William of Ockham (1285–1349) an English theologian and philosopher, postulated that “Pluralitas non est ponenda sine necessitate”; or translated, “Plurality should not be posited without necessity.” His principle gives precedence to simplicity or minimalism in problem solving. If there are two competing theories, the simplest explanation is to be preferred.
Today in the scientific community the theorem is called “Ockham’s Razor.” While trying to understand something, getting unnecessary information out of the way is the fastest way to the truth or to the best explanation. Or what can be done with fewer assumptions is done in vain with more.
At Laguna Group we apply “Ockham’s Razor” to all of our consulting assignments - “The simpler the solution, the better”
A service business is experiencing a high rate of customer cancellations.
Two business owners approached their customer retention problem in different ways. Each had access to the same market research data and their markets were similar in size and type of customers.
“Joe” decided to implement a complex, compensation driven solution. His employees were able to participate in a monthly bonus that was driven on how well they did compared to their peers. He designed 26 parameters to measure, from the simplest (being on time to company meetings) to very complex (reported customer complaints verified by a supervisor and then weighted on a 1 to 10 scale based on his judgment of relevant importance). Each of these parameters was graded on a curve, based on the whole teams score on each. He developed special programming in Microsoft® Access® to track and report on a quarterly basis each person’s performance report. He conducted a quarterly performance review with each employee, reviewing the 26-page report and the calculations of how the bonus (if any) was calculated.
Joe was convinced that his solution was the best because it covered everything that he could think of. There wasn’t an item to add to his list (at least none that the employees would volunteer to add), and the report was a thing of beauty – formatted professionally with tables of numbers, comparison scales and calculations for the bonus dollars.
“Al” decided to implement a basic program, something he could execute and monitor on a weekly basis. He built his program around the top issues identified by his customers as the reasons for cancellations. He trained his people on those issues, hired a manager to check up on their work, and paid spot bonuses for those that he “caught doing good”. He would arrange random quality assurance checks and report those results to that employee the next day – noting what below par work was to be redone, and equally praising the good work.
What owner do you think did better in keeping customers?
After 9 months,
Why did Al do better?
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