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How complexity influences your organization – The increasing importance of personalization

Some topics are simply complex in nature and cannot be explained on a single sheet of paper. For example, insurance premiums and pension plans are based on complex actuarial calculations. Government grants and subsidies depend on many regulations. Airline pricing and seating is a continuous and dynamic planning process. You most likely have experienced some of these yourself.

Last week we discussed the three dimensions of complexity. This is the first blog where we dive deeper into one of the three different types of complexity, namely, dynamic complexity.

In general, the way organizations interact with their customers has changed. In the public sector, treating citizens fairly, used to mean treating everyone equally. Now it means taking everyone’s personal circumstances into account. In other words, a fully personalized customer journey. There are often countless ways to personalize a product or a service. In the 1980s, Volkswagen was already able to offer 15.7 million different combinations for a Volkswagen Golf, instead of just a few standard configurations and a handful of colours. We also know this as mass customization. In short, every transaction and interaction is different. The next step would be mass personalization ensuring customer journeys are automatically and completely personalized.

mass customization Dynamic complexity


What does this cover in practice?

Business processes, and operations in general, become complex when they consist of many elements, many combinations of elements, and many different types of relations between elements. A further complicating factor is that all these business components often interact with others, and have cause-and-effect relationships. This makes the complexity of business even more dynamic. Lack of insight and oversight with respect to the components and their interdependencies leads to loss of control and organizational chaos, which cannot be accurately captured in a simple workflow. Consider the following examples:

  • Hospitals have a large catalogue of procedures and treatments. Many have dependencies. You are able to combine some while it is impossible with others. They can also be subject to preconditions. For instance, some procedures require an empty stomach, whereas others require the opposite. This raises the question of how every single combination of steps can be defined.

  • A pension plan has many elements. There are multiple risk profiles, various other pension plans from previous employers may be incorporated, the output can be fixed or variable, and so forth. As a result, every single pension plan can have different components and results. However, the configuration needs to be transparent. Consequently, the result needs to be explained to a consumer in a personal, yet repeatable and structured manner.

  • Tax systems are generally subject to many different complex sets of rules. There is an endless list of combinations of income, deductibles, assets and other factors that determine the amount of tax that needs to be paid or returned. As a result, the question is how taxpayers can be guided seamlessly through a complex tax-return process. This has to be in a manner that optimizes their rights and, at the same time, maximizes the tax income for the authorities.
Insurance calculation


What happens if you do not embrace dynamic complexity?

Every trend has a countertrend. Some organizations have created a value proposition by simply ruling out dynamic complexity and offering one or just a few variations on a product or service. Imagine straightforward call plans offered by telecoms or low budget health insurances. This is a perfectly valid strategy, however, choosing this static strategy means potentential value is lost. Still, as margins continue to erode, it is hard to compete on price alone.

Organizations adopting a different strategy have no choice but to embrace dynamic complexity. Nowadays this includes the value-creating capabilities of intelligent automation. If they do not, their processes and systems will simply not be capable of handling the customers’ desire to receive a personalized experience based on their specific needs. Or even worse, as these systems are only built to deal with a predetermined world, these organizations will not even notice the customers’ attempts to interact with them.

What is up next?

In order to remain flexible and future proof, these organizations have to take an agile intelligent automation approach into account. This preferably includes orchestration capabilities, creating value if replacing older systems is not an option. Next week we will focus on social complexity describing how the environment has a significant impact on complexity. Interested in reading our next blog? Keep in the loop by signing up below or follow us on LinkedIn, Twitter and Facebook to stay in the loop at all times. In the meantime, have a look at our website on how Be Informed can help you with turning complexity into value.

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