Simplifying is the way to offer incredible value for money and so to make a market grow thousands or even millions of times.
There are two ways to simplify, as described by venture-capitalist Greg Lockwood and me in our new book Simplify.
The first we call price-simplifying.
This requires cutting the price of a product or service in half, or more - sometimes over a number of years the price can be cut to a tenth of its previous level.
If the price of a product is halved, demand doesn't double. It soars.
And if the product or service is simple enough, it can be sold everywhere around the world.
When Dick and Mac McDonald cut the price of a hamburger from 30 cents to 15 cents in 1948 - and Ray Kroc held that price constant until 1967, despite high inflation - the hamburger market exploded, so that it is now measured in billions.
Yet price-simplifying only makes financial sense if you are able to make the product simpler to make and therefore cut costs by at least half.
This is not easy.
As Oswald Spengler wrote, "the simple notions are always the most difficult."
But it can be done - as demonstrated by Ford, McDonald's, budget airlines, mini-steel mills, IKEA, Penguin and Kindle books, online brokerage, index funds, personal computers, and many other mega-successful ventures.
And there is a reliable method followed by nearly all price-simplifiers, which can in principle at least be applied to any product or industry.
It usually involves using radical product or service re-design, restricting variety and creating a universal product, cheaper materials, new technology in the broadest sense, massive scale, reorganizing an industry around the innovator's business system, and co-opting customers so that they do much of the work.
Greg and I call the second and very different strategy proposition-simplifying.
Think of any Apple device - the Mac, the iPod, the iPad. Or the Google search engine, or the Uber taxi app.
Proposition-simplifying works if you can make the product a joy to use, because it is easier to use, more useful, and more beautiful.
As with price-simplifying, there is a common proposition-simplifying formula.
It involves hiding incredible complexity through extremely clever product design, and a relentless focus on making the product both more useful and simpler to use.
Whereas price-simplifying is all about making it simpler for the producer, proposition-simplifying is all about making it simpler for the customer.
What the Two Simplifying Strategies Have in Common
They are different ways to provide value for money - either because the product becomes so much cheaper, or because it becomes so much better.
And one thing that we can prove is that when a product or service is radically simplified, market size mushrooms - and most market share also goes to the simplifying innovator.
The result is that market value of the simplifying firm can increase by thousands or hundreds of thousands times.
I really like the ideas in this new book by Richard and Greg and recommend you read it soon.
"Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius - and a lot of courage to move in the opposite direction."
Ernst F. Schumacher
Action Step:
If you would like to read some examples of price simplifying and proposition simplifying go to Richards's website and read the last few issues of his excellent blog.
These are devoted to explaining in detail how to price simplify and proposition simplify.
There is also an excellent online test you can do at no charge to see if either of these strategies might be worth using in your own business.
Debate on this article is now closed.
Graham McGregor is a consultant specialising in memorable marketing. You can download his 396 page 'Unfair Business Advantage' Ebook at no charge from www.theunfairbusinessadvantage.com.
