Simplicity as standard

My blog is a day late this week as I had to spend some time ‘spannering’ my classic rally car to get it ready for its MOT test today.  The annual roadworthiness test is not actually required for a classic car in the UK, but it’s still nice to have as affirmation that you’ve bolted everything together as it should be.  However, it did get me thinking about simplicity.  There is nothing on the car that I’m incapable of removing and having a go at fixing – which is the exact opposite of the other cars in the household.  All that complexity brings huge benefits in terms of performance, efficiency and emissions, so I am not challenging the benefits of at least some of that technical complexity – even if it may mean that some of today’s €100k cars could be written off prematurely because an electronics module has failed.

However, the same is not true of many of today’s business processes, particularly in the downstream area that we focus on in ICDP, and which is still following the same basic model that has been around for decades.  Starting in the manufacturing plants, we know of some OEMs who have ‘black box’ models that allocate production across markets.  There are many parameters that properly need to be considered, but the models themselves have evolved over many years and internal owners, and now nobody really understands the internal rules, or dares to tamper with them.  They just put data in at one end and get apparently sensible answers out – but nobody truly knows now whether this is actually the optimum answer.

At the wholesale level, as manufacturers have sought to exercise more control over the retail process in a franchise model, they have continuously changed what was once a simple margin model into a complex multi-element system of margin, qualitative and quantitative bonuses.  Each one has some sort of cause and effect logic associated with it, but in reality in many cases each element has become too small to have a material impact on behaviour, and all of it potentially gets applied to customer discounts, particularly at period ends.  This did not use to be the case, so a more complex approach has contributed to a more disorderly market.

In retail, new car buyers now spend around 16 hours on online research (probably more during the lockdowns) and on average visit less than 3 dealerships, travelling up to an hour to do so.  Used car buyers expend even more effort to find their perfect match.  When they do turn up at the retailer, they want to buy a car.  They have not put all that effort into not buying a car.  Yet a combination of dealer processes, manufacturer requirements and regulatory controls make the process of meeting their need far from simple.  We complicate the matter further by “starting the process with a lie” as Trevor Finn said during his presentation to our members’ meeting last week.  There can be nothing more futile than creating a process step to negotiate a deal when everyone knows that the starting price is a nonsense.  What our US friends call “desking” where the salesperson goes to the manager to win the customer a better offer is adding insult to injury.

At all stages in the process we need simpler processes that have been designed to meet a real need, rather than to act as a sticking plaster on some self-inflicted wound.  As we return to work post-Covid, let’s think again about what we do, and why we do it.  In the process we’ll most likely get a lower cost, more transparent process that works better for all stakeholders.