Why Organizations Naturally Increase in Complexity—and What to Do About It
I’ve been fortunate enough to have the privilege of working with leadership teams in over 1500 organizations in my 30 years as a business advisor.
What I’ve noticed is that organizations often evolve without design. Organizations aren’t inherently designed to be simple and efficient. They’re typically designed to produce something. Additionally, organizations typically react to growth by adding positions and roles, sometimes without any thought.
For example, an organization might need a web developer, a second accounts receivable clerk or a quality specialist on the manufacturing floor. The leadership team starts to bolt their organization together by adding these roles in all of these different places without giving much thought to the overall design of the system.
Unfortunately, when we add more roles, we add complexity. That complexity goes up exponentially as you add roles and people.
Here’s what I mean: Let’s assume that all organizations start with a handful of founders. If there are two people in two roles, there are actually only a couple of channels of communication:
- I can talk to you.
- You can talk to me.
If we add a third person, now it goes up exponentially. You take 2 x 2 x 2. And if you add a fourth person, you take 2 x 2 x 2 x 2, which is actually sixteen channels of communication. And then, if you add a fifth person, there are now 32 potential channels of communication.
So, imagine as the organization grows to 50, 60, 100 people, or even 200 people. When your organization gets to this level, you literally have thousands of different potential communications channels. This affects processes, systems, communications and decision-making at every level in the organization.
So just by growing your business, it becomes more and more complex on its own. Often, the complexity outpaces the growth of the company.
The way to combat this is increasing complexity is to be intentional about simplifying your business, as well as your team’s roles and responsibilities. Set purposeful and impactful 90-priorities, which we call Rocks in the Entrepreneurial Operating System. Run effective weekly meetings that actually get things done. Get a pulse on your business through a handful of weekly activity-based numbers through your company’s scorecard.
If you’d like to discuss how you can make your business less complex and more efficient, reach out to me for a 90-minute Executive Alignment Session.
I’ll show you how to break down your organization into Six Components to simplify your overall business. I’ll also walk you through how to 1) master the moving parts of your organization, 2) focus your available resources in one, unified direction and 3) get more out of your business.