Simpler Business Institute

Newsletter # 3 - Simplicity messages from the past 60 years!

It's good that there is a healthy skepticism in business, especially in the current downturn. Business people have often commented to me that "You're just trying to invent a new management fad with your simplicity stuff, Ian."

And while I'm certainly trying to let people know how powerful it is to keep business relatively simple, I'm certainly not the first person, or the last, to suggest this.

So the topic of this newsletter is the writings of some other people over the years about the benefits of simplifying business. I haven't done a full academic analysis - that can be left for the academics - but I have uncovered a lot of agreement from others.

Simplification as a Business Policy and Procedure - Carroll Dean Murphy

In this 1943 article on business simplification, Murphy writes with amazing foresight about the understanding and benefits of business simplification. He foreshadows the importance of the supply chain in keeping business simple and prices low as a competitive strategy. He identifies the misinterpretation of simplification that executives still use today to justify doing nothing about challenging complexity. He notes the issue of "waste" (in his terms "lost motion") and highlights some of the techniques that eventually become key foundations of the Japanese automotive sector and finally to the "rediscovery" of the Lean Manufacturing Principles by Womack & Jones in the 1990s.

Simplicity Wins - McKinsey & Company

This 1995 book by a group of McKinsey consultants and published with Harvard Business School Press was the product of a 5-year examination of mid-sized companies in Europe and a companion study of similar US companies. The top performers had growth rates four times higher, productivity 25% greater, and return on sales three times higher than those of their weakest competitors. They concluded that the secret to the top performers' success was one word - simplicity. In the words of Simplicity Wins, "Everything points to the fact that the superior performance of the leading companies...is attributable to simplicity and rigorous implementation: simple, realistic objectives and a high rate of realisation, achieved through simplicity in structures and procedures".

Simplicity, the New Competitive Advantage - Bill Jensen

In his 2000 book, Jensen explores the value of a simpler approach to business, helping the reader to understand the benefits of clarity and focus. He offers important direction for making working lives easier, especially in new ways of thinking about work. He reports on findings that "work complexity [confusion] is wasting up to 2 hours per day per person [and] reducing complexity is like headcount reduction for free...or if your focus is top-line growth you can gain up to 120 minutes per person per day for new ideas and innovation". It's easy to read these words and say "that's probably a lot of waste", but do you realize that 2 hours per day equates to 25% of your workforce year?! I think the figure for small and medium-sized businesses is significantly less than the 2 hours that Jensen suggests, but even if it is just 50% of this, it is a huge opportunity to improve.

Simplicity-Minded Management - Ron Ashkenas

This recent paper in Harvard Business Review (Dec 2007) notes Simplification as a strategy in business. Ashkenas points out the causes of complexity as the steady accumulation of organizational structure changes, more products added than removed, processes evolving without regular review to keep them simple, and managerial habits where simple questions by a CEO can turn into a major exercise for hundreds of other people. Again, this article is skewed towards the big end of town, but you'll see parallels in SMEs as well.

I hope by these few examples you will realize that simplicity is not a fad - it's been around for over 60 years. But I think that over the past couple of decades we have been "conned by complexity" and have lost sight of the benefits of simplicity in our increasingly sophisticated world.

Maybe we should reflect on the words of one of the true technological geniuses of our world, Leonardo Da Vinci, who quoted that "Simplicity is the ultimate sophistication."  We should be searching for innovation to simplify our lives in all respects.

For more examples of how others have discovered simplicity in business, please go to the e-book Simpler Business - A success strategy for tough times which can be purchased from  www.simplerbusiness.com .

Owners and managers often allow their businesses to become complex, either in the actual businesses themselves or their management. This "creeping complexity" actually kills profits and success, especially in economic downturns when there is a huge focus on driving costs from business. Complexity means higher costs while simplicity delivers lower costs.

The best thing today about getting help to solve your business problems is the internet. In the last recession there was no easy way to find out what other managers were doing to sustain their businesses and to transform them in the upturn.

Now everyone can search for ways to improve their businesses. The Simpler Business Institute is seeking out the simple tools used by experienced people and making them available to you. Please check the website from time to time to see whether something has turned up to save you days or dollars.

No doubt you have some friends or colleagues who will also be challenged and get value from the message of a simpler business, so please forward this newsletter on to them.

For now, simply does it!

Ian Dover