Winning Edge® Management Concept

      


Ockham's Razor

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.

Crop circles began to be reported in the 1970’s, and there were two interpretations of these circles of matted corn and grass. One was that flying saucers made the imprints. The other was that somebody (earthlings) had used some sort of instruments to push down the grass. Ockham's theorem would say that given the lack of evidence for flying saucers and the complexity involved in getting UFOs from distant galaxies to arrive on earth, unseen and traveling faster than the speed of light - the second interpretation is simplest. The second explanation could be wrong, but until further facts are presented it should remain the preferable theory.

As it turns out, two people admitted to making the original crop figures (and the rest have apparently been created by copy-cats). Despite this fact, some people still ignore this truth and instead continue to believe that crop circles are being created by flying saucers.

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”


Winning Edge® Case study

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

“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

“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,

  • Joe’s business revenue showed no improvement and in fact had a slightly higher cancellation rate

  • During the same time frame Al cut his cancellation rate in half – improving his revenue and profitability.

Why did Al do better?

  1. He had a simpler solution; he applied “Ockham's Razor.”

  2. He focused on the important issues. We find that most Winning Edge® companies limit their action plans to the top 3 –5 issues. Beyond that their efforts are diluted and results diminished.

  3. He built in fast feedback – both positive and negative. We enjoy most sports because we get immediate feedback on our performance; the golfer hears and sees each shot; the bowler not only hears and sees each roll of the ball, but his score is projected on to the ceiling for all to see. Could you imagine if bowling was conducted through a sound proof curtain and you only got a quarterly report of your scores? Would you improve based on that feedback, or even enjoy the game?

If you would like Laguna Group to help you and your organization or for additional information:

E-mail us at admin@lagunagroup.com

Laguna Group®

27071 Cabot Road, Suite 132, Laguna Hills, CA 92653

Phone: (949) 388-6464

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