The Optimization Edge: A book review by Bob Morris

Posted on: January 15th, 2012 by bobmorris

The Optimization Edge: Reinventing Decision Making to Maximize All Your Company’s Assets
Steve Sashihara
McGraw-Hill (2011)

How to make complex decisions and recommendations about the best way to deploy assets

In a book I very much admire, Judgment: How Winning Leaders Make Great Calls, Noel Tichy and Warren Bennis assert that what really matters “is not how many calls a leader gets right, or even what percentage of calls a leader gets right. Rather it is important how many of the important ones he or she gets right.” They go on to suggest that effective leaders “not only make better calls, but they are able to discern the really important ones and get a higher percentage of them right. They are better at a whole process that runs from seeing the need for a call, to framing issues, to figuring out what is critical, to mobilizing and energizing the troops.”

One of the most challenging decision a leader must make, every day and often many times each day, involves allocation of resources, especially of time. It is a common complaint among C-level executives with whom I have worked closely that their daily agenda comes under severe attack almost immediately after they arrive at work. I agree with Stephen Covey that many (most?) executives spend too much time with what’s urgent and not enough with what’s important. I also agree with Steve Sashihara that many (most?) of these same executives need to “change the fundamental approach to how their organizations are led, decisions are made [about but not limited to allocation of resources], and assets are managed,” especially those for whom they are primarily responsible.

Sashihara focuses on companies in which there has been reinvention of the decision-making process in order to maximize all of the company’s assets. They include Amazon, Google, Marriott, McDonald’s, UPS, and Walmart. However different these companies may be, here is what they share in common: Their leaders asked the right questions such as these and then obtained the answers needed to make the correct decisions with regard to optimizing assets and resources:

o  What are our under-utilized assets?
o  Where and how are repetitive decisions about key assets being made?
o  When and how are we forecasting? How accurate are our forecasts?
o  When and about what are we repeatedly having lengthy debates over strategy decisions or operational issues?
o  What does “best” mean?

It is important to keep in mind that, as Sashihara explains, optimization is presented not simply as a technology “but as a set of principles and a way of thinking that are achieving superior business results as they reshape businesses, industries, and the competitive landscape.” Indeed, it not only harnesses the new breed of software but also makes explicit recommendations that help business leaders to achieve their organization’s strategic goals. “This is particularly useful in areas where the data are voluminous and change rapidly, which when you think about it, are those facing just about every manager today.”

Readers will appreciate Sashihara’s provision of a “Final Note” section at the end of each chapter that can help to facilitate, indeed expedite frequent review of key points. He also includes other reader-friendly devices throughout his narrative, such as Figures, checklists, and mini-commentaries that may seem to be digressions but, in fact, complement the flow of his narrative.

I commend Sashihara for achieving his objective to “create a clear, compelling picture of the power and potential of Optimization, so that a great number of people across industries and disciplines will be motivated to step up and take a ‘swing’ at turning the images presented here into reality, now and well into the future.”

In other words, do much more and do it better with much less, faster, and at a much lower cost, with fewer people involved.

Those who share my high regard for this book are urged to check out the aforementioned Judgment as well as Kevin Murray’s Language of Leaders: How Top CEOs Communicate to Inspire, Influence, and Achieve Results and Robert Cialdini’s  Influence: The Power of Persuasion.

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