Trade-off decisions

On the plane I was reading about Starbucks and their 'leap of faith'. The article opens with the paragraph

'In late March, as Starbucks was preparing to introduce its first offer on Groupon, the daily-deal service, the coffee chain's chief digital officer, Adam Brotman, realized he had no clue whether the gambit would pay off. … We do not want to sit on our hands,' Brotman says. 'If we feel excited about something, we'll get it out there, learn our lessons, and correct the mistakes. It's not always the most stress-free way to launch, but it's the fastest. … We don't think it's okay if things aren't perfect," Brotman says, "but we're willing to innovate and have speed to market trump a 100% guarantee that it'll be perfect."

What I find useful in the piece is the notion of trade-offs. Here it is speed to market over 100% perfect. The thing is that surfacing the trade-offs isn't that easy and then making the decision to play the trade-off isn't easy either.

This came to mind today as we were looking for a place to eat in Aldgate, London, this evening. We passed two pubs both shut, walked on past the Indian curry places because we'd had a lot of curry recently, and then were stopped by someone standing in a restaurant entrance who invited us in. It looked as if it was still being constructed but he was a nice guy and said the food was Turkish so in we went. Our trade off? Welcome and immediacy over possible food disappointment.

Indeed the place is still being constructed. Today was the first day of being open and there were lots of glitches e.g. at the end of the meal they said the card processing machine was coming tomorrow which meant a quick walk to the ATM, several menu items were not available, but these were then traded-off for us (well me, fascinated by how organizations operate) for excellent service, full explanations of what was going on, good food with beaming kitchen, waiting and management staff coming to ask us what we thought and a rather warm feeling of being in at the start of something that has potential. The owner (ex-physicist from Gallipolli) told us it was his last great adventure.

The trade-off for him – I'm guessing – was a kind of soft opening. He stood in the doorway seeing who he could encourage in and learned from what was going on ready for the full launch later this week (business cards, menus, credit card processing, menu fulfillment, all coming tomorrow – or at some point soon).

Earlier in the day I'd spent time discussing the trade-offs to be made in thinking about new office space. Were we trading off real estate savings for staff motivation? Were we trading off restricting the amount of square footage we looked for in order to force innovation and more efficient ways of delivering the products and services? We didn't come to decisions on these specifics but in discussing them we did come to some decisions on a way forward and how we would offer this for discussion to the wider office staff.

The same notion of trade-offs came in another article I read on the plane. This one on private companies running Swedish hospitals. Here the trade-off is on efficiency over hotel style amenities. St Goran's is the medical equivalent of a budget airline. There are four to six patients to a room. The decor is institutional. Everything is done to "maximise throughput".

The thing is that generally trade-offs are not being made in isolation but in a context of a number of other factors in the system that may or may not be brought to the discussion. In the Starbucks case 'speed to market' is being made in the context of customer expectation, desire to be a market leader, testing the technologies, risk to reward of making the trade off, and so on.

In organization design projects it seems to me that far too little time is spent on thinking of the trade-offs, and making conscious decisions on why they are being made, and what the possible consequences or outcomes might be. This brought to mind I piece I noted from Daniel Kahneman's book Thinking Fast and Slow on the topic of decision making:

Whatever else it produces, an organization is a factory that manufactures judgments and decisions. Every factory must have ways to ensure the quality of its products in the initial design, in fabrication, and in final inspections. The corresponding stages in the production of decisions are the framing of the problem that is to be solved, the collection of relevant information leading to a decision, and reflection and review. An organization that seeks to improve its decision product should routinely look for efficiency improvements at each of these stages. The operative concept is routine. Constant quality control is an alternative to the wholesale review of processes that organizations commonly undertake in the wake of disasters. There is much to be done to improve decision making.

What's your view on trade-offs, how they are decided, and the impact that more conscious trade-off decisions would have on an organisation's design?

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