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Critical Success Factors

Time spent on any item of the agenda will be in inverse proportion to the sum involved.

C. Northcote Parkinson Parkinson's law


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Even if Strategic Simplification primarily advocates simplicity, it has proven to be very difficult to implement. Although IT Cortex does not recommend "self-medication", it is of prime importance for an organization to be aware of what a methodology entails. Overcoming the following stumbling-blocks is a prerequisite to success.

Accept to forfeit customers who might require a specific, tailor-made or exceptional product or service.

A commercial company has to give up chasing all the customers that it possibly can and focus only on the ones that are ready to go for a standard offering. It is always very difficult to force the Sales and Marketing departments to trim down their creativity so as to keep the product and service offering simple and straightforward. Turned down specific requests (about features, tariff, delivery, packaging, payment) do not necessary translate themselves into lost customers if they are compensated by other improvements (see next point).

High-quality products or services, strong brand appeal and low cost must compensate for an increase in product "genericity".

A customer is always ready to make concessions provided that he perceives advantages in doing do so: typically if he is convinced of getting good value for his money (see the heuristics of our approach). Product or service de-complexification is but a preliminary step, one must also deliver quality and build a strong brand to make it sufficiently attractive to have customers give up on specific requirements. Pruning product or service specificity brings down the operating costs which in turn allows for better prices and/or improved margins. Both sales volume and profitability benefit from that measure.

De-complexify the product and/or service offering first then its delivery organization (not the other way round).

The flexibility and complexity of the product or service offering drives up the flexibility and complexity of the organization and therefore its operating cost. Since a problem has to be tackled at its root an improvement in operational efficiency can only be achieved by de-complexifying the product or service offering. De-complexifying an organization without acting on products or services will bring only marginal benefits.

No halfway application.

This methodology delivers spectacular results if applied in breadth and in depth. Halfway application will only deliver minor improvements that might not even be worth the trouble. This is due to the highly non linear shape of the Pareto distribution. A common mistake consists in simplifying only inasmuch as the company does not run the risk of losing a single customer. This is not sufficient. Losing customers is all-right (up to 20 % of them) as long as this improves the overall margin of the corresponding market segment.

Only a holistic perspective is valid, not a departmental perspective

The only valid perspective for applying this methodology is the perspective of the market, not the perspective of individual customers, nor the perspective of any department's responsible. Otherwise this is tantamount to political negotiations. This methodology is not about internal compromise but about market driven optimization. This is why Strategic Simplification can not be a middle management driven project but it has to be externally driven and sponsored from the top so as to reflect the most global possible perspective.

Implementing Strategic Simplification requires to go against a tendency deeply infused in many organizations : making things needlessly complicated. Being aware of the complexity drivers acting within organizations helps contain their effect to a level that still makes economic sense (called Pareto efficiency).

The stumbling blocks described above - though identified and well known - remain hazardous because of strong preconceived ideas deeply ingrained in the business culture advocated by many consultants. One needs to shift paradigm from a mechanistic, reductionist and overtaxed approach to an organic, holistic, lean and nimble approach. 

Should you be interested in discussing the applicability of IT Cortex approach to your specific situation, do not hesitate to contact us.

IT Cortex

Complexity drivers ] Preconceived ideas ]