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Innovation Insights by Stephen Shapiro

In my AMEX OPEN Forum article, “Design Your Business to Handle the Exception, Not for the Exception,” someone commented that simplification is a better strategy than segmentation.  And I wholeheartedly agree.

Car manufacturers do this when they use common parts and reduce the number of configurations to reduce costs and complexity.

Having said that, if you want something special, you still have the option of getting aftermarket modifications.

But sometimes eliminating options is not an option.

A company’s strategy may determine what makes the most sense; having a lot of options may be what you want.

Or in some cases (e.g., TSA airport screening) government regulations can impact your process.

Or sometimes, the overall cost effectiveness of the system, requires more complexity (e.g., the insurance claims/underwriting process described in the article).

We’ve done a lot of computer simulations that demonstrate that the segmentation strategy is, when simplification is not an option, the best solution (in most cases).

For example, when working with a race car team, the designers would develop major improvements to the car every two weeks after each race. They would then have manufacturing create the new parts so that they could be tested. The problem was that this caused disruption in the manufacturing process which was streamlined and optimized.

When they developed a new dedicated manufacturing line for the designers, the overall throughput increased significantly. The ad hoc design process no longer impacted the efficiency of the production process.

Of course you can find extreme example where this principle does not work. And in those situations, you may need to alter your process.

During slow times, fast food restaurants “make to order,” cooking your food only after you order it (although components may be pre-cooked). But during peak hours, they pre-make the most popular foods as a way of reducing wait time. Those with special orders will have to wait longer.

There is no one-size-fits-all solution. With any “innovation,” you want to test out the concepts, ideally via computer simulations, before introducing them.

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