The complexity and cost to produce something which is complex is more expensive than something that is lower quality or produced at a slower speed.

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What is Complexity?

Complexity in Six Sigma means non-value added high cost manufacturing processes. The Law of Complexity and Cost adds more non-value-added cost and work than either poor quality (low Sigma) or slow speed (un-Lean).

What Causes Complexity?

There are two significant contributors to complexity:

• Complexity escalates under differentiation, and occurs when we strive to develop a variety of offerings, features, and attributes. As an example, consider a cell-phone manufacturer with a growing number of cell phone models in its portfolio. Each model will require its own R&D, Marketing, and Support.
• Complexity escalates under sheer volume of back-operational work. Consider the production of a jet plane which involves hundreds of thousands of engineering specifications and processes that need come together for a final product.

Both scenarios are always at immense strategic risk when faced by a less-complex competitor.

How to Simplify?

Complexity reduction or elimination of non-value added processes is central to Six Sigma and Lean thinking.

There are two approaches to reducing complexity:

• Standardisation: Standardising the internal tasks and components of an offering so that a fewer number of them can be assembled into many different products.

A practical example can be found in the automotive industry. Instead of 8 different vehicles built on 8 different platforms, the manufacturer condenses its engineering designs into one platform. Consider how GM now shares one platform across Chevrolet, Cadillac, Buick, and GMC.

• Optimisation: Eliminating offerings that generate a loss particularly where you are strategically disadvantaged or see a declining market. Almost every organisation has products that refuse to generate profit. These should be removed or re-priced to generate adequate return.

The standardisation process achieves low cost without the market penalisation that an optimisation strategy may suffer.

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