Tag Archives: decision making

Decision Making and Fuel Prices

Economics shows that in certain situations providing similar goods at different price points can increase profitability. Oil companies have started doing this when selling fuel.

Typically, the choices are laid out left to right, with the cheapest option at one end and the most expensive option at the other. The result of this is many customers resort to rules of thumb and take the middle choice. That’s fine, but at the place I was at yesterday they had put their most expensive option in the middle. I bet they make more money in the short term as a result of this layout. Whether they build long term goodwill with their customers is another issue.

Decision Making and Music

People tend to think they make decisions in a rational, objective fashion, but the research of Adrian North, a Psychology Professor in the U.K. shows that even background music can influence decision making.

  • Playing sterotypical French or German music in a wine store determined which wine outsold the other, more interestingly shoppers were unaware that the background music had influenced their purchase.
  • In another study students in a cafe showed a greater willingness to pay for more expensive food when classical music was playing.
  • People were also more willing to hand out leaflets for a charity after listening to uplifting music.

 

Making The Most Of Your Information

As reported in this Techcrunch article FlightCaster received further funding today.

It’s an interesting startup company. They predict airline delays using 10 years of historical data combined with real time information. They claim the airlines could do a better job, but don’t because it’s in there interests to get everyone to the gate just in case the delay doesn’t happen, because announcing a delay in advance would always be self-fulfilling.

The company also brings to mind FareCast (now part of Bing Travel), the company Microsoft acquired that predicts changes in flight prices for consumers.

Why does this matter? Well it’s an illustration of the principle that we can always make better predictions, 4 hours before take-off FlightCaster claims to make 10x delay predictions the airlines do, with no change in the level of accuracy, the data is there, but we’re just not using it effectively. FlightCaster is just one example of this phenomenon.

Faster Decision Making

How long does it take your organization to make a decision? What’s the lag between something breaking and the decision to fix it? Sometimes a good, but slow decision is worse than an imperfect, but slow one. Especially when you consider the number of people involved in making decisions in most organizations and the cost of their time.

Are their layers you can take out of your decision making process to speed things up? Can you push decisions further down your organization to make it more responsive?

“Making good decisions is a crucial skill at every level.” Peter Drucker