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Change Management Training Tips:
Yes, You Can Simplify Your Organization

We're all drowning in complexity and information overload. Do something about it.

Over the past 30 years, I've worked with hundreds of senior executives, and not one of them has said, "My goal is to make the organization so complex that people won't be able to get things done." Yet almost every change manager I know complains about convoluted decision-making, endless budget planning cycles, confusing data, unnecessary reporting, unproductive meetings and a host of other excesses of complexity.

The truth is that most organizations are indeed too complicated, especially now that we're in an age of global supply chains and markets, increasing regulation, technological disruption and communications overload. And the way we design and manage our organizations unintentionally adds to the crisis of complexity. It too often makes work feel like an exhausting marathon rather than an exhilarating sprint.

It doesn't have to be this way. Change management can confront complexity and do something about it. Here are three initiatives that you can take:

Insist on common processes:
In big organizations with multiple locations, everyone wants to do things their own way, since they naturally think that their products or services or markets are unique. But when everyone has their own home-grown processes, it not only drives up costs but also makes it harder to share resources, compare performance and communicate effectively. It's like trying to manage construction at the Tower of Babel.

At SEB, in Stockholm, one of Europe's leading financial services firms, Annika Falkengren, the chief executive officer, confronted this type of process complexity by insisting that each functional area within the company (information technology, operations, marketing, finance, communications, human resources, legal) deliver its services the same way in each business segment and in every country. "One function and one solution for one SEB" became her battle cry for driving consistency, simplicity and cost-reduction.

To make the concept come alive, she and her change management team created an operational excellence program for SEB managers, called the SEB Way. The program not only fostered a common culture and language across the company but also introduced tools for driving simplification and standardization, which the managers all had to apply in their areas. In the first year of the SEB Way, 180 transformational projects were launched across the company, many focusing on cost reduction, systems rationalization and creating common functional practices. By the end of 2008, costs and people equivalent to 7% of the workforce had been freed up by the initiative, and SEB was functioning much more as one company--which was critical for enabling it to weather the economic turndown.

Reduce product variation:
The popularity and ease of making things customizable has made it natural for companies to assume that they should give customers as much choice as possible in tailoring products and services. But the promise of extensive choice forces businesses to gear up for the rare exceptions, not just the basics, and that significantly adds to complexity. The Herman Miller Aeron chair is a case in point. When Mary Stevens became senior vice president of product management for Herman Miller, with responsibility for the Aeron chair, she discovered that having 19 customization steps, each of which allowed for multiple choices, meant that the company was offering its customers 140 million possible configurations of the chair.

Because of all these one-time configurations, the supplier that provided the mesh suspension material for the chair was dedicating 80 % of its manufacturing capacity to only 20% of its output. And internally the systems and finance departments were maintaining extensive price files for each possible unit, while marketing was continually preparing new material.

Stevens then discovered that out of the millions of possible configurations for the chair, only 4,000 were ordered with any frequency, and 400 configurations provided the majority of sales. In other words, the almost limitless product variations were producing far more cost than value. Based on this data, Stevens initiated a significant change management streamlining effort that reduced the number of possible configurations, the associated costs and all the complexity involved.

Take the customer's perspective:
Although everyone agrees that products should be designed with customers in mind, it doesn't always happen that way, and so things get complex not just for the customers but also for sales and customer service. An easy way of confronting this type of complexity is to truly put yourself in the customer's shoes. That's what Paul van de Geijn, the former CEO of Zurich's global life insurance business, did with his change management.

At a conference of his European country chiefs in Barcelona, he gave each of them five minutes to fill in the application form for their country's simplest type of life insurance. When nobody could complete the form in the allotted time, the managers all began to realize that they needed to simplify the applications, and with them their entire business. That led to a change management campaign within Zurich called "Make Life EaZy" (Z for Zurich), which
produced significant gains in customer satisfaction, premium revenue and renewals.

Everyone agrees that simplification is a worthwhile thing to aim for, but you can never achieve it on a broad scale unless you make it part and parcel of your business strategy. That's why Gary Rodkin, the CEO of ConAgra Foods, focuses on simplicity as one of the keys to his company's success and makes it a core consideration in managerial performance reviews. David Calhoun, the CEO of Nielsen, and Laurent Attal, the CEO of L'Oreal USA, do the same. All these leaders position simplicity not as a corporate value or a nice slogan for mission statements but as a true driver of business success.

Everyone has the capacity to confront complexity and ask if there is a simpler way. If you're tired of running the complexity marathon, now is the time for
you to get started.

Source: by Ron Ashkenas http://www.forbes.com/2009/08/17/simplify-organization-complexity-leadership-managing-information.html

Subject: Change Management

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