Harvard professor Jim Heskett raises a monthly challenge at HBS Working Knowledge. This month's topic is "Is Less Becoming More?". Here's my take:
Complexity problems with producers are seldom encountered by first movers. Complexity tends to creep in either as result of the producers' need for differentiation, product complexity, or as "me-too's," choice complexity. Indeed, when producers want to differentiate themselves, up to a point, the safest and quickest way to achieve that goal is to add features or increase product complexity. Moreover, striking analytically (as opposed to heuristically) the right level of complexity may not even be doable. Thus, the first impulse of some producers is to err by doing more. When successful, product complexity is being subsidized either by scale economies, as in software, or by the consumers' wants, as in luxury products. Choice complexity is usually brought about by those "me-too" producers that want to capitalize on the first-movers' R&D. Less search-costs, its net effect is to drive down prices, being subsidized by producers. It is remarkable though how Apple manages to achieve product simplicity and choice complexity with its iPod line of products. Product simplicity endears iPod with the consumer, while choice complexity helps Apple segment its customer base. As a side note, products start simple, and then get copied and more complicated until another category starts anew.
Regardless of the type of complexity, product or choice related, the consumer is ultimately overwhelmed. Worse yet, consumers may even experience frustration due to unfulfilling complexity of choice. An example could be found on the shelves with cereal boxes at your health-food store. Cereals come in about two dozen offerings, but chances are that you'll find just one to contain organic cereals without sugar. Maybe the producers' problem is the lack of perceived innovation/differentiation in plain and sugarless cereals.
Additionally, you may want to consider: Minimalist vs. Baroque Categories
Complexity problems with producers are seldom encountered by first movers. Complexity tends to creep in either as result of the producers' need for differentiation, product complexity, or as "me-too's," choice complexity. Indeed, when producers want to differentiate themselves, up to a point, the safest and quickest way to achieve that goal is to add features or increase product complexity. Moreover, striking analytically (as opposed to heuristically) the right level of complexity may not even be doable. Thus, the first impulse of some producers is to err by doing more. When successful, product complexity is being subsidized either by scale economies, as in software, or by the consumers' wants, as in luxury products. Choice complexity is usually brought about by those "me-too" producers that want to capitalize on the first-movers' R&D. Less search-costs, its net effect is to drive down prices, being subsidized by producers. It is remarkable though how Apple manages to achieve product simplicity and choice complexity with its iPod line of products. Product simplicity endears iPod with the consumer, while choice complexity helps Apple segment its customer base. As a side note, products start simple, and then get copied and more complicated until another category starts anew.
Regardless of the type of complexity, product or choice related, the consumer is ultimately overwhelmed. Worse yet, consumers may even experience frustration due to unfulfilling complexity of choice. An example could be found on the shelves with cereal boxes at your health-food store. Cereals come in about two dozen offerings, but chances are that you'll find just one to contain organic cereals without sugar. Maybe the producers' problem is the lack of perceived innovation/differentiation in plain and sugarless cereals.
Additionally, you may want to consider: Minimalist vs. Baroque Categories
2 comments:
Great thoughts! Your blog's readers ought to read these too:
http://hbswk.hbs.edu/item.jhtml?id=5092&t=heskett&oid=5092&rid=-1&hid=-1&aid=-1
Great entry!!!
Here's some more context from Forbes:
It's been estimated that there are 1,000,000 SKU’s (Standard Stocking Units) out there in America. An average supermarket has 40,000 SKU’s. Now for the stunner: An average family gets 80% to 85% of their needs from 150 SKU’s. That means there's a good chance they'll ignore 39,850 items in that store.
Post a Comment