How much complexity is too much?

The Wharton School of Business publishes internet articles and editorial content bi-weekly covering a wide range of business topics and research. You can sign up for free at http://knowledge.wharton.upenn.edu/.

The latest edition included a special feature focused on complexity. I haven’t gotten through the entire series yet, but I’ve discovered some good stuff in the following article: Unraveling Complexity in Products & Services. The article asks how much complexity is too much?

After using several examples of pure excess in the variety and selection now available to consumers (such as 1,800 varieties of wine at a grocery store) the article first questions whether or not the consumer will be confused or delighted by the choices. Assuming they are delighted, will the added complexity strain already scarce resources and complicate production and supply processes to the point where profit is eroded even with increased revenue?

Eric Clemons, Wharton professor of operations and information management offers some suggestions on how complexity can work by focusing on adding value for the customer in the form of customized solutions without adding to your complexity. Clemons uses Dell as an example, citing their ability to offer hundreds of thousands of ways to respond to customer requests such as disk size, memory etc. but “no individual request is any more complicated or any less complicated than the others.”

The article concludes with 3 important rules for effectively managing complexity from the book
Conquering Complexity in Your Business (McGraw-Hill, 2004), co-authored by Wilson and George Group chairman and CEO Michael George. All three of these ring true with Lean philosophy:

One, eliminate complexity that customers will not pay for.

Two, exploit the complexity customers will pay for.

And three, minimize the costs of complexity you offer.

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Luke Van Dongen

Luke, an auto industry engineering veteran, blogged here from 2005 to 2006.

Posted in: Blog

3 Comments on "How much complexity is too much?"

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  1. jp says:

    I see Conquering Complexity as an additional dimension of Lean. Benefits of “traditional” process improvement can quickly plateau unless a company also looks at their total value proposition. As Toyota and Southwest Airlines have shown, standardization done correctly is one way to manage complexity and maximize value flow.

  2. Luke Van Dongen says:

    I would add that standardized processes aren’t necessarily a hindrance to finding creative ways to deal with complexity as is often perceived. With the right mindset, standard processes are allowed to change, grow and evolve to meet changing needs and challenges. The benefit to standard processes is that they provide a mechanism to ensure that bad changes can be undone, and good changes can be easily replicated accross an entire organization.

  3. devin42 says:

    Product complexity from the customer orderable options is where all of the problems starts… the key isn’t just cutting/standardizing options but rather controlling the combinations of options that you allow… technologies like the ones mentioned by companies like this (http://www.emcien.com) are where the world is going when it comes to managing product lines better.

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