Friday, May 25, 2012

Focus and Leverage Part 118

One of the major failures of many managers is their belief that improvements anywhere in the system will result in a system improvement. I've discussed the concept of suboptimzation before on my blog, but this time I want to talk about the difference between an optimizer and a satisficer. So what the heck is a satisficer? First, let's talk more about the concept of suboptimization and then we'll define both an optimizer and a satisficer. By the way, there's another great book for you written by Boaz Ronen, Joseph Pliskin and Shimeon Pass entitled Focused Operation's Management for Health Services Organizations.

The authors I referred to above define Suboptimization of a system as: Separate optimization of every subsystem, which results in underutilization of the performance potential of the whole system and may result in deterioration of overall performance.

Nobel laureate H. A. Simon recognized many years ago a managerial situation that causes decision-making hardship and his approach revolutionized management. Simon made the claim that executives and other decision makers are trying to become optimizers when making decisions. Simon defined an optimizer as a decision maker who always wants to make the best possible decision without any consideration of time constraints. He further claimed that decision makers will never have all of the needed information available to evaluate every conceivable alternative. Simon tells us that in a dynamic world changes are frequent and it is of utmost importance to make timely decisions. What good is a perfect decision if it comes way too late?

In 1957 Simon proposed an alternative approach to decision makers and recommended that they become satisficers. He defined a satisficer as someone who is satisfied with a reasonable solution that will significantly improve the system and does not look for optimal solutions.  The authors go on to explain that the satisficer sets a level of aspiration or a threshold that he or she aspires to achieve.  The objective here is not to maximize or minimize some performance measure, but rather to achieve a solution that will improve a measure.  And once the level of aspiration has been achieved, the satisficer can set a new level of aspiration.

A satisficer achieves excellence by complying with two basic principles:
1.    Set a high enough level of aspiration that is compatible with market conditions, competition, or investor expectations.
2.    Adopt an approach of continuous improvement.
The bottom line of all of this is that organizations don’t need to function perfectly, they only need to perform better than the competition.  This too is my message today.  Don’t try to seek perfection because usually in your quest for it, your decisions might be perfect, but they will most likely come too late.  This has been one of the problems I have with Six Sigma “projects.”  Although the DMAIC is a wonderful approach to improvement, I have seen too many examples where there is a failure to launch!  Collecting mountains of data, analyzing it using sophisticated statistical tools, but all of this at the expense of valuable time.

I am a total believer in the integration of Lean and Six Sigma with the Theory of Constraints simply because TOC provides the focus that is missing in many improvement initiatives.  In many ways Six Sigma is an approach used by many optimizers.  I am a satisficer and have been for many years.  Rather than quantifiable bottom line results taking months to achieve, since I am a satisficer my results typically come in weeks.  Are my solutions perfect?  Absolutely not!  But at the end of the day, in my opinion, a satisficer’s approach achieves leadership buy-in much faster because they see bottom line improvement much quicker than with an optimizer’s approach.  How many of you are optimizers?

Bob Sproull

No comments: