Is technological complexity just covering up your other business problems?

Complexity has been a theme through many posts on {grow}, most typically connected with the word “STRESS!”

I had a fascinating discussion with one of my ex-professors about technological complexity and why it is often making business life more difficult, instead of easier. A fundamental idea we explored was that often, technological systems are implemented to try to make up for a loss of business experience.  Let’s see what you think.  Here’s an example, comparing two real companies I have worked with:

The case for experience

Company A is a mid-sized tech firm whose newest senior manager joined the company eight years ago. Most of the top executives have been in the same company, in the same market, for 20 years or more. Even during the recession, they have made it a priority to retain experienced managers.

Company A has a simple CRM system to keep their sales pipeline straight but for the most part rely on their cumulative industry experience and intimate customer knowledge to serve their market and respond quickly to opportunities. Do they rely on Twitter and social media monitoring to “listen” to their customers? No. They KNOW what’s happening because of their deep personal relationships.  Their customers typically pay more for their services and demonstrate incredible loyalty due to these long-term bonds.

Now let’s turn to Company B.  Over the past decade, this company has rapidly replaced people who fail in a job. So even an experienced “superstar” who goes into a new job and doesn’t knock the lights out right away is replaced by an outsider who has zero experience in the company and probably zero experience in the industry. Within a few years, only one out of their 12 most senior executives was “home-grown.”

Implications of tech versus experience

To make up for the rapid experience and knowledge drain, many of the new executives instituted their own management systems, often carrying over a familiar application from their previous company.  Workers at Company B are almost constantly learning a new “process.”  To make matters worse, if a rumor begins that an executive is on the way out, all progress comes to a halt because they know that the replacement manager is just going to change direction on technology again any way.

When Company B was faced with a contract negotiation with its largest customer, all of the managers who knew the customer and had been part of previous negotiations were gone.  So they hired a consultant to build a computer model that considered supply, demand, competitor capacity, pricing scenarios and every possible angle to produce a can’t miss negotiation strategy.  The result?  Company B lost the customer entirely, an event the computer model predicted could not possibly happen. The computer couldn’t account for trust and business relationships.

Now I know there are a LOT of managerial problems with the Company B scenario I’m presenting, and obviously some level of complexity is inherent in any business.  But the point is, too often we …

  • Rely on software to mask over deeper management problems.
  • Focus on data instead of information.
  • Take comfort in analytics instead of common sense.
  • Minimize the value of real business wisdom and (gasp!) intuition because we feel the latest tech hype must be infallible.

Most likely, relying on software in place of real business experience results in personal stress, bloated costs, wasted resources, and excessive complexity.

As you try to stay ahead of the mounting technological tsunami, perhaps it is time to pause and consider whether there is a true business case for that new app or if this is just an attempted quick fix to bigger problems.

What do you think? Does this idea about complexity make sense in your company and your life?

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  • Spot on, Mark, as usual. An excessive reliance on technology and systems has occasionally been very much in evidence at companies I’ve worked with.

    Not only does it hamper internal processes, it also reflects on customer relations. If a vendor company’s systems and processes are overcomplicated, there is no reason for customers not to choose a simpler, easier solution as soon as it presents itself.

    A couple of examples:

    1) The endless voice menus of some purchase/support telephones. While they probably direct the call exactly to the right place and provide good tracking metrics, the customer can’t but feel secondary to the company’s wishes.

    2) Agency time-tracking and billing systems. True, my experience from these is a bit outdated and better systems have probably emerged since, but when I handled agency billing, it sometimes took nearly a full working day to get 10 projects billed. The rigidity of the system did in no way allow for the variety of options agency-client relations require, resulting in all kinds of strange tweaks and cheats. Which, in turn, skewed the metrics.

  • Mark

    @Kimmo – Great examples. Here’s another. I went to a conference attended by companies installing Oracle ERP systems. The main question executives wanted to know was when will they be finished and realizing value from the investment? The implied answer: Probably never.

    I know there is a severe risk of over-simplifying the issue. Certainly companies need technological solutions to manage complexity, especially as they grow and spread around the world. But especially in the case of ERP systems, most executives don’t even know enough about technology to know the right questions to ask when evaluating whether it is a sound investment or not!

  • Mark,

    I don’t think that any technology could fix your Company B scenario. That kind of management “churn” is a recipe for disaster.

    On the larger issue of complexity, the traditional approach in most US companies has been to use technology to manage complexity rather than to make a serious effort to reduce the underlying complexity.

    Principles of “lean management” can teach us a great deal about eliminating unnecessary complexity. Just to give one example, many manufacturing companies use expensive ERP/MRP systems to schedule, manage, and control production activities. Mature lean companies, on the other hand, use simple “pull” signals to control production activities.

    When considering a technological “solution” it’s usually wise to apply the “USA” approach. First, make sure you Understand the process you’re trying to improve. Then, look for ways to Simplify the process. Only the do you Automate the process.

  • Mark, I have another part to add to this: the company that tries to cut costs by investing in an unfinished product. I’ve done some work for a couple of major corporations here that have caused massive problems for their employees and customers by investing in half-baked software because they tried to cut corners.

    Untried and untested software is often worse than no software.

  • Mark

    @David — Fantastic points. I have had extensive training in the Toyota Production System and always was asking “why don’t you put these signals on a computer?” And every time they pounded me on the head! The idea of course was to be simple and visual. The points you bring up here are really vital and so often overlooked by manufacturing organizations!

  • Mark

    @Jon — Your comment is hilarious to me because the fact is, to add to their woes, that actual “Company B” invested early in an ERP system that was under development. They got a special entry-level price for being a development partner. The implementation was such a disaster that it was actually shutting plants down. And, not surprisingly, people were fired … and replaced by OUTSIDERS.

    Thanks for making me think of that story, Jon!

  • I work at a very senior level in tech and I can tell you that no technology solves any management problem ever. You’ve conceded the point about Company B’s management issue so I won’t beat that dead horse, but I will say this. Technology is only useful in organizations if 1) everyone is on board with what is being brought in, and 2) it serves the primary purpose of making management easier (assuming good management is in place). If these two points aren’t met no amount of technology will make a difference and often times it can make things worse.

  • Mark

    @Marc To build on your points, another problem is that management IS on board and then management changes. Often you start from square one from the politics of the IT project, creating waste and frustration. Thanks for the great addition today!

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