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Our world is becoming increasingly complicated, as abundance proves to have a double-edge. We are busier; we are inundated with ads; society places more and more expectations on us every year. We have so many more options, but we also have more choices.
As the complexity of life increases, so does the value of simplicity and simplification. Exactly how much is proven by how many of us would prefer a break from making distracting and unnecessary decisions. According to Siegel+Gale research, over half (55%) of consumers are willing to pay more for simpler experiences, and almost two out of every three (64%) are more likely to recommend brands that deliver simplicity. To put a $ or € symbol on that, the preference for simplicity has yielded a 679% growth premium over the last 10 years. Whereas most large companies have doubled or tripled in valuation since 2009, S+S brands have grown by more than 800%. What is more, the gap between simple and complex widens even more each year.
Many business leaders claim their organization is 100% customer centric. And yet despite the talk, the true customer-centric organization remains a rarity in most of the world, where simple organizations — those that have maintained S+S experiences over the last ten years are still freaks along the lines of Amazon, Google, and Spotify. The rarity is not for lack of trying. Every startup wanted to be like these companies ten years ago. Now most enterprises do too, some searching for the right model, others making the attempt to change.
But looking at organizations in South Korea, Finland and Israel, you will see three relatively tiny countries that have tremendous capability to innovate, adapt and develop groundbreaking solutions, most often achieving this in a simple and simplified way. Samsung, Nice, and Kone are just a few examples. These companies seem to be indefatigable in their ability to adapt, innovate, and keep experiences with their brand simple. They have mastered the ability to change, keep or enhance business divisions as required for a creative process that delivers value across the entire ecosystem of suppliers, employees and customers. Simplicity allows them to accomplish more for everyone, including shareholders.
Simple and simplified, what we call S+S, methods and strategies can be more difficult to achieve than other methodologies. An SAP or Samsung will find S+S much more challenging than a start-up, born with simplification as a core characteristic. What makes simplification so challenging is not really us, even though we do create complexities. It’s the cultural characteristics that cripple the capability of impactful change. We aren’t psychotic; we’re social.
In some countries change can cause the same social response as opportunity. But in many workplaces, change is stressful. Why? Or more importantly, can we fix it? I have isolated two cultural characteristics that are mutually exclusive between simple and complex brands. That is, you don’t find them in simple companies, but you do often find them in complex organizations.
If you are acting from within a complex company, than you will recognize these traits, but I hope you will also see how they work together to kill adaptability, innovation, human hope, patience and human great experiences.
Organizations with These Two Cultural Characteristics Are Just Treading Water
We tend to believe that process solutions can help our organization mobilize. Six Sigma, lean, and most recently agile methodologies. Sometimes they work perfectly, but many times not. We think, if we do things differently, then different things will happen often good things. This often is true but not nearly the whole truth. On the other side of the elephant, culture is directing not how but what decisions are ultimately made and acted upon — from leadership through customer service representatives. So even if we shake up the methods or process, the same bull**** will come out, a bit better in many cases.
Cultural complexities boil down to not four, but just two initial horsemen of the apocalypse. What we should eliminate before starting the journey toward simplification and simplicity.
Apocalypse 1: Consensus
If you haven’t yet, I recommend you attend a Korean or Israeli business meeting. They are full of emotion and great ideas. The people are not pursuing consensus as a goal; they are seeking the best solution for the customer and their organization. This goal contrasts sharply to many European organizations specially in our DACH region (Germany, Switzerland and Austria), which emphasize the need for consensus. Although consensus is sometimes reached in simple and simplified decisions, some decisions remain hotly contested well after the action is taken.
But if you think about it, the need to be in accord does complicate decisions. In a culture where you cannot disagree with the herd, how can unique ideas or opinions be heard? How can you establish trust with a colleague who might be telling the truth, or might be nodding and smiling while harboring the belief that the organization is driving off a cliff? Pressure to reach consensus forces some disagreements beneath the surface, where they cannot be fully analyzed and will lose its purpose the good of your organization.
The other possibility is the complexity side of the solution. If Emma believes the primary action will never work, then he might suggest a sub-action that will help to mitigate or prevent the damage, or hedge risk. His add-on will be valued because it brings the organization closer to accord and success of the initiative or specific action. But now, the solution is less impactful. And worse, outcomes will be more complicated and therefore difficult to test and analyze.
Make no mistake. I am not saying that we should disagree all the time. We at least need to agree on the overall goal. What often works is to focus on outcomes for humans, including employees and customers, as well as the organization. Decisions should not focus on making everyone’s ego feel satisfied and special, but only what will improve the company. Changing and simplifying on an organizational level is tough enough.
Consensus is nice to have, but only in rare cases will 100% consensus be possible — and to the extent that consensus makes the company better, it is good. Take ALDI, which has always had simplicity in their business model. Now they have greatly simplified the shopping experience by carrying much fewer brands than competitors. They make it easy for their target customers to make decisions. Instead of 30 different kinds of ketchup, customers only need to decide between 2. Do you imagine everyone agreed on which brands to choose? Do you think even that decision to wheedle the varieties of ketchup down to just two was accepted by every talented executive and middle manager?
And yet the company made a hypothesis about its core customers; its sales have doubled over the last three years and are still growing disruptively. When Aldi with its simple simplified model penetrated the UK, they gained market share fast. Competitors like Tesco fell in disgrace; many merged to compete with the S+S of Aldi and their disruptive customer experiences.
Apocalypse 2: Status Quo
For some reason, the unstated goal of many organizations, in many regions across the globe but specially in DACH is the status quo. People can take change as a personal offense. Predictability is not bad, per se, but when people want their job to stay the same from year to year, the need to retain status quo makes adapting to customer expectations very complicated and ineffective. How can we change the outside when the inside is the exact same? How can the inside remain the same when AI is in the game, changing the nature of work? Change and adaptability is part of life, and there is no way to escape this basic truth.
But think about what happens when you combine status quo with consensus. If co-creation, or groupthink says everything should remain the same, and consensus is the real goal of meetings, then how can meaningful change occur, ever? No one can disagree with consensus, and consensus is pretty close to the status quo. Is it any wonder why most organizations take so long to adapt? No one (status quo minded) wants to change. Even though we can acknowledge the need to evolve, we cannot acknowledge that our culture is preventing us from reaching enormous potential!
And if you aren’t swimming, you are drowning (conceit intended). Simplification and simplicity is directly tied to improving the organization for all humans interacting with it.
Simplifying your Company
To simplify your company is not an easy task for large, established companies. Smaller companies have the advantage of setting the right culture and expectations upfront, as well as the advantage of being less complicated by size. That said, there are maps and guides you can follow. Over the next two articles, I’ll discuss two different methodologies for simplifying your business, one of which is generating real innovation at SAP right now. The first is Boston Consulting Group. The second is my own. Both of these methodologies directly fuel simpler brand experiences across the entire ecosystem of partners, employees and customers.
This article was originally published on Ricardo Saltz Gulko's blog.