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To get at the roots of profitdestroying complexity, companies need to identify their innovation fulcrum, the point at which the level of product innovation maximizes both revenues and profits. Innovation Versus
Complexity
What Is Too Much of a Good Thing? by Mark Gottfredson and Keith Aspinall

Reprint R0511C

To get at the roots of profit-destroying complexity, companies need to identify their innovation fulcrum, the point at which the level of product innovation maximizes both revenues and profits.

Innovation Versus
Complexity
What Is Too Much of a Good Thing?

COPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

by Mark Gottfredson and Keith Aspinall

Walk into the In-N-Out Burger restaurant on
Fisherman’s Wharf in San Francisco, and one of the first things that may strike you is the number four. Four colors: red, white, yellow, and gray; four cash registers with four friendly faces behind them; and just four items on the menu. You can buy burgers, fries, shakes, and sodas. All the ingredients are delivered fresh to the store, where they’re prepared in the open kitchen behind the cashiers. You’ll see a few folks eating at the restaurant’s tables or tucking into their food outdoors on patio benches, but most customers come in with a handful of cash—no credit or debit cards, thank you—and head back out with their meals. Four is In-N-Out Burger’s innovation fulcrum—the point at which the number of products strikes the right balance between customer satisfaction and operating complexity.
Four means simple purchasing, simple production, and simple service. And, it turns out, in a world where fast-food restaurants are forever adding formats and menu items, simple means

harvard business review • november 2005

profitable growth. With its chain of about 200
restaurants