Satisficing versus Optimizing: Making your choice
Shopping is a process that people either tend to enjoy or hate. I'll go out on a limb and say that some people enjoy shopping less than others. As a result, those who like to shop may choose to optimize when they shop while the others may choose to satisfice. What does this mean and what are the implications for the workplace?
Nobel prize winner Herb Simon developed the theory of Bounded Rationality and this theory has been given the tag "satisficing", meaning that when people make decisions they sometimes don't look for the optimal choice, but they make a choice that is satisfactory and sufficient for the given circumstances. Some of us will satisfice when they shop, but some do not.
Buying a car is one process where I know that I have optimized in the past. Here are some of the factors I consider when I buy a car:
- capacity (cargo and people)
You may have other factors that you consider, but I suspect each one of us will optimize when we buy a car since we take a number of factors into account and then make the best choice when considering all of the factors.
Where we park in the morning, what we eat for breakfast or lunch, which radio station we listen to and many other common decisions can often be the result of satisficing versus optimizing. I know that I often make these decisions with little thought.
Why might we satisfice versus optimize in making a decision? Here are a few reasons to consider:
- time constraints
- impact of a wrong choice
- external perception
- organizational strategy, culture or direction
When viewing this list, each of these factors can help us determine whether we need to optimize or satisfice. Here are few cases where we need to optimize:
- hiring a new senior leader
- determining the location of a new office
- deciding upon a new product line
- expansion or retraction of a business unit
Each of the factors listed above require optimization in most cases.
Consider decisions that you make today and determine if you are optimizing or satisficing?
Did you use the right approach?
When are you optimizing when you might need to satisfice?