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Book Excerpt

Excerpt: Ron Ashkenas' Route to Simplicity

After my story "Simplicity Minded Management" appeared in the Harvard Business Review a couple of years back, I received dozens of requests from managers, consultants, executives, and human resources professionals who wanted to learn about practical applications. I realized that organizations and their leaders needed more than just an appreciation of the importance of simplification—they actually needed a handbook or guide for how to go about it. Hence Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done (Harvard Business Press, 2009) is excerpted here—R.A. What do I mean by simplification? Here's a real-world example: Suppose you want to drive to another town. It's not far, but you don't know the way. So you get directions—which roads to take, when to turn, key landmarks: simple. Everything is straightforward and you reach your destination easily. But what if your request for directions evokes a lot more information—road surface details, photos of every building along the way, a history of the area, and a few satellite maps at different scales? And what if even more information shows up while you're en route? And what if a thunderstorm blows through in the middle of your trip? And then what if construction blocks some of the roads and you have to change course, and then you have a flat tire along the way? Getting things done in organizations is like getting yourself from one town to another. Sometimes it's like that first trip. But more often than not, it's like the second: You have to sort through lots of potentially relevant information in advance, deal with real-time data, respond to changing conditions, make decisions on the fly, and generally work hard to get where you want to go. And that assumes that you actually know where you are going, and that your companions are content to let you make all the choices about how to get there—which of course is rarely the case. In other words, getting things done in organizations is usually far from simple. If you are running an organization, you can accept this complexity as a given—something you just have to live with. Or you can do something about it and make your workplace simpler, more productive, and more satisfying for customers and employees. That's what simplification means--making it easier for your people to get things done and for your customers and other partners to work with you. My first encounter with simplicity as a business issue was at GE (GE) in 1989. At the time, I was part of the consulting team that then-CEO Jack Welch had assembled to transform the company from a slow-moving, bureaucratic, top-down, overly analytical organization to one that would be fast, flexible, and boundaryless. As we developed what became known as the GE Work-Out process to accomplish this transformation, "simplicity" emerged as one of the key goals of the effort. In Welch's view, speed and simplicity were intertwined—and both were critical for GE's success. To move faster and be more responsive to customers and to markets, GE would have to reduce the number of steps required to get things done and make it easier for everyone to understand how to take those steps. Consequently a lot of the resulting projects focused on simplifying processes, both internally and externally. But simplicity at GE was more than just process streamlining—it was a mind-set and a culture that eventually permeated the way managers organized and led the company. Perhaps because of GE's high-profile success, many other companies subsequently adopted simplicity as a core value or an aspiration to strive toward. Others picked it up as their business environments became more complex or global or competitive (or as they saw other firms doing so). But very few companies acted as though they knew what simplicity really meant, or how to make it drive business results. In fact, it seemed that many organizations just wanted to copy GE's tools for simplification (such as Work-Out and Six Sigma) but didn't understand that simplicity was more than just a set of projects. subprime debt: baroque complexityAs I saw attempt after attempt to simplify meet with disappointment or outright failure, I realized that most managers were not addressing simplification as a skill or a mind-set or a core competence of leadership (which was how it was understood at GE). This is what prompted me to write the HBR article. This insight has only been reinforced by the global financial crisis that began in 2007, much of which was triggered by complexity so baroque that it compromised the ability of financial, governmental, and commercial institutions to manage risk safely and appropriately. For example, here's how The New York Times described one cause of the subprime mortgage crisis: "The confusion about these products lies in part in their complexity. Structured products are pooled assets that have been sliced and diced into ever smaller, more specialized pieces…Banks and other financial institutions pooled those asset-backed securities into new units, dividing them up again and issuing securities against them, creating collateralized debt obligations (CDOs). The idea took off, with new combinations that were further removed from the original asset. New creations included CDOs of CDOs, called CDO-squared. There is even a CDO-cubed." In addition to the complexity of their products, many of the financial firms that collapsed and were either shut down or bailed out also suffered from fragmented and complex risk-management processes that left them unable to identify risk issues until it was too late and from financial processes that kept them from fully accounting for their products and liabilities. These further complexities embarrassed the CEOs, who had to restate their losses or potential liabilities numerous times—conveying the (unfortunately quite correct) impression that they did not have the situation under control. Perhaps most disconcerting about the subprime episode and subsequent market implosion was the extent to which it illustrated everyone's lack of understanding of the complex interdependencies between financial institutions, other commercial establishments, government regulators and central banks, and the world economy. long hours, great stress, less effectDespite our recent economic struggles, the global economy is not going to get less complex. If anything, it will grow more difficult to understand. In addition, the pace of technological innovation and breakthrough will continue to increase, which also will add to complexity. It's as though Thomas Friedman's "flat world" has met Alvin Toffler's "future shock," and the resulting explosion has made everything incredibly complex. As a result many executives and managers feel that their organizations are becoming ungovernable, unwieldy, and tangled in knots. But while dramatic (and traumatic) situations such as the demise of Lehman Brothers or the end of traditional investment banking garner all the publicity, the bigger challenge is that many managers are feeling overwhelmed by complexity on a day-to-day basis. As a result, managers are working longer hours with greater stress, and feeling less and less productive. They attend meetings, sort through e-mail and voice mail, travel around the globe, manage relationships with dozens of people inside and outside their organizations—and at the end of the day often don't feel they have accomplished very much. And they worry that perhaps they are contributing to or creating the next financial scandal or subprime meltdown. This is the true crisis of complexity that is facing us all. But it doesn't have to be this way. While much complexity is caused by globalization and advances in technology and a host of other external trends, perhaps an equal amount is caused by the way we structure our organizations, design our products and services, construct our business processes, and manage our people. As Scott Adams, the creator of the Dilbert cartoons humorously points out, senior managers often turn their organizations into what he calls "confusopolies." But as a manager and leader, you have a choice. You either can add to complexity and make things more confusing or you can simplify work and make it easier for people to get things done. My objective here is to give you a resource guide for how to choose the latter. A Final Word: Simplicity Can Make a Difference The world is in the throes of perhaps the worst recession in 30 years. The financial system has melted down and is being transformed; the automobile industry is reeling; retail organizations are struggling to survive; public-service and health-care institutions are overwhelmed; governments around the world are pumping huge amounts of money into their economies and running up unprecedented deficits; and stock market plunges have wiped out trillions of dollars in personal wealth and shaken many people's confidence in their future security. As if this wasn't enough, governments also are struggling to develop renewable energy sources, reduce global warming, protect their citizens against terrorism, and bring billions of people out of poverty. It's a daunting time for organizations of all kinds, public and private, throughout the world. Yet at the same time, we are in the midst of the greatest technological revolution in human history. Advances in travel, telecommunication, and computing have made it possible to shrink the world and create a truly global economy. The mapping of the human genome holds the promise of reducing and preventing disease. Developments in physics, nanotechnology, and material sciences are transforming manufacturing—while new approaches to water, food sciences, and energy hold the promise of freeing us from traditional resource constraints. In other words, despite the doom and gloom of the global economy, it also is possible that we are about to enter a golden age of global prosperity that may solve many of the problems that we consider most intractable today. Unfortunately none of us have the luxury of sitting back and waiting for the right combination of technical, scientific, and social breakthroughs that will get us to the golden age. We have to deal with present realities. As such we need to redouble our efforts to get the most out of our current organizations so that they can invest in new technology, experiment with new approaches, and perhaps accelerate the discoveries that will change the world. In order to do this, we need to get back to basics—to simplify structures, products and processes; reduce clutter and wasted time; and make all people feel as though they are truly contributing and not just churning on a giant gerbil wheel. Workers at all levels—from the factory floor to the public school classroom to the executive suite—want to be as productive as possible and experience a direct line of sight between their efforts and their organization's results. Our job as organizational leaders, consultants, and advisers is to help them make that happen. Simplification is not the only answer—but it's a good place to start.
Ron Ashkenas is a senior partner with Schaffer Consulting, which specializes in the development and practice of organizational and cultural change. He is the author of Simply Effective and the co-author of The Boundaryless Organization and The GE Work-Out.

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