Organizational Complexity: Research Finds Executives’ Blind Spot

“Not all complexity is bad for business”, but the authors argue that executives don’t always know what kind their company has. Leaders cite ‘institutional’ manifestations of complexity (the number of countries they operate or the brands of the company), but relatively few consider the forms of ‘individual’ complexity the vast majority of their employees face, such as poor processes, confusing role definitions, or unclear accountabilities. This creates a blind spot many executives have when it comes to managing complexity effectively. The goal should be to identify where each type of complexity is an issue and what is responsible for the complexity in each area. This article reviews the experience of a multinational consumer goods manufacturer. At the institutional level, executives knew that they had a problem with time management for the senior team, who had to manage across all the company’s regions. Most employees, however, struggled instead with individual complexity. A discussion follows describing how the company took stock of the situation via a survey and used the data they collected to construct several regional “heat maps” to help pinpoint where, and why complexity was causing problems. Senior managers could then “remove complexity that doesn’t add value”.
 

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Julian Birkinshaw and Suzanne Heywood, “Putting Organizational Complexity in Its Place,” McKinsey Quarterly, May 2010