When building a business, add something to it, right? Wrong. When improving a business, the secret is to reduce or remove something. When a business is simplified, disturbances and issues stand in stark contrast to serene order.
Complexity is a profitable business’ enemy. Every time an order or customer is added, it increases the complexity of the business. So periodically complexity must be reversed out of the business and it must be simplified. We have seen our clients, owners of small and medium businesses, punching way above their weight in terms of earnings by reducing complexity and using simplicity as a force multiplier.
By reducing complexity, the leadership team is freed to focus on the critical few things the business needs for profitable growth. Removing less profitable activity, products and customers from the business eliminates unproductive costs while improving focus. By eliminating those costs, margin is increased. That margin can be banked in the form of additional earnings, it can be reinvested in the business to further improve earnings or it can be set aside for a rainy day to shockproof the business.
Via Negativa roughly translates to; “through subtraction”. Assess business results to-date through the lens of via negative and ask; “what can be removed from the business to improve its performance?” Things to investigate:
Customers that are costing to much to serve;
Product or service lines that cost too much to be profitable;
Sales talent that isn’t covering its costs in margin generated;
Supply, material or service costs that reduce business earnings; or
Staff or other cost levels that are out of line with industry norms for a business of this size.