Maximizing or Satisficing

March 19, 2019

Much advertising in the last 50 years or so has been featuring how products are better than the competition.  Or even better than their old versions.  Products that clean better; leave things shinier; have fewer calories; are smoother, and so on.

Product improvements were evaluated against older products and we always looked for a significant difference.  Little by little the differences that could be achieved diminished.  Product performance started to plateau and the advertising value to improvements declined.  In other words, the products were satisfying consumer needs.

Overtime, the improvements continued and also got less and less meaningful.  If your detergent cleans well enough, do you really need to run out and get the one that cleans even better, if it is hardly noticeable?  A lot of money in product research and advertising has been spent betting that the changes are important enough to get customers to switch.

The basis of this is the economic rule that people will always seek the maximum value they can get.  And we tend to equate that with maximum performance.

Recently “improvements” have been form changes rather than formulation changes, like Tide Pods, larger chocolate chip chunks in cookies, easier to apply personal care products.

Psychological desire to get the best is strong; but, at what price.  Many product categories reach a point where improvements become less and less noticeable and so less and less motivating.

Should we look to get exactly what we want or should we be happy to have achieved the goals we set? That’s a tougher question than it seems since so few of us are comfortable with incremental progress.  We think we see a solution and want to be there – NOW!

Does being a “perfectionist” pay off, or it is counter productive after 90% of what you want is done?  If you are satisfied with a product, why pay more for the new improved version.

Ih business we usually seek the perfect solution; but, a Venture Capital friend of mine tells me that a Great business idea with an adequate management team is not as good an investment as an Adequate Business Idea with a Great management team.  Why?  Because the great management team will find a way to morph the business into a successful arena.  So rather than seek out that maximum idea, a satisfactory idea may work better.

I like to point out Fred DeLuca, founder of Subway, a guy whose big idea was making sandwiches.  Nevertheless, he parlayed a more approachable business idea into a billion dollars.  And there was nothing particularly novel in his end product.

Readjusting your sights is a great exercise in humility and perspective.  Spending time to get to 90% of maximum may pay off more than taking the extra time to get to 100%.

One area where satisficing is a better strategy than maximizing is in learning a language.  If you can communicate, even if you are not 100% correct, you are a success.  Most people who are native speakers don’t really speak to maximum levels of capability.  Don’t worry if you don’t use the past conditional correctly.  Start talking.

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