Reduce Complexity, and Rise Your EBIT

AT Kearney has published a remarkable report on complexity: easy to understand and unfortunately not so easy to implement. However, it is worthwhile the effort to look into this as it could lead to an EBIT rise of 3% to 5%. Even more important, improper complexity inhibits growth.

AT Kearney identifies 4 steps to implement complexity reduction:

  1. Introduce a complexity control regime driven from a strategic perspective control it by making complexity cost transparent and measurable.
  2. Contain complexity value and cost across the extended value chain.
  3. Embed complexity control in control and governance processes.
  4. Some additional guidelines maximize the value creating variety of your products.

Minimize the non-value adding complexity, maximize resource usage, and that is all. so now it is your turn and have fun! Perhaps I can provide you with some ideas how to take it from here. In an earlier blog I discussed the most important business trends according to McKinsey. These trends can help you and provide you with concrete ideas. Reduce interaction in your business processes. Turn information into business. Make use of smarter ICT solutions. Complexity has no business owner. That implies nobody is responsible for reducing complexity, and if nobody stands up then it automatically is a concern of the Chief Executive Officer (CEO). With the help of a capable and knowledgeable adviser he can do it all. Necessary ingredients are mentioned in this blog.

Contact Hans Lodder