Simple isn’t enough

22Feb10

I was talking with an executive who was bemoaning the rising cost of health care for his organization and its affect on their ability to compete globally. He wasn’t optimistic about any meaningful reform that would lower costs. He stated that the problem with health care reform is that it is too complicated for the average person to understand. Sound bites and rants replace substantive debate.

I agree with his conclusion, but don’t limit it to “the average” person. We live in terribly complex times, and everyone, including business leaders, want simple solutions. There aren’t any. The myriad forces at work demand careful study and thoughtful analysis. They also require understanding the interaction of forces at work, and the cause and effect relationship between short term actions and long term impact. This is especially troubling as businesses continue to take actions that may improve margins short term, yet cripple the next generation of leaders who will have to deal with rebuilding the basic foundations of the enterprise. While many business executives rail against government policies that build debt for the next generation (and I agree with them), they are doing the very same thing in their companies. The complexity of the issues facing our businesses provides cover for them to take these short sighted measures.

Talent management is one area that comes to mind. Human Resource departments have seen their missions morph from attracting, developing, and retaining talent to personnel administration focused on controlling the cost of human capital. It may appear to work short term as the options for employee mobility in tough economic times are limited. Once the economy rebounds, these companies will see their best talent leave as quick as someone can say “salary increase”. They will be left with talent that is simply not skilled enough to attract offers from others.

Brand management is another area of concern. Toyota stands as an example. They pressured suppliers to make annual 10% reduction in parts cost until it reached the predictable point of harming quality. Many goods manufacturers are doing the same and are relying on past reputation while harming the future reputation.

It boggles my mind why so many focus on the simple fix instead of the more comprehensive solution. Perhaps they know by the time the problems emerge it will be somebody else’s to solve. Perhaps they don’t have the knowledge and skills required. Perhaps they are pinning their hopes that a general economic recovery will carry them along. I don’t know. It’s not that simple.

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