Is your company so complex it’s spiraling out of control? Take charge with simplification.

Key Takeaways:

• Growth doesn’t require complexity as a necessary evil; instead, it presents a challenge that can be overcome through simplification and strategic management practices.
• Business complexity arises when growth is not managed properly. It increases as more people and lines of communication are added, leading to exponential operational difficulties.
• Complexity can hinder growth and profitability, making businesses less competitive, slower, and less appealing to customers
• Simplification is a critical leadership skill necessary to navigate growth challenges. 

Business complexity slows down growth. It takes time to manage complexity, decisions are more difficult to make, and the path forward becomes muddled. Complexity also hurts profitability and growth. These businesses are hard to scale, slower, less competitive, less responsive, and less appealing to customers. 

The excuse is usually, “We’ve grown so much that everything has become complex.” But bigger doesn’t mean things are complex: in small and large companies, things become complex because they aren’t properly managed. As things spiral more and more out of control, we feel stuck. 

Simplification is important as both a concept and a practice. It’s so important that it’s the first leadership ability we teach in our very first session, Focus Day. Many factors contribute to complexity, and we’ll discuss those and how to master the ability to simplify (hint: it requires internal growth) to achieve greater success.

Understanding Business Complexity

What creates complexity? Let’s look at the complexity model:

• When an entrepreneur hires their first employee, complexity increases minimally among the two people and one line of communication between them. 
• As the company grows, however, and a financial chief is hired, a third person is added, increasing the team by 50%. This also raises the number of communication lines to three, reflecting more complexity. 
• A fourth employee creates six different lines of communication. Complexity increases exponentially, making coordination and management more difficult.

The learning is that complexity grows exponentially and multiplies operational difficulties. Complexity can occur at the company, departmental, and individual levels. One key to simplification is to distinguish between internal and external growth challenges. We want more clients, more revenue, more profit. That is external. Internally, we must master leadership abilities, primarily the ability to simplify.

The consequences of business complexity

Business complexity costs, and they aren’t all financial. In a complex business, efficiency decreases, and operational costs rise. Employee morale drops, well-being is shoved aside to keep the business rolling, and leadership lacks clarity. 

What happens? Innovation, adaptability, and overall business agility go out the window. 

Simplifying Your Business

Simplification is a core leadership skill. Mastery of it is essential to overcoming growth hurdles both externally and internally. However, for simplification success, we focus on the internal growth of skills and processes as well as external growth markers like revenue. 

Apply the 80/20 Rule, otherwise known as the Pareto Principle, when documenting core processes. This rule says that 80% of outcomes result from 20% of causes. What are the 20% of steps in everything we do that might have an internal or external impact? Document the what and not the how. 

In the end, we have a one or two-page checklist that’s easier to follow than an SOP manual, minimizes human error, and increases productivity.

Let’s look at an example:

This company simplified how they were shipping and receiving by posting a one-page checklist in the warehouse. Each time someone took a box, they used the checklist, describing the item in the box. This reduced shipping errors by almost 30%. This is a good example of streamlining a core process to simplify tasks, which results in more productivity. 

The ripple effect of simplification is an improved customer experience. Communication becomes easier as interactions – including emails – become shorter to be more clear, consistent, and direct. 

The Path to Simplification

To simplify, you must know where the complexities lie. 

Conduct a complexity audit

Evaluate core processes with a mindset of what can be removed or automated. Review your organizational structure using the accountability chart. Work on the structure first, not the people. What structure do we need? It’s not the one we have. Be sure to look forward six to 12 months.

Create three to five bullet points: What is the main objective? What is the top accountability for each of these functions? Once a leadership agreement has been reached, it’s time to add the people. Doing this creates clarity and accountability for everyone. Be sure to involve employees in process improvements to encourage buy-in and vision alignment. 

Leverage technology and tools

One company held a brainstorming session with all employees to discuss how to streamline a process by identifying what could be removed or automated. This approach built trust by involving everyone and training them in the core process.

Implementing simplified, user-friendly solutions that fit the company’s needs makes operations more efficient. When employees are included in decision-making, resistance decreases because they feel heard and valued. This leads to a clearer understanding and a stronger commitment to standardized workflows.

You will integrate simplified technology solutions with user-friendly tools that align with company needs and simplify operations. When people have a say, it minimizes resistance—everyone feels heard and can speak their truth. This brings clarity and, in turn, commitment to standardized workflows.

Measure and Track Progress

Simplification doesn’t mean making change for change’s sake. To be successful, any simplification must have verifiable results. Incorporate efficiency measurables in your scorecard.

• After simplification, track efficiency, error rates, and overall business performance,
• Monitor customer satisfaction to gauge impact.
• Make periodic assessments of core processes and structures to ensure they stay optimized. 
• Make adjustments as necessary based on feedback, performance data, and your company’s evolving needs. 

A good example of simplicity is the subject of a Netflix documentary, “Jiro Dreams of Sushi,” about Jiro Ono, an 85-year-old sushi master. Considered to be the premier craftsman of the world with a Michelin Star restaurant, his philosophy for success is simple: he tells his people that simplicity is the ultimate purity. So, when you’re doing something you feel is too simple, you’re on the right track.

Get Where You Want to Go. Simply.

Complexity is not an inevitable part of business growth. The journey toward simplification takes a proactive approach, focusing on internal process refinement, empowering team members, and leveraging technology. Complexity stems from a lack of structured management rather than size, so businesses, large or small, can take purposeful steps to streamline operations. 

Engaging in complexity audits, embracing the 80/20 Rule, and fostering an environment where every employee feels valued and heard are crucial strategies that enhance productivity and create a ripple effect that improves customer experiences and increases overall competitiveness. 

As we reflect on the wisdom behind the philosophy of simplicity, we are reminded that true mastery lies in the ability to distill processes down to their essence. In a complicated world, embracing simplicity can illuminate the path to success. When we commit to this approach, we set our businesses up for sustainable growth with an agile and responsive organization. 

Let’s strive to simplify, focus, and succeed together. Engaging with The Profit Recipe provides valuable insights, tools, and strategies to support personal growth and empower leaders and their companies to become the best version of themselves.

We’ve been there and done that. At the Profit Recipe, we teach leaders of all stripes to be more self-aware, embrace their vulnerability, and learn to delegate effectively to lead by design, not by accident. We understand the leadership skills entrepreneurs need for success and can show you how to elevate your company and your team.

New and experienced leaders can become the kind of coaches and managers who direct valuable, engaged, and productive teams that drive growth. Let us support your entrepreneurial journey–schedule a call with one of our experts today or send us a message.