Internal complications impact business performance: Boston Consulting Group

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New Delhi | Published: February 16, 2017 4:41:04 PM

As organisations grow, business models tend to get more complicated and companies in the USD 1-2 billion range typically start to feel its impact on business performance, says a BCG report.

Giving statistics on companies in India, the report said technology, media and telecom, energy and pharmaceutical companies are the most complicated. (Reuters)Giving statistics on companies in India, the report said technology, media and telecom, energy and pharmaceutical companies are the most complicated. (Reuters)

As organisations grow, business models tend to get more complicated and companies in the USD 1-2 billion range typically start to feel its impact on business performance, says a BCG report. According to a report by global management consulting firm Boston Consulting Group (BCG), the business environment is changing rapidly and in their attempt to stay competitive, companies tend to introduce new rules and new processes which in turn increases complexity. “When internal complicatedness is not addressed, tangible value is destroyed. This can be reflected in increasing costs, slow and poor decision making, low employee engagement, dissatisfied customers and declining business results,” the report said. Giving statistics on companies in India, the report said technology, media and telecom, energy and pharmaceutical companies are the most complicated. The report also noted that top managers do not realise this, but employees on lower layers report three times the complicatedness top managers do. “Managers are the ones in charge of dealing with complicatedness and they perceive themselves successful at it.

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However, they often fail to realise aspects that make work more complicated for their employees,” BCG said. BCG’s smart simplicity approach consists of four steps that enable companies to successfully simplify their organisation and create lasting competitive advantage. This tool has helped companies reduce complicatedness. Around 20 per cent faster process turnaround time, 15 per cent fewer handoffs across key processes, 30 per cent reduction in rework across functions and 20 per cent reduction in layers in the organisation, the BCG report said.

“We have seen this implemented across industries in India – specifically: IT, Pharma and Consumer Durables are the segments where we have seen the most traction,” it noted.

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