How to cut to the core of what your firm does - and then do it better

BOOK REVIEW: Simply Effective: How to Cut Through Complexity in Your Organisation and Get Things DoneBy Ron Ashkenas Harvard Business Press; €21

MANAGERS STRUGGLE today with increasing levels of complexity in their organisations and work life.

Communication tools mean they are always available, they have to process huge amounts of information and there are an increasingly large number of stakeholders inside and outside their businesses to be satisfied. Executives work longer hours with greater stress but are feeling less and less productive.

The problem, author Ron Ashkenas says, is that we create too many organisational levels, redundant functions and unclear roles. We add products, features and services without reducing the overall portfolio of offerings. We build processes with too many steps, loops and missing metrics and then don’t manage them as they evolve. Then we compound the complexity by giving vague assignments, not holding people accountable, miscommunicating and avoiding conflict.

Reducing complexity is not just about making it easier to get things done. It also has the potential to drive long-term competitive advantage by increasing the organisation’s capacity to address issues quickly and effectively.

Ashkenas believes simplification should be a core leadership strategy and, in this book, draws heavily on his consulting experience with large international organisations. He was part of the original team that collaborated with Jack Welch to develop the “Work” approach at General Electric for creating faster, simpler and more nimble organisations. The lessons learnt there form a large part of this book. He identifies four sources of complexity. The first is what he calls “structural mitosis” where units grow, divide and mutate in a process comparable to the division of cells in a living body.

The second is product and service proliferation where companies add to their product portfolios in an effort to delight customers or outsmart the competition. Then there’s process evolution. Every time anyone implements an idea about how to do something differently the process flow changes affecting others in the chain.

Finally, there is the effect of managers’ behaviour. If work is routine and repetitive, managers rarely need to deviate from standards. However, in dynamic environments, managers have significant scope for creating new work and over-riding templates – adding to complexity.

Three common traps in organisational structures are: focusing on structure before strategy; designing according to people and personalities; and building mechanical rather than organic organisations.

Ashkenas says four principles should be applied to tackle complexity: differentiation between core and support functions; taking a customer perspective; consolidating similar functions and tasks; and increasing spans of control.

A good example of a simplification strategy is the creation of centres of excellence. The example is given of ConAgra Foods, a major US consumer branded goods firm, which created such a centre for its advertising. Previously each brand team had developed its own advertising strategy and then worked with agencies to translate it into television, print or interactive adverts. With so many people involved, the process was not only costly but also inconsistent in terms of time and quality. In the new structure, all advertising was developed and managed in one place with a consistent process, managed by people with high degrees of expertise. The result was a dramatically reduced cycle time for getting adverts produced.

Another concrete example relates to how non-core tasks can be handled more efficiently. Pfizer’s Jordan Cohen has pioneered what he calls “the office of the future” (OOF). Some 10,000 managers are now supported by administration teams based in low-cost countries such as India. Tasks covered include data entry, appointment scheduling and making slide presentations. All a Pfizer manager has to do is click a desktop OOF icon to send work directly to the team or talk to a team member if the work needs explanation.

Increasing spans of control is another way of reducing complexity. Not only does this reduce costs by having fewer managers, it also facilitates a more accurate flow of information.

Change can be achieved where there is a will, and Ashkenas provides plenty of practical advice on how to go about this. However, overcoming cultural obstacles and ingrained practices is the key issue. In 2008, for example, Ford chief executive Alan Mulally announced an ambitious product simplification effort, setting the goal of reducing the number of car platforms around the world by 40 per cent in the following three years. The savings in engineering standardisation and procurement would be billions of dollars.

What was interesting is that Mulally’s predecessors had announced similar initiatives in the past, the most significant being the creation of what was called Ford’s “world car”. Despite their best intentions, Ford’s previous bosses had never been able to make the hard decisions.

Ashkenas stays true to the principles of his book, with concise, well-defined arguments, checklists and questionnaires along with a liberal sprinkling of relevant case study material. Any chief executive who is serious about reducing complexity in their organisation would benefit greatly from spending a couple of evenings reading this book.

Frank Dillon is a freelance journalist and media lecturer