Sunday, March 30, 2008

Simplify, Simplify

US automobile manufacturers, trying to find the right strategery to become profitable again, have decided to simplify.

DETROIT (Reuters) - Henry Ford, who created the automotive industry's first mass-market hit with the Model T a century ago, was a proponent of radical simplicity.

In fact, Ford became famous for saying his customers could have the $825 Model T in any color -- so long as it was black.

In the century since the first Model T in 1908, Ford's vision of top-down efficiency has been swamped by thousands of feature and color combinations on new cars, trucks and SUVs.

Ford Chief Executive Alan Mulally said he was amazed by the number of variations Ford offered when he arrived at the No. 2 U.S. automaker from Boeing Co in 2006.

"I was looking at the (Lincoln) Navigator console," Mulally said. "We have 128 different options you could choose on the console. That's just the console."

Ford's chief of marketing, Jim Farley, who was hired away from Toyota Motor Co last year, said he was stunned to find that Ford was offering 100,000 combinations of options on its entry-level Focus sedan. Some 80 percent of Ford's sales came from just 4,000 of those combinations, he said.

In response, Ford has cut complexity by reducing the number of "buildable combinations" of the 2008 Focus by 99 percent. On the 2008 Expedition, it has cut combinations by 95 percent.

What are the benefits of simplifying? Paint, for example, doesn't require holding large stocks of materials in colors that won't often be used. Simpler means easier for workers to understand, and if they understand it, they are able to work faster. Simpler makes it easier on the customer, who often times isn't as finicky as the dealer might imagine. The only people it upsets is the minority of finicky people who strive to be unique, and you'll never make money trying to please the minority at the expense of the majority.

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