Hal Sperlich is a legend in automotive circles: he led product teams that created both the original Ford Mustang and the first minivan for Chrysler. Both were runaway hits with car buyers, generating billions of dollars in profit for their makers. The key insight of Sperlich and his team was that if you build products that stand out on just three dimensions, your products need only be competitive on all the other dimensions. The insight came from observing that customers who were asked why they bought a particular vehicle could seldom remember more than three criteria, even immediately after making the purchase decision. Find the right three things for the customers you're aiming at, make your vehicle a unique and innovative standout along those dimensions, and you have a winner.
Sperlich's insight applies to individual products; it also applies to product lines, processes, and the organization itself. Human beings can't effectively focus on more than three or four things at once. A company with too many products and options drives up costs and confuses its customers. A simple analysis can reveal where the incremental costs of more products or more-complex processes outweigh the benefits. Similarly, an organization with too many layers of management will probably be unable to take quick action, even when the need for action is obvious. A diagram of managerial spans, layers, and decision making can show exactly where an organization may be too complex for its own good. A more efficient arrangement of spans and layers leads to quicker, better decisions; fewer unnecessary meetings; and more-empowered, more-motivated people.
Great managers keep it simple.
Implications for the general manager:
Read about the Road to Results
- Use tools in this book to calculate the systemic costs of strategic, product, organizational, and process complexity that have crept into your business. Determine lost opportunities for revenue and price optimization.
- Study your customers' needs in detail, and find three things that each segment you are serving really cares about. Focus your resources intensely on outperforming your competitors in these segments.
- Based on the above, simplify, redesign, and restructure to meet your company's innovation fulcrum. You can expect significant reductions in costs and significant increases in revenue and growth.
- Set no more than three to five critical imperatives for your organization, and communicate them so that every employee can remember, recite, and buy into what the company is trying to accomplish.
- Streamline your organizational structure, decision-making responsibilities, and critical business processes to ensure clarity, speed, and efficiency in meeting customer needs better than your competitors.