Source: Passing the Light in the Vastness by Yao Bin. In order to achieve great success, concentrate on solving a few important problems that can be accomplished with 20% of your time. This is the concept of important few and trivial many. To truly succeed, one must focus and be fully concentrated. In terms of product structure, the operating incomes of 100-300 billion yuan products are 401/1288/60 million yuan, respectively.
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1

William advocates Nominalism, recognizing only things that truly exist. Concepts that interfere with this tangible existence are useless baggage and should be mercilessly eliminated.

In his works, this idea is expressed as follows: "A Proposition cannot be asserted or denied to be true of the existence of any thing without evidence from self-evident, or else from revelation, or else from experience, or else from logical deduction, that force us thus to decide, from propositions as self-evident or from proof gotten through observation."

This statement is often quoted as the principle of parsimony, which succinctly sums up Occam’s Razor meaning that if certain facts can be explained equally well by multiple theories, then the simplest theory is the best. This is known as Occam's Razor.

Occam’s Razor once threatened many people and was deemed heretical. William himself suffered persecution for it. However, there is no doubt that this razor is the sharpest of intellectual weapons.

It has carved away centuries of debates in medieval philosophy and removed active Christian theology for a millennium, separating science and philosophy from theology, precipitating the Renaissance and the Protestant Reformation and beginning the first chapter or Prelude to modernization of the globe.

After centuries have passed, Occam’s Razor has been worn down by history at an ever-increasing pace. It has already surpassed its original narrow field and has a broader, richer and deeper significance. The starting point of Occam’s Razor is that nature does not make unnecessary moves. And complex things will often be resolved simply.

From that, various forms have sprung up. Such as:

①If you have two principles, and both can explain the observed facts, then you should use the simpler one until more evidence is found.

②The simplest explanation for a phenomenon is often correct compared to a complicated explanation.

③If you have two similar solutions, choose the simplest one.

④The explanation requiring the least assumption is most likely the correct one.

In the scientific community, Occam’s Razor means that when there are two theories that are competing and can both yield identical results, then the simpler one is better.

In the business world, Occam's Razor has further evolved into the Law of Simplicity: simplified information travels faster; a simplified organization is more agile; simplified designs are more easily accepted by the market.

What Occam’s Razor reveals is that there is always a simple solution to any problem. The best way is often the simplest. All of this is to keep things simple.

Colgate-Palmolive hopes to further increase toothpaste sales. Some suggest investing more in advertising. Some suggest increasing the salesforce. Some suggest opening up new local markets. Each of these proposals has its own advantages. However, someone suggested increasing the opening size of the toothpaste tube, so that people would use a tube of toothpaste for a shorter time, and correspondingly increase sales of toothpaste. This is a simple and feasible method. Complication and confusion are the biggest enemies of successful business operations. If we do not strive for simplicity, we will naturally fall into a quagmire of complexity.

Socrates said that the most likely solution to any problem is the one that takes the fewest steps. All human activity has an innate tendency to increase the complexity of a process and increase the number of steps needed to complete a task.

All standards and regulations have been complied with and implemented, but due to the complexity of the process, the final cost is astonishing. Therefore, we must feel very sharp about any complex process, because we know that the potential time, cost and number of errors may be enormous, so we must simplify, simplify, and simplify.

And this hurdle is the highest. It not only requires rich practical investment experience, deep understanding of trading systems and markets, but also the individual's personality, values, and understanding of the world to reach a realm where they can control and adhere to the trading system. They must regard the trading system as part of their lifestyle, integrate it into their thoughts and souls, and merge with the trading system to achieve the effect of passive investment. I think that's just about it.

In the business world, the popular saying is "This idiot, why not simplify". This is the same principle as Occam's Razor. The KISS principle requires companies to focus on their core business and outsource anything outside their core business. The so-called core business refers to the business that the company is best at and most competitive in.

Management scholars unanimously believe that a company should focus on its strengths and tightly grasp its core competitiveness. Companies will succeed if they concentrate their efforts on their core business, and fail if they are too far away from it. Whatever the reason, if the company's expected profitability is low, the solution is usually to return to its core business, where it excels and has the highest profit margin.

The most successful professional companies or enterprises retain only their core business and outsource everything else. A common trait among the world's leading companies, such as General Electric, Cisco, Dell and Intel, is that they concentrate their corporate resources on their core business.

In "Back to the Core: A Strategy for Growth", Chris Zook uses statistical data and real examples of American companies to clearly indicate that companies should first focus on discovering hidden growth and profit sources, not hastily abandon core business. On the contrary, they should develop creativity and deeply cultivate their existing core business.

When Jack Welch became CEO of General Electric, he found that the company's existing products were long and messy, with a total of 350 products, from nuclear reactors to microwaves, from robots to silicon chips. Nearly no American company has such a large and diverse business portfolio, which is not only large but also scattered.

In order to make General Electric more competitive, Jack Welch proposed the "one or two" principle, that is, this product must be made into the industry's top one or two products, otherwise it will be sold off.

In order to thoroughly implement the "one or two" strategy, Jack Welch even did not hesitate to give up some third or fourth-ranked businesses that were still profitable. After years of development, General Electric has risen from the tenth largest company in the Fortune 500 in 1985 to the top market value in the United States in 1997, becoming the most competitive enterprise. It can be seen that seizing the core business is the most basic and effective principle for enterprise development and growth.

"Do what you're best at, and outsource the rest!" To explain this using Occam's Razor, it means removing what you're not good at and retaining what you're best at, so that you can adapt to changes and seek development with all your might.

Three.

One of the biggest problems modern enterprises face is the increased management costs brought about by bloated organizations. Sometimes, management costs even exceed transaction costs, and bloatedness leads to another problem: the inability to take action flexibly. The most important feature of excellent companies is the ability to take action in a timely and flexible manner. They never establish any permanent organizations or inflexible organizational structures.

Someone surveyed 39 American companies, and the research results showed that the biggest difference between successful and unsuccessful companies was whether they were "simple" or not. Only simple organizations are best suited for selling complex products. The structure of most excellent companies has only one key feature: simplicity.

As long as the company has a simple organizational structure, very few employees can get the job done. After studying the organizational structure of excellent companies, management scholars came to the conclusion that the core leadership of large companies does not need to exceed 100 people, that is, the "100-person rule".

Emerson Electric has 0.054 million employees, but its headquarters has fewer than 100 employees. Schlumberger, a diversified oil service company with 6 billion in assets, operates this global empire with approximately 90 management staff.

The global retail giant Walmart's founder, Sam Walton, said he believed in the rule of having no one in the company's headquarters: "The key is to go into the store and listen carefully." Warren Buffett's Berkshire Hathaway, which employs 0.27 million employees, has only 23 people at its headquarters.

Excellent companies generally have concise systems, and Procter & Gamble is a good example. Procter & Gamble has a slogan - "one page memo", which is the crystallization of Procter & Gamble's management experience over the years.

They believe that any suggestion or proposal that is more than one page is a waste for the company and may even have adverse consequences. Former President Edward Hannes said: "Screening out a page of reports about facts from numerous opinions is the basis for Procter & Gamble to make the right decisions." The power of a one-page memo is much more concise and effective than a "stack" of dozens of pages with key points distributed.

The target of any company is to make a profit. It is crucial to achieve the main and secondary goals of the enterprise with the least cost, which is essential for the company's success in the market. The company will make the most profit by achieving the highest output with the least input. Even when the business is going smoothly, the best companies are always looking for ways to reduce costs and save money.

Four.

Occam's razor requires clear insight into the key points of a matter, which are unnecessary details, and then simplifies them with a quick knife to save time and effort as well as to improve efficiency. In this regard, Occam's razor has something in common with the 20/80 rule, also known as the Pareto principle. In 2023, the company's overall sales volume of 18,000 kiloliters, a +28.10% year-on-year increase, showed significant growth. As for product structure, 10-30 billion yuan product operating income respectively were 401/1288/60 million yuan.

According to the 20/80 rule, we must pay attention to the following points:

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Complexity causes waste, while simplicity contributes to efficiency.

Most activities are meaningless and worthless in concept, and executing them results in waste without any relevance to customers.

A small fraction of critical activities are extremely effective and valuable in the eyes of customers, but they are often buried among worthless activities.

Some people, relationships, and assets in any organization are unproductive, while others are highly productive.

The 80/20 rule reveals imbalances in causal relationships, indicating that we can achieve enormous results, outcomes, or rewards by grasping the key small causes, investing fewer key efforts, and exerting minimal key efforts.

For enterprise marketing, this means that 20% of customers create 80% of profits for the company, while the remaining 80% of customers generate only 20% of profits for the company. By focusing on the key 20% of customers and applying limited marketing efforts to them, the company can achieve twice the result with half the effort.

The key to successful marketing is to focus on the few customers who actively consume products or services and have the strongest purchasing power and consumption frequency, namely the core customer group, who are the most important people. It is simpler and easier to focus mainly on this 20% of customers than to take care of 100% of them.

To achieve real success, we must put our focus and concentration on the critical few problems, because solving these critical few issues requires only 20% of our time to achieve 80% of the results.

The 80/20 rule is also a principle of management in which 80% of the output comes from 20% of the input, 80% of the results come from 20% of the causes, and 80% of the achievements come from 20% of the efforts. This means that most of what we do is of little value, and in all of our time, a small amount of time is more valuable than the rest.

Therefore, we must spend our time on a few important issues, because solving these few important issues only requires 20% of our time to achieve 80% of the results. This is about the critical few and trivial many. To truly succeed, we must concentrate with all our hearts and minds.

Occam's razor advocates a thinking mode that pursues simplification and demands that we choose the simplest and most effective method that is results-oriented. This means that simplicity is not our ultimate goal, but efficiency is. In fact, simplicity is often behind complexity.

We seek relatively simple methods to achieve maximum results at the fastest speed and with the minimum cost. Therefore, the simplicity pursued by Occam's razor does not mean shallowness, rudeness, and crudeness, but rather depth, richness, and refinement.

Procter & Gamble has always wanted to pursue simplification, and has therefore reduced the complexity of its activities, one of which is cutting off inefficient promotional activities. Endless commercial promotions confuse consumers and frequent price fluctuations make them base their purchase decisions on prices rather than brand quality, resulting in a decline in brand loyalty.

However, in the competition for Crest toothpaste, P&G has also shown that it sometimes deviates from the track of simplification when the situation becomes difficult. After being hit by Unilever and other competitors, Crest also had to offer a buy-one-get-one-free promotion. Therefore, even for P&G, simplification is not a simple matter.

Grasping the key points of things requires extraordinary analytical and synthesizing abilities to achieve a complete understanding of them. Outstanding leaders who have implemented radical reforms possess exceptional insight. They seize the essence of management, so they know where to start, what to delete, and what to retain.

Five

The principle of management taught by Occam's razor is "Keep it simple and do what you do best." This is a simple strategy that applies even to investment. The stock market is a very complex system filled with all kinds of noise. James Anderson believes that only 1% of the information on the market is useful, while the remaining 99% is useless but triggers huge market fluctuations.

Buffett once said, "Investing is easy, but not simple." This "simplicity" is so simple that even business schools do not want to teach it. Because the three cornerstones of value investment are simple, and it is not complicated to determine what is a great or excellent company, but it is not easy to achieve investment success. The only thing that investment can do is to grasp the simple and essential things. Occam's razor can be applied. The future is uncertain, but simple solutions are often the best answers.

John Bogle, the father of index funds, proposed investing in index funds in his book "Common Sense on Mutual Funds" because it adheres to the principle of Occam's Razor - the simplest, for the general public, may be the best.

In a chapter of this book called "The Nature of Returns: Occam's Razor Principle," he defines what is "simple and essential," which deserves our close attention and reflection:

①The more complex the analysis method, the more complex the preconditions are, and the more harsh the environment that can be applied;

②The variables that need to be considered in short-term operations are much larger than those in long-term operations. The more variables there are, the more unpredictable the market is. However, in a long-term investment strategy, the factors that need to be considered are significantly reduced, and the investment return is more certain;

③The difficulty of predicting the performance of a single stock or portfolio is very high and almost unpredictable;

④The more primitive things are, the more stable they are. Common sense is the cornerstone of investment. By studying the sources and patterns of past market returns, we can provide the simplest investment common sense for the market.

As Albert Einstein said, everything should be as simple as possible, but not simpler. The reason why simplicity works is that it conforms to human nature and common sense.

Editor/Somer