How many loaves tonight?: Every evening someone has to decide how many loaves each shop gets. For years Lena has done it in her head. Marco wants to decide it a different way.
The night shift
- At 2 a.m. Priti and her six bakers start the night shift at the Mill Lane bakehouse.
- By 5 a.m. the vans leave with bread for the High Street, Market Square and Park Road shops.
What went wrong last month
- One loaf in ten was thrown away at closing time.
- Park Road sold out by noon twice.
Marco's way is to decide from the evidence (scientific thinking, also called scientific management). A decision is made from data, through a logical, step-by-step process: gather the facts, compare the options, test the best one, measure what happens. 'Scientific' describes the method, not a laboratory. Like an experiment, the decision can be checked and repeated by someone else.
Marco decides the bread order
Define the problem
One loaf in ten is wasted, about 120 of the 1,200 baked each night, while Park Road runs out. The aim: bake closer to what each shop sells.
Gather the data
Three months of till records: loaves sold by shop, by day of the week and by weather.
Analyse it
Patterns appear. High Street sells a third more on Saturdays. Park Road sells a fifth less when it rains, because its customers walk.
Test one option
For four weeks Park Road's order is set from the data and the weather forecast. The other two shops carry on as before, so the results can be compared.
Measure and decide
Waste at Park Road falls from 10% to 4% and it sells out only once. The method is used for all three shops, and checked every month.
What deciding from evidence gives
- Objective: the till records do not have favourites, so less room for bias
- Options are compared and their risks assessed before money is spent
- The decision can be explained and justified to a bank, a shareholder or the staff
- Consistent: anyone following the method reaches the same order
- Less waste and higher productivity, so a lower cost for each loaf
What it costs
- Slow: three months of data and a four-week trial before a decision
- Costly: systems, analysis and staff time to collect and check the data
- Data describes the past, so it can miss something new
- Poor data gives false confidence: a wrong number looks as solid as a right one
- Experienced people may feel their judgement no longer counts
Data is not the same as a decision: The till records told Marco what Park Road sold on rainy Tuesdays last spring. They could not tell him that a school opening next door in September would change everything.
Scientific thinking is only as good as the data it uses and the questions it asks of it.
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Lena looks at the sky: Before Marco's spreadsheet, Lena set the order at six each evening, with no data and no workings. Lena has baked since she was twelve, and she was usually close.
How she reached the number
- She would look at the sky.
- She would remember that the football was on.
- She would think of the regular who buys six loaves on Fridays.
- Then she would say: 'High Street 380, Market Square 420, Park Road 400.'
That is deciding by experience and feel (intuitive thinking, or intuitive management). A decision is made from instinct and gut feeling, built up over years of seeing the same situations, rather than from collected data. It is not guessing: a guess has nothing behind it, while Lena's feel has thousands of Friday evenings behind it. She just cannot write them all down.
Where intuition works at Lena's
When there is no time
At 4 a.m. on a hot, humid night, Priti presses the dough and feels it rising too fast. She shortens the proving time on the spot. There is no time to measure anything.
When there is no data
Lena tastes a new rye loaf and decides to try it in all three shops. Nobody has ever sold it, so there are no till records to study.
When it is about people
Kofi can tell from a counter assistant's face that she is struggling, and changes her shift before she asks. No spreadsheet shows that.
What deciding by feel gives
- Fast: a decision in a minute, when waiting would cost the sale
- Works where there is no data, such as a new product or a sudden problem
- Uses years of experience that no spreadsheet holds
- Creative: it can spot a chance the numbers would not suggest
- Cheap: no research to pay for
What it costs
- Subjective: open to bias, mood and wishful thinking
- Hard to explain or justify to a bank, a shareholder or the staff
- Hard to check, repeat or teach: it lives in one person's head
- Experience of one situation may not fit a new one
- A big mistake is more likely when a lot of money is at stake
The pumpkin loaf: Last October Lena was sure a pumpkin loaf would sell. She loved it, and so did Priti. For three weeks the night shift baked 40 a day, and about 30 of them were thrown away.
Why nothing warned her: Nothing warned her, because nothing was measured until it had gone wrong. A feel is strongest where it was learned; a new product is exactly where it is weakest.
Managers who decide this way also tend to trust the judgement of their experienced staff. At Lena's, Priti decides at the ovens and the shop managers adjust their own displays, and they are used to being asked what they think. That habit matters when a business thinks about changing it.
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Neither way is better in general. The same bakery uses both in the same week, because different decisions call for different thinking. A few questions show which way a decision leans.
| Ask | Leans scientific when | Leans intuitive when |
|---|---|---|
| How much time is there? | Weeks or months: a fourth shop | Minutes: dough rising too fast at 4 a.m. |
| Is there any data? | Yes: years of till records | No: a loaf nobody has sold before |
| How new is it? | It happens every day, like the nightly order | It has never happened before |
| What does a mistake cost? | A lot, and it cannot be undone: a lease, a loan | A little, and it can be fixed tomorrow |
| Must it be justified to others? | Yes: a bank, shareholders, 400 bakery managers | No: the owner decides and answers for it |
| Is it about taste or people? | Less so: numbers of loaves, costs, prices | Yes: a new flavour, a worried employee |
Most real decisions mix both: Lena and Marco want a fourth shop. They use both ways of deciding.
Choosing the fourth shop
Data narrows it
Marco counts the people passing two possible sites at different hours and builds a forecast of sales and costs. The data narrows it to two streets, with almost the same numbers.
Judgement picks
Lena spends a morning at each. On one, the people passing are office workers who buy lunch; on the other, families who buy bread for the week, like her customers now. Her feel picks the second.
A check afterwards
Look again later to see if the choice was right.
Data to narrow the choice, judgement to make it, and a check afterwards to see if it was right.
Lena's Bakery Ltd: leans intuitive
- Small. 22 people on three levels; the owners are at the counter and the ovens every day.
- Little data. Three shops' till records, and only since Marco started keeping them.
- Answers to few. Three shareholders who all know each other.
Goldcrust plc: leans scientific
- Large. 400 bakeries and six levels of hierarchy; head office cannot see each street.
- Plenty of data. Millions of sales a week, from every bakery, by the hour.
- Answers to many. Thousands of shareholders, who expect every big decision to be backed by evidence.
Size pushes a business towards evidence: As a business grows, its managers are further from the customer, it has more data, and more people want its decisions explained. All three push it towards scientific thinking.
Even Goldcrust relies on feel for some things: which new flavour to launch, or which manager to promote.
Marco's plan for Mill Lane: Park Road's trial worked, so Marco wants to run the whole bakehouse scientifically. Lena agrees to look at the numbers first.
What would change
- The nightly order would come from the data, not from Lena or Priti.
- Every recipe would be written down with weights, temperatures and times.
- Each baker's output would be recorded every night.
| Last year | This year | Forecast with Marco's plan | |
|---|---|---|---|
| Loaves baked per baker per night | 205 | 200 | 230 |
| Loaves thrown away (share of loaves baked) | 9% | 10% | 4% |
| Bakers who leave in a year | 1 | 1 | 3 |
The first two rows are the benefit. The night's wages for the six bakers come to about $1,200. The labour cost of one loaf is the night's wages divided by the loaves baked: $1,200 ÷ 1,200 = $1.00 today. At 230 loaves per baker the same wages bake 1,380 loaves: $1,200 ÷ 1,380 = about $0.87. Waste falling from 10% to 4% of 1,200 loaves means about 72 fewer loaves in the bin every night.
What the switch gains
- A logical process: options compared and risks assessed, so better odds of a good decision
- Higher productivity, so a lower labour cost for each loaf
- Less waste, so fewer loaves paid for and never sold
- Decisions Marco can explain to the bank when Lena's Bakery borrows for a fourth shop
What the switch costs
- A change of culture: bakers used to judging by feel now follow a sheet and are measured
- Staff who were asked for their views may feel less trusted, so motivation falls
- Time to re-organize who decides what: the order moves from Lena and Priti to Marco
- Money for a till system, recording and training
A cost does not have to be in dollars: The third row of the table is the cost. One baker a year leaves now; three are forecast to leave if the plan goes ahead.
Why each leaver costs
- Each one has to be recruited and trained again.
- New bakers burn loaves and fall behind while they learn.
Bakers, not machines: Priti puts it simply: 'We are bakers, not machines.' A change in how a business decides is a change in how its people feel about their work.
So Lena and Marco keep both. The nightly order comes from the data, because it is a daily, measurable decision. Priti keeps her say at the ovens, because the dough on a humid night is a judgement no sheet can make.
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How this comes up: Inside a case. A business that uses intuitive thinking and gives its staff a say in decisions plans to introduce scientific thinking.
What the case and question give you
- A table forecasts what would happen: productivity up, labour turnover up.
- The question: explain one benefit and one cost for the business of introducing scientific thinking/management, for four marks, two and two.
The four-mark pattern
- Name the benefit. Decisions follow a logical process based on data, so options are tested and productivity rises.
- Show what the figure means for this business. Output per baker is forecast to rise from 200 to 230 loaves a night, so the labour cost of a loaf falls from about $1.00 to $0.87.
- Name the cost. A change of culture: staff used to judging for themselves are measured and lose their say, so motivation falls.
- Show what it means for this business. Leavers are forecast to rise from one a year to three, and each has to be recruited and trained.
Trap 1: copying the table is not applying it: '230 loaves in the forecast' repeats the case. '15% more bread from the same wages, so each loaf costs less' uses it.
Trap 2: the name alone is not the case: 'Lena's Bakery would be more productive' could be any business. The second mark needs a figure, a person or an event from the case, and what it means.
Explain one benefit and one cost for Lena's Bakery of introducing scientific thinking/management.
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