Fri. Apr 19th, 2024

Businesses nowadays have to manage an ever-increasing number of tools and data, making them more complex than ever. Businesses must act swiftly and make decisions because working environments and market conditions are changing at a faster rate than ever before. Organizations must have a thorough understanding of their data, tools, and processes—as well as how they all work together—in order to react to change effectively.

Read More: OTCMKTS: LEEEF

Organizations are under tremendous pressure to adapt to this combination of accelerated change and increased complexity. Those that can clearly understand the impact of their decisions on their business and its operations will be better able to adapt to change than those whose complexity overwhelms them. Put another way, firms must find a means of defining business complexity if they are to remain competitive.

What is complexity in business?

The term “business complexity” describes how an organization’s people, products, data, and technologies come together to form a vast, interconnected network. Positive business changes like innovation, growth, and expanding product portfolios frequently result in it. In essence, a business’s ability to support new customers, grow, and add new tools results in an increasing number of dependencies and interconnections within the company.

But corporate complexity can, and frequently does, spiral out of control. In general, business complexity increases with enterprise size. Additionally, for some businesses, it can be challenging to understand how different elements affect one another and which ones are actually essential to the operation due to the complex web of interconnected data, technology, and processes.

What is the reason behind the current rise in business complexity?

There is no doubt that many organizations now face a higher level of complexity than they did a few years ago. The COVID-19 pandemic sped up the process of change, requiring organizations to quickly adapt their approaches to a new market, provide new tools to enable a remote workforce, and step up their efforts to undergo digital transformation.

Due to all of these modifications, a large number of new procedures, workflows, and instruments had to be adopted quickly. According to a recent Okta (2022 Business at Work report) customer study, the average number of apps that businesses use has grown by 24% since 2016. This equals 187 apps on average for large organizations (those with more than 2,000 employees).

Concerns about less favorable economic conditions do not, however, change the importance of digitization. In contrast to just 6% who intend to reduce spending, 51% of businesses still intend to increase YoY IT spending in 2023, according to SWZD’s 2023 State of IT report.

To expedite important use cases and enable more sophisticated analytics, investing in new technologies is frequently required. However, this comes with a catch: more tools equal more data silos. When disparate teams within the organization invest in disparate tools, it becomes exceedingly challenging to make connections between tools and comprehend their interdependencies.

As per a Ventana market report, disparate data sources and systems pose the biggest challenge to data governance for organizations. In essence, data silos make it very difficult for businesses to guarantee the accessibility, usability, affordability, and security of their data. The layers of procedures that organizations implement as they expand only serve to increase this complexity.

The effect of complexity in business

Business complexity has an impact on almost every facet of an entity. Among the most notable areas of influence are:

Decreased creativity, productivity, and teamwork

Employees are overloaded with more information than they can possibly process as businesses become more complex. Ninety percent of employees cited “managing information overload” as the main cause of work complexity, according to Pega research.

Finding pertinent information, figuring out what’s current, and prioritizing actionable steps based on that information all take a lot of time. That time could be better used for higher-value group projects like ideation and creative problem-solving. According to recent data, employees look for project-related information for an average of five hours per week—nearly an entire workday.

Not to mention that it can seem almost impossible to try to explain complicated ideas to stakeholders in order to get their support. According to the same Pega study, managing internal procedures and bureaucracy is the second biggest factor in daily complexity, which frequently causes teams to become misaligned and impedes the achievement of objectives.

Slowed growth and decision-making

One of the main issues with complexity is that it makes data synthesis and analysis extremely challenging. Teams that have data silos only see a fragmented picture of the company, which makes it challenging to gather all the information needed to make informed decisions.

In fact, according to 86% of participants in an HBR survey, their companies’ inability to expand was being hampered by the complexity of decision-making and business procedures. The irony here is that complexity, which was a byproduct of growth at first, can become a significant roadblock to further growth.

Organizations are paying a heavy price for this complexity. An average Fortune 500 company’s managers lose more than 530,000 working days and almost $250 million in labor costs annually as a result of the time they spend making decisions (McKinsey).

A higher risk to security

Data silos affect decision-making and collaboration, but they also raise risk because crucial data is dispersed among several tools. According to recent PwC research, 75% of executives are worried about privacy and cyber risks as a result of their organizations’ excessive complexity.

It will become more difficult for organizations to locate data and implement adequate security measures the more complicated their business is.

Manage business complexity with these tips

Simplifying business complexity can be likened to a risky, high-stakes game of Jenga: could the entire structure collapse if one element is removed?

Even though it may seem like a daunting task, organizations can take certain actions to manage the complexity, make things clear, and ultimately maintain the smooth operation of the business.

1. Reduce complexity to forms that are simple to comprehend, such as images

Organizations should begin managing complexity by comprehending it: what causes it, how is it connected, and which components are the most crucial?

One of the best ways to depict the relationships between various objects and the various levels of a business is through visuals.

Visualize your business processes, systems, and architecture as they are right now. To save time and guarantee that the visuals are up to date, you might want to think about utilizing a tool that integrates your technical systems and visualizes them automatically. With this knowledge, you’ll be able to quickly spot chances to streamline the company and assess the effects of prospective changes.

2. Combine resources and cross technological divides

For companies looking to control business complexity, consolidation ought to be their first priority. Give top priority to all-encompassing solutions that can work in tandem with your current tools or even take their place when assessing new technologies to implement.

You can reduce the amount of data silos in your organization by lowering the number of standalone tools you have. Teams will find it simpler to manage security risks and make decisions if there are fewer data silos.

3. Encourage organizational flexibility to handle complexity.

Complexity is an inevitable byproduct of growth; your company will become more complex as it expands. For this reason, it’s critical to both embrace complexity and take action to make things clearer and simpler. Here’s where organizational flexibility is useful.

To make sure your company is prepared to respond to both internal and external change, including new opportunities or threats, put your attention toward integrating an internal business agility capability into your corporate culture.

4. Establish a single source of reality

Complexity management requires maintaining team alignment throughout the entire organization. Look for methods to centralize information, including concepts, previous judgments, procedures, systems, and more, to make sure that everyone has access to the knowledge they need to innovate and make decisions. The majority of cloud-based repositories provide accessible and safe storage choices; they are especially helpful for distributed or hybrid teams.

A single source of truth facilitates collaborative conversations and ideation while saving time, which makes innovation a more reliable and scalable process. It also guarantees that work and knowledge remain within the organization as team members come and go.

Starting with our brand-new Team Spaces feature is highly recommended. By gathering all the tools you require in one location to start work, manage progress, and maintain alignment, you can establish a home base for your team.