Book – Think Simple: How Smart Leaders Defeat Complexity

simple.pngMany people think that they have a more complex business than they have.  More times than not, they actually create complexity in their mind.

JCPenney: though we remember the outcry of disappointed customers when discounts and coupons were cut, this story is not quite complete.  The company planned to re-create stores and provide a different, simplified and more engaging experience.  This experience would replace existing stores and coupons.  Unfortunately, the “old” value was removed before the “new” value became available.  JCPenney’s customers might have reacted differently if the entire plan was rolled out as designed.  This was, definitely, not that simple…

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Blue Men Group: understanding the need for  simplification (and communication).  The group conducted an interesting research: what do people new to Blue Men expect from the show?  The results were baffling: guesses were very inaccurate, and often strange.  After the first show the same audience claimed that they were surprised by the experience, as the show was significantly different from expectations.   Blue Men Group realized that show promotions need to be clarified.

DirectTV Latin America: simplification of brand and simplification of reporting structure.

Reporting structure: functional heads in each country reported to a manager based in Florida. For example, heads of marketing of Peru, Chile, and Colombia were reporting to a head of marketing in Florida. It created significant overhead in Florida and constant flow of communication.

To tell you how messed up this arrangement could be, I visited Florida shortly after I started this job.  Everyone of those functional heads swore to me that their part of the company was making money.  But when you added it up, they were actually in bankruptcy.  It became convoluted and financial reporting was designed to reflect convoluted structure.  Somehow, they all convinced themselves that they were making money.

Solution: eliminate the entire organization in Florida and empower management in each country to be responsible for its own business.  Each country became its own PNL, and the entire organization became more entrepreneurial and less complicated.

What causes this complexity?  Mostly ego and a desire to control.

Employees in big companies are typically eager to change and quick to embrace the idea of simplification.  It is complexity that sets people running in the opposite direction.

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