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The Complexity Crisis
John L. Mariotti, ca. 230 pages, Platinum Press (2008)
Complexity is the factor at the heart of a profitability struggle many companies are facing these days. This is the core message given by John Mariotti, former CEO and consultant, in his 2008 book The Complexity Crisis – Why Too Many Products, Markets, and Customers are Crippling Your CompanyAnd What to Do About it. According to him, complexity is a problem that companies of all industries possibly experience, but which is recognized and addressed by only very few.
The book contains three major sections, starting with a precise analysis of The Problem. Mariotti observes that, due to increased competition and low growth rates in developed markets, companies try to exceed the market’s growth, by adding new products or specifications, in order to sustain growth. This indeed increases sales and leads to top-line growth but, at the same time, adds complexity and hidden costs to overhead accounts, lowers efficiency, or increases obsolescence. Therefore, the unmeasured complexity costs erode the additional revenues and the company may end up with an unforeseen decline in the bottom line and lower profitability at the end of the year or quarter. Following the executive proverb of “What gets measured gets managed”, Mariotti introduces different symptoms that may hint to a complexity problem and suggests indicators that measure complexity. CEOs who are aware of the problem thus can avoid sliding unnoticed into complexity trouble. This does not mean that complexity cannot be used as strategic competitive advantage. The author proposes a “use-it”-strategy, if it is a competitive advantage, or a “lose-it”-strategy, if it adds unreasonably high costs. Section two illustrates the idea of the complexity crisis with several examples from branches as different as fast food, computer or aviation industry, pointing out how and why companies suffer from complexity and how they managed to re-simplify their business-model. Section three, The Solution, provides executives with specific practical advice on where complexity usually creeps in, how it can be traced, strategically addressed and driven out if necessary.
Those who read the word ‘complexity’ and think of complexity and chaos theory in natural science applied to the business world, will not find what they seek. The author draws parallels between scientific complexity theory and business. His elaborations, however, stay on a metaphorical level and do not aim to examine the business world from a complex scientific perspective.
Tripl3leader recommends this book to executives in the way business works in today’s globalized, highly competitive and complex world. Even though some ideas sound like familiar management advice, readers gain valuable insights into complexity-related problems present in many companies, independent of whether they offer products, or services. They also receive practical advice about how to leave chaos behind and get back to order and profitability in case they are caught in the complexity trap.