In my book, The GOSPEL of Strategy, I wrote that strategy must be simple.
This is because Simplicity is powerful.
Pinboard vs. Delicious
One of the best examples of the power of Simplicity as a strategy comes from two rival social bookmarking services, Pinboard and Delicious.
Pinboard and Delicious are social bookmarking websites that offer similar services but pursue very different strategies.
Pinboard’s strategy is focused on Simplicity. It offers no frills, no elaborate stuff, and no fancy design – just the basic tags to manage bookmarks. And Pinboard offered its simple service to users at a simple fee structure of $3/year (before the fee increased to $22/year overtime). It was started in 2009 by one person (web developer Maciej Ceglowski) and has continued to stay that way (at least until 2021). No need to raise investors’ money, no need to add complexities, just sticking to the basics.
Delicious, on the other hand, started much like Pinboard, offering basic tags in 2003. But then, Delicious chose a strategy of fast growth by adding many features and increasing complexities. Its founder, Joshua Schachter, raised $2m in investments in 2003 and managed to grow Delicious into a company with several million users (but the operation wasn’t profitable due to complexities). Mesmerized by the fast growth, despite not being profitable, Yahoo bought Delicious in 2005 for an undisclosed sum (rumors said it was somewhere between $15m and $30m). Unable to make it profitable, Yahoo sold it to Avos Systems in 2011, which removed the popular (but expensive) support forums that Delicious users had come to love. In 2014, after failing to make Delicious profitable, Avos sold it to Science Inc. In the meantime, Delicious users were continually leaving and using other services.
Finally, in 2017, Pinboard acquired Delicious for just $35k and shut it down, offering existing users the option to migrate their accounts to Pinboard instead.
After rapid growth and increased complexity in its offerings and internal structure, Delicious, in which millions of dollars had been invested, was ultimately consumed by Pinboard, a company of one, for a small price of $35k.
In sum, Pinboard had kept things simple, played the long game, and ended up winning.
Screenshot of the pinboard website.
The danger of complexity
Companies often try to grow by taking on additional complexities. While complexity is well-intentioned, it is a dangerous thing to do. Adding one step to the process would not increase the complexity too much. But after a few years of adding steps here and there, a simple task that once took a handful of steps now requires sign-off by many department heads, a legal review, and a dozen meetings with stakeholders. Moreover, when complicated processes are added to other complicated processes and systems, accomplishing any task would require a massive effort.
As a result, complexities often detract from a business’s original model/primary focus, resulting in high costs and additional problems. Then, more money and time are needed to solve those additional problems.
For companies (including the large ones), simple rules, simple processes, and simple solutions typically win.
Simplicity has to be the mandate
By simplifying rules and processes, a company frees up time to take on more work or more customers. Therefore, for a company to succeed, a strategy for simplifying isn’t just a desirable goal but an absolute requirement. Too many products or services, too many layers of management, and too many rules/processes lead to atrophy.
If you are a CEO of a large company, implement radical Simplicity across your entire company.
Weave the idea of “simple” into every aspect of your company, from product development, organizational structure, sales, and marketing to innovation and R&D.
Start as simple as possible, and always fervently question adding new layers of complexity. Only add new items or processes to the mix when they’re absolutely required.
Don’t be enamored with new technologies, new software, and new devices. Too often, large companies adopt them to “keep up.” Instead, focus on helping customers immediately with what you’ve got right now. Focus on your current ability to solve existing problems.
Don’t try to be simpler but end up more complicated (this often happens). People often add more tools, software, and devices to make things easier but actually create complexities.
Slash your complexities. Routinely question everything you do. Is this process efficient enough? What steps can be removed, and the result be the same or better? Is this rule helping or hindering our business? For example:
You don’t need thousands of products in your inventory if the bulk of their sales comes from just 10% of the SKUs.
You don’t need the latest and greatest software when simple spreadsheets can do the same.
You don’t need twenty company-wide initiatives if three will do.
Then, who knows, perhaps you’ll end up acquiring a massive competitor that couldn’t keep up with your radical Simplicity, just like Pinboard did.
Continue to explore the secret of winning strategy here.