Solve Your Problems

Empty seats in an upmarket restaurant on a Tuesday night prompted its co-owner to ask why. “Well, Tuesday isn’t Saturday,” came the reply.

For Nick Kokonas, the answer he received was both obvious and annoying. The issue created empty tables on a Tuesday and drove excess demand for reservations on a Saturday. It seemed madness not to open 7 days a week, and also madness to only open for 4 of them.

Table occupancy is a problem for every restaurant owner making it:

• Impossible to bulk-buy ingredients
• Dependent on weekend trade
• Hard to recruit staff

It was a problem which Nick needed to fix. It wasn’t an exclusive problem for his restaurant, it was an industry problem and had been for years. Einstein was right when he said, " We cannot solve our problems with the same thinking we used when we created them.”

So he started looking at other industries where reservations took place.

Theatres caught Nick’s eye.

Unlike a restaurant, customers pay before the performance. They pay for better seats too. The ones with the best view cost more than those with a lesser view.

Occupancy was much higher.

Customers paying before the performance meant they had something to lose if they didn’t show up. It wasn’t the theatre that was going to suffer, unlike the current practice in a restaurant.

Turning restaurant seats into an imaginary theatre, meant the busier days would replicate the seats with better views. The quiet days would mirror the lesser views at the theatre.

It created a new pricing model.

Choosing what to eat is part of the experience of eating out. Rather than pay for the whole meal, a reservation would take a percentage and deduct it from the bill at the end.

Two simple factors changed the game creating a huge increase in occupancy:

• Dynamic pricing
• Online booking with payment (skin in the game)

The story I relate to is true and important for a few reasons. It highlights how you can’t solve problems with the same thinking that created them. You have to think differently. What Nick shows is an how you reason from first principles.

When you reason from first principles you're breaking the link to the ‘same thinking’ approach.

You can take a statement like ‘Tuesday isn’t Saturday’ in the context of eating out and see where the problem rests. Ironically, you can also see where the solution rests too.

It is what Nick did.

This brings me to your decision-making. For all the hype about first-principles thinking, you can’t do anything without understanding. So, this week, when faced with a problem make the decision to understand it. See what the fundamentals are because when you can grasp these, you can look at how others overcome them too.

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