RATIONALIZATION -   (Originally published July 1997. V3, I3)

ra·tio·nal·ize (rash'e-ne-liz')

Verb: ra·tio·nal·ized, ra·tio·nal·iz·ing, ra·tio·nal·iz·es.

1. To interpret or explain from a rational standpoint.

2. To cause to appear reasonable or rational.

3. To devise reasonable but untrue explanations for (for example, one's behavior).

ra'tio·nal·i·za'tion

            How often do you find yourself rationalizing?  While the prime definition of ‘rationalization’ is to interpret or explain from a rational standpoint (No. 1 above), most ‘rationalization’ I encounter is best defined by No. 2 or No. 3 above.

            It is amazing how much time is wasted attempting to make irrational decisions seem rational.  If a decision is wrong, all the talk in the world will not make it right.  Taking corrective steps quickly will reduce the potential damage that may result from that bad decision.

            You may have noticed from previous newsletters that the underlying theme of the majority of my comments deals with not wasting time looking to place blame.  Regardless of your type of business, re-hashing who did what wrong, costs money.

            Rationalization can be used to justify spending money or not spending money.  It can justify buying a new piece of equipment or not buying it.  It can be used to justify hiring a new employee or not.  You can readily see that rationalization is a very SUBjective way of making decisions that should be very OBjectively made.

            A good decision comes from making the following determinations (in this order):

1.      Decide the exact need.  This is represented by the final results to be obtained (nicer looking documents, faster completion times, more work produced).

2.      Decide what is needed to obtain the results of the above.  This may be a new piece of equipment, or new software, or additional personnel.  It may also be better utilization of existing equipment, or using unused functions of existing software, or changing the priorities governing the work of existing personnel.

3.      Once the above is determined, you then can look for the hardware, software, or person to accomplish the results wanted.

            I have found that most people follow the above, EXCEPT they start with number 3 and RATIONALIZE their way through numbers 1 and 2.

            Every decision in business should be made with the idea of not losing money doing it.  There are many ways to express this concept, but the final result comes down to taking in more than you spend.  If a decision to spend an additional $25,000 every year brings in an additional $20,000 every year, you do not have to be a rocket scientist to realize that unless the income goes up, you would be better off not spending the money with this decision.  If on the other hand you spend $25,000 the first year and $5,000 each year thereafter, and you have the same additional $20,000 yearly income, you will, in a couple of years, be making money from this decision.

            This principle also holds for new personnel.  While having someone to only answer the telephone may be nice, a new phone system that will allow calls to be directed to the proper desk may be more effective and less costly.

            Now with that said, I have to also say there are times when you must make a decision that is not profitable in itself.  What is important is that you realize this fact before making the decision.  Usually this situation arises when attempting to break into a difficult market or when accommodating an existing customer.  Regardless of the reason, you should continue to revisit your decision to see if the original goals are being achieved.

            Since the only thing constant in business is change, you should always be prepared to re-evaluate and make changes.  Circumstances, outside your control, may change, and a perfectly good idea one day, may no longer be valid the next day.

THE OBSOLETE PC

            The tools (PC’s & software) you, and your personnel, use, are just that, “TOOLS”.  If you owned the fastest Indy car ever built, but did not know how to get out of first gear, I doubt we would be seeing you downing your milk in the winner’s circle.  Unfortunately, this is the situation with most small businesses.  The attempt is made to be more productive by buying faster computers.  This has produced a very interesting statistical change.  Several years ago it was estimated that the average PC user was only taking advantage of about ten to fifteen percent of his software’s capabilities.  Today, due to the faster PC’s and more powerful software, the number has dropped to about seven percent.  This is similar to the inadequately trained SST pilot who announced to his passengers that it appeared they were lost, BUT, he was happy to report, they were ahead of schedule.

            The primary reason for up-grading your PC hardware should be to accommodate the newer available software.  Do not fool yourself into thinking because a computer is faster, you will necessarily improve your output.  Your present hardware with your present software accomplishes a known quantity and quality of work.  If you up-grade only your PC, it is most likely that there will be little noticeable difference, except for your computer expenses for the year.  If your PC will accommodate a newer version of your software and you up-grade only your software, you will most likely see some improvement in quantity (speed) AND a marked improvement in quality.

            If you follow the steps outlined in the article above on rationalization, you may find that that your hardware is not as obsolete as you once believed.