Tuesday, April 7, 2009

Occam's Razor -- A Modern Guide to Decision-Making

Ken Keller, a great friend of Chief Executive Boards International, suggested another idea that may be of help to CEBI members and readers.

Occam's Razor (aka Ockham's razor) is a problem-solving principle attributed to a Franciscan friar, William of Ocham, a 14th-century English logician. The principle is that the explanation of any scenario, observation or problem should be reduced to the simplest terms and simplest assumptions possible.

This is remarkably confirmed by Joe Busby, another friend of mine who has applied incredibly sophisticated neural network and pattern recognition tools to the analysis of massive arrays of manufacturing process data. Know what Joe found? In several cases, an amazing correlation between yield in continuous manufacturing process and outdoor temperature and humidity! Think about it -- a production line making plastic film is instrumented with hundreds expensive sensors and quality measuring devices. Yet, Joe found that the primary factor in making good film at high yields was ambient temperature and humidity.

So, how can we use this in a typical business? It's the philosophical origin of the KISS principle (keep it simple, stupid). In the category of problem solving:

  1. Look at all the asserted root causes of the problem. Pick the simplest one -- likely to be the closest to correct

  2. Consider the proposed corrective actions. Pick the simplest one -- likely to be the one most easily implemented and the one most likely to solve the problem.

When looking for opportunites:

  1. Look at the proposed opportunities, and the complexity of pursuing them. Pick the simplest course -- likely to be the one most successful.

  2. Consider the simplest strategy to pursue an opportunity as the preferred strategy

  3. Ask really simple questions -- likely to get the simplest answers
    - What do my customers want from me?
    - Am I delivering it?
    - The way they want it?
    - Are my costs in line?

  4. Action on a sub-optimal strategy is preferred over inaction and further analysis in pursuit of the "best" strategy

Simply stated, when there are two competing ideas or solutions, the one that is simpler is better. What's your experience with simple vs. complex explanations? Or simple vs. complex strategies? Please click on "Comments" below and share your experience with others.

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Terry Weaver

Chief Executive Boards International

Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it

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