Complexify is such a delicious, underused word. I’ve been using it a lot lately, hopefully with great effect on people who are on the receiving end.
CEOs and founders struggle with this all the time (as do I). They are executing on a strategy and a plan. A new idea or opportunity comes up. It’s interesting and/or exciting. Energy gets spent against it. Momentum appears. While some people on the team raise issues, suddenly the idea/opportunity starts taking on a life of its own. Things get more complex.
Eventually, there’s a reset. The core of what is going on is good — there’s just a bunch of complicated crap happening that is distracting everyone and undermining the goodness in the business. So, the CEO and the leadership team go on a mission to simplify things. This takes a while, usually involves killing some projects, and often results in some people leaving the company. These aren’t big restructuring exercises but rather focused simplification exercises. The end result is often a much stronger business, with more focus, faster growth, and better economics, especially EBITDA.
This happens regularly in the best companies that are scaling. In my view, it’s a key part of the job of a CEO who is working “on the company” a majority of her time, rather than simply working “in the company.” It’s particularly powerful when a company starts to see its growth rate decline (it’s still growing, but at a slower pace than before) or a company is spending too much money relative to its growth rate.
Six months (or twelve months) later the simplification effort is complete. The company is performing much better. EBITDA has dramatically improved (or the negative EBITDA has gotten a lot smaller.) Growth is happening in an economically justified way. The product is improving faster. Customers are happier. Everyone around the team is enthusiastic.
And then a new idea or opportunity appears. Energy starts being spent against it. Momentum appears. You get where this is going.
I call this complexifying, a word I rarely see in the entrepreneurship literature. Maybe it’ll start creeping in now. All I know is that I’m using it a lot these days.
Originally published at Feld Thoughts.
