South African Journal of Industrial Engineering
versión On-line ISSN 2224-7890
versión impresa ISSN 1012-277X
VAN RENSBURG, A.C.J.. Can complexity analysis support business performance insight?. S. Afr. J. Ind. Eng. [online]. 2012, vol.23, n.2, pp.16-28. ISSN 2224-7890.
Most people intuitively understand complexity, but being able to analyse it scientifically is not a common practice. For business executives, 'complexity' must be one of the most important concepts to understand, as it directly impacts business performance. From a business improvement perspective it is critical to quantify complexity, as engineering optimisation models require some level of clarity and understanding for decision making. Excess complexity prevents a proper understanding of the business system, which makes accurate forecasting impossible, and so increases the risk of failure. This paper uses Shannon's entropy to measure and gain insight into complexity, and shows how it can be used to gain better insight into the performance of a business system - especially when dealing with non-linear relationships between business components.