There’s a barbecue joint near my house. The barbecue is fantastic and the business is hugely successful. People line up for the barbecue an hour before the place opens. The restaurant’s menu is focused on one key offering – the barbecue – and a couple of accompanying menu items – potato salad and cole slaw.
There’s not much else on offer – no other sides, meat, or alcoholic beverages. The business is kept as simple and focused as possible, and it works well. This, however, is an exception, rather than the rule. Most businesses have no choice but to be complex.
Complexity Is Inevitable
Today’s business environment is complex; our workplace is a web of relationships, priorities, and stakeholder interests. For years, management science has tried to simplify complexity — to streamline, to break it down into pieces. These methods work to some extent, but complexity is here to stay.
As complexity grows and gets more and more overwhelming, businesses look for process improvement opportunities and take steps to simplify and streamline the way their work is done.
Some businesses, with Yahoo! being a recent example, streamline their product lines to focus on what they do best. Others, such as the case with the airline industry’s Simplifying the Business (StB) change initiative, are taking a wide range of steps to change the way they operate in order to bring in focus and clarity.
Although helpful and necessary, simplifying and streamlining does not remove complexity. Organizations need to work on solutions designed for success in a complex environment.
Complexity Management: The Problem of One Dimension
Restructuring is widely used as a way to get a handle on complexity. It’s common for organizations to try to move boxes around on the org chart. They may group their various departments into separate units, or group products together by market segment, or organize its various units by region.
In any of these scenarios, something or somebody suffers. For instance, when professionals are grouped into functional units, the units rarely work with one another to resolve cross-functional issues.
When products are grouped by market segment, the customer is often the one who gets the short end of a stick, as interacting with the company becomes a maze of narrowly-specialized contact points, where the right hand doesn’t know what the left one does.
When companies let regional offices run the show without collaborating across the organization, consistency becomes an impossible goal, and customers suffer yet again.
The problem here is relying solely on the org chart and the vertical structure it represents. Each organization has a vertical structure, which is important for managing resources, but the key to tackling complexity is in optimizing the horizontal business processes across the organization and its various units.
Complexity is two-dimensional, and the horizontal dimension is where we could see how the organization’s units and functions fit together, regardless of reporting relationships on the vertical org chart.
For example, your production process, when examined horizontally, will show you what regions and customer bases it touches, and which departments are involved in the process at what point.
The Power of “And”
So the key to tackling complexity is not in simplifying it to a point that it doesn’t exist, but in acknowledging its existence and looking at your business from two dimensions.
The solution isn’t in some magic org chart, but in the fact that your org chart has to be considered second, and your organization’s business processes first.
You need to look at both – your geography and your organizational units. Or your product lines and customer bases. The solution is not in figuring out “either, or”, but in finding and addressing the “and.”
Matrix organizations are often known for their confusing dual-reporting relationships. These relationships stem from one-dimensional thinking that one leader cannot manage two or more elements of the business. In dual reporting, there’s often a regional leader and a functional leader (e.g. Director for the MENA Region and Marketing Director).
As organizations free themselves from only looking for solutions on the vertical org chart, it becomes apparent how one leader, responsible for a specific sector (marketing in the MENA region), can handle two or more elements as she works collaboratively with other sector leaders.
This perspective allows leaders and OD professionals to better understand how all moving parts of this big and complex machine work together. They can use this knowledge to organize these various parts into organizational sectors. Each sector will have a leader who will work across the business with other sector leaders to make sure that each process is as optimized and focused on outcomes as possible.
We offer training, webinars and working sessions for OD professionals. We customize our courses to fit the needs of an organization, depending on its level of matrix maturity and specific challenges it’s looking to address.