The Operational Complexity Map: How Growing Companies Can Identify Where Scale Is Creating Friction

Growth in a company is not limited to adding new people or increasing revenue but it is also associated to expanding the business to new geographies,  new acquisitions, introducing new products/services and partnering with more third party vendors and adding more teams.

All this is growth. But growth also creates complexities.

How growth creates operational friction

The processes which works well for a company operating from one location may not work well when new five locations are added in the company network. The workflow which was managed comfortably within the small team may not be a success when the hundreds of employees join the company. An acquisition may bring new customers and capabilities but it can also bring different processes and working styles.

Similarly the third party vendors may have their own processes, tools and systems to perform the work which needs to be well integrated with the companies to perform efficiently with them.   

This is how growth can create operational friction.

Is complexity itself is a problem

No, complexity itself is not a problem. Having operational complexity is not bad either.

A growing company will eventually becomes more complex due to increase in the number of employees, overlapping processes, more operational systems, more locations and dependencies on multiple departments of the organization.

The complexity becomes a problem when the operating model of the business does not evolve at the same pace as the business itself. This is when the complexity start turning into friction.

The simple way to look at it is:

Growth -> Complexity -> Friction

The challenge for the senior management is not to reduce the operational complexity from the system but to identify where that complexity is creating friction and why?

Because without identifying the actual cause, it may be a chance that organization may put focus on solving the wrong problem.

The Operational Complexity Map

One way to identify where the complexity is creating friction is to map the conditions of growth against the friction they might be creating. The following mapping may act as a starting point for the senior management to think and transform.

*This map is not meant to suggest that every growing organization will experience all these problems.

How to identify where friction actually exists

Once the senior management observes the operational friction, they react fast and can add introduce new tools, automate the workflow or simply explore the options to implement AI to solve the problem.

And this is why sometimes organizations make mistakes.

Technology may eventually be the right solution, but it must not be the first approach. The ideal approach may be to ask first

“What is actually causing the friction?”

The best to investigate is to ask the following four questions:

• Where is the friction occurring?

Is it happening within a particular team, across departments, between locations or with vendors?

Identification the location of friction will help the organizations narrow down the actual problem.

• What is creating the friction?

Let us assume that employees are manually inserting the same information in multiple systems, then in first instance it looks like an employee efficiency problem.

But the underlying problem may be that the systems were never integrated.

• What is the business impact?

Not every operational complexity requires transformation.

The organization needs to understand what is the impact of the complexity on the business. Is it affecting the revenue, customer experience, employee productivity or the ability of the business to scale.

This is important because transformation must be driven by business impact rather than the existence of inefficient systems.

• What is the appropriate intervention?

Once the cause and impact are understood it becomes easy for the organizations to decide what needs to be changed.

Sometimes it will be tweaking an existing process.

Sometimes it will be just defining the ownership of the employee.

Sometimes it can be technology driven where an workflow automation is required, or a custom software needs to be developed or the integration of AI to address the specific operational requirement.

The intent is “Solution should follow the problem and not the other way round”.

Don't jump immediately to technology

Not every friction needs a technology solution, but there is a tendency in transformation initiatives to diverge towards technology like:

• Adding new platform

• Adding new automation tools

• Developing a custom application

• Integrating AI

All the above can create the significant value when applied to the right problem else can simply digitize the existing complexity.

The following are some of the examples where the frictions can be resolved without any technology intervention:

1. Sometimes changing the way two teams interact may solve the problem.

2. Sometimes removing an unnecessary approval may improve turnaround time.

3. Sometimes standardizing a process across locations may create more value than introducing another system.

But  sometimes technology, automation or AI will genuinely be the right answer.

So the important question is determining which one applies.

From Operational friction to Transformation

It is now clear that the actual picture is not identifying the problem and implementing the solution but

Growth->Complexity->Friction->Diagnosis->Transformation

That is to say that:

Growth introduces complexity.

Complexity may create friction.

Friction needs to be diagnosed.

And only after understanding its cause and business impact should the organization decide what needs to be transformed.

The transformation may involve people, processes, workflows, systems, automation, AI — or a combination of them.

The objective is not to remove complexity from a growing business but to understand where complexity is creating unnecessary friction and what needs to change so that the business can continue to scale.

That requires something before transformation begins.

Thinking.

Because transformation should not start with the question:

“What technology should we implement?”

It should start with:

“What is preventing the business from operating effectively at the scale we are trying to achieve?”

Identify that first.

Then decide what needs to change.

Think before you transform.