Abolish unproductive complexity

McKinsey occassionally hits upon an insight that I like :) 

In issue #2 of McKinsey Quarterly, there is an article by Lowell L. Bryan and Claudia I. Joyce entitled "Better strategy through organizational design" which has some interesting take-aways for those considering or doing portfolio management.  Of course, the article does over-generalize and simplify the world and how organizations work in order to make a point, but nevertheless, let me give credit where it is due as the article does make some interesting points. 

My favorite point is about unproductive complexity which the authors appropriately explain is "the common enemy in today's corporations."  While there points are related to organizational design, unproductive complexity seems to carry through many facets of organizations I talk to about resource allocation.  Somehow the old K.I.S.S. acronym is completely out of fashion (K.I.S.S. = Keep it Simple Stupid). 

Instead of looking at the data and information to see which investments are performing and which are not and/or which teams are performing and which are not to make obvious go/no go investment decisions, organizations dress up the information using value maps, maturity models, linear curves, real options, regressions, myriad bubble charts, etc.  I'm not sure the purpose of this beyond making an obvious decision from simple data & information except to make it look more sophisticated and fancy needlessly (and maybe justify jobs).

There is a greatness to simplicity when looking at resource allocation.  Did the investment under- or over-deliver what it was supposed to?  If under, what is the problem?  Is it a fundamental issue due to the product, the competition, the team executing, etc?  If over-delivering, should we consider further investment in this type of product or think about innovating further to extend an advantage?  Or perhaps the team who made the prediction was low-balling and we need to hold them accountable?  These are the key questions.  And I'm not sure you need all sorts of high-brow academic and/or consultant-inspired jargon, frameworks and nonsense to understand these fundamental questions.

What removing this complexity also does is make decision-making discussion and power more available to people within the organization as it is not resident with a few elite geeks who control the keys to some unknown black box.  And this engagement of "the masses" is a good thing as it leads to greater engagement and accountability.  But allow me to let my astute friends at McKinsey say this in another way.  Bryan and Joyce argue that "to overcome unproductive complexity, a company must undertake a management initiative specifically to make itself operate as a single profit center that can allocate decisions among the employees best able to make them.  The workers closest to the the company's business opportunities must collaborate easily with one another, exchanging knowledge throughout the enterprise...And the company will have to become much better at measuring its performance if it is to motivate these people and hold them accountable."

To all the decision analysis, strategic finance, portfolio management groups out there, please remember that your ideas may appeal to the geek in you and us, but they're often tough to translate to everyone.  And so KISS (Keeping It Simple Stupid) is key.