That was the tagline for the Apple II personal computer in 1977. It’s an admirable sentiment. But how do you define simplicity? #lmgtfy (let me Google that for you): 1) the quality or condition of being easy to understand or do and 2) the quality or condition of being plain or uncomplicated in form or design.
Power of Simplicity
A prime example of the power of simplicity comes from the investment world—the systematic investment plan or SIP in common parlance. For the uninitiated, an SIP is a way to automatically invest a certain amount every month into a mutual fund. Its simplicity lies in the fact that it takes the burden of “timing the market” off an investor. And it just works (for the details, take a look at the concept of cost averaging).
The SIP has exploded in popularity in India, a testament to its effectiveness from the average investor’s point of view. The Association of Mutual Funds in India estimates that there are 24 million SIP accounts, and total SIP collection was a whopping $1 billion (Rs 7,365 crore) for September (incidentally, a rough month for the markets). And yes, both of us are among the 24 million accounts.
Zoom out from the Indian to the global markets for another example—the exchange-traded fund, or ETF. It’s a type of mutual fund that, instead of having a fund manager actively pick out stocks or other assets, “passively” invests in markets by just tracking an index such as the S&P 500. Simplicity at work—and it trumps all manner of sophisticated investment strategies, according to the likes of John Bogle, founder of the Vanguard Group.
Biggest Assesment Companies
Through Vanguard—one of the biggest asset management companies in the world—Bogle has shown that the most sensible way to make money in the stock market is through a tracker fund. This is a type of low-cost mutual fund which merely mimics the main stock market index (and therefore does not need to pay a fund manager millions of dollars for potentially non-existent skills).
So useful are Vanguard’s offerings that not only does the firm manage $5.1 trillion of assets, investors, as revered as Warren Buffett, have also said that the portion of their inheritance which they will leave for their families will be invested in Vanguard’s tracker funds.
Simple businesses can also make for great investments. Branding firm Siegel+Gale runs the Simplicity Index, which surveyed 14,000 respondents in nine countries to gather perspectives on simplicity and how industries and brands make people’s lives simpler or more complex. Siegel+Gale even made a stock portfolio comprised of the publicly traded simplest brands in their global top 10 list. That portfolio rose 433% from 2009 till 2016, compared with 135% for the S&P 500.
However, simplicity is anything but easy to achieve. Think of the modern smartphone—it helps us get a lot of things done and we don’t have to put in much effort to figure it out. As far as we’re concerned, it just works. But a whole lot goes into making that happen.
Some components used
The major components in an iPhone XS Max, for instance, include the screen, earpiece, cameras, logic boards, battery, SIM card reader, taptic engine, speaker assembly—all of which have their own components and subcomponents. And beyond the physical parts is Apple’s massive machinery of marketing, design, patents, employees and much more. The company employs more than 120,000 people, 9,000 in the design department alone.
Similarly, achieving simplicity in our own lives is not easy. So how can we do it?
In the early 1950s, Polish psychologist Solomon Asch conducted a series of groundbreaking experiments that redefined our understanding of how profoundly peer pressure influences us.
For the experiment, he placed one genuine student among seven actors who were trained to give pre-selected replies. All eight participants were asked which line from the card on the right below matched the line displayed on the other card.