16 June 2011

Examples of Complicated and Complex in Business

This morning I was asked by a friend for an example of complicated and complex systems/procedures in business. I threw back this small example to him.

Do you have a few to add of your own? Please let us know in the comments below.

Hi mate. It's not one or the other, but a sliding scale.

Examples in business:
Simple: Buying stock from Bunnings. Margin Low, Risk Low.
Complicated: Buying stock from multiple vendors. Margin Medium, Risk Low.
Complex: Buying Stock from eBay. Margin High. Risk Medium.

Basically, the definition of Complexity in business is where there are multiple forces at play, one or more hidden and some interacting with others.

The way to operate in the Complicated is to set good procedures that ensure the lowest cost vendor is used each time when stock and forecasted demand are taken in to account.

The way to work in the Complex is to focus on improving:
1) your awareness, both of new stock on eBay, and future possible demand requirements, and
2) your adaptability, including contracts that stipulate slightly different materials may be used depending on availability, different stock-keeping procedures which change based on constant review of market forces, and workers having access to refinishing tools to touch up incoming stock that is damaged or below quality.

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