It Pays to be Simple!
What do you think is the biggest disruptor today – that key element that allows a startup to turn companies that have been in the business for decades on their heads? It’s what Apple did to Sony in the music business; Google did to Yahoo and Altavista in the internet search business; Amazon did to retailers world over and so on and so forth. The answer is simplicity. If there’s a common thread that runs across some of the most popular and customer engaging brands today, it’s simplicity – the ability to deliver a compelling value proposition in the most direct, effective and efficient manner.
As per the Global Brand Simplicity Index 2014 companies can gain immensely by simplifying. Close to 40% of consumers are willing to pay more for simpler experiences and 70% are more likely to recommend a brand because it provides an easier experience and communication. Unfortunately most businesses today are caught up in webs of complex processes accumulated over the years that is getting further heightened with the onslaught of digitization. And this is beginning to cost them – the Top 200 Global Companies are losing 10.2% or US $237 billion of profits due to hidden costs of complexity. The good news is that senior management has become aware of the adverse effects of complexity – in a Wharton-SAP study conducted recently, 63% of global executives said that complexity hinders growth, raises costs and reduces productivity.
What’s the way forward then? Run Simple – which also happens to be SAP’s new guiding philosophy. We’re talking about it in the way we run our very own business – I recently chaired a panel discussion on the topic and invited opinions from CIO, SAP APJ and Head of Procurement, SAP APJ. The resounding conclusion was the urgent need to reduce the vast number of internal processes we have as a business and keep it simple. We’re also making this apply to our current portfolio that touches close to 5000 product suites accumulated over the past 40 years! We have re-imagined our platform SAP HANA that is at the core of so many SAP solutions and have drastically simplified the User Interface to better meet customer needs. The result is an integrated, easy to use and intuitive platform that at the click of a button delivers access to our diverse range of products.
Of course, going back to simple is not as simple as it may seem. In fact by the time most companies come around to making a change, the world around them has changed again! Indeed according to a McKinsey study conducted in 2013, 40% executives worry that their organization will not keep pace with technology change and lose their competitive edge. But it needs to be said a common mistake most companies seem to be making in this of era of digitization is to react to changes rather than transform into something new. Simplification starts with the ability to re-imagine your business. Keep your customer at the central point of this analysis and emerge with the way forward for your business. The next step is to free up budgets and resources not to mention have clear cut goals that you want to achieve from the simplification. It’s best to start small and then take on more processes to simplify. Last but not the least, simplification must start at the top but route its way through the layers of an organization to wield effect.