Why board management is the direct path to reduced complexity

– Organizations' biggest challenge

The article is based on Anders Nørgaard and Thomas Lykke's book: Complexity – The company's biggest challenge

By Lotte Lyng and Jacob Ørum, Klart

When we read Anders Nørgaard and Thomas Lykke's fine book on complexity, we were inspired to write this article, where we point out why the introduction of boards is a concrete and strong proposal for how the challenge of complexity can be concretely addressed.

Complexity is growing all the time

Organizations must have the complexity necessary to create (maximum) value. Complexity beyond this point is 'unhealthy complexity'.

The problem is that the complexity of the organization grows all the time if we do nothing actively to limit it. One of the reasons is that there is generally more energy and prestige in getting things started than in cleaning up and shutting down.

Why does complexity increase?

The sources of complexity are themselves complex. As one director put it: "Combination of strategic ambiguity about the vision for political reasons combined with frequent changes, network organization and "collaboration across" gives a complexity explosion".

In each case, we observe four requirements for the modern public organization as sources of complexity:

  • demands for increased speed in the production of services
  • requirements for increased availability – 24/7 and on all channels
  • demands for individualized solutions – the citizen is the customer
  • requirements for agility and perpetual adjustment

The organisation's attempts to meet these requirements often result in continuous changes in organisation, processes, goal management, IT, etc. And then we have the trouble with complexity – for example because the re-organisation is experienced as deja-vu; the new process is not implemented; the goal management measures the wrong thing; and the IT system struggles for far too long.

Consequences of complexity

The result is increased costs – and 'unhealthy complexity' often amounts to approx. 20 % of these costs. Added to this is an increased risk of loss of productivity, dissatisfied customers and poor well-being.

The organisation's focus is shifted away from the core task, and it is increasingly taken up by its own processes and policies. The raison d'etre, the value proposition, the customer value – you name it – disappears from view and the organization grinds to a halt!

How do we reduce complexity?

It is essential for the organization's ability to deliver effectively on the core task that complexity is kept down. Anders Nørgaard and Thomas Lykke point to a wide range of efforts to reduce complexity – we focus here on four central approaches that can be taken:

1. Map out and maintain focus on the core task

  • Clarify what the core task is       
  • Remove tasks that are not close to the core and remove processes that do not support the core
  • Clean up regularly

2. Make operation simple

  • Simple solutions are usually the best - if you don't understand it, it's a bad solution
  • Most tasks should be solved for 90% – the last 10% does not contribute value
  • Organization must reflect the organization's core processes – not the business areas

3. Clarify the strategy

  • Formulate and communicate a clear strategy that can be understood by everyone, and which enables decentralized prioritization. Reduction of complexity must permeate the strategy
  • Decentralize within a clear framework
  • Remove all efforts that do not have a clear connection to the strategy and only initiate projects that clearly support the strategy
  • Start only one project at a time and close the project if it does not create value

4. Introduce boards and stand up meetings

Board management is a powerful framework for reducing complexity. It can help us keep complexity down by maintaining focus on objectives, creating transparency and providing an overview... for example:

  • Strategic goals on the board make the strategy alive and present. At the stand up meeting, we can see and ask: "Which efforts support which goals - and do the efforts continue to contribute to us reaching the goal".
  • The focus on the core task is directly supported by the stand up meeting's dialogue about the day's/week's tasks. At the stand up meeting, we can see and ask: "If we do the right thing - we prioritize correctly - the plan is good".
  • Breaking down the projects into milestones and focusing on status and progress reduces complexity. At the stand up meeting, we can see and ask: "What does it take to reach the next milestone"

The board creates transparency, the stand up meeting creates dialogue and good operational management creates clear frameworks and goals. It is the direct path to reduced complexity.

Difficult and unpopular

Reducing complexity is difficult, unpopular and requires persistent work. And it is the top management that is responsible for leading the way!

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