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About the Authors
Acknowledgements
Preface
PART I – COMPLEXITY: THE SILENT KILLER OF PROFITS AND GROWTH
Chapter 1. The Overwhelming Case for Conquering Complexity
Chapter 2. Exposing the Silent Killer
Chapter 3. How Complexity Slows the Flows of Critical Information
Chapter 4. How Conquering Complexity Drives Shareholder Value
Chapter 5. Complexity as a Strategic Weapon
PART II – COMPLEXITY ANALYSIS: QUANTIFYING AND PRIORITIZING YOUR COMPLEXITY OPPORTUNITIES
Executive Overview of Complexity Analysis
Chapter 6. Identify Strategic Complexity Targets (Complexity Analysis Phase I)
Chapter 7. Map & Quantify the Impact of Complexity
Chapter 8. Build a Complexity Value Agenda
PART III – IMPLEMENTING COMPLEXITY AGENDAS
Chapter 9. Simplifying Product and Service Lines
Chapter 10. Finding the Complexity that Customers Value
Chapter 11. Avoiding the Big Costs
Chapter 12. Achieving Service and Process Simplicity
Chapter 13. Using Information Technology to Deliver Complexity at Lower Cost
PART IV – HIGH-RETURN INVESTMENTS WHEN CONQUERING COMPLEXITY
Chapter 14. Creating a Culture that Can Conquer Complexity
Chapter 15. Conquering Complexity in Your Product and Service Value Chain
4. Chapter 16. Applying Complexity Principles to Mergers and Acquisitions
Appendix
index
PART I – COMPLEXITY: THE SILENT KILLER OF PROFITS AND GROWTH
Chapter 1. The Overwhelming Case for Conquering Complexity
A Tale of Two Companies – The Three Rules of Complexity
Complexity Rule #1: Eliminate Complexity that Customers will not pay for
Complexity Rule #2: Exploit the Complexity Customers will pay for
Complexity Rule #3: Minimize the Costs of Complexity you Offer
Finding the Right Combination of External and Internal Complexity
The Complexity Value Proposition
Conclusion: The Competitive Advantage of Conquering Complexity
Chapter 2. Exposing the Silent Killer – How (and how much) Complexity Drains Time and Resources
in Your Business
How Complexity Silently Kills Profits and Drains Resources
Process Cycle Efficiency: The Foundation for Quantifying Complexity
Quantifying What Affects PCE: The Complexity Equation
How Variation in Mix Destroys PCE and Profit
What Lever to Pull?: Advice on Improving PCE
The Power of Numbers
Conclusion
Chapter 3. How Complexity Slows the Flows of Critical Information
Information Flow Complexity = Too Long to Reach Decision Makers
Complexity Creates Noise in Information Systems
Dell and Compaq: Better to be Fast than First
Conclusion: Cumulative Effect of Complexity on Strategic Decision Making
5. Chapter 4. How Conquering Complexity Drives Shareholder Value
The Challenges of Accounting for Complexity
Making Decisions that Benefit Shareholders: Earning per Share vs. Economic Profit
Key Lessons about EP and Growth
The Complexity Imperative in Fast Markets
The Links between Complexity and Value
Conclusion
Chapter 5. Complexity as a Strategic Weapon
Six Precepts for Strategic Use of Complexity
Percept #1: Customers define value
Percept #2: The biggest gains from conquering complexity come from step-change
improvements
Percept #3: Focus on what matters most – 100% of your value creation probably resides
in only 20% to 50% of offerings
Percept #4: Think value share instead of market share
Percept #5: Growth results from value-driven application of finite resources
Percept #6: First eliminate offerings that can never generate positive Economic Profit,
then attack internal complexity
ALDI International: a case study in strategic complexity
Eating away the competition
ALDI’s secret of success: Eternal watch against complexity
PART II – COMPLEXITY ANALYSIS: QUANTIFYING AND PRIORITIZING YOUR COMPLEXITY OPPORTUNITIES
Executive Overview of Complexity Analysis
Chapter 6. Identify Strategic Complexity Targets (Complexity Analysis Phase I)
Overview of Target Selection
Step 1: Identify areas of greatest value-at-stake
Data you’ll need to evaluate value-at-stake
6. Interpreting Economic Profit
Getting more from Your Waterfall Chart
Step 2: Analyze the Strategic Position of selected value-at-stake units
Data you’ll need to evaluate strategic position
Using and interpreting Strategic Position Data
Mining Market Profitability and Competitive Position Data
Outcome of Strategic Analysis
Step 3: Develop a Complexity Profile of Selected Business Units
Data you’ll need for a Complexity Profile
Charting and Interpreting a Complexity Profile
What You Can Learn from a Complexity Profile
Summarizing Phase I Lessons: Sources of exploitable advantage
Conclusion
Chapter 7. Map & Quantify the Impact of Complexity (Complexity Analysis Phase 2)
Overview of Mapping Complexity and Quantifying Impact
Step 4: Identify the Strategic Value of your core processes
EGI Case Study, Part 1: Core Process Analysis
Step 5: Determine Family Groupings
EGI Case Study, Part 2: Identify Product Families
Step 6: Create a Complexity Value Stream Map
EGI Case Study, Part 3: CVSM
Step 7: Computing PCE Baselines
Data you’ll need to compute PCE Baselines
Calculating PCE Baselines: EGI Example
Conclusion
7. Chapter 8. Build a Complexity Value Agenda (Complexity Analysis Phase 3)
Overview of Developing a Complexity Value Agenda
Step 8: Calculate EP% by Offering
Data you’ll need to compute EP% by Offering
Step 9: Perform a Substructure Analysis
Data you’ll need to perform a Substructure Analysis
Interpreting a Substructure Analysis
Step 10: Calculate PCE Destruction and Complete a Complexity Matrix
Data you’ll need for PCE Destruction and the Complexity Matrix
Completing and Interpreting a Complexity Matrix
Step 11: Evaluate Potential Impact of Process or Offering Changes
Path A: Value Creation from Process Improvement
Path B: Value Creation from Offering Improvement
Adding Numbers to the Options: What-if Analysis with the Complexity Equation
Step 12: Select Options and Build Business Cases for Selected Opportunities
Step 13: Create a Complexity Value Agenda (and Execute!)
The EGI Case Study: Prioritizing and Building a Value Agenda
Conclusion
PART III – IMPLEMENTING COMPLEXITY AGENDAS
Chapter 9. Simplifying Product and Service Lines
Going for Big Gains in Economic Profit
The Pricing Lever
Simplifying Product or Service Configurations: Exploiting naturally occurring Configurations
Adjusting Your Customer Portfolio
Options for Deletion of a Product or Service
8. Managing Deletions
Roadblocks to Simplification
Conclusion: Biting the Simplification Bullet
Chapter 10. Finding the Complexity that Customers Value
A Case Study in Choice Explosion
What Customers Want vs. What They Value
Technique #1: Key Buying Factor Analysis
Technique #2: Kano Analysis
Technique #3: Functional Analysis
Technique #4: Conjoint Analysis
Conclusion: Considering Complexity when Developing Customer-Focused Strategies
Chapter 11. Avoiding the Big Costs
Using Complexity Principles to Simplify Product Designs
Simplicity Principle #1: Emphasize Commonality
A. Commonality through Modularization
B. Commonality through Platforms
Case Study: IPM’s applications of Platform Thinking
Benefits of Commonality
Simplicity Principle #2: Exploit Design Reuse/Recycling
Simplicity Principle #3: Design With the Life Cycle in Mind
Benefits of Life Cycle Planning and Execution
Example: Simplifying Brake Design in Bikes
Improving Design-to-Market Cycle Time
Conclusion: Start with the End in Mind
9. Chapter 12. Achieving Service and Process Simplicity
Chapter 13. Using Information Technology to Deliver Complexity at Lower Cost
PART IV – HIGH-RETURN INVESTMENTS WHEN CONQUERING COMPLEXITY
Chapter 14. Creating a Culture that Can Conquer Complexity
Chapter 15. Conquering Complexity in Your Product and Service Value Chain
Chapter 16. Applying Complexity Principles to Mergers and Acquisitions
Harrington, H. James, Total Improvement Management: The Next Generation in Performance
Improvement. McGraw-Hill, Inc. 1995.
Introduction
Overview
1. Top Management Leadership: The People Who Need to Change First
2. Business Planning Process: Aligning the Organization and the People
3. Environmental Change Plans: Best Practices for Improvement Planning and Implementation
4. External Customer Focus: Best Practices for Outstanding Customer Relationships
5. Quality Management Systems: ISO 9000 and More
6. Management Participation: Management Must Set the Example
7. Team Building: Bringing Synergy to the Organization
8. Individual Excellence: Going Beyond Teams
9. Supplier Relations: Developing a Supply Management Process
10. Process Breakthrough: Jump-Starting Your Process
11. Product Process Excellence: The Production Side of All Organizations
12. Service Process Excellence: How to Best Serve Your Customers
13. The Measurement Process: The Balanced Score Card
14. Organizational Structure: Restructuring the Organization for the Twenty-First Century
15. Rewards and Recognition: Rewarding Desired Behavior
10. Pangarkar, Nitin, High Performance Companies: Successful Strategies from the World’s Top Achievers.
John Wiley & Sons (Asia) Pte. Ltd. 2012
1. My Motivations
2. Discover Diamonds among Coals
3. Build Durable Assets
4. Focus on Small Wins
5. Integrate to Innovate
6. Advance (Strategically and Competitively) During a Crisis
7. Beware of the Incremental (Strategic Change)!
8. Strategic Principles in a Nutshell