Sonny Saksena

Many companies believe that they incur no incremental costs when they add just one more feature to a product or one more term or condition to a contract. Yet these seemingly minor changes accumulate over time into significant financial costs; IBM research has found that they can account for 15 percent to 20 percent of total business costs. The rule of thumb across industries is that the cost of complexity increases by 20 percent to 35 percent for every doubling of complexity. Furthermore, we’ve found that 30 percent to 50 percent of the difference in cost structure between high-achieving suppliers and average suppliers of the same product comes from differences in design or in the complexity of the companies’ product line. Operational inefficiencies account for another 30 percent — and they’re largely a result of overcomplexity.

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