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Why You Should Pay Attention to Business Simplification Now

April 7, 2015 by Becky Wieber 0

Simplification. Whenever this word is uttered in the office, what comes to mind? Reducing operations to go back to basics? Diminished scope? Making something more intelligible?

All of these definitions may apply in certain situations, but once the word “business” is placed in front of it, “simplification” takes on a whole new meaning.

In truth, business simplification is an opportunity to bring your business and customers closer together in ways never before thought possible. By stripping away layers of bureaucracy, letting employees do what they do best, and focusing the entire business network on what’s important to customers, your employees and customers have a voice that can ignite action – normally for the better. Not only is your workforce happier, but so are your customers.

The call for simplification: Perform better by working smarter, not harder

For years, companies have battled everything from a corporate culture resistant to change to managers who do not dedicate the time and effort for proper implementation. As a result, most companies now have this tangled ball of outdated processes and patchwork fixes that are forced to complement technology being used to get work done. In fact, the Knowledge@Wharton Simplifying the Future of Work Study, sponsored by SAP, recently revealed that 74% of respondents believe that business complexity has hurt efforts to meet process and decision-making goals. And 60% indicate that more technology isn’t the answer – rather it becomes a barrier to achieving goals.

Morris Cohen, Wharton professor of operations and information management and co-director of the Fishman-Davidson Center for Service and Operations Management observes, “Business simplification is necessary, and perhaps more so now than in the past. As firms have become more global, outsourced and technology driven, the complexity of their operations has increased. Thus, the need for simplification has become greater.”

Business simplification requires strong leadership

As long as nothing is done, processes will stay the same and the IT infrastructure will continue to integrate new technology at an astonishing pace without any regard for redundancy and obsolescence. Complexity will only then continue to grow and restrict business operations from realizing its fullest potential – further frustrating customers and employees and negatively impacting the business. In fact, the top 200 global companies lost US$237 billion of profits in 2013 to complexity. Meanwhile, 40% of executives worry that their organizations will not keep pace with the pace of technology innovation – making it nearly impossible to realize the full competitive advantage of those investments.

Can your business afford this? Can any business? Of course, not! So what’s keeping your business from running simpler?According to the Knowledge@Wharton study, it may be your leadership. In the white paper Taking Charge of Business Simplification: Why Simplification Initiatives Succeed Only When Executives Lead, Jeff Woods, a vice president of marketing who leads corporate, portfolio, and thought leadership marketing at SAP, insightfully advises, “How many executives have stood up in front of their employees quarter after quarter, extolling the virtues of simplification – only to make no progress in reducing complexity? It isn’t enough to just recognize or talk about simplicity. Achieving this goal requires true leadership.”

But first, leaders must debunk their employees’ misconceptions of business simplification. We’ve all been burned before in the name of simplifying. But in reality, it doesn’t have to be so scary and onerous.

Myth 1: Business simplification is just the latest buzzword with no tangible benefits

The concept of business simplification is the new mandate – not a fleeting trend by any means. Leaders know that if accomplishing a goal ever becomes too difficult, it could lead to a brain drain of top-performing talent and clients can decide to go elsewhere. As a result, 51% of leaders place significant importance on the need to simplify, and that will grow to 67% three years from now.

With simplification, there are fewer bureaucratic bottlenecks, which can keep clients, vendors, and partners satisfied and comfortable working with your business. Plus, 62% believe it can help improve productivity and performance across all lines of business.

However, there’s still much work to be done. Only about one-quarter of employees believe their senior leaders are clearly aligning decisions and actions with the rhetoric. And there’s more bad news: 83% think simplification efforts are generally ineffective.

Myth 2: Complexity is just a reality that’s impossible to fix

This is an unfortunate myth. We are certainly not powerless against complexity – and, yes, it’s avoidable and unnecessary.This sentiment is quite reminiscent of the debate over product quality 20 years ago. Back then, quality was seen as an expense of imprecise, labor-intensive, or material-intensive approaches that went beyond what customers wanted. However, the emergence of Total Quality Management and Six Sigma gave executive the confidence to view the concept of “quality” as an overall problem that could be addressed as a strategic competency.The same situation can be said of simplification. As a few companies begin to show the courage and conviction in getting it right, the rest of the business community will wonder what’s happening, learn from their example, and turn those lessons into scalable, repeatable methodologies.

Myth 3: We do not have the expertise to effectively drive simplification

Believe it or not, your best experts can be found in your workforce. And it’s these employees who are ready to join the simplification movement.

The Simplifying the Future of Work study uncovered that most employees have some experience with simplification. A majority have simplified business processes (84%) and decision making (82%), while other have done the same with operational practices that went beyond their core team (52%).

Myth 4: There’s no such thing as “being too simple”

We’ve all heard the wisdom of too much of a good thing can be bad – and simplification is no exception. Daniel A. Levinthal, a Wharton management professor whose research interests include organizational learning and technological competition, warns that oversimplification “may squash innovativeness. If there’s too much focus on a particular set of metrics, they’re going to get some dysfunctional byproducts of that.”

To avoid this mistake, companies should take a customer-centric approach. Denise Broady, chief operating officer of industry cloud at SAP, suggests, “…if you put the customer at the center, the simplification process makes it easy.”

For more tips and expert insight on how to simplify your business, take a look at the latest findings of the Knowledge@Wharton study Simplifying the Future of Work Study and join the conversation at #FutureOfWork. 
If you’re going to SAPPHIRE NOW in Orlando from May 5-7, 2015, join us for our Future of Work sessions around these topics and more.

This story previously appeared on SAP Business Trends.

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