There are two reliable strategies for successful simplifying to create a very attractive star business
I’ve just received copies of a new pocket edition of Simplify by Greg Lockwood and myself. It comes in a fetching green cover and naturally I started re-reading my own book. For those of you who want the essence of the book in a few words, here are the relevant extracts, slightly modified to make the message even simpler.
Key Points from Part One
- There are two reliable strategies for successful simplifying to create a very attractive star business – but they are very different.
- Price-simplifying focuses on simple to make, relying on a spectacularly low price to generate a mass market.
- Proposition-simplifying focuses on making the product a joy to use – easier, more useful, and more aesthetically pleasing.
- Price-simplifiers – such as budget airlines, fast food outlets, and IKEA – substitute cheap customer utility for expensive customer utility.
- Proposition-simplifiers – such as Apple – work through the complexity of a sophisticated product or service until it becomes really intuitive, easy to use, and delightful.
- Both types of simplifiers are adept at making trade-offs – delivering superb value for money yet also high profits. This is achieved through shrewd and original redesign of the product and how it’s delivered.
- The ideal is to transcend normal trade-offs – where for example cost is lowered by reducing some element of performance – by discovering what Lockwood and I call virtuous trade-offs – where you have two good attributes rather than one good and one bad one. Penguin books is an example, when by reducing the price Penguin could sell enough copies of a book to attract the very best authors at a time when only hardbacks featured them. New virtuous trade-offs are always out there, waiting to be unearthed. The best of them are great for customers, great for the firm, and lethal to rivals.
We hope you can’t wait to simplify. But don’t expect it to be easy:
- You must come up with a radical simplifying idea.
- Then you must develop a product or service which is dramatically simpler than anything now available – something that is much simpler to make and therefore at half or less than the current price, or so much simpler to use that customers will pay a premium for it.
- Moreover, the product or service must be so simple that it has the potential to become universal. Geography, culture, and other barriers to universal use must be conquered or transcended. Any delay in making the product universal and global lets competitors poke their nose into the tent.
- The business system must be redesigned too, so that the new product, and the company making it, sit at the hub of a new web. Customers, suppliers, and other important – such as franchisees – must all be part of that system, sitting in concentric circles around the product and the company, like planets around the sun.
- Rivals must be excluded from the system, or at least banished to its periphery. They may be allowed to retreat to areas where the company and its product do not wish to compete. But under no circumstances should any rival be allowed to challenge the dominance of the new product in its heartland market.
- The product must be internationalized before imitators can launch their local versions.
- Simplifying is a creative affair, but it is also intensely practical. Combining the two is hard.
Yet, the gods of economics and customer psychology favour the simplifier. A small and young venture – one that follows one of the two simplifying strategies, adapting it to suit its own industry – can hit the jackpot.
Furthermore, in addition to benefitting themselves, simplifiers help society and everyone in it to a much greater degree than non-simplifiers.
Finally, although there are limits to the genius of simplifying, there is no limit to the number of simple universal products that can be imagined and created.
Go forth and Simplify!
The new pocket edition is available here