The hidden cost of doing business

Abstract

Purpose – The purpose of this article is to present the findings of a project to study the complexity management activities and strategies of 20 global companies.Design/methodology/approach – The article is based on a survey of 65 managers of 20 global companies. Interviews with senior management were combined with the study of public and company files.Findings – Global companies have a tremendous opportunity in making quantum leaps in complexity reduction. We have found that around 25 to 35 percent of costs is complexity‐driven. There are two successful approaches to managing business complexity costs: simplification and reconfiguration.Research limitations/implications – The study is embedded in qualitative research.Practical implications – Coping with complexity requires continuous efforts to identify and eliminate complications that add no value. Management has to analyze the company and its environment to flush out the hidden linkages between costs, activities, and the decisions that generated them.O...