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The most powerful factor for business growth? Simplification!

A personal thought on a possible scientific explanation

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Post published on 03/06/2021 by Fabrizio Cesarini on site and released with licenza CC BY-NC-ND 3.0 IT (Creative Common – Attribuzione – Non commerciale – Non opere derivate 3.0 Italia)

Cover Image credits and copyrights by Alvaro Reyes on Unsplash

Copyrights by Fabrizio Cesarini

In a data driven world, all our choices must start from its analysis. Normally, in a company, the most interesting data is that of profit. Quite simply, when its trend is increasing we are in a positive phase, when it is decreasing we are in a negative phase and we must necessarily intervene to change direction.

This is quite obvious. But, in practice, how to do it?

We can find the answer from the mathematical analysis of the profit formula.

Article Simplification - Fig 1 - Profit Formula

That is: SIMPLIFY.

As a product manager I deal with the realization of a product at 360°, from the technical characteristics to those of commercialization and distribution. The analysis of sales confirms what initially could have been a pure intuition dictated by common sense: simplifying the product allows its greater use by an increasingly larger pool of users.

What might be a trivial observation actually has a scientific explanation.

Let’s see how. Let’s start with the profit formula, which is obtained by subtracting Costs from Revenues.

So it’s obvious that for greater profit you have to work in at least one of two directions, revenues and costs.

Normally companies tend to work on the cost side. Everyone is more or less skilled and trained in cost reduction. Even if it seems to be the quickest and easiest solution, in fact it is not. Reducing costs has limits beyond which one cannot go without changing the product itself and its quality.

Of course here simplification plays its part.

But what if we try to think differently? Let’s try to intervene in the part of the formula that apparently seems less logical.

How can we intervene by simplifying the revenue part? It seems like a counter intuitive concept.

To increase revenue we need to Simplify the product and therefore the user experience. Yes, you got that right.

Simplifying a product leads to the product itself being more desired by users and therefore selling more.

We tend to think that complex products are more popular with customers. This is not always true. There are lots of reasons why customers prefer a product that is simpler to use.

A product made simple in its design or in its use leads to a greater user experience and hence to an increase in value and therefore in price.

Once again, the simplification of the user experience also influences the “revenues” variable, increasing profit.

Experience teaches us that behind a problem to be solved there are “equations” to be solved. In this case the solution is the simplification of the product that passes through many ways.

One of them is the user experience.

But there are other possibilities, such as using alternative sales channels or communication systems.

What are your experiences?

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