Category Archives: Leadership

All Hail Complexity. Not.

If the last few days on Wall Street and in Washington haven’t debunked the truth about complexity, it’s hard to imagine what could. The masters of the universe with the winds of hasty deregulation and arcane derivatives of derivatives financing schemes at their backs claimed to have uprooted the laws of economics. Why does someone who wants to borrow $500,000 for a home mortgage have to prove they actually have an income or can pay the money back? According to the economic wunderkinds, the new rules of money magic spread the risk around so no one need ever worry. That, by the way was $2.8 trillion dollars ago which is the amount Bloomberg Financial Markets calculates was lost in the market value of global stocks over just two days last week.

The New York Times reports the US Government is seeking to provide over $985 billion financial guarantees on top of an estimated $500 billion budget deficit projected for next year. In the off chance you’re calculating how much this bail-out might cost you and your family it’s roughly $2,000 for every man, women and child in the country. Whether you think we should be bailing out financially reckless investment houses, banks, and insurance companies along with their shareholders or not is great topic for a long and undoubtedly fascinating discussion.
The lessons for those of us in the association profession and our Boards alike is this. Complexity costs money. Lots of it. Not only does complexity raise costs, it also hinders growth. By some estimates the least complex organizations have growth rates 30 to 50 percent above organizations with average levels of complexity. Finding ways to simplify offerings using the Aldi principle (which suggests you remove a product every time you add a new one) is one of the ways your association might find balance. Simplification works when it comes to strategy too. Most often associations tackle too many initiatives at once and stretch themselves thin. Having three really urgent and important priorities receiving the “full on” attention of the organization before moving on to a fourth or fifth will increase your chances of success on every initiative. Look for opportunities to reduce costs, enhance your relationships with customers and members and for ways to build upon your inherent strength and competitive position. With simplicity and transparency as your watchwords, it’s pretty unlikely you’ll be searching for a government bail-out any time soon. And thanks in advance—that would be very good news for all of us in these difficult economic times.