The recent death of electronics retailer Circuit City provides many somber lessons for business. One key idea is that simplicity may be overrated.

A compelling method for analyzing the demise of one firm is to compare the loser with a winning competitor. Joel Spolsky, writer for Inc Magazine, considers the wildly successful technology store in Manhattan called B&H a front-runner:

The whole operation is a crazy Willy Wonka factory. If you want to check out a product that’s not on display, a salesperson orders it by computer terminal from a vast stockroom in the basement. Moments later, as if by magic, the product arrives at the retail counter, via an elaborate system of conveyor belts and dumbwaiters. You can try out the gear, see if you like it, and, if you do, the salesperson puts it in a green plastic box and places it on another conveyor belt, which runs, above your head, to the pickup counter. There, an employee bags your purchase. Meanwhile, your salesperson gives you a ticket, which you take to a payment counter. After you have paid, you get a different ticket that you take to the pickup counter to get your merchandise.

This description sounds unreal compared with the usual visit to a big box retailer. Typically, customers amble around with a shopping cart, engage (or evade) sales associates and carry desired purchases to the register themselves. Browsing for digital cameras inside a Rube Goldberg machine is surely distracting and unproductive. But Spolsky has an alternate explanation for the complexity:

At first, this all seemed like incredible overkill to me. But then, as I thought about it more, I developed a theory as to why B&H operates this way. With all the expensive electronics and cameras and lenses and laptops floating around the store, the system creates a series of checks and balances—typically, five employees are involved in every purchase—in order to reduce shoplifting and employee theft.

Better control over inventory reduces overall costs, which results in customer savings. Combined with an exceptionally helpful and intelligent staff, it’s no surprise that B&H is always packed and continues to prosper.

Overwhelming complexity is usually a sign that a business process ought to be simplified. However, in some cases, the many steps in a procedure were specifically crafted to achieve particular objectives. This is smart business process modeling. Companies like B&H should be praised for their commitment to self-improvement.

The world may never know why Circuit City failed while other electronic stores succeeded. It is clear that blame cannot rest with either excessive complexity nor unyielding simplicity. As The Methodology Blog covered last month, no methodological approach is a silver bullet. Rather, organizations must engage their tactical challenges with an open mind and total dedication. If you are ready to talk about ways to improve your operation, contact Slaughter Development today.

❖ ❖ ❖