Let’s Sell 3 Items Faster, Rather Than 30 Item More Slowly

It’s tough to be all things to all people. I’ve found that successful companies don’t try to be this way. They try to do a few things well, rather than a bunch of things poorly. Each new product or service requires more inventory, more people, more space, more advertising- more everything.
Most of us know Burberry as the long-time maker of raincoats. In recent years, they expanded into a wide variety of products, including dog bowls! The new CEO asked for an analysis of “what each product contributed to the business. Its findings: 80% of Burberry’s sales came from 20% of its wares”. ‘Sounds like the old 80/20 rule- those percentages seem to hold up!
As a result, Burberry cut their product offerings by almost a third. “What we needed at this time was focus” said the CEO. “We needed to simplify on the inside to compete in the complex environment on the outside.” Why? “It’s back office system didn’t keep up with its expansion, and the company often delivered goods to stores after its ad campaigns had run.” In short, the systems needed to run the business became too complex.
The Lesson: If you can’t deliver your product or service in an efficient, profitable manner, consider simplifying- offer fewer products.
Your Homework: What products make up 80% of your sales? Do you really need the other 20% of the products or services? What costs could you save by eliminating them?
(Source: “Burberry CEO Retrenches: Fewer Items, Faster Delivery”, Wall Street Journal, 5/24/07)