Monday, December 28, 2009

Tough Decisions

I received an interesting email the other day on Insight into Decision Making – Tough Decisions.

A group of children were playing near two railway tracks, one still in use while the other disused. Only one child played on the disused track, the rest on the operational track. The train is coming, and you are just beside the track interchange. You can make the train change its course to the disused track and save most of the kids. However, that would also mean the lone child playing by the disused track would be sacrificed. Or would you rather let the train go its way?

Let's take a pause to think what kind of decision we could make...

Most people might choose to divert the course of the train, and sacrifice only one child. You might think the same way, I guess. Exactly, to save most of the children at the expense of only one child was rational decision most people would make, morally and emotionally. But, have you ever thought that the child choosing to play on the disused track had in fact made the right decision to play at a safe place? (albeit of course playing near any track in the first place is unsafe). Nevertheless, he had to be sacrificed because of his ignorant friends who chose to play where the danger was.

This kind of dilemma happens around us everyday. In the office, community, in politics and especially in a democratic society, the minority is often sacrificed for the interest of the majority, no matter how foolish or ignorant the majority are, and how farsighted and knowledgeable the minority are. The child who chose not to play with the rest on the operational track was sidelined. And in the case he was sacrificed, no one would shed a tear for him.

The great critic Leo Velski Julian who told the story said he would not try to change the course of the train because he believed that the kids playing on the operational track should have known very well that track was still in use, and that they should have run away if they heard the train's sirens...

If the train was diverted, that lone child would definitely die because he never thought the train could come over to that track! Moreover, that track was not in use probably because it was not safe. If the train was diverted to the track, we could put the lives of all passengers on board at stake! And in your attempt to save a few kids by sacrificing one child, you might end up sacrificing hundreds of people to save these few kids.

While we are all aware that life is full of tough decisions that need to be made, we may not realize that hasty decisions may not always be the right one. 'Remember that what's right isn't always popular... and what's popular isn't always right.' Everybody makes mistakes; that's why they put erasers on pencils.
[end of extract]

The reason why decision making is so tough is because of the consequence we need to face when making the wrong decisions. In the above example, it could be a psychological impact that we need to live with. Decision making today also comes with risks and trade-off. Making the wrong decision on your investment could mean great financial losses, or a missed opportunity. Marketing Management decision making impacts the marketing mix strategies and brand perception and positioning.

It seems the complexity of decision making can be proportional to the perceived consequence or impact. For simplicity case, let's categorize them into 4 levels;
Level 1 - Little or no impact, including personal and daily decision making, such as what's for dinner?
Level 2 - Involving 2 or more opportunity cost variables, such as cost, time, or product design changes which cannot be regained
Level 3 - Involving second person, especially when impacts trust and perception (example contracts, agreements, policies, negotiations)
Level 4 - Involving more people or the general public, especially impacts credibility and social perceptions, and including a combination of some of the earlier levels (also advertising campaigns, promotion, positioning strategies)

I heard that we need to make about 500 decisions a day on average. And since it's an overwhelming experience, we try to auto-pilot or delegate some of these decisions and even set up algorithms to make some decisions for us faster. Basically what we are doing is avoiding the consequence of making a wrong decision - since it was based on some model, or someone else's idea. And with the more decisions we pass over, we lose our thinking edge and decision-making intuition.

But how do we have time to manage over 500 decision a day? Well, with the impact levels, it helps to create a threshold when certain decisions can be auto-pilot (or delegated), and when certain decisions are just too important and need our attention and intervention - no matter how simple the surface impact may look. As a guideline, I would say anything from levels 3 and 4 should have our personal attention.

We need to recognize that each and every decision we make can have a different outcome. As much as we want to standardize things, it's impossible to have spaghetti every dinner. Circumstances (hunger, time) and expectations (motive) can change our decision making process, and ultimately the outcome. Simply setting auto-pilot or delegation decisions with level 3 or 4 impact can be disastrous - especially since it involves another person - and we've heard many times before that you can not be efficient in a relationship.

In making decisions, people try to get the best outcome. But what's the best outcome is also relative to the person making the decision - especially for post-purchase experience. The marketing team needs to persuade the potential customer that the product/service will satisfy their needs. Having made a purchase, the customer should be encouraged that he or she has made the right decision with the after-sales support and services.

Finally, in the book by Wharton on Making Decision by Stephen J.Hoch, we look at 7 Strategic errors in decision. Understanding and overcoming these strategic shortcomings will help improve our decision making effectiveness.
  • Being blinded by emotions
  • Overreliance on intuition
  • Emphasis on speed
  • Failure to detect deception
  • Underestimating risks
  • Insufficient information technology for decision support
  • Insufficient regulation

Sunday, December 6, 2009

Is Speed a Good Thing?

For those of you who have a Facebook account, you would probably have joined some Facebook games application.

I played the wildlife zoo game because it was entertaining seeing things grow (in this case, the zoo and it's population) and also challenging (how to manage funds to expand your zoo). This kind of game (strategic life simulations) have been around for a long time and most people would be familiar with SimCity developed by Maxis and published by Electronic Arts (EA) back in 2000. After over 16million copies sold worldwide, and numerous awards, this game has evolved with all sorts of simulation expansion packs today. Other equally successful games include Civilization, WarCraft, and many more. Simulation games allow you to flex your creative and strategic muscles in truly amazing ways. Whether you're planning cities, building societies, or controlling lives, the power is in your hand to express yourself while shaping entire worlds and destinies. (EA)

The most critical adversary in simulation games (or any other games as a matter of fact) is time. In all cases, the players have to abide by the time principles and resource issues. Time will decide if your army is capable to withstand the invading forces when they arrive. So the faster you train your army, or the faster you build your walls or weaponry, the better your chances for victory.

This is not so much different from real life scenario. In reality, we also need to abide by time principles and resource issues. But, society today wants things super fast, faster! And the expectations of this "super fast" is evolving to that of a simulation game timeframe which could be about 1:100,000 - for example, constructing something in 1 minute (game time) when it normally takes over 70 days in real life. I am not suggesting the time frame game developers use are innacurate, but rather, the mentality and confusion that it has shaped in society's expectations today; "If in the game I could do it, why not in real life?", "I just want it faster".

In supply chain and dealing with customers; customers want products and materials faster. And so often we encounter our customers will face "lines down" situation, and expect suppliers to switch assembly to accomodate their "more urgent" orders. But with all the switching and expediting, streamlining, lean, Kaizen, 6-Sigma, most of the time you probably won't be able to do much (with the exception of keeping inventory/WIP, cutting corners/materials, introducing additives, hormone growth and other unethical and unsafe ways, and perhaps planning in SIM world). In the example of Wildlife zoo, you can actually buy more wildlife dollars and points to speed up your zoo population - and this "business" is rather common with a lot of other games nowadays, where you can buy character points instead of earning them.

When there's no opportunity for virtual bailouts, marketers need to engage with better communication and product diffussion/lifecycle planning. The market will continue to expect things faster and faster, and narrowing the gap between reality and SIM time frames. Marketers, likewise are expected to be able to react swiftly in this new and challenging environment. In order to succeed, go play more SIM games - not really, but that would be a more fun and exciting choice. In reality, marketers need to equip themselves with the marketing fundamentals and knowledge on the latest trends and tools development so that when the situation arises, they can make strategic marketing decisions instantly - and this is a competitive advantage!

Speed of execution is a good thing, but there are somethings that you cannot cut corners or get someone else to do for you - learning, exercising and nurturing relationships. Invest some time today to identify the larger rocks, build solid foundations and overcome the quadrant 2 (important issues) first. In the meantime if you need to release some stress, enjoy a game or two.

Click here for more info on Facebook Wildlife Zoo

Friday, December 4, 2009

From My Book List: The Ultimate Book of Mind Maps by Tony Buzan

Fun with MIND MAPS...

Learn MIND MAP today,
  • Unlock your creativity
  • Boost your memory
  • Change your life
(Mind Maps can also be used to describe the contents of your blog!)

Now you can create yours too, there are 3 simple levels!

Level 1 - Take a plain piece of paper and some colored pens (I used color pencils). BE CREATIVE!!! Start by writing or drawing the theme of your Mind Map. Use pictures or key words.

Level 2 - Create thick branches radiating out from the central theme. Use different colour for each to represent main thoughts.

Level 3 - Review the key words you have written - does it spark off further ideas? Draw further branches radiating from each of your key words in order to accomodate the associations you made.


(Taken from the ultimate book of Mind Maps by Tony Buzan - please read the book to find out more)

Tuesday, December 1, 2009

The Customer is Always Right

We hear it all the time, "the customer is always right", or "the customer is king". So what should we do when the king is wrong? or is requesting something absurd? Good thing, there is a new phrase coined with a disclaimer, "the right customer is always right". Well, it puts things in a better perspective because the "right customer" should be that 20% contributing to our 80% sales or revenue - and should deserve that special privileges. But even so, if we had to weight brand reputation / business sustainability over customer's whims and fancy, the latter (brand reputation / business sustainability of course), without any doubt needs to take priority.

So, how do we treat our customers justly? Customers like us, are emotional human beings, have needs and wants, and learn to wear their pants one side at a time. Therefore, it should not be difficult to decide our course of action when a customer complaints or request for a refill, again. The Bible according to Luke 6:31, "And just as you want men to do to you, you also do to them likewise." And this verse today have become the "Golden rule" or ethical code that states one has a right to just treatment. But will that make us go out of business? I think not. In contrary, a delighted customer, not only buys more, but tells 15 others of their positive experience.

Well, that's easy and even our competitors can do it. So what's next? Take the golden rule one step further and you have empathy (defined as the capability to share another being's emotions and feelings - Wikipedia). Empathy involves understand customer's needs and expectation. Most writings and seminars today will also include listening as part of empathy. Listening to your customers involve understand their likes, dislikes, preference and most importantly motivation. Another important part of listening is to understand customer complaints (or a better phrase, customer feedback).

If you are not in the public sector, nowadays most customers don't complaint, they simply take their business elsewhere - to your competitor's door step (or website)! SME & Entrepreneurship Magazine Oct 2009 cover story quotes, When your customers say that your products need improvement, they mean it. When they say your services should have more "happy looking customer relations", they really mean it too. Nobody wants to be treated like a nobody.

Organizations therefore should encourage customers to provide feedback and create an environment where feedback are seriously reviewed and action taken. A good example I noticed was at Jusco (Queensbay Mall, Penang) where customer complaint cards, complete with some management response, are posted on a notice board, visibly, and in front of a customer service counter. Of course some other companies choose to reward their customers for taking the time and effort to respond, but the most important thing about this activity is not only about getting feedback, but taking action. Sometimes taking action can be easy like enhancing facilities, while others that deal with service level are more difficult (irrational ones could be ignored).

So how do we align our employees with this customer focus? Firstly management needs to play the leadership role and walk the talk, while employees should undergo adequate training on values and how to handle and respond to customer feedback. A reward scheme could also boost staff performance, and it's equally critical to make sure employees have some flexibility to make decisions that delight customers. I've seen Starbucks baristars going out to buy newspapers because they didn't have enough copies.

Whatever you are not willing to do for your customers, your competitors probably are. Making sure customers are delighted is not a simple task, and requires a crystal clear focus, dedication and commitment. But the rewards really do pay off. A delighted customer, not only spreads the word of joy, but remains a loyal customer - and we all know how much more business (and referrals) a loyal customer can bring. And, it's also less expensive retaining a customer than getting new customers.

Finally, here are Lisa Ford's Gold Standard Customer Service;
  • Be reliable (do what you say you're going to do; do it when you say you'll do it; and do it right the first time)
  • Be responsive (act fast and consider the human side)
  • Make customers feel valued (make all customers think they are most important)
  • Be empathetic (understand the customer's situation and feelings)
  • Be competent (have the first person contacted take ownership of the problem and be responsible for getting it solved)

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