Why do simplification programmes fail?

Abstract

Large organisations have been running simplification and change management programmes for decades, yet complexity keeps returning. This article examines why business simplification strategies fail to stick, exploring the difference between habitual and structural complexity and why treating the symptoms rather than the operating model is so costly. Drawing on examples from financial services and insurance, including HSBC, NatWest, and Schroders, it sets out what effective digital transformation and AI automation programmes have in common: a clear operating model, disciplined portfolio rationalisation, and leadership capable of holding the new shape under pressure.

Why do large organisations keep running the same simplification programmes?

Here is a paradox that should bother you more than it probably does.

Every large organisation, at some point in its recent history, has run a simplification programme. Most have run several. The consultants came in, the workshops happened, the layers were counted and found to be excessive, the swim-lane diagrams were drawn, the recommendations were made, and somewhere there is a slide deck that proved, conclusively, that things needed to be simpler.

And yet here we are. The same leaders, in the same institutions, are announcing simplification again. NatWest is committed to it organisation-wide. HSBC is explicitly framing itself as becoming simpler, more agile, more focused.

Schroders has put a number on it: £150 million in annualised cost savings, a three-year transformation, which is the kind of commitment that does not get made unless somebody looked at the current state and concluded it was genuinely unsustainable.

In itself, complexity is a neutral concept. A modern airliner is complex. Not many of us would choose to fly away to our holiday in a wood and canvas biplane, however simple it might be. What we’re considering here is unnecessary or accidental complexity, sometimes called complication.

So the question is not whether organisations are unnecessarily complex. They are.

The more interesting question is: why does simplification keep failing to stick? And what does it actually take to make it work this time?

Why complexity builds up: the hidden cost of sensible decisions

Complexity in large organisations is not accidental.

It is the accumulated residue of sensible decisions made in isolation.

Every governance committee that was created had a reason to exist. Every approval layer was added because something went wrong once.

Every duplicate system was built because the existing one didn't quite do what this particular team needed. Every portfolio of projects expanded because each individual initiative had a legitimate sponsor and a plausible business case.

The problem is not that any one of these things was wrong. The problem is that they compound.

And over time, the compound effect of thousands of locally rational decisions is an organisation that is globally irrational, one where getting anything done requires navigating a system that was designed, in effect, to slow things down.

This is why simplification programmes fail.

·      They tend to treat the symptoms rather than the cause.

·      They reduce headcount in one area without touching the governance structure that made all that headcount necessary.

·      They rationalise the technology portfolio on paper without changing the operating model that keeps generating new systems.

·      They remove layers from the hierarchy without redistributing the decision-making authority that justified those layers in the first place.

A few months later, the complexity has returned. Slightly rearranged, wearing different clothes, but structurally identical.

Digital transformation failure in financial services: the TSB case study

The 2018 TSB IT migration is one of the most documented digital transformation failures in UK financial services.

The bank attempted to move 1.9 billion customer records to a new platform over a single weekend, a technically ambitious programme that had been years in the planning. The migration failed catastrophically, locking 1.9 million customers out of their accounts for weeks.

The eventual cost exceeded £330 million.

The root cause was not the technology itself. Post-incident reviews pointed to a governance structure that separated technical delivery from operational readiness, a change portfolio that lacked integrated risk oversight, and leadership that had approved go-live timelines that the delivery teams privately knew were unrealistic.

The complexity of the underlying systems had never been fully mapped.

This is a near-perfect case study in structural complexity being treated as a project-management problem. The organisation simplified the timeline without simplifying the system. When it failed, the complexity it had been carrying invisibly became very visible indeed.

(Source: https://www.bankofengland.co.uk/news/2022/december/tsb-fined-for-operational-resilience-failings)

The operating model is the root cause, not the symptom

Think of it this way.

A river doesn't cut the same path because it is stubborn. It cuts the same path because the underlying geology keeps directing water into the same channels. If you want the river to run differently, you don't just move the water, you have to change the ground it flows over.

Organisational complexity works the same way. The ground is the operating model: the combination of governance structures, decision rights, technology landscape, and process design that determines how work actually gets done. Until you change the ground, the complexity comes back.

This is what makes operating-model change both the most important and the most difficult thing a large organisation can attempt. It is not a project with a start date and an end date. It is a deliberate reshaping of the system the organisation runs on and it requires a different kind of discipline than most change programmes bring.

What effective change management looks like in practice: structural vs habitual complexity

Here is where a senior change leader earns their place.

The first thing they bring is the ability to distinguish between complexity that is structural and complexity that is merely habitual.

Both look the same from the outside. But they require entirely different interventions.

Habitual complexity: The meeting that exists because it always has, the sign-off process that nobody has questioned in years. Things like this can often be removed with relatively little effort, once someone has the credibility and courage to name it.

Structural complexity: The governance layer that exists because of a real accountability gap, the duplicate system that exists because two businesses genuinely have conflicting data needs. This type of complexity takes longer and requires more careful design.

Confusing the two is expensive.

Treating structural complexity as if it were habitual leads to removal without replacement, which creates the gaps that justify adding complexity back in six months later.

Treating habitual complexity as if it were structural leads to over-engineering: designing elaborate solutions to problems that were never real.

The second thing they bring is portfolio clarity. Most large organisations, when they look honestly at their change portfolio, find more than they can deliver. Significantly more. Projects that were approved in different budget cycles, under different strategic priorities, that are now competing for the same scarce resources, the same people, the same technology capacity, the same leadership attention.

The result is that everything moves slowly, because nothing has enough behind it to move quickly.

Rationalising a portfolio is not a comfortable exercise. It requires saying no. Not to bad ideas, which is easy, but to good ideas that are not the right ideas right now, and that’s much harder. It requires a clear view of what the organisation is actually trying to achieve, and the willingness to deprioritise things that don't contribute directly to that aim, even when they have advocates, even when the business cases are compelling.

A senior change leader can hold that line. Not because they are indifferent to the difficulty of the conversation, but because they understand what the alternative looks like; a portfolio that is technically approved but practically paralysed.

How to make your business simplification strategy stick

There is one more thing that rarely gets enough attention in simplification programmes: The change has to be designed to stick.

This means building the new operating model into the rhythms of the organisation, into how decisions get made week to week, how performance gets measured, how resource gets allocated.

It means resisting the temptation to run the new model and the old model in parallel for too long, which is comfortable but counterproductive, because it allows people to default to the familiar whenever the new approach requires effort. And it means naming, clearly and early, what the organisation is choosing not to do anymore.

Simplification is, at its core, a series of losses as well as gains. Teams lose ownership of things to which they’re emotionally attached. Processes that people built with care get retired. Systems that somebody championed get switched off. If that is not acknowledged honestly, the emotional resistance tends to surface later, maybe publicly, maybe privately, often quietly and persistently. Once that starts, it’s very difficult to stop.

The organisations getting this right are not the ones with the most ambitious simplification targets. They are the ones with the clearest understanding of what they are building toward, the discipline to sequence the work properly, and the leadership capability to hold the new shape under pressure.

Simplicity, it turns out, is one of the hardest things to build. But it is also, right now, one of the most valuable.

Written by Sweyn Martin

Senior Programme Manager & Change Leader

Sweyn Martin is a senior programme manager and portfolio leader with over 25 years of experience delivering large-scale change programmes in insurance, financial services, building societies, and beyond. He has held global leadership roles at AXA Partners, Allianz Commercial, Lloyds Banking Group, and ITV, as well as senior delivery and consultancy roles at Nottingham Building Society.

His work spans operating model design, portfolio governance, digital transformation strategy, and the introduction of Agile and AI automation practices into organisations built on traditional delivery models. He has overseen change portfolios exceeding £100 million, recovered failing programmes against regulatory deadlines, and helped global insurers realign hundreds of millions in change investment to strategic priorities.

Sweyn holds a Managing Successful Programmes (MSP) Practitioner qualification, is a Member of the Association for Project Management, and is experienced in SAFe, PRINCE2, Lean, and P3O frameworks.

He writes about what genuine organisational simplification requires, and why most change management programmes fall short of delivering it.

Available for senior programme manager and head of programmes roles, permanent and contract, in financial services, insurance, and adjacent sectors.