Game Theory

Employees participate in a cost-cutting game to learn the price value of parts.

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OCTOBER 1988

Cost-cutting isn't fun no matter how you do it, but a little gamesmanship can help. When Sundance Spas, a Chino, Calif., plastic hot-tubmaker, launched a one-year program to reduce its cost of goods sold, it began with a rousing, companywide session of "The Price is Right.'

"It taught purchasing agents in a few minutes why it's important to tell people the value of things," says CEO Ron Clark. In one instance, employees guessed that a plastic part frequently broken during manufacture cost only $2, and then discovered that its actual price was $32.40. "Just six weeks after they learned that, the production people came up with a two-piece design for the part. Now, when the piece has to be replaced, it costs us $2 rather than $32.40.'

Almost across the board, Sundance employees were surprised by how much they'd underestimated costs, and many of them offered suggestions for savings. Says Clark: "If you've got to do some belt-tightening, I think the game is a lot more effective way to break the news than handing out a memo informing supervisors their budgets have been cut.'

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