complexity

A graduate EOS client and friend, Kevin Labrecque, sent me an article from the Harvard Business Review by Rita McGrath,- To Reduce Complexity in Your Business, Start with Pen and Paper. You can read the whole article here. Ms. McGrath provides several examples of  businesses whose success masked the complexity that had crept into their business. They include Nokia, Circuit City and Home Depot. She points out that a management-through-presentation culture is often a harbinger of this issue and produces a tangle of complex growth. She infers that Power Point (or its equivalent) is a tool of the complexity. I agree.

A solution she advocates is to make pen and paper model of the business. She suggests looking at variables in 4 columns:

  • Outcomes (what you are trying to achieve, as in sales)
  • Drivers (what you believe causes the outcome to occur, or not)
  • Leading indicators (how do you know how you are doing on the drivers?)
  • Work streams (what are you doing to influence the leading indicators).

A Simple System to fight Complexity

Ms. McGrath provides an example of how she used this model to help a retailer get back on track with its core focus. What I love about Ms. McGrath’s observations is that the business system I teach – EOS – the Entrepreneurial Operating System – does exactly what she suggests. We develop all of the work we do on white board or easels. I am sure Ms. McGrath would approve.

  • Outcomes – EOS challenges all leadership teams to agree upon and document their outcomes in Russian nesting doll fashion – a long term goal, typically, although not necessarily, 10 years; a 3 year picture; a 1 year plan and then finally the outcomes they will focus on for the next 90 days. These four items are all documented in a simple two page document we call the Vision/Traction Organizer (V/TO).
  • Drivers – There are many tools in EOS which help leadership teams focus on the drivers of their business. A key one is the accountability chart where the goal is to agree on one, and only one, functional owner for all the key functions (drivers) in the business.
  • Leading Indicators – EOS advocates agreeing on 5-15, activity based, leading indicators of the outcomes you want and then tracking them weekly in an instrument we call the Scorecard. Read this post to understand the difference between a Scorecard and a Dashboard.
  • Work Streams – EOS suggests that there are 6-12 Core Processes in each business which need to be documented and followed by all in order to assure the outcomes you want occur repeatedly, profitably and can scale.

There are lots of systems available to help you do what Ms. McGrath advocates. If you would like to learn more about this one – you can read Traction: Get A Grip On Your Business by Gino Wickman which explains EOS entirely. You can buy it here or you can ask me to give you 90 minutes of my time and I will perform the movie version of the book for you and your leadership team.

Graphic credit: Versionz

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