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Driving Forces of Complexity

The portrait of the world in which we sell is almost complete. We have examined the nature of the enterprise sale and the environmental pressures that are forcing them into commodity-like transactions. The last element in the picture is an equal and opposing pressure that, in essence, is forcing additional complexity into already-complex transactions. Simply put, environmental forces are adding more complexity to the mix. We are seeing complexity piled on complexity.

Many of the driving forces of complexity are emerging from the changing nature of business itself. The structure of our organizations is becoming more complex. In many cases, decentralized organizational structures have replaced the fixed, hierarchical infrastructures on which traditional companies were built. In other cases, consolidations are having the opposite effect and have taken decisions away from the technical, clinical, and operational levels to professional managers who frequently take a vital but limited financial view to their decisions. In addition, the speed with which these transformations are occurring is unprecedented. The result is increasing difficulty in understanding and navigating our way through a customer's business. Identifying the powers of decision and influence in today's corporate labyrinths isn't easy either. With increasing frequency, the customers themselves cannot define their decision process.

The trend toward globalization is exacerbating the growing complexity of organizational structure. We are often selling into decentralized companies that span the globe and encompass dozens of different languages and cultures. "Where in the world are the decision makers?" is not a rhetorical question in an increasing number of situations.

The restructuring of organizations has extended back down the supply chain. Customers are consolidating, fewer companies are controlling higher percentages of demand, and fewer competitors are controlling higher percentages of supply. It's an environment where the winner takes a substantial share, if not all, of the marketplace.

At the same time that our customers are demanding commodity-based pricing from us, they are demanding more intricate relationships with us. They are drastically reducing their supply bases and asking the remaining vendors to take a more active role in their business process. They want those of us who are left to become business partners and open our organizations to them. They are also asking us to add value at much deeper levels than we have traditionally delivered to their organizations.

The customers' desire to build tighter bonds with fewer vendors is adding layers to the sales process. Buying decisions include more considerations and more players, and those players are often located at higher levels in the organization. This is on top of the multiple decisions and multiple decision makers that already characterize enterprise transactions.

There is an even more sobering consideration here: If your customers are tightening up their supply chain, there will be fewer opportunities in the long run. One lost sale in this environment could easily translate to the long-term loss of the customer. We saw an extreme example of what that can mean in the case of the Pentagon's contract for the Joint Strike Fighter. The companies that did not win that sale had to either abandon that business or accept supporting roles working for the winner. How many customers can you afford to lose on a long-term basis?

Increasing levels of complexity can also be found in the situations and problems our customers face and in the solutions that we offer them. We tend not to see the world through our customers' eyes, but when we do, we find that they face many problems. Their business environments are more competitive than ever, technological advances are radically altering their industries and markets, and their margins for error are always shrinking. The increased complexity of the environment translates directly to increased complexity in their problems.

The solutions that we design to address those problems are correspondingly complicated. Products and services must be designed to transcend geographical borders and connect and integrate decentralized structures. Our solutions need to incorporate elaborate technical innovations and address the needs created by technological change. In addition, our margins for error are always shrinking. The transformative solution and the situation it is designed to address are ever changing and increasingly intricate.

Finally, complexity is driven by competition. To stay on top of our markets, we often find ourselves trapped in "innovation races" with our competitors; in doing so, we can actually outrun the needs of our customers. Harvard Business School professor Clayton Christensen calls this performance oversupply and describes the phenomenon in his book, The Innovator's Dilemma: "In their efforts to stay ahead by developing competitively superior products, many companies don't realize the speed at which they are moving up-market, over-satisfying the needs of their original customers as they race the competition toward higher-performance, higher-margin markets." [2]

Ironically, when the complexity that we add to our products and services exceeds the needs of our customers, they respond by ignoring the features they do not need and by treating our offerings as if they were commodities. Here's how Christensen traces the process: "When the performance of two or more competing products has improved beyond what the market demands, customers can no longer base their choice on which is the higher performing product. The basis of product choice often evolves from functionality to reliability, then to convenience, and, ultimately, to price." [3] Here is yet another example of technological innovation driving commoditization.

There are two points to all of this: First, if you are already involved in enterprise sales, you can expect them to get more complex. Second, if you are not selling a simple commodity but have a relatively simple sale at this time, you may well end up with a full-blown enterprise sale in the near future.

[2]Clayton M. Christensen, The Innovator's Dilemma, p. xxiii.

[3]See note 2, p. xxii.

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