How to simplify a complex organisation
Nicolay Worren
Independent consultant and business school lecturer

There are several indications that complexity is increasing,
and that this affects efficiency in large organizations
Information overload More time in meetings Unclear accountability
Corporate e-mail traffic ”We know who is
(billions of messages per year) responsible for solving
35 key business problems in
30 our unit”
25 1960
20 40% 30% 30%
15
10
5 NO YES
0
2003 2004 2005 2006
Typical result in employee
1982 surveys in large corporations

One important cause is current organisational models,
which rely on extensive collaboration and co-ordination
1960 2008
CEO
CEO
Shared Services Product A Product B Region A Region B
HR
Engineering
Country A1
Production
Marketing
IT
Product B
Accounting
Product A
Country A2

Collaboration is of course something positive – but one
sometimes forgets that it has a cost (and a capacity limit)
110
∆ = 20
100
90
80
70
Number of potential
bilateral interactions 60
50
40
30
20
10
∆=4
0
0 1 2 3 4 5 6 7 8 9 10 11
Number of people

This challenge is particularly evident at the interfaces
between functions and units in a matrix
Example
Product A Product B Product C
Region A
Who decides:
Product offerings?
Price? Region B
Market strategy?
Region C

It is therefore not surprising that several large companies
now have abandoned matrix structures
*Source: Burns & Wholey (1993)

An internal customer-supplier model is an alternative that
will contribute to simplification through clear roles
Those who deliver Those who develop and Those who market and
internal support services deliver products or sell products or services
or resources to product services to end
units customer
Requests Requests
Delivers Produces Sells
Support service product product
Customer
Products Sales
services

In addition, it is possible to simplify by aligning the
organisation with the actual information flow in processes
Example from
in
VP Before client project
MS EN JG CQ RK RI BG BP KT RB BM WW RB JLB KL
.|
.|
out
in
VP After
Ca New Apps Infra Eng.
Cap Pl Trans Sig. RF Hand 3rd P DataTrans IP Eng Lab LR Cap
I/C D/C Msg Web A/R/P SIP IGW QC Tools
& Ful. Eng Msg. Ext. sets Apps Centerport Netw. Svcs Ops Plan
MW/WNE/S out Maint Dev

The first step in a simplification process should be to
evaluate the current situation and set improvement targets
Example
= Today = Where we should be
To a great
Not at all
extent
Our decision processes enable us to act
quickly to changes in the external market
To a great
Not at all
Feedback from our employees suggest that extent
there is clarity with regard to roles and
responsibilities in our organisation
To a great
Not at all
extent
The goals pursued by different functions and
units in our organisation are complementary
To a great
Our productivity measured per employe Not at all
extent
is as good or better than the average for
similar companies

Contact
Nicolay Worren
Independent consultant and business school lecturer
nicolay@worren.com
Tel: +47 93 03 04 02