We have never attended a management committee meeting where someone has raised their hand and suggested: “Let’s make the company more difficult to manage.” No one approves a plan to have more urgent issues, more exceptions, more meetings, more SKUs, more inventory, more fires to put out and less time to think.
And yet, that is exactly what ends up happening in many industrial companies. Not because of one major wrong decision, but through the accumulation of hundreds of perfectly reasonable decisions made separately:
“Let’s accept this customer, even if they require a different service from everyone else.”
“Let’s keep this SKU; after all, it still sells something.”
“Let’s create this Excel spreadsheet while the ERP is being adapted.”
“Let’s make this commercial exception. Just this once.”
“Let’s produce this urgent order. The customer is important.”
“Let’s add one more step to the process to prevent errors.”
Each one makes sense in isolation. The problem is that the organisation accumulates them, and rarely reviews them.
Complexity enters by solving a problem
That is what makes it so dangerous: it almost never arrives as a problem. It arrives as a solution.
It solves an important customer issue.
It solves an urgent situation.
It solves an ERP limitation.
It solves a commercial need.
It solves an operational exception.
And precisely because it begins as a solution, no one questions whether it should remain in place. Until one day the organisation discovers that it is still dedicating time, resources and management attention to solving problems that ceased to exist years ago.
The symptoms everyone recognises but no one connects
Complexity does not announce itself. It manifests itself in day-to-day operations, although no one attributes it to a common underlying cause.
It appears when production changes its schedule five times in the same week to deal with urgent orders that did not exist three years ago. When a salesperson needs to call three different people to confirm whether an exception agreed two years ago is still in force. When the planning manager cannot be away because they are the only person who understands certain unwritten rules. When a product that accounts for 1% of sales consumes 15% of the organisation’s effort.
At the same time, broader warning signs emerge. The warehouse grows, but service levels do not improve. Coordination meetings multiply. Teams operate in firefighting mode. Priorities change every week. More people are needed to do essentially the same work. Margins deteriorate even as sales grow.
And then come the usual questions:
“How is it possible that we are generating 30% more revenue and less cash?”
“Why does every change become increasingly difficult to execute?”
“Why does everything seem slower than it was three years ago?”
The answer rarely lies in one major inefficiency. It lies in the sum of hundreds of small complexities that have been accepted as normal, and that no aggregate KPI manages to explain.
It is not philosophy. It is margin, cash and capacity
Complexity is not a problem exclusive to large corporations. We have seen it in industrial companies with €20 million in revenue and in companies with €200 million. In factories with too many SKUs. In distributors with commercial policies that are impossible to sustain. In organisations where every customer has their own process and their own exceptions.
And when it is measured, the numbers are uncomfortable. We have seen companies where 20% of SKUs generated more than 50% of production changes. Customers that accounted for 10% of sales but consumed more than 30% of administrative and operational effort. Organisations that had doubled their product catalogue in five years while EBITDA remained virtually flat.
Complexity appears above all in companies that grow. Precisely because they grow. Because growth has a side effect that is rarely discussed: if it is not managed, it generates complexity faster than the organisation builds the structure needed to absorb it. This is why many companies discover too late that selling more does not always mean creating more value.
The cost that does not appear in any account
The cost of complexity rarely appears in the accounts. There is no line item in the income statement called “cost of complexity”. But it is there, scattered and diluted.
It is embedded in inventory that no one wants to eliminate. In constant changeovers. In urgent purchases. In overtime. In discounts granted without clear criteria. In parallel IT developments. In rework. In meetings. In dependence on individuals who are the only ones capable of understanding how something actually works.
It is a cost-to-serve that is not allocated, a contribution margin that erodes without explanation and working capital tied up without generating a return. Taken together, complexity consumes margin, consumes cash, consumes speed and, above all, consumes management focus.
Leading also means deciding what to stop doing
That is why an essential part of leadership is not just deciding what to add — new products, customers, markets, processes and tools — but having the judgement, and the courage, to decide what to stop doing. What to eliminate. What to simplify. What to standardise. What no longer creates enough value to justify the hidden cost it generates.
Companies rarely lose competitiveness because of a single wrong decision. They lose it through the silent accumulation of reasonable decisions that no one ever revisited.
Conclusion: complexity must be managed or it will govern
Managing profitability with precision requires making what is currently hidden visible: identifying where complexity is concentrated, how much it really costs and which decisions around product range, pricing, customers and processes can recover margin, cash and capacity. It is not a one-off efficiency exercise, but an ongoing management discipline.
Because complexity has one final dangerous characteristic: once it is embedded, it stops being perceived as complexity and starts being mistaken for the natural way the company operates. And that is when it truly begins to destroy value.
Complexity is never approved in a management committee. But when no one challenges it, it ends up governing the company all the same.
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