When we talk to new clients, one of the common issues we find is that a past decision about a critical issue is turning out very badly.  For example:

• A general manager had been appointed who was unqualified and also damaged the culture of the business.
• A website was being built that was far too expensive, behind schedule and didn’t actually deliver what the business really needed.
• Incorrect tax planning advice had been given by a trusted accountant who was also charging fees that were far too high.
• A contract manufacturer had been appointed that didn’t have the capability to fill packaging required for the main growth market for the business’s products.

In every example we have been able to give advice that dealt with that problem as painlessly as possible… but our clients still suffered some losses and anxious moments along the way.

When we (gently) asked our clients why and how they made those ultimately poor decisions, the typical, embarrassed response was: “it seemed like a good enough decision at the time”.

We All Make Bad Decisions, Sometimes

Let’s be honest – we all make bad decisions at some point, and they can lead to big regrets.

We lose money we can’t afford to lose.  We lose time that we can’t get back.  We lose opportunities that don’t come around again.  And we often “kick ourselves” afterwards, because hindsight often reminds us that we could have, should have known and done better.  If we had thought more wisely about our problems, and our choices.

So why do we do that?  In short, because success too many stressed, busy people is often making a decision quickly (assuming of course that it can’t be avoided), with the least amount of potentially painful analysis.  We simply feel relieved (and productive) when we get a difficult job done.

Worse, most people “don’t know what they don’t know” and, rather than dealing with that gap, many don’t do any objective research when solving their problems, at any stage.  Instead they make decisions based on friends’ personal opinions, or they are excessively susceptible to consumer advertising.  So they might buy the first product they see that they feel is good enough.  Or hire the first candidate or key supplier they meet.  Or rent the first office they inspect.

In Defence of Good Enough

Now don’t get me wrong – I actually believe that “good enough” usually trumps perfection.  Simply because it’s usually more efficient.

In the real world, it’s rare that any goods or services – the things that we acquire through many business problem solving decisions – will be perfect on every count.  For example, a software system may have very powerful features, but the subscription cost may be too high for a small business to afford.  Its the same when we hire staff, rent premises, adopt a business name or brand, and so on.

So we usually make compromises – eg low price and low risk might be more important to us than quality, to some degree.  When we settle for “good enough”, rather than seek out the best possible (or “optimal”) outcomes, we are satisficing:

“Satisficing is a decision-making process in which an individual makes a choice that is satisfactory rather than optimal. It would require a great deal of effort – and may not even be possible – to gather all the necessary information in order to make the best decision, and satisficing thus represents the kinds of decisions we are actually capable of making.”

All of us do it, and we are mostly more or less happy with the outcomes – until those decisions turn out badly, like the examples I used earlier.  So how do we make bad satisficing decisions?

When “Good Enough” Isn’t Good Enough

In my experience, there are four fundamental risks with satisficing, as a problem solving mindset, especially in business:

1. We don’t think enough about “what good enough looks like” – so we can’t measure how well our choices actually meet our needs.
2. We make the wrong “conscious compromises”, when deciding what “good enough” means to us.
3. We make “unconscious compromises” that undermine an otherwise “good enough” decision.
4. We mistakenly apply the technique to problems that really should be “optimised” – where we genuinely need to get the very best available outcome.

What “Good Enough” Looks Like

Before embarking on any problem solving exercise, its essential to have a clear picture of what “solving” the problem will produce, as an outcome, eg in terms of:

• Quantity – how much of something do we need?
• Quality – how good does it need to be, in terms of features and benefits?
• Price – how much will it cost?
• Scarcity – does enough of it exist?
• Timeliness – when do we need it?
• Risk – how reliable does it need to be

However, in my experience most of us skip ahead to sourcing solution options without investing enough time in this often quite simple exercise.

Conscious Compromises

We all make compromises, every day.  We get take away meals when we are tired of cooking.  We buy “the worst house on the best street”.  We take jobs that don’t pay so well, to get valuable experience.  We do that because we are consciously giving something up, to (hopefully) get something even more important to us – like more money, more time, or better opportunities down the track.

For example, I have an old iPhone, and some friends tease me about that.  Usually I tell them that it’s good enough for my limited IT interests and needs and it’s very reliable.  That’s a conscious compromise that I’m happy to make.  However, that compromise might still turn out badly, if it turns out that my old iPhone can no longer run apps that are essential to me.

Unconscious Compromises

Furthermore, what if I didn’t know what a newer iPhone can do – how would I know when it was time to get a new iPhone?  In the absence of that knowledge, my satisficing behaviours might also be creating an unconscious compromise that might lead to me not having “good enough” either now or in the future.

In both examples, poor satisficing compromises will ultimately cause me loss.

Problems That Really Should be “Optimised”

Some decisions just can’t be left to satisficing – usually where the effectiveness of the solution is more important than its efficiency.  Here’s my advice on how to choose which method to apply:

1. Optimise only the biggest problem solving decisions – the ones that are probably “urgent AND important”, where effectiveness will be paramount.
2. Satisfice the rest, for efficiency.

Here’s what is most likely to be “urgent AND important” to virtually every contemporary business:

• Your business’s purpose, name, business model and values.
• Your strategic plan.
• Your strategic advisers, accountants and lawyers.
• Your leadership team.
• Your brand.
• Your products and prices.
• Your key staff.
• Your remuneration policy.
• Your trade practices, employment, accounting and taxation compliance.
• Your forecasting approach.
• Your customer and supplier terms of business.
• Your key suppliers and distributors.
• Your premises.
• Your business partners.
• Your capital funding.
• Your insurances.
• Your valuable intellectual property.

That’s actually not a very long list.  But how many of us have accepted too many compromises on one or more of those, whether we were aware of those compromises or not?  I’d guess every one of us, at some point.  So don’t be embarrassed – we have good company!

How to Make Good Enough Satisficing Decisions

1. Be prepared to “do the work” – if a decision needs to be made, invest enough in the process.
2. Determine what success really looks like.
3. Have the courage to put aside “the nice to have” so that you get “good enough”.  The prioritisation technique that we use at the Advisory Collective is called “MoSCoW”.
4. Get even limited advice from experts or good online sources – not well meaning amateurs.
5. Use facts, and beware of your feelings.
6. Admit that compromise might be unavoidable, or even desirable – but make those decisions consciously.
7. Ask your family or close friends to give you frank but fair feedback about how you make decisions – they can probably see our “unconscious compromises” clearer than we can.
8. Finally, have a good, hard think about how you have made bad decisions in the past – put aside your embarrassment and learn from those mistakes.

And remember that the general advice in my previous article on problem solving still applies.

How Experts Can Help You to Optimise AND Satisfice Well

How many of us have the deep experience, skills and time to deal with all of the “urgent AND important” challenges I mentioned earlier?  I’ve been solving business problems like most of those for more than 30 years, and there are some on the list where I still need to get help.  That’s one of those reasons I work with my business partner and our collective.

That’s also why you probably need to engage expert business advisers and consultants to help you optimise some of those critical decisions, especially if your business is too small to hire experts in those fields as employees.

So if there is ONE business problem that you definitely need to solve by optimising, not satisficing, its this: pick the right business adviser for you, to help you figure out:

• Which problems to solve through optimising vs satisficing.
• How to best optimise your big decisions, and get the right expert help if necessary.
• How to make “good enough” satisficing decisions, when they are truly good enough.