Business management: Complexity cost: The race for simplicity

Simon Collinson, Melvin Jay

Research output: Contribution to journalComment/debatepeer-review

Abstract

As the oil industry continues to become more dynamic, the world's petroleum companies will need to simplify their businesses so they can increase profitability and reduce risk. There are many advantages in reducing business complexity. Firstly, reducing complexity means that companies are able to be more agile. Although national oil companies (NOC) hold the majority of oil reserves globally, many IOC have the advantage of less bureaucracy and politics slowing down their processes and decision making. This ensures a more clear and streamlined decision making process, making reaction times faster when faced with major events, changes in oil prices or new opportunities. Secondly, the management behaviors that cause complexity need to be addressed. Managers need to see how their decisions create unnecessary complexity, for themselves and others working around them, and learn how to simplify their organizations. Very few managers have ever been trained on how to simplify something that is too complex. Finally, managers should also avoid new sources of complexity by putting in place an evaluation process to test the complexity impact of changes in organizational structures, processes, and projects. This will help to ensure that complexity does not slowly creep back into the company, undermine growth and damage profitability in the future.

Original languageEnglish
Pages (from-to)39
Number of pages1
JournalPetroleum Review
Volume65
Issue number776
Publication statusPublished - Sep 2011

ASJC Scopus subject areas

  • Fuel Technology
  • Energy Engineering and Power Technology
  • Marketing

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