Week 10, 2022—Issue #194
Managing Variety: Customer Needs, Product Lines, and Management Layers
Each week: three ideas on the future of work. This week: three ways for organizations to manage variety. (This post was originally published in the WorkMatters newsletter on March 11, 2022).
The Law of Requisite Variety tells us that an organization’s ability to manage variety must match the variety of its environment.
That makes intuitive sense. If your customers want 100 different things, you should provide those 100 different things to stay in business,
But how do you “manage” variety when the environment is largely out of your control? Consider the following:
1. Customer Needs
How many markets do you operate in? How many segments do you cater to? How many discrete customer needs do you focus on? The higher the number, the more you expose yourself to environmental variety. If it’s too much (i.e., if you are exposed to more variety than you can handle), you can extract yourself from some markets by deciding to not cater to them.
2. Product Lines
How many products and services do you provide? How many options are there for each? How much customization do you allow for? The higher the number, the more environmental variety you can (potentially) handle. If it’s not enough (i.e., if you are exposed to more variety than you can handle), you can expand your offering or allow for more customization.
3. Management Layers
How many layers of management are there in your organization? The lower the number, the more environmental variety you can (potentially) handle. If it’s not enough (i.e., if you are exposed to more variety than you can handle), you can decentralize the organization by removing management layers and pushing decision-making authority toward the front lines.
You can’t control your environment but you can manage your exposure as well as your response.
It’s a continuous process. It has to be. Markets change all the time which means your exposure changes as well.
The same is true for your organization. Your ability to handle variety varies with each new hire and product launch, etcetera.
Keep the Law of Requisite Variety in mind. Ask yourself: does our ability to manage variety match the variety in our environment.
Then act accordingly.
That’s all for this week.
Until next time: Make it matter.
How can we build better organizations? That’s the question I’ve been trying to answer for the past 10 years. Each week, I share some of what I’ve learned in a weekly newsletter called WorkMatters. Subscription is free. Back-issues are published to Medium after three months.