Rules can be fast, ass ways to approach the best decision without the cost of detailed analysis. Another benefit of rules over intuition is they can be cited to defend a decision. However, some drawbacks of rules are they don’t consider all applicable information and they don’t allow exceptional performance of some elements to offset inadequate performance of others. It’s important to examine rules for the omitted attributes as well as attributes considered more important than others, which are distortions of the rule.
As the article states, the pyramid of approaches, from bottom to top, are Intuitive Judgments, Rules and Shortcuts, Importance Weighting, and Value Analysis. The higher the method on the pyramid, the more accurate, complex, and costly it can be. (Shoemaker, Russo, 1996, p. 26) For this discussion, the focus is on the Rules Method and applying the six steps to evaluate the rule. Step 1: The rule Identify an important rule of thumb from your organization that is used to make quick decisions.
I work part-time at a gym which has a requirement of completing an initial program for several weeks at a higher price than ongoing maintenance. This preliminary program includes more details and equipment o get the member started, hence the added cost. Once complete, participants can continue their membership at a maintenance rate. Sometimes members stop attending for various reasons. If they wish to start again and it’s been over 1 year since they last attended, they must complete the initial program again.
If it’s been less than a year they are simply reactivated. This is a generic threshold rule evaluating requests for membership reactivation against the preset criteria of last attendance within 1 year. It is approved only if the ;l-year criterion is met. Step 2: Success example Give an example of where this rule comes close to the correct decision. Janice (fictitious name) had been a member for over 3 years with regular attendance. When she got pregnant, her doctor advised her to discontinue the program as being too intense because she was a high-risk pregnancy.
Once she delivered and was ready to come back to the gym, it had been over a year and she was told she had to repeat the startup program. In this case she was relieved because she didn’t feel ready to return at the level she’d been at previously. So, starting at the beginning was a welcome option in that she could work gradually back to ere previous level of physical fitness. She felt the physical cost would be too great, too quick, at the maintenance level, so the extra financial cost of starting over was worth it for her.
Step 3: Failure example Give an actual example of where it failed badly and explain why. Scott (fictitious name) had been a member for two years with perfect attendance, very dedicated to the program recommending it to several friends who subsequently became members. About a year and a half ago, his job transferred him to Dallas. There isn’t a facility in that city, so he cancelled his membership. Recently he moved back to our location and stopped in to reactivate his membership. When he was told he’d have to do the initial program over again, he was upset and disappointed.
While away, he kept in good shape doing similar exercises on his own and with a personal trainer so felt he didn’t need to start over, nor did he want to pay the higher rate. The business manager apologized but said that’s the rule and there was nothing she could do about it. He did not rejoin the gym, instead joining a competing gym with a similar program, as well as encouraging is friends to quit our gym and join the other one with him. This was an unfortunate failure of that threshold rule resulting in the loss of his patronage as well as negative feedback against the gym.
Word of mouth complaints can harm local businesses. In this case I think this rule failed badly because it consists of only one threshold to determine eligibility to reactivate membership. The business needs to add another criterion, another threshold, to account for other relevant information. His fitness level could be evaluated to determine his ability to pick up where he left off. Additionally look at how close was the lapse in attendance to the I-year cutoff. The business managers need flexibility in deciding who can reactive and who must start over.
Step 4: Limits Construct cases where the rule would produce disastrous results (to understand its limits). Limit – declining reactivation of ineligible but robust members lost customers Unhappy participants declined reactivation take their business elsewhere. Competitors know this rule so spread the word that they are more flexible and offer discounts. Limit – accepting reactivation of ineligible but unfit members = potential injury If equines managers allow frail participants to reactivate at a fast pace, they could be injured and have to miss the program anyway.
Step 5: Improvements Generate possible improvements of the rule. How can analytics help in avoiding failure? The business owners can add criteria so the decision isn’t based solely on one rule. This would make it more of a Dictionary generic rule, in that the business manager could evaluate the most important factor first (length of absence under/over 1 year), then look at the next most important factor (over 1 year, then evaluate fitness level), followed by the next, etc. According to the article, one study found that the dictionary rule yielded about 80% accuracy rates attained by optimal rules, vs.. 0% accuracy for threshold rules. (Shoemaker, Russo, 1996, p. 16) Analytics could help in avoiding failure by conducting a fitness evaluation. Part of the initial program includes these evaluations. The business manager could have the member complete the evaluation and compare the results with their last evaluation to see if they’re on par with continuing the program. Step 6: Testing Describe how the new rule would be tested before being implemented organization-wide. Review past rejections using the new rule to test the outcome compared to the old rule.
