Four steps to reduce organizational complexity

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Ossy
Berichten: 66
Lid geworden op: di feb 25, 2014 5:09 am

Four steps to reduce organizational complexity

Bericht door Ossy » za mar 08, 2014 7:12 am

There’s no questioning the fact that companies today are faced with growing complexity. Environmental, political and competitive changes conspire to create a challenging and complex operating environment.

In response to these ever evolving pressures, companies often try to mirror external complexity in their internal environments. For example, they may respond to more sophisticated customer demands by creating tailored products and services. They may address the need for cost cutting and innovation by building matrix organizational structures. They may attempt to add new processes to address evolving market needs. In isolation, each of these responses makes sense, but in combination, they can significantly affect organizational performance.

Take BMW for example. At the end of 2012, the company recorded a 12 percent increase in sales volume and revenues in 2011, as well as the best operating profit in the company’s history. Despite these positive results, shares in the company were lower than they were at the beginning of the year.

How can you explain BMW’s strong top-line growth in a tough market, combined with a lower stock price? The answer lies in the fact that revenues grew significantly more than profits. In fact, profits were flat on the year, and post-tax return on sales actually dropped.

BMW attributed the flat profits to an increase in personnel, higher innovation costs, and intense competition. While technically true, there is a subtler culprit, one that underlies all these factors: higher complexity. More people, more R&D, and more products equal more complexity, which leads to higher costs, which, in turn, bring down profitability.

There are several common causes of complexity: a proliferation of products and/or services, inconsistent and overlapping processes, misaligned incentives, byzantine organizational structures, and poorly articulated strategies, often in some form of combination.

How should organizations deal with complexity?


Read more:
http://www.thejakartapost.com/news/2014 ... exity.html

Pesche
Berichten: 7
Lid geworden op: di mar 25, 2014 10:35 am

Re: Four steps to reduce organizational complexity

Bericht door Pesche » wo apr 02, 2014 8:42 pm

here are six questions from Drucker any manager trying to cope with, “the complexities of size, markets, products and technologies.” ask the first two from the standpoint of your overall organization ask those who work for you the second two. And the final two you should ask yourself.
1. What does the customer value, or what is Marketing? BMW is entering into the electric car market that is an investment. This “may be the most important question This insight is especially relevant in an age where customers have more power and choice than ever before. Unless there is a relentless quest to figure out what they want and need—and the only way to do this is “to go out to look, to ask, to listen, “ and is always something quite different from what is value or quality to the supplier.”

2. What is our business, and what should it be, what is our core strategy? “Nothing may seem simpler or more obvious than to know what a company’s business is. Yet “the right answer is usually anything but obvious.” This is particularly true in an era in which market structures can change with astonishing rapidity and new horizons are continuously opening because of technological advances. One of the reasons for Amazon’s great success, , is that it is constantly honing its answer to “What is our business?”—although doing so requires an extraordinary amount of discipline. Why? Asked seriously, “the question causes controversy, argument and disagreement. “It requires judgment and considerable courage. The answer rarely follows what ‘everybody knows.’ . . . It should never be made quickly; it can never be made painlessly.”

3. What is the task, what is my main job? No one ever would have asked this question to a 1950s blue-collar laborer. That’s because “in manual work “the task is always given”: A car rolls down the assembly line, and someone bolts on the fender. But today, when knowledge work is predominant, tasks can be far more difficult to define. There is often no specific way for a knowledge worker to tackle an assignment. He or she typically has enormous discretion over what steps to take (and which ones not to take), and in what order to take them. Even outputs can be fuzzy when the “work product” is what lies between people’s ears, not what emerges from their hands. The key to improving knowledge-worker productivity, begins bottom-up, “with asking knowledge workers themselves: What is your task? What should it be? What should you be expected to contribute? And what hampers you in doing your task and should be eliminated?”

4. What are your ideas for us to try to do new things, develop new products, design new ways of reaching the market or innovation? More than ever, it’s imperative that all employees make innovation a priority, not just the R&D staff or the “new products” team. To be sure, not everyone has equal capacity for driving “change that creates a new dimension of performance,”. “There are clearly people who are more talented innovators than the rest of us,”. But each person in the organization, from top to bottom, needs to adopt an innovative mindset. One way to foster this, , is for senior executives to hold a session a few times a year with 25 to 30 more junior employees from across all functions., “the senior opens the session by saying: ‘I’m not here to make a speech or to tell you anything. I’m here to listen. I want to hear from you what your aspirations are, but above all, where you see opportunities for this company and where you see threats.’” Such gatherings, “are one of the most effective ways to instill entrepreneurial vision throughout the company.”

5. Who in this organization depends on me for what information or what is knowledge? “Each person’s list will always include superiors and subordinates,” “But the most important names on it will be those of colleagues, people with whom one’s primary relationship is coordination.” This notion rings even more true now, as traditional command-and-control structures slowly give way to more fluid and flexible arrangements at a growing number of enterprises. Asking this question—and making sure that the information you deliver to your peers comes in the right form and at the right time—is a central part of taking “information responsibility.” After determining who depends on you for information, the follow-up question is also crucial: And on whom, in turn, do I depend?

6. What would happen if this were not done at all, do I have an alternative? There’s never been a more apt moment to ask this question, what with every manager these days struggling to preserve his or her most precious resource—time, everyone keep a detailed time log, tracking how minutes and hours are actually spent. Mark down events as they occur; don’t rely on your memory. After three or four weeks, analyze what you’ve recorded and ask what the result would be if a certain activity weren’t undertaken in the first place. “If the answer is nothing would happen, “then obviously the conclusion is to stop doing it. It is amazing how many things busy people are doing that never will be missed.”

Drucker said that in 1981, you have to read it

Annd read something about BMW not just looking at figures, that is good for the stockmarket but does not say anything about BMW

beras
Site Admin
Berichten: 130
Lid geworden op: ma feb 24, 2014 5:57 pm

Re: Four steps to reduce organizational complexity

Bericht door beras » do apr 03, 2014 1:27 am

Pesche schreef:Drucker said that in 1981, you have to read it

Annd read something about BMW not just looking at figures, that is good for the stockmarket but does not say anything about BMW


Thanks for your remark/tips. The coming few days I am too busy with arranging the building of the first small house.
With decent planning, good management (hehehehehe...) and skill workers the first house (the body) will be ready within 1 week as from day 1 and within the planned budget. Look at viewtopic.php?f=36&t=15&start=10

After that I will sure read more about BMW.

Thanks,
Beras

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