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Article
process Darwinism
By
Merit Smith
Vice President Last week, when I was in a hub waiting on yet another delayed regional jet, I read
Universal Principles of Design by Lidwell, Holden, and Butler. What a great book! It has 100 ideas, with two pages per idea. Each idea is laid out in concise prose on one page, with illustrations or graphics on the facing page. Each article, a freestanding essay on an interesting aspect of design, also includes references in case you want to read more. What’s special about the book, though, isn’t the format but the selection of ideas.
The authors use “design” in a broad sense: it can mean the design of a system, process, or organization. The topics of the articles range from the “80-20 Rule” to “mental models” to “signal-to-noise ratio.” I’ve given the book to several busy executives, and they’ve had two common experiences with it. First, they have all actually read it. Second, reading
Universal Principles of Design helped them recognize that there was an element of design in problems they were working on.
One article stood out for me: the one on cost–benefit. Rather than a dry rehash of managerial accounting concepts, the authors explained cost-benefit in stunningly simple logic: Activities will continue as long as their benefits exceed their costs. That statement made me stop reading and begin thinking. I was able to identify five different client problems from over the past three days that could be analyzed with this concept. Here are the examples:
 | “Are we really getting a return from our disease management program?”
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| “If we redeployed our account service reps to a contact center model, would we have the same or better level of service at a better cost?”
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| “Do we have our regional offices in the right regions? Are we positioned to serve the old geography or the new pattern of growth?”
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| “Will going to a hospitalist model improve care and cost? Or should we keep and improve the traditional internal medicine/specialist model?”
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| “VoIP…should we switch to it?”
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All of these questions had a common underlying structure—namely, “Given that we are doing x today, will the benefits of continuing it outweigh the costs?” For each question, an alternative design was forcing cost–benefit to be considered.
Once on-board the plane, my mind wandered as the flight attendant did the safety briefing. Several days earlier, I’d had a long discussion with a fellow about natural selection and survival of the fittest. The cost-benefit idea and natural selection came together for me as we waited on the runway. Of course, it is not a fully formed idea, and you are free to expand it, refute it, or ignore it. But you might be clever to use it as part of your management processes. Here it is:
| Executives use cost-benefit techniques as a means of natural selection.
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| Processes and activities that are seen as having favorable cost-benefit survive better than those with less favorable cost-benefit measurements.
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| Over time, under the pressure of this management practice, the future lies with the process that has the best cost-benefit.
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Seems simple, right? But it explains a lot of different things we’re seeing. Think of Southwest Airlines, the offshore movement of provider credentialing and accounting functions, and the transformation of customer service into self-service.
Cost-benefit thinking doesn’t help with all problems. And some service designs can be competitively justified by difficult-to-quantify factors. Barnes & Noble and Amazon, for example, can co-exist and thrive.
If you find that you make decisions without cost-benefit thinking, stop for a second, walk around the parking lot, and take another look at the problem. You might just improve your design and avoid an avoidable mistake.
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