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The Battle Against Complexity

In every part of life, and especially in business and bureaucracy, there is a natural tendency toward complexity. Step by step, even the simplest process becomes more involved, requiring ever more activities to accomplish the same result. Additional steps are added, each of which seems logical at the time, but which gradually increase the cost and decrease the efficiency of the entire process.

Here is how the law of complexity works. If there is only one step in a process, the square of one is still one. The level of complexity is very low in a single step activity. The potential costs, time and mistakes are low as well. For example, if you decide to make a phone call, and you do it yourself, the action is simple and direct. There is virtually no complexity. The number of mistakes you can make is only one, misdialing the number.

Once you add a second step, you have a complexity level of two. The number two squared is four. The level of complexity has now jumped from one to four and the likelihood of mistakes, costs and delays has gone up by 400%. An example of this would be if you asked someone else to make a phone call for you to relay a message and get a reply. The room for miscommunication and the probabilities of missed messages jumps dramatically.

Exponential Increases

If you add a third step, the number three squared equals nine. The complexity level is now nine in terms of potential costs, delays and mistakes. For example, let us imagine that you ask someone to ask someone else to make a phone call for you, relay a message and get an answer. The potential for miscommunication, and all the costs, delays and problems that may go along with this confusion has jumped 900% from when you thought of making the call yourself.

As you keep adding additional steps, the level of complexity begins to increase exponentially. Once you have a process with ten or fifteen steps, the costs, time and possible mistakes go through the roof and out of sight. This principle explains \$3500 toilet seats in the military and the hundreds of millions of dollars of waste that has to be written off in government projects each year. The complexity levels are so high that it takes years to get something done, at horrendous cost, and it is usually full of mistakes.

Reducing the Steps

The key to simplifying and streamlining your work and your business lies in your ability to reduce the number of steps in each process. When you reduce a process by a single step, as in going from five steps (a complexity level of 25) to four steps (a complexity level of 16), you reduce the possible costs, delays and mistakes by a factor of nine! As you reduce steps, you speed up your ability to get results, at lower cost, with fewer mistakes.

In the process of reengineering, you stop the clock, like calling a “time out!” in a football game, on a particular business activity that has become complex and time consuming. You then analyze every step involved in the process of doing that job, writing them down in order.

Simplify the Process

Once you have made a list of every step, you then go through the list, looking for ways to reduce steps wherever you possibly can. You know that even a single step reduction in a process will dramatically reduce the complexity and thereby increase the speed at which the job or task is accomplished.

You act as your own management consultant and ask hard questions, just as you would if you had been hired in from the outside. Ask why every single step is being taken. What is its purpose? Why is it being done in this particular way?

The second stage of reengineering is for you to go through the list with the goal of eliminating at least 30% of the steps the first time through. This is virtually always achievable, sometimes to the amazement to everyone involved. It just takes a little imagination.

Collapse the Process

Here is an example. Northwest Mutual Life Assurance Company, prior to reengineering the process, required six weeks to approve a life insurance policy application from the field. By the time the approval got back to the agent, the prospective client had often decided to go somewhere else, or not buy the policy at all.

When they analyzed the six-week process, they found that there were 24 steps in the approval or disapproval of a life insurance application. Twenty-four different people had to examine some part of the application. But the total amount of time actually spent on each application turned out to be only 17 minutes.

It turned out that this process had developed over many years as a way of avoiding mistakes in policy approvals. Each time a mistake had been made in the past, another check or control was created to catch the mistake in the future.

The process had obviously become too cumbersome so they therefore decided to re-engineer it. The method turned out to be quite simple. They consolidated 23 of the 24 steps into a single job for a single person, who checked every detail of the policy before sending it to a supervisor. The supervisor simply checked the analysis of the first person and gave an approval or disapproval. The answer went back to the field within 24 hours. As a result of this new speed of processing, Northwestern Mutual was able to write many hundreds of millions of dollars of additional insurance every year.

Consolidate and Eliminate Steps

In reengineering, you first eliminate every unnecessary step that you possibly can. Next, you look for ways to consolidate steps into one job so that more of them can be done by a single person or at the same time, rather than being stretched out.

In the most efficient and profitable airlines today, you will often find that the person who checks you in and gives you your ticket is the same person who clears you onto the plane at boarding. Then, you look up and find that he or she is the steward or stewardess on the flight. When you arrive, he or she is busy gathering newspapers and cleaning up for the next flight. In some airlines, each of these jobs is done by a different person. Which airlines do you think are the most profitable and efficient?