Business dynamics versus IT complexity in businesses and IT systems
Something that the thriving leaders of the digital world must consider is that such systems can be complicated to understand but not necessarily bad. On the contrary, they have proven to offer a massive turnover. In dynamic and uncertain environments, complexity confers critical benefits.
It’s time to dive deep into the business dynamics to reflect on the nature, benefits, and costs of complexity. We will offer guidance and insights into the best practices on how to manage complexity in a business organization.
What good does complexity bring?
As far as business circumstances are concerned, complexity can be defined as multiple elements, including technological infrastructure, raw materials, products, services, and other organizational units. They are interconnected and are codependent and equally prone to offering advantages and disadvantages, depending on the way they’re managed.
Some notable advantages include an increase in the resilience of the business architecture. There is no second thought about the fact that companies that adapt to modern technologies and equip their employees with industry best practices are in a better position to cater to any unforeseen unpleasant situation. Adaptability is the most natural phenomenon when dealing with human matters, including business and technology. Shuffling and reshuffling existing elements can ensure sustainable learning mechanisms. This approach has helped leading fashion retailers, such as Zara, create a tailored selection for customers and adapt to ever-evolving trends. Closely correlated and interconnected elements ensure effective coordination. Shared behavioral protocols and a similar wavelength with which their movement is enabled ensure foolproof collective security.
Above all other benefits, inimitability caused by complexity can be an unbeatable element for competitors. The challenge of replicating the interrelationship between each element requires unmatched skill. The same happened with Apple when they tried their luck with the Map application. The results were devastating and struggled to gain acceptance with consumers.
The costs of complexity
A phenomenon that offers a plethora of benefits to taking your organization to new heights is bound to cost a fortune. Creating and maintaining multiple elements is not only complex and beneficial but expensive as well, especially compared to other standard approaches that bring down a company’s productivity.
The inability to manage regular operations gets difficult with increased complexity, which is rooted in the system’s decreased understandability. Things can get hard for the leaders within an organization as they will have no clue about where and how to intervene to manage performance in case of a system glitch.
When combined, the whole situation that’s ingrained in complexity can cause extreme uncertainty. The organization works tirelessly to set up a system with responses based on predictable behavior. This is taken over by unpredictability if it’s not managed effectively and promptly. Catering to this situation of uncertainty demands high levels of reliability through strategic investment in time and resources.
Losing sight of business matters
History is loaded with examples that showcase diverse impacts of excessive complexity. At top of the list, Three Mile Island Nuclear Reactor was the result of a complex control panel. The team failed to interpret the crazy alarms and layers of notifications, resulting in catastrophic confusion. A fixable rudimentary issue of the stuck coolant draining valve turned into something horrific – courtesy of complexity.
Why complexity gets out of hand
The ever-so-evolving internet has exposed the inflexibility of many technologies and business processes. The inability to adapt to new channels comes complimentary with it. This inflexibility is rooted in complex systems, where developing and testing new capabilities is time-consuming, and every change becomes an expensive adventure. In major banks, the systems are often so complex that even the bare minimum operations result in rigidity and high expenses.
Inefficient and non-value-adding variations of complexity make it difficult for the system to maintain the culture of innovation and growth, resulting in strategic disadvantages. Implementing a standard centralized digital process may sound boring but is the right approach in many cases.
Going beyond anecdotes for dealing with quantifiable results and a larger sample led us to two major findings:
- Conventional wisdom may consider agility-borne benefits to be contradictory – that is, efficiency at the cost of employee engagement. However, our results show otherwise. Smooth and seamless agile transformations delivered 30% higher customer satisfaction, employee engagement, and operational performance, leading to a turbocharged innovation model. Organizations with a successful agile transformation are more likely to be top-quartile performers among their counterparts.
- Management and organization leaders must take charge of the operations, rather than sitting back and waiting for this to happen bottom-up. Four elements stood out in our logistic regression model when we compared around 300 highly successful transformations with the 580 less successful ones to see the difference in their course of action. The results of this analysis are the secret behind a higher success average of around 75%:
- To ensure a trickle-down impact, ensure that the team at a higher level within an organization has these concepts at their fingertips. They should be in a position to lead by example and enable change.
- Among all the efforts toward agility, do not forget to set clear organizational values and ensure that the top team follows them in a structured manner.
- There is more to an agile infrastructure than just the top team. Focus on building connective tissue among strategy, business process, people, and technical aspects.
- Slow and sturdy wins the race, but do not let the organization exhaust itself with unnecessarily extended processes. Commit by picking high-priority areas.
Based on this analysis and findings, organizations that improve customer satisfaction and boost operational turnover can rely on agile transformation.
Significant performance improvements with agile transformations
An agile transformation sure has bundles of benefits, but does it work as well in reality as it does in a theory? With this new model, you welcome a team with a new highly motivated mindset, effective strategy, and state-of-the-art technology. The scope to take risks and investments will follow. An agile working environment where employees are an essential part of the decision-making process and have the opportunity to master their craft drives innovation.
Business agility depends on the foundation for execution
Modern business approaches, where there is a need for a hands-on strategy and extraordinary decision-making skills to enable change, have made business agility an absolute necessity. Accurate predictions are often a long shot but are quite effective when it comes to digitizing consistent business elements. Setting your eyes on constantly evolving factors ultimately makes a foundation for execution turn into a foundation for agility.
Among various types of agility, there could be multiple explanations for different outcomes from a similar agile setup. However, the takeaway is simple: a digitized foundation for execution enables managers to focus on what products would succeed and then bring those products to market within an industry.
National/political environments and business discipline
With increased revenue comes great responsibilities and accountability. Many companies with complex and unsorted financial and operational matters get stuck with legal obligations. Some organizations face complicated rules and regulations within the same country and end up having massive expenditures with no added value. On the other hand, a solid foundation for execution and transparent processes makes it easy to access data in no time. New laws and business regulations may affect a business process but with a well-structured system, data can easily be accumulated.
Building a foundation is safe and cheap
It’s time to shake off the outdated idea that making improvements is risky and can rip off your business financially. The foundation of execution can be implemented on a single ongoing project within a company. It can be a pilot project to understand how it works and how much it costs. A massive decrease in processing costs and enhanced efficiency is a done deal.
Creating business value with a foundation for execution
Knowing where to defend and where to attack can go a long way when mapping business strategies, tactics, and capabilities. However, organizations need to approach business agility in terms of the dynamics of the business strategy. EA not only enables agility but can play a major role in increasing the flexibility and viability of an organization.
Business agility is facilitated by sufficient resources that are required to react to a certain improvisation. Although the need for a balance between efficiency and flexibility helps execute the process, increased requisite variety and fewer constraints for implementing strategic change are guaranteed. There could be a manual agility process or an automated one; the main factor that sets these apart is the process’s ability to replicate the improvements in the latter. Moreover, business agility management is as crucial as the transformation itself. This new and specialized business capacity is event-driven and consistent.
EA principles for business agility
The ability of a business to react to a certain change in the industry that affects customer behavior is what agility is all about. Apart from enabling more innovation and improved value proposition, a noticeable decrease in system risks makes the business stronger from the core. However, before putting business processes on the path of agility, leaders must consider some fundamental principles of EA for business agility.
At the top of the list, we must reduce bureaucracy and constraints to avoid multiple approaches. No matter which industry we are dealing with, a system should put the customer first and keep up with their journey to make relevant up-sales. In every business structure, effective communication paired with data-driven processes enables fast decision-making, which is an essential ingredient for business agility.
The value a business agility model brings along is worth giving a shot. Not only does it offer greater freedom of choice for management but also to the teams at an individual level. With an appropriate and timely flow of information, an organization can do wonders, and that is what business agility offers – the knowledge of change followed by immediate action capabilities.
Implementing change is without a doubt an essential pillar of the business process, but being able to unlearn certain trends and legacy is equally important. Moving fast in response to customers’ needs and gaining critical advantages allows organizations to switch resources quicker and faster than their competitors.
Successful business agility management factors
To determine the positive impact that improvisation has on business agility management capabilities, we must cross the following factors off our checklist:
- Ensure there are measurable aims for stakeholders and create a business model that is updated regularly
- Stay atop all the potential risks and equip the team to deal with dependencies, costs, return on investment, and cultural issues
- Stakeholders must be updated about the change, the reason behind it, and the cost and benefits that follow a particular implementation through effective communication
- Ensure there are training programs and skill polishing sessions across the board for personal counseling that help alleviate any change-related fears
Combined, these factors work effectively toward the success of business agility management.
What challenges may follow business agility management?
Apart from the undeniable benefits, business agility management may encounter multiple challenges that can only be catered to through proper skill development. The constant need for the adaptation of continuous advancements within the system might be exhausting for some stakeholders. With constant change follows constant risk and unpredictability. To be able to deal with such fears, uncertainty and doubts can often get a bit difficult.
Designing a business model and setting the right foundation for viable outcomes is essential for agility management. Setting realistic goals and maintaining the balance between decision-making speed and efficiency is one of the biggest challenges for highly motivated leaders. However, by continuously scanning the market trends and customer behavior, organizations are likely to grab game-changing investment opportunities.