July 25, 2017

Forget Complexity: The Key to Profitability is to Simplify


Usefulness
Content
Freshness

Summary


"Simplify: How the Best Businesses in the World Succeed" is a breath of uncomplicated and non-jargon air for business leaders just want to execute good strategy without investing thousands on outside consultants or initiatives. The book focuses intensely on the core principles that helped some of the most profitable businesses on Earth (McDonald's, Ikea, Apple, etc.) simplify where it counts so that they can excel at sidestepping the competition.

Forget Complexity, the Key to Profitability is to Simplify

Simplify: How the Best Businesses in the World Succeed is not your average book on simplicity. You won’t find tips on how to organize your desk space for greater efficiency or which new productivity app you should install. The concept of this book goes much deeper than that. Simplify makes the claim that simplicity is directly tied to profitability. Simply put, the book makes the claim that the best businesses (no matter how complex they may seem on the outside) are really good at competing on just two things, price or offering.

What is Simplify About?

Despite all of the complex technical innovations that businesses like Apple, Pixar or Google do, their core business function is very simple. Apple’s products help people communicate and work. Pixar tells stories digitally. Google helps people turn data into information. Yet, how many times do business owners feel pressure to do the opposite? Many businesses feel the pressure to add more features to their products or services in order to stay competitive.

Simplify argues that you shouldn’t.

Instead, Simplify breaks down competition into two main categories. In this highly competitive global environment, your business can win customers in one of two basic ways: your price (price simplifier) or value (proposition simplifier). In order to successfully compete, the authors invite readers to simplify their business operations before doing anything else. Businesses need to determine if they will beat their competitors and woo customers by offering lower prices or by doing something unique that customers are willing to pay more to get. Using the case studies in the book, you have to ask if the chief focus of your customers is price (like a $1 hamburger) or emotional value (like a $600+ iPhone).

Deciding on the chief focus (aka “pain point”) is important because it determines the entire thought process behind everything your business does. It determines the strategy that keeps a company like Apple or McDonald’s in business despite increased competition and a constantly shifting consumer base. These businesses know what they are good at and what the customers want. When companies forget this simple message, they get overly complicated and sabotage their progress in the process.



Simplify is the product of industry experts Richard Koch and Greg Lockwood.

Koch is a former management consultant and private investor turned author and founder of his own business, L.E.K. Partnership. Koch credits the power of Pareto’s 80/20 Principle to help improve his personal and professional life as well as those of his clients.

Lockwood is also the co-author “Superconnect: Harnessing the Power of Networks and the Strength of Weak Links” with Richard Kock and is founder ad partner at Piton Capital, LLP, which he set up after helping UBS get established in the European market.

What Was Best About Simplify?

Simplify is unique because it doesn’t address productivity for a “feel-good” reason. It promotes productivity because it has been a time-tested model that has worked for companies like McDonald’s, Uber, Apple and others. For businesses that are tired of dealing with complexity, this book offers a business philosophy that intuitively makes sense to both consumers and business owners.

What Could Have Been Done Differently?

While Simplify provides a bare-bones approach to profitability, it doesn’t provide enough detail on adapting the strategy. To provide an example, the book praises McDonald’s as an efficient price simplifier yet it fails to highlight companies that failed like Blockbuster, Kodak, etc.) due to innovation. Continuing with the case study of McDonald’s, further study about how McDonald’s can continue to evolve while maintaining its core low price strategy would be great for companies stuck in the same situation. And those unsure about what move to make next.

Why Read Simplify?

Simplify is best suited for those businesses with an established track record of success. Though they may be over-complicating that success with the wrong staff, policies or strategy. Many businesses in the “it’s complicated” situation might feel overwhelmed about where to start in the simplification process. Simplify provides a specific strategy focused around your businesses’ specific value to customers. The authors recognize that not all purchases or consumers are alike. The context of a purchase matters. Readers of Simplify are taught how to focus in on their key contribution in that context and focus on what customers value most.

Comment ▼
Advertise Here

Charles Franklin


Charles Franklin Charles Franklin is a Book Reviewer for Small Business Trends. He has a background as a professional reviewer, and is also a content provider and customer relations professional.

Leave a Reply

Your email address will not be published. Required fields are marked *

*



Looking for templates, checklists or guides? The Small Business Resource Center has them!