Henry Ford made one car model in 1908, and he sold 1,700 cars. Then he decided to add three more types of cars in the next years, and he sold 1,690 cars. He started to think about driving toward simple.
Ford noticed that sales in total declined during those subsequent years because he had a company pulling in many directions. The complexity of adding several models made a powerful impression on his approach to business.
Within a few years, he decided only to sell the Model T. He focused everyone in the business on one mission – make and sell one car better to more people in more places. Over the next 18 years, Ford’s market share was 43%. Today, Ford has 15 models and a 14% share.
Although this is a one-hundred-year-old example, there are a great lesson startup companies forget. Line extensions frequently don’t add incremental sales – they add incremental complexity. Selling more stores or customers the core three SKU’s in your product line is a far better strategy than adding additional products. I made a very good living for over a decade selling one SKU, a kick-ass double chocolate brownie.
Startups are difficult enough to get off the ground.
If they have multiple products going into multiple markets, the complexity is exponential. Since the first few years are crucial, anything a startup can do to simplify their offering, their message and their efforts often create more value.
Craving Simple
- What happens in your business if more people work on two growth segments versus five? Can you make more progress and go deeper into a segment with a more concentrated effort?
- If you can simplify the number of teams or initiatives, can you reduce the amount of wasted time in meetings and other nonsense?
- When an operation is simplified, you increase the opportunities to achieve growth. Think of how Southwest beat the competition by having the same fleet of planes, so they had the same types of parts everywhere without any odd ducks. Their simplicity in inventory management of spare parts allowed them greater turnaround time at gates meaning they had more flights per day covering more overhead.
- In the world of CPG, bestselling products are often out of stock because of line extensions. Instead of caring three facings of a best seller, they have one each of three flavors/types and the top seller is often unavailable creating lower overall sales.
- Simplicity breeds clarity. Great companies that have singular missions achieve greater results. Startups with greater focus have an increased chance of success IF they pick and market a problem-solving product to an existing market need.
How simple is your product offering? What would happen if you focused everyone on your top three efforts instead of five, seven or more?
One of my superpowers is FOCUS. (My other superpower is roasting chicken). I can coach you and your team to get more from less. Let’s talk. 919 720 0995.
Photo credit: https://commons.wikimedia.org/wiki/File:1910Ford-T.jpg
