I’m just back from Providence, Rhode Island, and a stimulating two days co-hosting BIF-3, the third annual summit of the Business Innovation Factory. Presenter after presenter, from all walks of life, told remarkable stories about reinventing a police department, rethinking national security, even redesigning the lowly nail, to make it more resistant to hurricanes.
If there was one theme that tied together the diverse presentations, it was simply this: How hard (bordering on impossible) it is for companies to keep new products simple and to focus their innovations on simplifying existing products.
On this score, one of the stars of the gathering was Jason Fried, founder of a red-hot Web outfit called 37signals. Fried’s company, based in Chicago, has distinguished itself by making products that are shockingly easy to use, and that have avoided the “bloatware” and “feature creep” that infects so much of the software industry. When my cohost, Wall Street Journal tech pundit Walt Mossberg, asked Jason how his company resists the seemingly irresistible lure of complexity, the young CEO had a simple answer: “We are enemies of mediocrity. And if you try to make everyone happy with your products, you end up with mediocrity. Our company has opinions, and we build products based on those opinions. We need more opinionated companies.”
Well said. I’ve seen that same point of view expressed in so many of the maverick companies I’ve gotten to know. If you’re going to do something original, something distinctive, something great, then almost by definition you’re not going to be right for everyone. The worst thing a CEO or the head of engineering can do is to overreact whenever a customer, even an important customer, demands a new feature or insists on a new service—especially if that new feature or service risks cluttering the simplicity of the offering. In other words, one of the most important jobs of a leader or an entrepreneur is knowing when to say no—even to important constituencies.
The folks at Southwest Airlines, the great innovators in the sky, really get this point. Back in September, Southwest announced that it was going to retain its controversial policy of not assigning specific seats to passengers. Instead, it was going to make minor adjustments in its first-come, first-served policy to cut down on mad rushes at the gate. The media coverage was enormous. And what was interesting was how eager newspapers were to find passengers who hated Southwest’s open-seating policy and were disappointed that the airline didn’t adopt a more conventional (and complicated) process.
But this negative reaction wasn’t a sign of problems, as many of the articles suggested. It was a sign of strength. Great brands, by definition, aren’t designed to appeal to everyone. Not all customers are created equal—and in the case of Southwest Airlines, customers who value more of the amenities, policies, and procedures of the legacy carriers aren’t ever going to be passionate about Southwest. Customers who are passionate about Southwest don’t just value the low fares that open seating supports, but have come to expect and enjoy the organized chaos that the experience involves. One test of how committed a company is to keeping its offering distinctive and simple is how fearless it is about ignoring (even offending) vocal customers whose needs don’t conform to the core mission.
Arkadi Kuhlmann, founder and CEO of ING Direct, the company that has almost single-handedly made Internet savings a mainstream sensation, has built the fastest-growing bank in the United States around that same attitude. Everything about the ING Direct experience is absurdly simple. The bank offers a few savings accounts, a handful of certificates of deposit, maybe 10 different mutual funds. And that’s it. Credit cards? No way. Online brokerage (now that it has five million Internet-based customers)? Perish the thought.
ING Direct even simplifies the kinds of customers with whom it does business. The bank has no deposit minimums. (You can literally open an account with one dollar.) But it has unofficial deposit maximums. You want to open an account with a million dollars? Please find another bank. “Rich Americans are used to platinum cards, special services,” Kuhlmann told me. “The last thing we want in this bank is to have rich people making special demands. We treat everybody the same, which is how we keep things simple.”
That kind of attitude doesn’t always make you popular—but it’s the edgy attitude required to make you successful. (Jason Fried of 37signals has also learned how to say no to potential investors. In the eight years since his company’s inception, he has declined more than 30 offers of venture capital.) “Your company has to have opinions that people care about,” Fried told the audience at BIF-3. “Our company has those opinions. That means some people love us, and some people hate us. But very few people ignore us.”
Is my argument too simple? Sure it is. But hopefully that’s what makes it interesting too.
