Sometimes Good Enough is the Best Strategy
In many aspects of life, we strive to optimize – we want to get the best deal, pay the least amount for something, finish first place in a contest, etc. Driving an extra mile down the road to a different gas station to save a few cents per gallon is an example of optimizing.
But sometimes, we display behavior that doesn’t aim to optimize some objective, but rather to reach some level of performance that is satisfactory – or “good enough”.
So when is “good enough”… good enough?
This behavior was described by Nobel Prize winner in Economics, Herbert Simon, as “satisficing” – a mixture of satisfying and sufficing (1 – 2). He noted that unlike the traditional models of human behavior underlying many economic models, which assume fully rational actors who seek to maximize their expected utility, real behavior is more complicated. Someone exhibiting satisficing behavior defines a minimum standard of performance they would like, and when they find something that meets or exceeds those standards, they stop looking. Optimizers would continue to exert efforts to search for additional alternatives to find the very best of the best. Satisficers instead are happy with “good enough”.
Research shows that people who display strong optimizing behavior spend more of their time and effort making decisions, such making product comparisons, but interestingly, tend to be less happy with their decisions after the fact (3). They experience more feelings of regret after making a purchase rather than people who display strong tendencies toward satisficing (3).
Of course, sometimes it doesn’t make sense to settle for good enough. Can you imagine a company whose tagline was “Our Quality is Good Enough”? Companies want to find the best employees, produce the best products, offer the best customer service, etc., and rightfully so. But at the same time, sometimes it makes sense to set a minimum threshold for performance, and then expend energy on other, more important matters.
In situations of scarce resources, how much time and effort to place on optimizing versus satisficing ultimately comes down to the priorities and mission of the organization. What makes sense for one company to maximize might make sense for a different company to satisfice.
Collier Research Systems has the expertise to help your organization figure where you should be optimizing and satisficing. With unique experience and perspectives in decision making and risk, Collier Research Systems is well positioned to guide your company through your most difficult decision making challenges. To learn more, visit www.collierresearchsystems.com.
(1) Simon, H.A. 1955. A behavioral model of rational choice. The Quarterly Journal of Economics, 69, 99-118.
(2) Simon, H.A. 1956. Rational choice and the structure of the environment. Psychological Review, 63(2), 129-138.
(3) Schwartz, B. 2004. The tyranny of choice. Scientific American, April, 70-75.