By John L Mariotti
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Additional resources for The Complexity Crisis: Why to many products, markets, and customers are crippling your company--and what to do about it
Sample text
Imagine you are sitting in a conference room, the graphics projector is on and the handouts are in everyone’s hands, along with morning coffee. The presentation starts. The top-line revenue on the P and L shows gross sales revenue up 9 percent over plan (which was not much different from last year’s number). It’s not quite up to the desired 10 percent growth, but close. The hard-fought 4 to 5 percent price increase (largely charged to the older, loyal customers) went through, and that accounts for almost half of the increase.
When combined with the increased claims and deductions, almost one-quarter of the profit from the 8 percent revenue growth has disappeared. Hmmm. This is not so good and promises to get worse. The explanation is that the variances were mostly due 26 3 ⁄ The Bottom Line—Where Complexity Hurts to rework and scrap associated with the new products, but some of it was also from reimbursing vendors for expedited freight—airfreight from China—to get replacement goods for the rejects the new vendors shipped.
The Complexity Crisis is now so obvious to me that I continue to be amazed that it has remained widely unrecognized for so long. Over the past few years, my thoughts have evolved as I have seen a few companies react and do the right things to deal with complexity, but many, many more continue to struggle. Once I had considered the true nature of today’s problem, I went back to Peter Drucker’s work to test my hypothesis. ” In the summary, Drucker stated his beliefs. 13 Part One ⁄ The Problem “The end products of the manager’s work are decisions and actions, rather than knowledge and insight.