Keep it simple, stupid — or KISS — isn’t just a design principle. It’s also a preferred approach to building a sustainable business model. The less complexity in a business, the less friction. The less friction, the more efficient a business runs.

However, as businesses grow and scale, the more difficult it is to keep it simple. Complexity is a natural part of growth, but it doesn’t have to reduce efficiency. That’s where complexity management comes in.

Complexity management is the analysis and optimization of complexity in enterprise organizations. Complexity introduces uncertainty and unpredictability. Complexity management reduces that and the anxiety that it brings.

The initial study of complexity management created the Global Simplicity Index over a decade ago. The methodology has only improved — in 2017 it estimated that enterprise organizations were losing $86 billion a year to complexity. The costs of complexity can be significant, which makes managing them a priority.

Why Complexity is a Good Thing

If simplicity is calm, complexity is noise. On the surface, noise may be annoying and distracting. However, amongst the sound, there are often voices that should be heard.

By itself, complexity is neither inherently good nor bad. Innovation often happens in complex organizations, but can also ensure that good ideas never see the light of day.

How a business environment reacts to complexity is key. If it is able to adequately maintain order and processes that ensure initiatives are completed, it may be good. If it fails and the gears of an organization come to a stop, it can be crippling. Look at the typical supply chain. These are massively complex systems that work remarkably well.

More resilient.

Relying on just a few people, technologies or systems is ill-prepared to react to unforeseen events. Having a diversity of backgrounds and experiences means better corporate strategies and organizations are better equipped to react to changes. The redundancy that comes with complex enterprises also removes the reliance on one person or system.

Adaptable.

Complex organizations are better situated to adapt and react to changing needs or requirements. Market changes mean needs shift regularly. A complex enterprise that is capable of creating new products will meet the challenge.

Better coordination.

Though complex, these types of organizations are typically well-connected to each other. They share behavioral instincts and work well together. They have a shared vision and realize that they are more likely to meet goals working together than alone.

Harder to copy.

The more complex you are, the less likely outside organizations will be able to copy what you do. Complex organizations are highly unique and difficult to understand. Unless you are deeply entrenched in the company, it’s unlikely that outside organizations will be able to do what you do.

The Downsides to Complexity

While complexity does bring certain advantages, it also brings additional challenges. Introducing complexity to an organization that is not used to it is jarring and can stifle creativity. Maintaining complexity in an established organization is a job by itself. It’s a balance that managers must figure out, often without an obvious answer.

Reduces efficiency.

Streamlined organizations operate quickly and reduce bloat. Complex businesses can feel like they move at an iceberg speed and are full of bureaucracy. This all slows down the speed of business and makes it more difficult to get things done. A not-insignificant part of the business is spent on running the business instead of improving products or better serving customers.

Lowers understandability.

Navigating a complex organization can be an adventure. Finding the right person to talk to when a problem arises is a challenge and reduces employee effectiveness. This applies to all employees as well. Managers and individual contributors alike are negatively impacted.

Can become unmanageable.

Related to the above, the more complex an organization is, the more difficult it is to implement good management strategies. Streamlined organizations have clearer values and understanding of roles. Complex companies can have this muddled, making it difficult to keep decision makers working toward a shared goal and accountabilities. They become more organic instead of structured, with individual units acting on their own.

Unpredictable.

This all leads to a certain level of unpredictability. Without all parts of the organization working in concert, they are left to their own devices and often make their own decisions. This can have good or bad consequences, but having a full understanding of the impacts of decision making is difficult to understand.

Organizations must invest time and money to fully grasp how changes to one part of the company may impact all parts.

How to Manage Complexity

Companies do not become complex overnight. This is a gradual process that often takes years to set in. It doesn’t have to make the organization unwieldy, though. A thoughtful implementation and constant maintenance and management can make even the largest organizations operate smoothly and effectively.

Accept that it happens.

The larger an organization, the more difficult to manage it will be. It’s a simple math game, with the increase in headcount having a direct impact on the level of complexity. Effective organizations don’t fight this and accept that it will happen no matter what they do. Embrace change and worry about how to manage it, because it will happen no matter what you do.

Create modular structures.

The best complex organizations have large business units within them. Accepting that different parts have different missions means creating multiple connected but somewhat autonomous modular structures that work independently.

Finance and product development may not do the same thing, but they do need each other. Systems are able to grow and adapt as needed and are more resilient as failures in one part do not impact all parts. Pure silos should be avoided, though.

Use simple, common operating principles.

Complex organizations are often decentralized, creating a series of city states versus a single body. This can be well managed by using basic, unifying principles that everyone can work toward. This helps ensure that, though parts of the business may not work directly with each other, everyone is speaking the same language. That builds connections where previously there were none and can provide a competitive advantage.

Build in a bias for change.

The only constant is change. Enterprises should not fear change, but should embrace it and consider it strategic management. Organizations —and people — are typically resistant to change.

However, the world around you is in constant flux and organizations must evolve with it. Some of the world’s most successful companies build in change as part of their natural management structure because they understand that just because something worked in the past is no guarantee that it will continue to work in the future.

Don’t be a control freak.

Micromanagement cannot work in complex environments. Control freaks are typically resistant to change and want things done in their vision, even if that vision is the wrong way to go approach an issue. Unpredictability is the rule and managers that do not easily give up power are less likely to respond well to it.

Expect surprises.

Don’t just prepare that the unpredictable will happen, expect it. The world is naturally chaotic and it’s difficult to gauge what the next major challenge your organization may face will be. If you expect the unexpected you’re less likely to be caught flat footed.

Fix, repair, prune.

Well-run organizations require constant maintenance. People should be looked at often to determine if they’re in the best position for their skill set and processes should be reviewed to determine if they still serve a valuable function. If change needs to happen, it’s in the best interest of the company to do so.

The Final Word

Complexity may sound like a daunting word, but it doesn’t have to be a negative for an organization. It requires work — lots of it — to create a complex but efficient organization.

However, if implemented well, it sets up the business to be agile enough to evolve and resilient enough to meet any challenge.

FAQs About Complexity Management