Simplify. Richard Koch
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The Cannibalization Trap
The Customer Trap
The Complexity Trap
The Skills Trap
Key Points
14 How Market Leaders Can Simplify Without Tears
Countering Price-Simplifying
Countering Proposition-Simplifying
Counter Price- and Proposition-Simplifying
Is the Penny Dropping About Acquiring Proposition-Simplifiers?
Key Points
PART FOUR: THE REWARDS OF SIMPLIFYING
15 Does Price-Simplifying Pay?
Ford
McDonald’s
Southwest Airlines
IKEA
Charles Schwab
Honda
16 Does Proposition-Simplifying Pay?
Amazon
Apple (the iPod Years)
ARM
Tetra Pak
The Boston Consulting Group (BCG)
17 The Success of Simplifying: An Archaeological Dig
How Do the Companies Fare in Terms of Increasing Their Market Value?
How Do the Companies Fare in Terms of Annual Increase in Value?
How Do the Companies Fare in Terms of Outperformance of Their Rivals?
Industry-Wide Simplifying
Conclusions
18 The Limitations, Power, and Glory of Simplifying
Are There Any Viable Non-Simplifying Strategies?
Simplifying in the Big Picture
The Next Steps for Entrepreneurs
Next Steps for Corporate CEOs
Endnotes
Acknowledgments
About the Authors
Index
PERRY MARSHALL
This is not just a “great” book. Nor is it merely an important book, or a “good read.” SIMPLIFY is one of the ten most valuable business books you will read in your lifetime. I charged $7000 a head for a three day seminar with Richard in Chicago. The event culminated in five hours of Richard delivering his SIMPLIFY material. This audience included entrepreneurs with $10 million+ businesses, with potential to reach into the billions. They were ecstatic.
SIMPLIFY is a shortcut to the exact business that will game-change any industry. Business people and investors talk about “unicorns,” “disruptive business models,” and all the rest. Those superstars are hard to predict, but we know them when we see them — usually after the big money has already been made. This book leaps you past years of meandering to the exact product or service that will tip the playing field solidly in your favor. If you pull this off, your competitors will find it impossible to follow you. And you will make life-changing money.
The real title of this book could very well be, SIMPLIFY: If you don’t, they will. That’s because it is inevitable that sooner or later, someone will come along and revolutionize your industry. It will typically be an outsider — like Larry Page and Sergey Brin upsetting the search engine industry with Google. The good ol’ boys club rarely sees the outsiders coming until it’s too late.
It will happen. The question is, who is going to do it? It can be you. Even if you’re insider. If you know the formula.
This is not just a book to read and enjoy. (Though it is a very enjoyable read.) This is a book to memorize, to internalize, whose ideas should permeate your thinking, your planning, and the language you share with your investors and key team members.
Richard worked harder on this book than any other. It was a massive undertaking. Simplification always is.
Oliver Wendell Holmes famously said “For the simplicity that lies this side of complexity, I would not give a fig, but for the simplicity that lies on the other side of complexity, I would give my life.” What he means by this is, our initial conceptions of a product or a project are often clear and simple … then in the middle of the project things get almost hopelessly complex. Most people never get out of the woods.
But on rare occasions, a visionary like Steve Jobs has a clear vision for achieving simplicity and elegance and doggedly pursues this to the end. That vision is what Richard defines in this book. We’ve heard all the stories about Jobs’ obsession with simplicity, but here Richard lays it all out in a succinct formula that mere mortals can achieve. He has embodied simplicity even in his teaching of it.
Richard sent me several drafts and we spent months discussing it. His final product is genius. I don’t know if it will outsell his famous book The 80/20 Principle; it may not, as this material is highly advanced.
But it doesn’t matter. Because this is Richard Koch’s Magnum Opus.
RICHARD KOCH
For the past forty years I have searched for simple, elemental, elegant, and parsimonious principles that will help individuals create great new businesses, and thus enrich the world and the people involved.
Principles are wonderful things, because if they are really powerful they can save us enormous effort and stop us going down dead ends. In science and business there are just a few such principles; but whereas most scientists are aware of the beautiful principles in their field, few business people are guided by principles in their daily work, preferring to rely on methods — the next level down. Yet, as the nineteenth-century philosopher Ralph Waldo Emerson said, “As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.”
To qualify, a principle must be so overwhelmingly powerful that ordinary mortals — such as you or me — can reliably create extraordinary results, not through personal brilliance, but just by following the principle carefully and with a modicum of common sense.
The principles can tell you which businesses you can create or work within, with a reasonable expectation that if you follow the principles, the business will stand a great chance of success.
Through trial and error, I have had some success in identifying some really stunning principles. If you had asked me four years ago which single principle works best in business, I would have said the Star Principle. As you may know, this is my interpretation of the famous “Boston Box,” invented by the Boston Consulting Group. Also known as the Growth–Share Matrix, the Boston Box says that every business falls into one of four categories:
Star — the largest business in a high-growth market.
Question mark — a business in a high-growth market but not the largest in it.
Cash cow — the largest business in a low-growth market.
Dog — a business in a low-growth market that is not the largest in it.
The Star Principle says:
The best businesses are “stars”: that is, they hold the number-one position in a market or niche that is growing fast (by at least 10 percent a year over several years).
Stars