Chapter 7: The Power of Simple – Customer CEO: How to Profit from the Power of Your Customers

7

The Power of Simple

Key Customer CEO Question:

Chauncey Gardiner spoke with quiet confidence when he said, “In the garden, growth has its seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.”

Gardiner was a character brilliantly played by Peter Sellers in the 1979 movie, Being There. He was a simple man suddenly thrust into a complicated world. In a Hollywood twist, he accidently becomes an advisor to the rich and powerful, including the president of the United States. What was hailed as a commonsense metaphor about coming economic prosperity was really nothing more than mindless drivel spouted by a man who was a mere gardener. His name was actually Chance. Chance the gardener.

Being There was entertaining and a great piece of satire. But the deeper truth is that we all seek simplicity in a world seemingly gone mad with complexity. I have a poster on my office wall with a quote by musician and civil rights advocate Charles Mingus, who once said, “Making the simple complicated is commonplace; making the complicated simple, that’s creativity.”1

In my customer research work over the years, I have heard this sentiment expressed hundreds of times about every kind of product and service. The key Customer CEO question “Why is this so complicated?” comes from years of hearing frustrated customers who don’t understand how companies could screw things up so badly. I remember a focus group I did in Houston, Texas, for an office equipment manufacturer. None of the office managers we were interviewing could understand why a leading global brand had decided to create such a complicated machine. It featured a dizzying array of options, switches, and glowing lights. The consensus of the group was that the product was a giant disaster because all they really needed was a “big red button” to turn it on and off. The company should have taken the time to listen before it designed the machine. But, as so often happens, the company thought it knew better. The engineers loaded up the product with complexity because, pure and simple, they could. The machine was withdrawn in less than a year due to underwhelming market response.

The good news is that a trickle of simplicity may be turning into a raging river. There is finally a revolution of simplification taking shape in the marketplace. When we look at technology innovations like the cloud, software as a service, analytics dashboards, and apps we see that developers are finally beginning to think about simplicity as a major driver of new business opportunities.

Great designers and inventors focus on reducing unnecessary steps. Take the simple metal zippers in our clothing. A zipper will eventually get stuck, lose teeth, and break. It took Swiss inventor George de Mestral’s random act of removing burrs from his dog’s fur to imagine the possibilities that became his invention, Velcro. He noticed that the burrs were actually made up of tiny hooks.2 Larry Miller invented the elliptical trainer after observing his daughter run.3 In Pursuit of Elegance, author Matthew May explains why simplicity is such an important goal: “Because by nature we tend to add when we should subtract, and act when we should stop and think. Because we need some way to consistently replace value-destroying complexity with value-creating simplicity. Because we need to know how to make room for more of what matters by eliminating what doesn’t.”4

Customers are tired of so many choices everywhere they look. Remember the dilemma outlined by psychologist Barry Schwartz regarding excessive grocery store product choices? It becomes overwhelming. When there are too many choices, the brain shuts down and defaults to the familiar brands it knows and loves. No one has the time and energy to figure it all out. In a Harvard Business Review blog post, it was reported that a corporate executive board’s survey of seven thousand consumers worldwide found customers are “overwhelmed by the volume of choice and information they’re exposed to, and marketers’ relentless efforts to ‘engage’ with them.”5

I believe every business should strive to become a simple business. Every product, service, and experience you ask customers to acquire should be simple to buy, use, maintain, and get rid of when it’s used up or worn out. The more people can enjoy something because of its simplicity, the more often they will use and recommend it to others.

Let’s take a look at four Customer CEO companies that succeed at simple.

Number Two and Lovin’ It

Last week, I thought I would try a California Bacon Club. They had a big picture of one on their menu board but the guy behind the counter didn’t even know what it was. He had to go ask his manager. I just wanted to eat and get out of there while they stood around debating it. I needed to get back to work. Why offer it if you don’t even know what it is?

Francisco, Miami, Florida

Participant in a focus group about fast food restaurants

In March of 2000, my friend, filmmaker and director Ed Schumacher, picked me up at Los Angeles International Airport (LAX), and we headed for lunch. In less than five minutes he pulled up to a small restaurant on South Sepulveda Boulevard. The restaurant was sitting almost directly across the Pacific Coast Highway from LAX runway 24R. There was a line of people waiting to get inside. This was my introductory visit to an American cultural phenomenon known simply as In-N-Out Burger. As we entered the restaurant, Ed assured me I was in for a special meal. He explained that, since moving to LA from Florida ten years earlier, hardly a week had gone by that he hadn’t made an In-N-Out visit because it wasn’t just a typical fast food hamburger joint. It turns out he was right.

In-N-Out Burger isn’t the kind of place that would offer anything as exotic as a California Bacon Club. With more than 230 stores in only a handful of states, it has quietly become the number-two hamburger restaurant in America based upon sales per store. At nearly $2 million per unit, In-N-Out Burger runs second only to McDonalds.6 And since 1948, it has continued to thrive through the Power of Simple. In an industry that usually features complicated menus that cause customers to waste time by standing and staring while trying to figure out what to order, In-N-Out is straightforward, with just five basic items. The company has never tried to be all things to all people. Late founder Harry Snyder summed up In-N-Out Burger’s simple mission by saying, “Keep it real simple, do one thing and do it the best you can.”7

For more than a half century, since 1948, In-N-Out has amazingly stayed the course: sell fresh, great-tasting hamburgers, French fries, and milk shakes. It has avoided the temptation to offer breakfast, kids’ meals, salads, pizza, chicken, fish, or exotic sandwich variations. By sticking to its core business, it delivers a cost structure much better than that of McDonalds or any other chain. The company doesn’t waste valuable floor space, inventory, and maintenance costs supporting marginal products. It has built a competitive advantage by leaving those low-volume items to its competitors.

In her book In-N-Out Burger: A Behind the Counter Look at the Fast-Food Chain That Breaks All the Rules, author Stacy Perman explored the phenomenon of the restaurant that Harry built:

The little regional chain that was built on a philosophy of quality, made-to-order hamburgers, and “the customer is always king” had over the years drawn fans from every imaginable quarter. In an industry that has come to be seen as a scourge on modern society, responsible for everything from obesity to urban blight to cultural imperialism, this modest, low-slung eatery with the big yellow arrow is unique among fast-food breeds: a chain revered by hamburger aficionados and epicureans, anti-globalization fanatics and corporate raiders, meat-eaters and even vegetarians. Make mention of the three monosyllabic words and a kind of reverie takes hold. People’s eyes close and their lips begin to quiver with the pleasures of sense memory.8

In-N-Out Burger illustrates how you can beat your competitors by being a Customer CEO company. Rather than falling in love with the idea of being innovative in terms of product development, it has succeeded by becoming master of the basics in a commoditized business. It is the best at simply delivering on the core product that customers crave. By keeping things simple, the company reduces mistakes and shortens learning curves. In-N-Out defies conventional wisdom in the fast food industry: there are no freezers, microwaves, or hot racks to keep food warm or to heat things back up. Everything is fresh and made to order. Paradoxically, In-N-Out Burger has become one of the most innovative companies in America by not being innovative.

From the beginning, what customers thought about every detail of the restaurant was critically important to the company. This desire to listen closely was born of humility and an obligation to provide the best experience possible. Harry Snyder’s goal was to always serve both customers and employees. The late Rich Snyder, who succeeded his father as CEO in the early 1990s and served until he was killed in a plane crash, believed in the idea illustrated with the Upside-Down Org Chart in chapter 1. Snyder used an inverted pyramid as a symbol instead. He practiced servant-based leadership and saw his job as CEO at the bottom of the pyramid, not the top.

According to Perman, Synder believed, “He was there to support everyone else in the company. When talking to store managers, he was always careful to refer to the shops as ‘your stores’ and never asked them ‘What store do you manage?’ He wanted them to have pride of ownership. Regardless of anyone’s position or length of time with the company, Rich treated everyone equally and as if they were all special.”9

The Snyders had always shown their people they cared by the way they paid employees. From the outset, employees at every level were paid better than their counterparts at the competition. The Snyders recognized that loyal, happy employees would have contagious enthusiasm and that customers would respond. The result was one of the lowest turnover rates in the volatile fast food industry. “They have the lowest turnover rate in the fast food industry, which is notorious for turnover,” says Perman. “They say that the average manager’s tenure is 14 years, but they have managers who have been there 30 or 40 years.”10

In-N-Out’s dedication to the Power of Simple should be contagious for every business. Focus on producing a quality product, treat people well, be consistent, and success will follow. Think about this for a minute and consider how it applies to your enterprise. How has In-N-Out outlasted and prospered while literally thousands of other eating establishments failed over the decades? I believe that we tend to get too caught up in complex strategic planning rather than simple execution. We constantly worry about getting knocked off by established or upstart competitors so we attempt to shield ourselves from every potential risk. Unfortunately, this diverts our attention from just simply getting the job done for our customers. As we see with In-N-Out, customers will richly reward you for creating simple.

Why Didn’t I Think of That?

I love Zinfandel. But I don’t drink it very often because opening the bottle is a real hassle and it spoils before I can finish it.

Sarah, Chicago, Illinois

Participant in a customer interview about wine

Benjamin Franklin once said that wine is “a constant proof that God loves us, and loves to see us happy.” For American fans of wines from Napa Valley and Sonoma, nothing could be truer. The worth of California wines became recognized around the world in 1976 at an event called the Judgment of Paris. Two relatively unknown California wines, the 1973 Chateau Montelena Chardonnay and the 1973 Stag’s Leap Wine Cellars Cabernet Sauvignon from Napa competed in a blind test against better-known French wines. And both Napa wines won.11 This was a monumental moment in wine history, and it set the stage for thirty years of explosive growth in the American wine industry. There was also a popular movie made about the Judgment, called Bottle Shock, based loosely on what happened at the event. The French winemaking industry had enjoyed a virtual monopoly on what was considered great wine until the emergence of this new breed of winemaker.

The wine world has changed much since 1976, with global imports of every variety. It truly is a global village of wine. Australian winery Casella Wines reinvented the category in the early 2000s with its Yellow Tail brand. The winery developed a product that focused on winning the nontraditional wine-drinking market by capturing people who prefer beer and cocktails. Casella found that an entirely new market could be captured if it offered a simpler, sweeter product that didn’t require a high level of wine sophistication to enjoy.12

In fact, Yellow Tail tackled wine snobbery by figuring out that many customers were intimidated by the terms and complexity often associated with wine drinking. Debate rages on in the wine world about fruitiness, tannins, and aging, but what about the bottle the wine is sold in? Was there a way to make the packaging of wine more accessible to people like Sarah? In other words, was there a simpler way to drink wine?

The best ideas usually create those “Why didn’t I think of that?” moments in us. Meet Vinoware, an idea that answers so many customer issues it is shocking no one has done it before. It’s a radical new kind of wine container that’s part stemless wine glass and part corkless bottle. A California company called Stacked Wines has jumped into the middle of the Power of Simple. The product stacks four individually sealed containers made of lightweight, high-quality, shatterproof, recyclable plastic. Each “cup” is sealed with a top like you would find on a yogurt container.

Three University of California, Irvine, students developed the idea and won “Best Concept Paper,” but they kept going until they turned their Stacked Wine into a real product. “The concept of individual wine glasses seems so obvious. We’re all amazed no one has thought of it before, but it seems that’s how a lot of great ideas are born. I’m hopeful that Stacked Wines will become as commonplace as individual servings of other beverages,” said Jodi Wynn, the company’s cofounder and vice president of marketing and business operations.13

Writer Conor Friedersdorf summed up the need for easier-opening wine bottles: “Being a forgetful sort, I’ve had occasion to force corks down the necks of bottles with objects as varied as a cheap plastic pen, splintery driftwood, a friend’s lipstick container, and the curved metal protruding from a u-lock.”14

The new brand solves many obvious problems for wine drinkers. If you want to go mobile for a picnic, hike, or camping trip, it works. Customers can peel, pour, and drink without bringing a corkscrew and glasses. And because the glasses are plastic, there’s nothing to break. Stacked Wines also eliminates the problems of opening a full bottle that might not get drunk. A person can drink a cup at a time.

An unintended benefit of Stacked Wines was highlighted by the popular television host and author Dr. Mehmet Oz. He is a proponent of the health benefits of drinking a glass of red wine but complains that it is hard to accurately measure a glass. He extolled to his large national audience the virtue of the individual Stacked Wine cup, which holds approximately six ounces, a serving that equals only 140 calories.15

Of course, packaging will only get you so far. Stacked Wines won’t last long unless the wine is well received by the market. So we decided to organize a blind wine tasting in Los Angeles. We wanted to see how people liked the wine when it was pitted against other well-known but unidentified wines. Five people were served three chardonnays and three merlots each. Two of our panelists preferred the Stacked Wines chardonnay; the other three ranked it third. The Stacked merlot ranked first for three of our testers, while the other two ranked it second. Overall, it was a good night for Stacked Wines. Here are some of the comments people made after we revealed the brands they had tasted.

Lynne said, “The Chardonnay was really delicious. I could taste apple right away. But it didn’t overpower me. I would buy this. I love the little cups.” Scott told us, “The packaging is cool. Not the best merlot but good enough for a weekend to the mountains.” Frank agreed. “I’ve had better, but it was really pretty nice and tasty. But, I think these guys will do well because they have made it so convenient to use.” Brenda said, “I could taste the berries. It was really great! I will definitely be buying Stacked Wines.” Paul was the one most sold on the wine: “They’ve done a fantastic job for a new brand. High quality, plus it’s so simple. Really, really nice.”

So far, so good, but the big payoff for Vinoware is that it has designed something so simple that it can easily replace current traditional products in the distribution system. A Stacked Wine package takes up the same shelf space as a traditional wine bottle at a reduced weight. The company sees a growing market because its wine is simply more accessible and easier to consume. That’s the Power of Simple in action.

Sole Simplicity

I love shoes. What’s it to you?

Veronica, San Antonio, Texas

Participant in a focus group about women’s shoes

Carrie Bradshaw, played by actress Sarah Jessica Parker, was the famous narrator of HBO’s Sex and the City. Often described as fashion-obsessed, Carrie was a shoe lover who particularly desired expensive shoes by high-end designers. And the more expensive the shoes, the better. According to her friend Miranda, played by Cynthia Nixon, Carrie was at least $40,000 poorer because of her love affair with shoes.16 From Carrie’s point of view, shoes, not diamonds, were a girl’s best friend.

Dominique McClain Barteet is a real-life shoe aficionado. After years of international travel, she tired of packing and hauling multiple pairs of shoes from home to hotels and back again. When she found a pair in a style she liked, she would buy the shoes in several colors. Being a bit more practical than Carrie Bradshaw, she decided none of this made any sense. She wondered why no one had ever come up with a simpler shoe solution.

Why not have one base sole with interchangeable tops? That way, a woman could customize the look of a shoe for any occasion, business, casual, or formal. This customized shoe could match any outfit. The key was being able to change it fast. Upon further investigation, she found that no manufacturer had yet thought of this idea, and she saw a ripe business opportunity because she knew that many women faced the same dilemma. According to Hoovers, a business research company, the U.S. shoe store industry has a combined annual revenue of about $27 billion.17 Industry research publisher IBISWorld reports, “Women in the U.S. are more likely to purchases multiple pairs of shoes than women from most other parts of the world. Women’s shoes regularly change in style, which allows for high competition levels between firms.”18

Branding her shoe enterprise One Sole: The Original Interchangeable Shoe, Barteet first designed a comfortable and fashionable shoe. She was awarded multiple patents on her unique design, which features a set of snaps that secure the custom tops in place. As she began to show her idea to others, demand grew organically as small local stores wanted to carry the line. Customers started suggesting new designs, colors, and fabrics for the tops. In 2012, Barteet was asked to appear on the ABC network program Shark Tank.19 For that reality show, entrepreneurs seeking funding appear before a panel of investors pitching their ideas. When Barteet appeared, she stunned the panel by announcing that she had sold nearly $20 million of shoes part time, while continuing to work as a pharmacist.

I convened a small group of three self-professed shoe-aholics in San Antonio, Texas, to understand why Barteet had hit the mark. Only one of the three women was familiar with One Sole, as she had seen Barteet’s Shark Tank appearance. After showing them a pair of One Soles, it was clear why the product worked. It was simple.

Barbara said, “This is fantastic. I’ve been known to pack an extra bag just for my shoes. My husband will be very happy!” Jennifer saw the obvious benefit of saving money. “This is brilliant. As much as I love buying shoes, this will save me hundreds of dollars a year.” When I showed them the One Sole website, which showcases literally thousands of tops, they were astounded at the sheer simplicity of the product. Veronica asked, “Why didn’t anyone think of this before? This is one smart woman.”

Barteet’s One Sole shows what you can accomplish when you are willing to solve a problem that is right in front of you. Often, you only need to step back and see it. Barteet may have seen it herself in the beginning, but she immediately engaged with potential customers by asking them their ideas about how to build the line with new designs.

That’s the Power of Simple.

Profiting from the Power of Simple

Complexity kills profitability. Simplicity is always a better choice. The truth is that no matter how good you think you are today, others are waiting to take you down. They will see a better way that will disrupt you. Upstarts will take advantage of your dependence on the status quo. You will profit over the long haul if you continue to focus on simplification. Every market will have someone who is the clear leader in simplicity.

Simplicity is what the Customer CEO is demanding and will find. Instead of offering a constantly changing menu, In-N-Out Burger has defied fast food logic by turning out a consistently great product. Stacked Wines saw what industry giants have always missed: a simpler way to serve wine for people who just want to enjoy a single glass or who want to take it along easily. One Sole enabled women to lighten their load and have a wider choice of shoe designs than ever before for a fraction of the price. Simple works. Here are some simple ideas about being simple.

Simplicity Requires Careful Observation

Observation is the way to stay engaged with your existing and potential customers going forward. Spend plenty of time in the field actively watching how customers are using products and services and experiencing brands. Find the pain points and simplify them as soon as possible. For example, One Sole allowed women to take along a lot of shoes by figuring out a new way to pack them and change them efficiently.

Don’t Make the Customer Do Extra Work

If you make your customer do extra work, some upstart will come after you. I cannot emphasize this enough. People want to do less work. So figure out ways to do that undesirable work for them. Do not assume you are the only one thinking about this issue. You aren’t. Look to reduce the amount of work a customer must do while using your product. By reducing the extra work involved in opening a bottle of wine, Stacked Wines found an entirely new market segment. Ask yourself, can my product or service be made any simpler?

Ask the Right Questions

When approaching the idea of simplicity, it’s easy to ask the wrong questions. The right questions to ask up front about your product are:

• Do you believe there might be a better way to do this job? Why or why not?

• What if there was a product that could do the job much better? Would you buy it?

Whatever business you are in, start with the right questions. Once you learn whether you are onto something, get out into the field to observe people doing the job you are trying to make easier.

Reduce Complexity with Fewer Choices

Kill features and services that don’t get used, and optimize the ones that do. Think about In-N-Out’s menu board versus those at other quick-service restaurants. You don’t have to offer something for everybody. Make a few really great things. Why clutter your choices?

Think End to End

Simplicity relates to the entire customer experience, from pricing to customer support. It’s important to apply this thinking to every customer touch point as well. For example, when was the last time you sat down and had some customers try to navigate your website? If you haven’t done this, you might be surprised at the disconnect between what they are trying to accomplish and the experience they are actually having.

Remember that the more complicated your products are, the fewer the people who can or will use them. No single Customer CEO power will open up the pipeline to new customers more than simplicity.

(How well does your organization engage the Power of Simple? Visit customerceopowercheck.com to download our free diagnostic tool.)