
How companies turn scaleand complexity into revenue,margin and market share Authors Reef Al AwwadSenior Manager,Accenture Strategy,Energy Kevin MillanPrincipal Director,Strategy & Sustainability,Accenture Research Christopher RoarkCost & ProductivityReinvention GlobalLead, Americas Lead,Accenture Strategy Russell Warren Managing Director,Cost & ProductivityReinvention Energyand Technology Lead,Accenture Strategy Contributor Katherine YasickSenior Manager,Accenture The complexity dividend: How companies turn scale and complexity into revenue, margin and market share Contents In brief4 Rethinkingcomplexity inthe age of AI Governing theungovernable:Three places to start Bigger is better,except when itisn’t 10 24 In brief Organizational scale has advantages,but theycome at a cost. For many growing companies,operations can get so complex and layered thatdecision-making slows to a crawl. Costs can getembedded so deeply in processes and workflowsthat they’re hidden from view, putting a relentlessand invisible drain on productivity and profits. There is a dual imperative in the age of AI. Growing companies must first shift their thinkingabout complexity: rather than focusing on removingit, they should use AI to amplify “good” complexity—the kind that drives growth, revenue and margin—and simplify or sunset “bad” complexity that drainsprofit. Second, they must rethink the role of AI itself.Deployed correctly, AI can be the X factor that allowstop-heavy organizations to be fully in control of theirperformance. The insights in this reportare drawn from our clientwork, as well as fromour recent survey of500 senior executives atcompanies with revenuesof at least $1 billion, fromour 30 in-depth interviewswith C-suite leadersand from our empiricalanalysis of 1,444 globalcompanies. For more onour methodology, pleasesee “About the research”on page 26. AI is built for complex environments. It makes it possible for decision-makers to surface,analyze and connect vast amounts of data andworkstreams, providing visibility into businessunits, supply chains, operational systems, internaland external teams, customer behaviors and more.AI turns operational complexity into a strategicadvantage—so organizations stay nimble, responsiveand profitableno matter how large or how fast theygrow. Bigger is better,except when it isn’t many growing companies is that scale can devolveinto competitive liabilities. Decision-making slows.Responsiveness gets compromised. Products,services and investments become hard to manage.Enterprise priorities get clouded. Experiences getdiluted across channels and touchpoints. Larger organizations should have formidableadvantages over smaller firms. They often have access to deep financial resources tofund new ideas, research and projects. Economies ofscale allow them to negotiate better prices and buildstronger supplier partnerships. Pools of first-partydata give them valuable insights into their customers,products, suppliers, workers, processes, and evenpartners and competitors. The cost implications are real. Instead of being nimbletrailblazers, larger organizations tend to get slowerand more methodical as they grow. Their growthmindsets get overwhelmed by operational complexity,with lower margins and frustrated customers to showfor it. These advantages can be significant, but they comeat a cost and often remain unrealized. The reality for The relentless leak of operational complexity “What’s really slowingthe company downis bureaucracy: toomany layers, too manysignatures.” into new regions—think retail outlets or infrastructureinvestments—see declines in operational excellenceand inconsistent customer experiences, even withintheir core markets. Other sectors, such as technologyand banking, often see innovation slow as they juggleregulations and new business models. To solve the complexity puzzle, top-heavyorganizations typically turn to a range of tactics. They often centralize decision-making, standardizetheir processes and introduce new technologiesto help manage teams and workflows. While thesemethods can help tame complexity, rampant growthcreates challenges that outpace these tactics. The ramifications can be far-reaching: takeovers oflarge companies are at a near-two-decade high, andfirms with weak revenue-to-cost discipline are seventimes more likely to be targeted.1The impacts ofactivist investors over the past 18 months shows justhow serious these challenges have become. Managing Director,Strategy and Planning,Global Bank For example, many large organizations evolve intoconglomerates with separate business units thathave competing priorities, diluting the strategicdirection of the organization and impacting financialperformance. In other cases, businesses that expand The root causes of complexity Complexity isn’t simply a byproduct of scale—it’sbuilt into the very engines meant to drive growthacross products, channels, markets and experiences.Managed correctly,