand and redefine decision-making processes. Below are some key aspects related to the internal decision-making process that might provide leverage in gaining simplicity.

Different types of decisions. First of all, we need to understand what type of decisions are made in the company. As Jonathan Ive (Chief Designer Officer of Apple and responsible for many of the company’s star products) stated, ‘simplicity is somehow essentially describing the purpose and place of an object or product’. It is striking, but pretty common too, that a company lacks clarity or consistency regarding which decisions are the most critical. As a first step towards simplicity, we must recognize and catalogue the differently types of decisions: ‘casual’ decisions are those that are repetitive, instantaneous, operational and with low impact; ‘conscious’ decisions are the ones with a clear middle-term impact but are not decisive; and finally, ‘complex’ decisions are those that have a great impact on the long-term.

Empowering and allowing for flexibility. Once we understand the different levels of criticality that decisions have, it is fundamental to make sure they are made at the lowest possible level without compromising their effectiveness. Organizationally speaking, this means having simpler and more agile decision-making processes. If casual decisions are being made at the managerial level, then the company is complicating things more than necessary. Of course, this requires reliable delegation processes in order to ensure the effectiveness of the decisions made at each level.

At the same time, communication must be able to flow from the bottom up in cases where a problem cannot be solved at the lower levels. Many times, we hear of cases of low hierarchy employees who detected problems that could have a great impact, but who did not inform about it because they lacked the tools to solve it and there was no alternative channel to raise the red flag. It is fundamental to find some flexibility within the organizational chart and create alternative channels. That way, this kind of situations can reach the higher levels at least as suggestions, benefiting from the input provided by those closer to operational areas.

Benefit from both an intuitive and a methodological approach. As mentioned above, countless casual and operational decisions are made every day. When these decisions have to go through bureaucratic processes, we add more pointless complexity. In some cases, the intuition of those who have the technical expertise to solve a problem (and who have done it numerous times) should be enough to provide a speedy solution without adding unnecessary steps.

Conversely, the same logic applies to ‘conscious’ decisions –they usually demand a lot of time and energy, spent on subjective debates based exclusively on intuition. But if could have a method that, without being complex, allow us to learn from these situations and help solve similar situations in the future, all the process would be made much simpler. One of the characteristics of simplicity is related to its predictability and repeatability. This means it is necessary to adopt a method that includes the different steps and criteria that need to be followed in the decision-making process, rather than related to the answer.

Cells for critical decisions. We have left the most difficult decisions to the end because of their huge impact and their intrinsic complexity. These decisions affect a large number of variables, require dealing with a considerable amount of uncertainty, and may affect different interests both within and outside the company. Nowadays these decisions ‘cut across’ the organizational charts both horizontally and vertically, resulting in a power game that delays decisions, is wearying for those involved and does not necessarily lead to better results.

Without going into the possible need to revise the organizational structure (since it would be too complicated), I would like to introduce the idea of developing inter-area decision-making teams that would work as autonomous ‘cells’ for this purpose. The aim would be to grant these teams the necessary authority and autonomy, ensuring the different business areas are represented, and empowering them on their decision capacities as a team. These teams are put together without considering the regular organizational chart. Strategic projects that get usually caught up in the traditional circuits would be assigned to staff members from different areas, ensuring their autonomy through a decision-making entity with clear control, which will assign the necessary resources and provide methodological support to help them channel all their knowledge. Through this approach, conflicting interests between areas become explicit at early stages and can be dealt with accordingly. Also, incorporating different perspectives provides more clarity, long-term projects gain agility and flow more smoothly instead of being delayed by everyday emergencies, and there is greater flexibility to allocate resources where they are most needed.

Steve Jobs was clear about this concept: ‘Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.’. Simplicity has become a must for company that want to be more efficient, and immersing on the decision-making system can be the best investment to attain this goal. It is only a matter of making a decision, simple as that.

Federico Esseiva
Partner at Tandem.
fe@tandemsd.com