In today’s fast-paced business environment, complexity often grows quietly — embedded in well-meaning decisions across sales, procurement, product development, and beyond. Tomas Pribyl, Head of Supply Chain, draws on years of experience to spotlight an often-overlooked risk: unchecked complexity. In this candid Executive Insight, he explores how seemingly small decisions can snowball into major operational burdens, draining profitability and agility. More importantly, he outlines practical principles and cultural shifts that can help organisations move from reactive firefighting to proactive, long-term value creation.
Executive Insight:
By Tomas Pribyl,
Complexity in organisations is inherent and inevitable. It manifests in various forms and levels, and there is even such a thing as “good” and “bad” complexity. Quantifying its impact on the organisation is difficult establishing a process to control it is even harder. Very rarely is complexity treated as a threat or a business risk. As a result, it’s uncommon for C-suite leaders to devote meaningful time to monitoring or evaluating it. Yet, like the slow build-up of cholesterol in the arteries of a blissfully unaware foodie, it can silently erode your profitability.
Why is that? First, complexity always increases. It’s not that employees arrive each morning intending to complicate their work, certainly not. But especially in large organisations, people work in proverbial silos. What benefits one department’s KPIs may negatively affect another’s.
Meet Charles from Sales, who acquires a new customer that requires just a minor product customisation. Or Cindy from Procurement, who qualifies a new offshore supplier offering a 3% price advantage. John, the Product Manager, extends the product line. Meanwhile, R&D updates the bill of materials to meet new regulations or improve performance. The hidden hook in all these well-intentioned projects is the inability to accurately quantify their cumulative impact on the supply chain.
Let’s look again at John’s new product. On an executive sales deck, it looks great — new customers, revenue, and margin. The cost? A small engineering project, maybe a few dozen or a few hundred hours, easily approved. The supply chain costs, however, are much harder to define and are often overlooked, even if the CSCO is at the table. These include master data setup and maintenance, production changeovers, forecasting bias, additional inventory of unique SKUs and materials, product and material obsolescence risk, and added administrative overhead. Multiply that by similar initiatives from Procurement, Product, and R&D year after year, and suddenly the organisation is drowning in a sea of SKUs, suppliers, and source materials, all of which consume space, time, and working capital.
But organisations must evolve to stay competitive, right? They need to add complexity. So, what’s the right approach?
To keep things simple, I recommend focusing on two core principles:
- Define your portfolio’s complexity tipping point.
This is where added complexity stops delivering value (“good complexity”) and starts hurting margins (“bad complexity”). Tools such as cost-benefit analysis or value-complexity matrices can help establish this baseline. - Introduce a robust “Kill or Cure” program.
Everything that falls on the “bad complexity” side of the line should either be improved or eliminated.
Of course, implementation is often the hardest part. Even in companies that agree complexity is excessive, that consensus rarely translates into action. Common roadblocks include:
Prioritisation – There are always more urgent business issues. When business is bad, we cut the fat. When business is good, we focus on delivery. Complexity rarely wins in this prioritisation game.
Tangibility – It’s easy to calculate the gain from a new customer or the cost savings from a cheaper supplier. Calculating the cost of complexity is a different story, it involves estimating unknown variables. How do you calculate forecasting bias for a new product sold to a new customer? Or predict inventory build-up and obsolescence risk when you don’t know that bias? Only the boldest supply chain leaders will escalate such risks based on intuition, even though gut feeling is often the most accurate insight available.
Executive focus – Addressing complexity often requires top-down decisions. The VP of Sales isn’t going to drop even the slowest-moving SKU just because the CSCO thinks it’s a good idea. Some organisations are fortunate to have collaborative leadership. Most are not. Often, it’s political. Executives give nothing away unless ordered to by their superior or unless they can trade favours for something else.
And even if a company manages to implement a complexity reduction program, it’s not a box to tick. Managing complexity must be a continuous process, it needs to become part of the organisation’s DNA.
Want to launch a new product? Fine, tell me which underperforming one you’re willing to retire. Once the Kill or Cure mindset becomes part of company culture, every new initiative will be evaluated with complexity in mind and managing it will stop feeling like chasing a rainbow.
