How offering less can benefit employees, customers, and investors.

Welcome to the Good Jobs Strategy Newsletter!

In this edition, you'll discover:

• Costco's unique approach to customer experience

• In-N-Out's secret to high-quality burgers at low prices

• The benefits of offering less in the Good Jobs Strategy

Get ready for a quick, insightful read (est. time: 5 minutes) that'll show you how offering less can create more value for employees, customers, and investors alike. Enjoy!

Costco

Costco does things differently compared to other stores. They don't provide shopping bags, put signs on the aisles, or offer many product choices. You won't find them advertising or having extended shopping hours, and they only accept American Express or cash. Despite all this, Costco has around three million loyal customers visiting daily.

By offering fewer products and limiting sales promotions, model retailers like Costco can significantly reduce costs and increase employee productivity. This approach isn't just for retailers; it works for various companies, as long as they're careful about their offerings.

In and out

HIGH-QUALITY BURGERS AT LOW PRICES On a recent visit to California, Zeynep Ton and her family treated themselves to an extraordinary version of the most ordinary of American meals. They went to a burger chain and had hamburgers made from beef that had never been frozen and contained no additives, fillers, or preservatives. The lettuce was crisp and hand-leafed. The onions were hand-cut. The bun was freshly baked and lightly toasted. The fries were made from whole potatoes, sliced fresh right there and fried in trans-fat-free vegetable oil. Ton's five-year-old, who is already a foodie-his favorite food is oysters!-ate his burger with gusto.

Now Ton understood why In-N-Out, a chain of 281 stores, has such a cultlike following. She also understood why it consistently earns one of the highest customer satisfaction scores of any fast-food chain.9 Ton knows—even her five-year-old knows—that hamburgers and fries are not good for us. But these were ever so good!

The hamburgers were just $1.90, quite a bit cheaper than Big Macs at McDonald's or Whoppers at Burger King, which aren't made with such fresh ingredients or so much hand labor. Great quality, low prices, and yes, In-N-Out offers better jobs than other fast-food chains. As of the end of 2012, the company was privately owned, so there is not much data on its financial performance, but outsiders consider the company to be extremely successful. The company has had steady sales and profitability growth, and analysts estimate its profit margins to be around a healthy 20 percent." Even Warren Buffet thinks so highly of its performance that he is reported to have told UCLA students that he would love to own In-N-Out. During the same discussion, Buffet mentioned that the other company he would love to own is Trader Joe's-no surprises there.

How can In-N-Out deliver great burgers at such low prices? One factor is a menu with only six items-hamburgers, cheeseburgers, double doubles (a double cheeseburger), fries, shakes, and soft drinks. That's it. No salads, no chicken, no desserts. Given how quickly food becomes unsellable, a restaurant that operates with less waste than its competitors has a big cost advantage. Such a small menu means In-N-Out can easily forecast demand for its ingredients, reduce waste, and reduce costs all through its supply chain. The small menu also helps the chain improve labor productivity, decrease errors, and maintain consistently high quality.

More May Not Be More, Even for The Customers Ton ponders, "What about customers? Yes, things may be more expensive for companies when they offer more products and more promotions. But isn't it the case that the more products a store carries in a particular category, the more likely it is that the customer will find what he or she is looking for? Isn't it true that the more promotions a store offers, the more customers it will attract? Doesn't this all mean higher sales?"

Not always. A higher variety of products and more promotions increase the complexity of a store's operations, causing employees to make more mistakes or to cut corners. The result is operational problems, which then lead to higher prices and poor customer service, which will eventually bring down sales and profits. Higher product variety can also overwhelm a customer and lead him or her to leave a store without buying any of the choices.

Unlocking the Power of the Good Jobs Strategy: The Benefits of Offering Less

Let's dive deeper into the Good Jobs Strategy and explore how offering less can create a positive impact on employees, customers, and investors. This strategy demonstrates that less is more, as it leads to increased efficiency, improved customer service, and ultimately, a better working environment.

Offering less - in terms of products, promotions, services, or amenities - while simultaneously investing in employees through training, stability, and better pay helps companies reduce costs and enhance customer experience. This approach contributes to employee satisfaction, resulting in greater dedication, lower turnover, and overall company growth.

The Good Jobs Strategy resembles a healthy human body, with multiple factors working together to maintain overall well-being. In the same way, a combination of operational practices works in unison to produce intertwined benefits for all stakeholders.

By streamlining operations, offering less can improve labor productivity. Employees have less physical work to do and can focus more on delivering exceptional customer service. This is possible when a company invests in a well-trained and motivated workforce.

With a limited product range and fewer promotions, employees can process customers more quickly at the checkout, improving customer satisfaction. Furthermore, knowledgeable employees can recommend alternatives when a particular product is unavailable, enhancing the customer experience and boosting employee motivation.

A successful implementation of offering less also enables companies to leverage their investment in employees to better understand customer needs. This can lead to increased profits, growth, continuous improvement, and the ability to seize strategic opportunities.

In summary, offering less can give employees greater job security, reduce waste, and increase efficiencies. When retailers spend more on their employees, they are investing in their own success, which powers the virtuous cycle of the Good Jobs Strategy.

Tomorrow, we will focus on standardizing and empowering.

Best,

Camillo