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Smart complexity

Daniel Mahler (A.T. Kearney partner and the firm's global coordinator for sustainability based in Zurich (daniel.mahler@atkearney.com))
Adheer Bahulkar (A.T. Kearney principal based in Washington, DC (adheer.bahulkar@atkearney.com))

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 4 September 2009

1446

Abstract

Purpose

For many firms the problems of manufacturing, marketing and distributing a complex product line persist, and it is driving up costs in an economy where cutting costs is essential to survival. This paper aims to promote the innovative concept of “Smart Complexity.”

Design/methodology/approach

This paper explains how a firm can adopt this new complexity management concept. It is an approach that challenges the notion that every new product variant drives growth.

Findings

Recently, a company that adopted this approach increased margins by 1 to 3 percent and set the foundation for ongoing improvements in profitability.

Practical implications

This four‐pronged approach to complexity management starts with consumer research to find the right level of variety. It adds richer SKU‐based data on costs across each step of a newly transparent value chain. It brings this data to a cross‐functional, integrated decision process. Finally, it implements process changes to ensure complexity is governed and managed over time.

Originality/value

The leadership lesson: desirable complexity drives consumer buying decisions. Undesirable complexity unduly complicates internal processes without making a whit of difference to the consumer. The new concept of Smart Complexity distinguishes between the two.

Keywords

Citation

Mahler, D. and Bahulkar, A. (2009), "Smart complexity", Strategy & Leadership, Vol. 37 No. 5, pp. 5-11. https://doi.org/10.1108/10878570910986425

Publisher

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Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

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