Complexity Reduction as a Dimensional Failure
A global manufacturer’s SKU reduction effort collapsed when operational logic clashed with political influence and misaligned incentives. Dimensional Reasoning Theory reveals the failure as a cross-plane misalignment, offering targeted steps to restore alignment and embed lasting portfolio discipline.
Context and Background
In a global manufacturing enterprise, an initiative was launched under the name Complexity Reduction. The objective was clear: eliminate obsolete SKUs that had not been sold for multiple years, thereby reducing system complexity, planning burden, and operational inefficiency. The operations function supported the effort, citing excess changeovers, inventory risk, and planning noise. However, the sales organization resisted.
Their rationale was not grounded in performance metrics or forecasted demand. Instead, it was political and relational: several of the obsolete SKUs had once been ordered by high-revenue customers. Despite the absence of recent demand, the symbolic attachment to these SKUs created internal friction. Sales argued that removing these items could send the wrong signal or limit future optionality, though no active customer quotes or engagement data supported that claim.
The initiative failed quietly. SKU counts remained unchanged. Portfolio complexity persisted. No formal postmortem was conducted. The issue dissolved into the background, becoming yet another known inefficiency left untouched due to internal disagreement and structural paralysis.
Dimensional Diagnosis
This failure unfolded across three planes.
Operational:
Obsolete SKUs consumed planning time, created unnecessary changeovers, and increased inventory risk. The operational team had clear metrics proving the cost of inaction, but these findings were not enough to move the decision forward.
Political:
Sales leadership leveraged its influence to block the SKU removals, framing them as potentially harmful to the company’s market presence. This position persisted even without data to support the claim, creating a political stalemate that sidelined operational priorities.
Relational:
Historic ties to once-valuable customers fueled emotional resistance to change. These SKUs had become symbolic markers of loyalty, and removing them was viewed as a breach of long-standing relationships, even when no current orders existed.
Systemic Insight
The collapse of this initiative was not caused by flawed operational logic, but by unresolved tension between competing dimensions. Operational leaders had the evidence to act, but political influence and relational loyalties held equal weight in decision-making. Without a framework to reconcile these perspectives, the process stalled. Over time, the lack of resolution reinforced a culture where inefficiencies could persist simply because no single dimension was empowered to override the others.
What Now: Direction After Diagnosis
Clarify Decision Rights:
Assign final authority for portfolio changes to a cross-functional governance group. This ensures decisions are balanced across operational, political, and relational priorities rather than dictated by the strongest single influence.
Realign Incentives:
Tie sales performance metrics to profitability and SKU health, not just revenue volume. This shifts incentives toward sustaining a healthy portfolio instead of protecting underperforming products.
Require Evidence-Based Justification:
Make customer demand data or strategic rationale a prerequisite for retaining obsolete SKUs. This moves decisions from perception-driven debates to fact-based choices.
Narrative Execution Guide
1. Convene a governance council with leaders from operations, sales, finance, and strategy.
2. Establish clear SKU health metrics, including profitability thresholds and demand patterns.
3. Conduct recurring portfolio reviews to evaluate SKUs against these metrics.
4. Communicate decisions transparently to both internal stakeholders and key customers, explaining the rationale to reduce resistance.
Reflection
Complexity reduction is rarely an operational challenge alone. In this case, political and relational forces overpowered operational logic, creating a stalemate that left inefficiencies untouched. Dimensional Reasoning Theory surfaces these hidden dynamics, showing leaders where alignment must occur before meaningful change can take root.
