“Price – Quality – Delivery” and Reality [Reader Post]

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Jim Yardley wrote a brilliant article on August 18, 2012, for “another” conservative web site. His article was entitled “You Can Pick Only Two.” His article was so good that I had to throw my 2¢ worth in. Jim did a great job explaining just how the “Price – Quality – Delivery” paradigm works in the real world.

In his article, Jim said”

“Look how Britain currently (and America in the future under ObamaCare) has suffered with health care that simply reflects the truth of that old adage:

You want low-cost and high-quality health care? Fine, you’ll have to wait for several months to see a doctor, but that’s OK — you got two out of three.

Don’t want to wait? OK, we can do that, too. It will be fast and cheap, but we can’t guarantee top quality. Now are you happy?

Oh, you want top quality and you want it immediately? Fine, we can do that, too, but you can forget cheap.

And these trade-offs apply not just to health care, but to everything else that government (or private industry, for that matter) provides.

His healthcare example was outstanding. I wish I had thought of publishing the idea, but, alas, all I can do is add to it by providing a visual representation.

Why, you ask, do I want to do that? Because I used exactly the same example to support and teach critical thinking. In the military and civilian worlds I found the old adage “a picture is worth a thousand words” to be quite true, especially as rank (military or civilian) rose. That is not a “knock” on rank – it’s a reflection of their changes of view.

The “real world” ALWAYS has three dimensions. Working with only two dimensions means that you are working with a “plane.” When Jim says that you can only pick two, he is referring to one of three planes that you can choose. The third dimension and its default quantity is FORCED upon you by reality. You MUST work in three dimensions – working with only two dimensions is unrealistic (although it may work in the short run).

The first figure, a graph, illustrates reality, what Jim Yardley was expressing. EVERYTHING is/can be expressed in three dimensions (graph axes). He chose dimensions (Price – Quality – Delivery) that are very realistic, particularly for the health care example he selected. Note that in Jim’s first example above, he cites “low-cost.” The problem here is that a low-cost to the consumer program will carry a very high program price, such as with Medicare. So a low-cost program will have a high price.

The next figure illustrates working only with the “Quality – Price” plane, illustrated here in light blue. There is absolutely nothing incorrect with choosing these two dimensions. The only “problem” occurs when reality, requiring that you work with three dimensions, FORCES you to take the default “Delivery” quantity, which is zero, or not a very rapid delivery. This is what Jim is illustrating in his first example above.

Let’s say that you have a program that has a price/quality target illustrated by the “*”. But notice that the quantity of “Delivery” is zero. Making the quantity of the third dimension (Delivery) have a non-zero quantity is going to involve, as Jim says, a tradeoff. If, for example, you have only X dollars to spend on the entrire program, then the “*” MUST move toward the “Price” axis, or the “Quality” axis, or both, if the “Delivery” quantity is to become non-zero, to move away from the graph origin. Or, if the “Price” and/or “Quality” quantities are fixed, then it’s going to take more money (or effort – same thing) to move the “Delivery” quantity away from the graph origin, the zero quantity.

Both situations are classic examples of tradeoffs.

The same is true regardless of which two dimensions you choose, be they “Price – Delivery” or “Quality – Delivery.” Moving the third dimension away from a zero quantity, the graph origin, is going to require a tradeoff.

And, no, the “Quality – Delivery” plane, illustrated below, with its forced “Price” quantity of zero is not a contradiction. Think about it. In this instance, the word “price” means the VALUE of the program. A program that has no value is not going to accomplish its mission, regardless of its quality or delivery. This is a visual example of Jim’s second health care example above.

That is Jim’s point – if you are going to work in only two dimensions (“You Can Pick Only Two”), then the default quantity of zero for the third dimension will be FORCED upon you. Or a tradeoff is going to become involved. There is simply no way to avoid it.

There may, indeed, be a fourth or fifth or … dimension in which all three of the dimensions of our reality are satisfied. But, as Jim says, “… find some of the fairy dust Obama thinks he has in a closet somewhere in the White House.” That is the ONLY way we can escape our three dimensional world!

But that’s just my opinion.

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This model has been around for a long time. You can apply it to green energy. If you want to have reliable energy consistently, be prepared to pay very high prices for it. Solar energy can work only if you need it when the sun is shining. When you need to add batteries to the mix, it becomes very expensive. Wind energy is similar. If you want to minimize CO2 (cannot figure out why you would want to do this when it is an essential trace gas!) releases from fossil fuel plants, you can get reliable energy consistently, but the cost of minimizing CO2 is very expensively.

Now, if you want use taxes from people and businesses who engage in World trade to pay for special projects like green energy, electric cars, health care, financing jihad governments (Moslem Brotherhood), terrorist organizations (Hezbollah) we don’t need, these people/companies lose their ability to pay employees. So, You can look like a hotshot in the world, spreading money to every environmental or terrorist organization, but you sacrifice the jobs at home! Clint was right. If the man cannot perform in the job, replace him!

Oh, this is like the “Faster-Better-Cheaper” slogan that NASA came up with in the nineties. It was obvious to the most casual observer that you can only achieve two out of the three at the same time.

@Randy: Randy, question. You’re only referring to ‘green energy’ ? correct? you said: ” If you want to have reliable energy consistently, be prepared to pay very high prices for it. ” and of course that statement is correct for ‘green’ energy, but not for ‘energy’. Natural gas fired or coal fired boilers of course provide extremely reliable and cheap energy. And of course the cheapest energy of all, if not for all the ‘regulations’ would be nuclear energy. The costs of medical care are similar in some ways to the cost of energy. The more requirements and restrictions involved, the higher the cost. So I think the only time you can’t acheive faster, better, cheaper are when the government and their regulations are involved. Private enterprises specialize in providing all three quite successfully. That’s why private businesses succeed where government operations don’t

@Randy: Yes, Randy, you are correct – this model has been around for a while. But it seems that politicians (especially Democrats) can’t seem to learn it.

Warren Beatty [not the liberal actor]
ah shot no your not him?
I’M so glad, I never liked his acting,
bye
thank’s for the POST,
I sure hope we have been made of three dimensions,
otherwise it would be boring to live in black and white,
like the DEMOCRATS DO.

This is an overoptimistic analysis, actually. The ‘choose two out of three’ (fast, good, cheap) limitation is something that was intended to express the *best* you could hope for in the private sector. Given the perverse incentives that apply when government is involved, there is no reason you can’t end up going 1-for-3 or even 0-for-3 (actually you can do this easily enough in business, too, if you don’t know what you’re doing). Our current system arguably is fast-and-good, but expensive. I bet it doesn’t get any cheaper under Obamacare and will probably get slower due to overloading.

Warren Beatty,
yes, What came to mind from your EXCELLENT POST, IS that how many sheets of papers and still adding on they have required to make that plan 3 dimensions on flat papers which no matter how many
they add to it, the paper are on a flat surface and remain flat on flat one dimension plus reality,
they where lacking of vision, they only had one track mind with the added many regulations on the rest of the papers so to confuse and make sure it stay indescriptive, same way they ,OBAMA AND LAWYERS
CONCOCTED THE MANY PAGES OF REGULATIONS, SO MANY THAT SOMEONE NOTICE THERE
ARE NO WAY YOU CAN LIVE WITHOUT BREACHING ONE OF THE REGULATION,
MAKING BUSYNESS CRIMINAL TO THE EYES OF THE GOVERNMENT, THAT IS ANOTHER ONE DIMENSION WAY THEY SWINDLE MONEY AND PAY THEIR NUMEROUS HAPPY LAWYERS,
THE 3 DIMENSIONS ARE IN THE OBAMA INTENT,
ONE, BRING PUNISHMENT TO ALL, 2, HUMILIATE THE BRIGHT MINDS, AND 3 CONTROL SOLELY,
A NATION OF GIANTS TIED TIGHT BY OBAMA, LAUGHING WITH HIS CREW, ALL THE WAY TO THE BANK, AND DICTATORIAL TOTAL CONTROL.
THE PEOPLE are so busy struggling to make their needed budget, they fail to see the noose slowly strangling them,
and cannot believe that smiling president could mean to hurt AMERICA, THE MANY GAVE HIM TOTAL TRUST, HE SHOULD NOT HAVE HAD, HE ABUSED THE TRUST WHEN YOU WHERE NOT LOOKING,
except the CONSERVATIVES THOSE THEY ARE SO TOLERANT AND SMART PLUS THEY HAVE SOMETHING OBAMA DON’T HAVE, WHICH IS THE LOVE OF AMERICA AND THEIR OATH TO THE CONSTITUTION, AND LAWS OF THE LAND, THEY SEE BEING ERODED PIECE BY PIECE,
AND THEY HAVE SEEN THE MANY DANGERS AND HAVE BEEN LOUD TO WARN THE PEOPLE,
THIS FROM DAY ONE,
BUT THE DEMOCRATS SAW INSTEAD THEIR OWN WAY TO GET WEALTHY BY PLAYING THEIR HATE AND RACIST CARD TO DIVIDE THIS NATION OF UNIQUE MINDS ALWAYS AIMING AT CREATING INSTEAD THEY HAVE BEEN LEAD TO DEMOLISHING THEIR OWN BROTHER AMERICAN,
SO TO KEEP THEIR SANITY AND FREEDOM TO USE THEIR BRAIN OVER THE THUGS AND LEADER WITH HIS POWER WHICH HE DID NOT DESERVE, BECAUSE OF HIS DANGEROUS INTENT
TO CHANGE AMERICA FOREVER, AND BRING HER IN ONLY HIS ONE DIMENSION PLUS IMPOSING REALITY.