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Analysis of Paralysis

If your strategy doesn't help employees act, it's not a strategy.

"Keep it simple, stupid." That's the advice every executive has received on how to share strategy with employees. The subtext is often, "Keep it simple, because your people are stupid." But you don't need to embrace simplicity just so your people can comprehend your message. The point of simplicity is more fundamental: Simplicity allows people to act.

Researchers Eldar Shafir and Donald Redelmeier helped prove this point in an article in The Journal of the American Medical Association. They gave doctors the medical history of a 67-year-old man who'd been suffering chronic hip pain from osteoarthritis. He'd been given drugs to treat his pain, but they had been ineffective, so there was only one viable option: hip-replacement surgery, which would involve a long and painful recovery. Then a final check with the pharmacy uncovered one medication that hadn't been tried. Would the doctors like to give the drug a shot? Forty-seven percent of doctors chose to try the medication in a final attempt to keep the patient from going under the knife.

Another group of doctors saw the same facts, except they were told that the pharmacy had discovered two medications that hadn't been tried. If you were the patient with the bum hip, you'd be thrilled—two nonsurgical options are better than one. But when the doctors were presented with two nonsurgical options, only 28% chose to try either one.

What happened here is decision paralysis. More options, even good ones, can freeze us, leading us to stick with the "default" plan, which in this case was slicing open someone's hip. This clearly is not rational behavior, but it is human behavior. Similar tests with different groups have revealed consistent results.

Think about the sources of decision paralysis in your organization. Every business must choose among attractive options: growing revenue versus maximizing profitability, quality versus speed to market. Fold together lots of these tensions, and you have a surefire recipe for paralysis. It took only two options to fuzz the doctors' brains. How many options have your people got? As Barry Schwartz puts it in his book The Paradox of Choice, as we face more and more options, "we become overloaded…. Choice no longer liberates, but debilitates. It might even be said to tyrannize."

You can see the hidden tyranny of decision paralysis in the newspaper almost every day. The companies flagged in the Chinese recall scandals appear to have been caught between the competing principles of safety and cost reduction. Customers who record their contentious customer-service calls and post them online, as one person did recently with Earthlink (and others famously did with AOL last year), are outraged by hypocrisy: companies that say, "Make the customer happy," but pay service reps based on criteria like speed or quotas. At that nexus, paralysis leads to frustration.

We once talked to leaders of one of the nation's top mental-health facilities, which was in the process of revamping its mission and goals. We were surprised to find that it had 11 core values. They were admirable—innovation, integrity, and so on. But values are supposed to guide behavior, and you can't even remember 11 values, much less use them to make decisions. Stephen Hawking can think in 11-dimensional space, but you can't. Practically speaking, having 11 values is equivalent to having no values.

Simplicity is the way out. Imagine if the doctors in the psychology study had worked for a hospital with the mission statement, "Invasive treatments should be a last resort." Suddenly, the choice isn't so paralyzing, even with two drugs. The statement is simple because it makes a decision easier, not because it's dumbed down. Doctors aren't idiots.

Some organizations have evolved stories to simplify strategy. For instance, Costco employees know the "Calvin Klein jeans story," as reported in Evelyn Clark's book Around the Corporate Campfire. In 1996, Costco was selling out of Calvin Klein jeans at $29.99 a pair. Then, the chain's buyers struck a deal to get about 4 million pairs at a discounted price; with Costco's usual 14% markup, the jeans would sell for just $22.99. The buyers knew that Costco could easily sell out the full order at $29.99. Where do you set the price? The decision: $22.99. Jim Sinegal, CEO, said, "I use that as an example because it would be so tempting for a buyer to go with the higher price for a very quick $28 million in additional profits, but ours didn't. That's an example of how we keep faith with the customer." These situations could be paralyzing: Should you maximize profit or stick with a rule that keeps prices at bargain levels? The Calvin Klein story resolves the tension.

Even a one-liner can ease paralysis. The scrappy Savings & Loans Credit Union in Adelaide, Australia, has an internal strategic motto: "We don't want to be first but we sure as hell don't want to be third." The strategy is to stand back and let the first mover take the risk and grab the glory of innovation, then come in right behind and make a copy that's crisper than the original. The lessons for employees are clear. Constantly scan the environment for good ideas. Don't be first, be best. Look for new employees who are good, quick executors, not creative pioneers. And reserve the incentives for people who are improvers, not inventors.

A simple strategy can resolve decision paralysis. And it doesn't have to be simpleminded to do the trick.

Read more Made to Stick columns

Dan Heath and Chip Heath are the best- selling authors of Made to Stick: Why Some Ideas Survive and Others Die. If you've devised a simple strategy for your company, tell us.

A version of this article appeared in the November 2007 issue of Fast Company magazine.