Entrepreneurs

Why Tesla Copies This Lesson From Ford’s 112-Year Old Playbook

Ford holds the unexpected key to building automobiles of the future, though it’s not Ford who is using it. Tesla is.

As Henry Ford famously said, “Any customer can have a car painted any color that he wants, so long as it is black.” And the reason for this was because achieving production line efficiency and improved product quality required compromise. And in 2021, it still does.

When more is less, the question is where do auto manufacturers (and startups alike) decide to make these compromises–and at what cost to both its brand and its consumers?

When Ford offered the Model T in just one color, it was on a mission to build a better vehicle. Every decision made is at the expense of an alternative. Even with technological advances, there’s still only so much time in a day and so many resources available. Auto manufacturers–like any industry or business–must make decisions at the expense of others every day. In other words, in the early 1900s, Ford recognized that compromise was necessary for efficiency and quality.

And in the 21st century, Tesla does too, recognizing that too much choice is a bad thing

In a market bursting with decision overload, Tesla stands out with fewer choices. Compared to auto brands like, say, Toyota, Tesla offers about one-third the color options and one-quarter of the models. Meanwhile, on paper, Tesla’s stock value is over 4X the price of Toyota’s.

Tesla has built a brand on fewer options, with its futuristic–and predominantly white–electric vehicles. But the real genius behind the limited color selection at Tesla isn’t rooted in brand building. It’s in consumer behavior and psychology. While many businesses work tirelessly chasing the whims of every customer, it dilutes its offering. The more a business tries to appease everyone, often, the more they struggle to satisfy anyone.

Doing fewer things comes with the benefit of doing things more efficiently. Streamlining the production process meant superior production. It’s perhaps the same conundrum businesses, such as McDonald’s face as it continuously expands its menu offerings–complicating the production process, making efficiency more difficult, and lending to its ongoing broken ice cream machine conundrum.

The concept is unlikely to come as a surprise to wise entrepreneurs. However, many entrepreneurs get blinded by wide product offerings. Take restaurants for example. Many try to appeal to every patron’s taste, and yet when a patron is faced with a novella of a menu, their hearts don’t jump with delight as the restaurant may envision, but their heads spin.

Psychologically, and according to the paradox of choice, people may be drawn to a plethora of options, and yet the more options they have, the less satisfied they are with their choice.

In fact, adults make more than 35,000 decisions per day. Our brains are bursting with conscious and subconscious decision-making, and so what we want isn’t another choice. But the reprieve of fewer–but superior–options.

Businesses that try to do everything, do less of any one thing. Those who become the best–whether automakers like Tesla or the world’s top athletes–are those who focus on quality over quantity. Time is invested in becoming an expert at one thing. We become what we focus our energy on. And in a market of abundant choice, the best products or services aren’t those that do it all, but those that are all in one doing one thing.

Not only does a large number of products and product options lead to lower product quality, but an abundance of options leads to decision overload. Time and time again, research proves that more isn’t always better and then that when consumers are faced with too much choice, they’re less likely to make a choice. In other words, offering more oftentimes means selling less. And when you do land a sale, customers with a large library of choices, are less satisfied with their choice. Think of it as, less choice, more commitment.

As Henry Ford also said, if people were asked what they wanted, people would have asked for faster horses. In other words, asking your audience what they want isn’t necessarily the way to give them what they really want. The best businesses know that people don’t always know what they want, because people–unlike businesses–don’t necessarily know what’s possible.

The idea that fewer options mean higher quality, more sales, and increased customer satisfaction are widely understood, but largely unpracticed. Options muddy the water, and the most successful companies are those that make the decision for their consumers crystal clear. Startups who not only understand this–but live this–are those that outlive the competition and become the most successful in their markets, marrying production efficiency and product quality, leading to increased sales and satisfied customers.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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