Manufacturing Breakthrough Blog
Friday April 1, 2016
Optimizer Versus Satisficer
Last year, I read a wonderful book entitled, Focused Operations Management For Health Service Organizations by Boaz Ronen, Joseph Pliskin and Shimeon Pass. You may be wondering what a book on healthcare has to do with manufacturing? In this book the authors introduce the difference between being an Optimizer versus being a Satisficer. If you’re like me, you probably have never heard of these two terms, but I think you’ll see their relevance shortly.
Nobel laureate H. A. Simon recognized many years ago (circa 1957) a management situation that according to Simon, caused significant decision-making hardship. Simon claimed that decision makers like executives, managers, engineers, etc. were trying to become optimizers while making decisions. According to Simon, optimizers are decision-makers who are always in search of the best possible decision without considering time or resource constraints. To achieve the best possible decision, the optimizer gathers all of the information needed to build a model that will allow them to choose the best alternative.
The problem with being an optimizer is that this approach requires significant amounts of time, effort and money to achieve critical solutions. In reality there is probably no limit to the number of different alternatives that can be evaluated, so optimizers will never really have all of the needed information on hand to effectively evaluate all of the alternatives. As I said, this approach is very time consuming and sometimes very costly. The hard reality is that while the perfect solution might result in a better solution, it may simply come too late, rendering some products obsolete. Optimizers are often guilty of analysis paralysis and typically demonstrate a “failure to launch” type of behavior.
Satisficers are decision makers who are satisfied with a reasonable solution resulting in significant improvement to the system rather than waiting for the perfect solution. The satisficer sets a level of aspiration, a threshold or objective to be achieved. The satisficer’s objective is not to maximize or minimize some performance measure but to achieve a solution that will improve the measure beyond their predefined level that they had set. When this level has been achieved, the satisficer sets a new target to surpass and the process repeats itself. This sort of stair-step approach to improvement keeps the organization moving in a positive direction without waiting to achieve perfection.
The authors provide an example of a hospital (Hospital A) wanting to computerize patient records, so they hired a consulting firm to develop the system. The problem was that it took six years to develop a system and two years later, the technology changed, making their new system obsolete. A competing hospital (Hospital B) adopted and adapted a computerized patient record system used in other hospitals and within one year, it worked reasonably well. Hospital A sought the optimal solution while Hospital B settled for a satisfactory solution.
So what’s the real difference between these two types of decision makers as it applies to process improvement? The authors tell us that for an optimizer to reach an optimal decision, they must generate all possible alternatives, then gather all the information, then build a model that will evaluate the alternatives and finally choose the best one. This obviously requires time, effort, and money. Let’s face it, building the optimal model to evaluate all of the alternatives is time and labor-intensive. And while the optimizer may find the perfect solution, it may simply come too late and in our dynamic world today, we all know that changes must happen frequently. Timely decisions must be made which makes life challenging for the optimizer.
The authors tell us that Herb Simon suggested that decision makers should behave as satisficers and that they should seek to reach a satisfactory solution and not an optimal one. They further explain that a satisficer wins by complying with two basic principles:
- Set a high enough level of aspiration consistent with market conditions, competition, and investor expectations
- Adopt an approach of continuous improvement
The point is, if your management style is one that searches for an optimal solution, valuable time is lost making improvements. I consider myself to be a satisticer and as such, in my work, I am attempting to provide rapid improvement in a step-wise fashion something like the following graphic:
By approaching improvement in this manner, I have found that dramatic improvements come very quickly and continue to get better and better as time passes by. I highly recommend this approach because, if for no other reason, the leadership of organizations are able to see improvements in very short order. And when they see improvement, it’s much easier to sell your improvement methodology to them again.
In my next post we will complete our discussion on whether you should be an optimizer or a satisficer and the impact of each will be in your company. As always, if you have any questions or comments about any of my posts, leave me a message and I will respond.
Until next time.
Focused Operations Management for Health Service Organizations by Boaz Ronen, Joseph Pliskin and Shimeon Pass, John Wiley & Sons, 2008