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Can a company apply the Strategic Simplification approach on its own ?

In practicality no. Even though this might sound as a biased statement by a consulting group selling this type of service one needs to be aware that performing business “de-complexification” requires mitigating between corporate functions. Sales and marketing typically resent being hampered in their “creativity”. IT generally requests the simplest possible business processes to automate and the most straightforward information models to implement but, on the other hand, some "IT'ers" love to display their virtuosity by programming very intricate rules disconnected from any business reality. Accountants demand operational ease of use but can become quite finicky in setting up accounts and processing rules so detailed that you can't see the wood for the trees. Generally companies tend to please representatives of all their key functions by working out a costly compromise. Strategic Simplification raises above departmental demands and applies a holistic approach instead of a compromising attitude toward a myriad of individual requirements. A global and holistic perspective - as opposed to multiple fragmented viewpoints – requires that someone external to the company stands for that broader perspective and acts as an impartial arbiter.

How much does it cost [to de-complexify a business] ?

The cost is of course highly variable. It depends on the company’s current product and/or service portfolio, its size, the diversity of its market, the intricacies of the existing business procedures, the efficiency of the IT systems and, most importantly, the company culture. The range of those parameters makes it unrealistic to produce a “de-complexification tariff”. What may be taken for granted is that the cost of de-complexifying a business is in proportion with the benefits that can be reaped from this exercise as long as the organization accepts to play by the rules of the Strategic Simplification approach. If a business is overly complex it will obviously be more costly to de-complexify but this will also bring in more savings.

Are the benefits [of performing strategic simplification] measurable ?

The measure of the benefits is unfortunately not algorithmic and therefore not accessible to purely quantitative assessment methods. The only tool that we have to evaluate its impacts and results is by surveying the executives and the personnel of the organization having undergone Strategic Simplification. This business endeavor is never the only thing that happens at any one time in the life of an organization. During the course of a de-complexification engagement the business environment can improve or deteriorate, the resources of the organization can change and many other things can happen. As anyone knows it is not possible to measure the effect of one parameter on a complex system while other parameters are also changing. We are therefore left with qualitative appreciation, not quantitative measurements.

  

Is it possible to compute the R.O.I. (return on investment) of a de-complexification engagement? 

In all intellectual honesty, no, not any more than it is possible to compute the R.O.I. of a large IT investment. Some consultants claim to be able to do so but this is self-deception. Improvements are both qualitative (e.g. the relationships between functions and departments, the work atmosphere, the stress level on key functions, the contacts with the customers, etc.) and quantitative (products and/or service profitability, delivery time, overhead costs, etc.). Moreover the effect is not static (i.e. frozen in time) but dynamic (i.e. it reflects an evolution in time). Valorizing qualitative improvements is always a highly arbitrary exercise with little convincing value if any. The whole exercise looses much of its interest and credibility when qualitative and quantitative aspects have similar importance.

My  organization and my IT systems are geared toward complex and specific products because I serve a market primarily interested in ad hoc and highly specialized solutions ? Which benefits shall I reap from business de-complexification ?

If you cater for specific and complex needs, you ought to know your customers well. Everything comes at a cost. The question is always how close to Pareto efficiency do your customers want to be and how much are they ready to pay to be away from that optimum. We are well aware that Strategic Simplification is not relevant for a few markets like the luxury market or the safety and security market or for therapeutic products. IT Cortex has the ethics not to embark on a project with a weak or irrelevant business case. Besides those markets it usually makes perfect business sense to streamline products and services in order to achieve Pareto efficiency.

What interest can strategic simplification have for markets that are not price sensitive ?

The markets that are not price sensitive are either the luxury market or any market where safety and security play a key role. In those markets building a brand is what ultimately matters for a commercial organization. The luxury market is primarily "ego-driven" and rationality plays little in purchase decisions. Security related markets play on the fact that physical integrity or health have no price (although they have a cost). The brand to build should therefore be geared toward emphasizing those aspects in those markets. However brand building does not lean on intricate and sophisticated concepts but on a few (two or three) salient features or characteristics. That's where Strategic Simplification can play a role: focus on the essential.

Does a Strategic Simplification project necessarily translates itself in lost job and downsizing ?

Not necessarily. The rational pruning of "Pareto-inefficient" activities, can be coupled with quality improvement, diversification and business growth in other related market segments. Resources that are being made redundant by eliminating the "trivial many" activities can be assigned on the "vital few" activities in a connected business market in which the company diversifies itself. Moreover a brand personality comes out stronger of a de-complexification exercise which has inevitably positive repercussions on the sales volume.

Does IT Cortex offer turnkey implementation ?

As a rule the first two steps of our methodology (diagnostics, and operation streamlining) are never proposed as turnkey projects given the scope uncertainty pertaining to those stages.

However, once the precise scoping of the de-complexification project is signed-off and once the resources within the company are properly mobilized then a turnkey de-complexification  project can be signed (fixed price, fixed duration). One nevertheless needs to be aware that an external company like IT Cortex can only play an advisory role, not a decisional role. The outcome of the project, in terms of overall profitability gains, will ultimately be function of the extent to which the company plays by the rules of the Strategic Simplification approach.

What are the conditions to perform Strategic Simplification ?

The essential condition is that the general management fully supports the project and thoroughly understands the stakes of the initiative. The rest is “simply” a matter of selecting the right partner and playing by the rules of the methodology. One needs to be aware that the effort to de-complexify a business is collective. It is shared by all functions of the company. It is not simply a matter of empowering a consultant to fulfill a mission or of externalizing a collective responsibility. It is a question of surrendering individually cherished specificities to improve the global efficiency of an organization within its environment.

Some key players in the de-complexification business have been known to be passionately fond of the complexity sciences. Do they now have changed their mind by advocating business de-complexification ?

No. Whatever paradoxical this might sound anyone knowledgeable in complexity sciences is enamored with simplicity. Complex systems are by essence issued from simple interactions between multiple components or agents. Those simple interactions give rise to an emerging global behavior that transcends the local or individual behavioral patterns. Complexity sciences consist in studying the conditions – the “metalaws” - under which simple interactions translate themselves into global behavior. Examples of complex behavior emerging out of simple interactions are vortexes, thermodynamic curiosities like the Benard cells or the Belousov-Zhabotinski reaction, the brain, ants or termites colonies, artificial life development, neural networks, etc. 

Similarly, simple interactions – i.e. simple business rules – can give rise to efficient and sophisticated business operations whereas intricate rules can drag an organization into inefficiency. Complicated rules imposed top-down decreases the efficiency of an organization by concomitantly bloating its overhead. Simple bottom-up initiatives improve overall efficiency and work out incoherencies in a "natural" manner. The key lesson taught to us by complexity sciences is the creative power of interactions governed by simple laws and between multiple agents expressing themselves bottom-up.

 

Consulting companies offer a wide-variety of packaged services like business process re-engineering, quality programs, best practice benchmarking and now business de-complexification. How to pick the one that best suits my company?

From a high level perspective one can classify those approaches into two main categories : 

bullet

the ones that aim at equipping oneself with a paraphernalia of tools and methods in the hope of managing the complications imposed by the multiple constraints set internally or externally on the organization.

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the ones that target Pareto-efficiency by pruning the requirements set on the "trivial many" activities, sub-processes, rules and guidelines. 

Traditional consulting is all about the first approach whereas Strategic simplification is all about the second approach. By essence this second approach is the one that maximizes the efficiency at creating customer value and therefore also, ultimately, at creating shareholder's value.

Is Strategic Simplification antithetical with the existence of conglomerates like, for example, General Electric which is a thriving company even though management books do not consider it as a viable business model ?

What matters are the customers the conglomerate serves and how they serve them. There is no counter-indication to being a conglomerate as long as the "trivial many" have been eliminated in the product or service portfolio, from the customer listing and in the business processes. 

Should you have any additional question or comment related to our service offering, do not hesitate to contact us. We reserve ourselves the right to publish them together with our answer on this web page if they are relevant to our target market.

Ó IT Cortex