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November 2010

Simplify Complexity, Please!

To simplify complexity is probably the Holy Grail for every organizational leader around the globe. It also is a request I frequently get for the Baldrige Criteria for Performance Excellence. Please simplify the Criteria, so they are easier to address. So, with these two challenges in mind, I address simplifying complexity this month for two reasons: (1) we are completing the revisions to the 2011–2012 Criteria, and (2) I recently was reminded of the 2010 IBM CEO Survey results entitled Capitalizing on Complexity by the just-released companion report on Working Beyond Borders, which presents IBM’s 2010 Global Chief Human Resource Officer Survey results. According to the CEO study results, the increasing complexity of businesses’ and other organizations’ current operating environments calls for senior leaders to embody creative leadership, reinvent customer relationships, and build operational dexterity. The study notes that operational dexterity requires agility (a Baldrige core value) and the need to simplify products, services, and customer interactions. To me, the key message is that complexity in a globally competitive marketplace and an uncertain global economy will only increase and that this complexity requires a simplification of operational processes. The ability to execute flexibly and rapidly requires “lean” processes that are clear to the whole workforce and routinely exercised to align with current and anticipated market needs. In other words, complexity will require systematic strategic thinking (a complex process) and then simplicity in execution. Simplicity in execution is aided by elegantly simple products, services, and customer interactions.

The human resources study also deals with complexity and simplicity. The biggest opportunities identified in this study of 700 organizations across 16 countries were to cultivate creative leaders, capitalize on collective intelligence, and mobilize for speed and flexibility. The first two areas, in my opinion, again call for handling complex, strategic processes, and the third area calls for simplicity in operational processes in order to execute them rapidly.

The path from complexity to simplicity requires significant analysis. Analysis begins with measurements and data, and it results in key metrics and information. This “simple” concept has been embedded in the Baldrige Criteria for years. Yet it amazes me how many organizations still measure what’s easy, rather than what’s important; analyze the data; and then don’t use the results for decision making because the data are not particularly valuable. In a 2006 book on systems thinking, Jamshid Gharajedaghi talks about the “necessity of reducing endless complexities and the need to produce manageable simplicities.” He says this requires a holistic frame of reference and a systems methodology, as well as a focus on relevant issues to prevent drowning in a proliferating amount of useless information. The Baldrige Criteria provide a holistic frame of reference, and they require complex thinking, but I believe they also provide the path to clear identification of relevant issues, followed by identification of key data, and analyses for decision making.

Let me share with you some of the changes coming to the Criteria in 2011 that I believe address the concepts shared in this Insights column. First, in support of simplicity, each group of questions (the numbered paragraphs in each item) will now have a subhead that summarizes the content. Using the outline formed by the item titles, area to address titles, and these subheads, Criteria users will have a simple guide to performance excellence.

We also have strengthened the line of sight from strategic challenges and advantages to core competencies, to strategy, and then to work systems and work processes. This clear set of linkages should take an organization from the strategic environment in which it functions to the execution of its operations in a logical sequence. While each of these concepts is complex, the line of sight should simplify execution. Strategy development in our global marketplace will increasingly require some degree of intelligent risk taking, which is introduced as a new consideration in 2011.

The role of senior leaders in the reinvention of customer relationships is highlighted by a change in the Criteria related to developing a customer culture in the organization. The responsibility has been moved from the Customer Focus category to the Senior Leadership item. Senior leaders establish the tone for the organization’s customer culture, and their focus on relationship building sets the tone for employees’ focus on customer relationship building and engagement.

The last change I will highlight in this column reflects our further thinking on the role of performance projections. This concept has been moved from a results consideration to a strategic consideration in alignment with key organizational analyses and decision making. Performance projections thus become a component of strategy development and a simple guide to areas in need of innovation.

Complexity, I am afraid, is a fact of global life. Handling complexity requires agility and the ability to execute with a sufficient degree of simplicity. So why are the Baldrige Criteria complex? Because achieving organizational sustainability in a global economy is complex. But my hope is that using the Criteria will help you handle complexity and execute with greater agility and simplicity!