Complexity Cost

Complexity Cost

Complexity Cost Jonathan Poland

Complexity cost is the cost associated with making something more complex. Complexity can have a range of costs, including increased operational costs, higher maintenance costs, and greater difficulty in making changes to the system.

Adding complexity to a system or process can sometimes be justified if the value that is delivered by the complexity outweighs the associated costs. However, it is important to carefully consider the trade-offs between the value delivered by complexity and the costs that it incurs.

In general, it is important to strike a balance between the benefits of complexity and the costs that it imposes. Too much complexity can lead to inefficiency and increased costs, while too little complexity may not provide the necessary functionality or value. Finding the right balance will depend on the specific context and the needs of the system or process in question. The following are generalized examples of complexity costs.

Learnability

It is more difficult to learn to use something that has 100 functions than something that has 10 functions.

Usability

It may be more pleasing and productive to use a tool that has 10 buttons as opposed to a tool that has 100 buttons. For example, an air conditioner with too many functions may be unpopular with customers who simply want clean, temperature controlled air.

Efficiency

Complexity may reduce economies of scale. For example, a production line that produces one product may produce far more total value than a production line that is stopped and reconfigured for production runs of different products.

Communication & Politics

Complex organizations face increased communication costs as coordinated efforts involve more stakeholders. Office politics may be more intense in a large firm leading to irrational decisions such as hiring middle managers to boost the status of an executive.

Maintenance

Complex things with many unique parts may be costly to maintain. For example, a machine composed of thousands of obscure parts may be costly to maintain as compared to a machine with dozens of commodity parts.

Operations

The cost of operating complex things. For example, troubleshooting software with 1 million lines of code may be more difficult than solving problems on a smaller code base.

Overhead

Administrative and marketing overhead. For example, it is more costly to manage promotion, advertising, distribution, sales, pricing and customer service for a large portfolio of products.

Supply

The cost of procurement and managing a supply chain. For example, an organic cosmetic company that uses 12 ingredients from 3 suppliers may have reduced supply costs as compared to a competitor that uses 250 ingredients from 28 suppliers.

Performance

Complex things may be slow. Given the same resources, software with 2 million lines of code typically runs slower than software with 20,000 lines of code.

Risk

It can be costly to identify and manage the risks associated with complex things. For example, information security is more challenging in an environment with hundreds of different technologies as opposed to a single platform.

Change

It tends to be costly to change complex things. For example, improving a food product with 3 ingredients is less costly than improving an aircraft with 2.3 million parts.

Learn More
Buying Behavior Jonathan Poland

Buying Behavior

Buying behavior refers to the actions and decisions made by consumers when purchasing goods or services. These are relevant to…

Competition Jonathan Poland

Competition

Competition is a term that refers to the act of engaging in a contest with others in order to determine…

Serviceable Available Market Jonathan Poland

Serviceable Available Market

The Serviceable Available Market (SAM) is a term used to describe the portion of a market that is capable of…

What is Complex Sales? Jonathan Poland

What is Complex Sales?

A complex sale is a type of sales process that involves multiple stakeholders, a high level of customization, and a…

Product Requirements Jonathan Poland

Product Requirements

Product requirements refer to the documented expectations and specifications that outline the desired characteristics and features of a product or…

Market Risk Jonathan Poland

Market Risk

Market risk is the possibility that the value of an investment will decline due to changes in market conditions. This…

Feasibility Analysis Jonathan Poland

Feasibility Analysis

Feasibility analysis is the process of evaluating the potential of a proposed project or system to determine whether it is…

Environmental Issues Jonathan Poland

Environmental Issues

Human activities have caused many environmental problems that are harmful to ecosystems, quality of life, and health. These issues have…

Corporate Reputation Jonathan Poland

Corporate Reputation

Corporate reputation refers to the collective perceptions or attitudes that various stakeholders, such as communities, customers, employees, partners, and regulators,…

Search →

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress, a platform for building better assets, tackling global challenges, and advancing the greater good.

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress, a platform for building better assets, tackling global challenges, and advancing the greater good.