An everyday decision and better business outcomes

We can learn about how we work from observing and reflecting on our decision behaviours be it in work or at home. Here is a cut-down version of one of our Business Decision Design® training course case studies.

Narrative:

I recently had to buy two rear tyres for our car. I have two young children so I have safety on my mind more than cost. However, I do like to shop around to make sure I get a good deal. Six months ago I replaced the two front tyres. I like the idea of supporting local businesses, especially independent ones rather than the national chains. I got a good deal from a local tyre firm on the front tyres. This time they cannot get hold of the exact same tyres and the cost per tyre has gone up by £9 each (up 7% on last time).

Decision Analysis:

Outcome wanted?

  • Correct new tyres on rear wheels with minimum cost and effort

Requirements?

  • New tyres on the rear wheels (functional)
  • Same make & model of tyre preferred or nearest match (safety)
  • Need to comply with load and speed ratings set out by the manufacturer (safety)
  • Same or better price than last time (financial)

Constraints?

  • Limited distance to travel to get them fitted
  • Need to complete the task soon
  • Our car has pressure sensors in the tyre valves which can be damaged if the tyre fitters don’t have the right equipment

Inputs?

  • Conversation with local preferred supplier on availability and cost
  • Online sources of tyres (for price comparison and availability of matching tyres)
  • Online sources of reference data [car model’s required speed and load rating]
  • Online commerce providers

Process?

  • Tyre search for original brand / model
  • Cost comparisons
  • Short-list options
  • Select an option by considering selected and weighted decision criteria

Weighted criteria?

  • Must be same brand
  • Can be updated model
  • Must be lowest cost
  • Must be local fit (<5 miles)
  • Must be done within 3 weeks

Type of decision?

  • Investment decision
  • Infrequent decision (i.e. once a year or less)
  • Cost driven
  • Commodity purchase focus on price and availability not relationship(s)

Design considerations:

How much effort was it worth?

  • In cash terms I was looking to save £18 or more and ended up saving £46 (17%) compared to my default supplier’s quote
  • Which depending on what daily rate you use buys anything from 20 minutes to a day’s worth of effort
  • I spent ~ an hour looking at this but not at the cost of paid work.

How could I have improved the decision-making process?

There was an option to procure tyres only and I could then have had them fitted by my local preferred fitter – it would have taken more time to explore the cost benefit of this approach.

I could have asked some other people how they go about making this type of decision to get some fresh ideas on what appears to be a mundane process.

How do you go about this?

 

The full Case Study explores additional aspects of Business Decision Design® beyond the above two points but this gives you a flavour of one type of analysis for this type of decision.

 

Here is a link to that sunset picture – illustrating that it is never too late in the day to create something beautiful!

I hope you have an enjoyable week.

 

Nigel Stock

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