The Costly Mistake Hidden in Your Policy Manual

Your customer service team asks you the same question for the third time this week: "This customer wants a refund, but it's been 35 days and our policy says 30. What should we do?"

You're facing a classic business dilemma: Should this be a system decision or a human decision?

In software development, we learned to distinguish between two types of logic: deterministic systems that handle predictable scenarios, and human judgment that handles everything else.

System-based decisions work beautifully for anticipated events. If you can predict the scenario and define the appropriate response, you can create rules that handle it automatically.

• Refunds under 30 days with original receipt? Automatic approval • Orders over a certain amount? Requires manager sign-off
• Customer complaints about specific issues? Route to the specialist who handles that category

But here's where many businesses go wrong: they systematize nothing or they try to systematize everything, including situations that genuinely require human judgment.

I've watched companies create elaborate policy manuals that attempt to cover every possible scenario. The result? Frustrated employees who feel like they're being asked to follow a script that doesn't match reality, and frustrated customers who feel like they're talking to robots instead of people.

The key insight is knowing which decisions belong in each category.

System-based decisions are perfect when you have clear boundary conditions. What's too much? What's too little? What's too frequent? What happens in the standard case versus the exception? When you can answer these questions definitively, you can create rules that handle most situations automatically.

But some situations require the nuanced judgment that only humans can provide. Complex customer relationships, unique competitive situations, or problems you've never encountered before—these need human intelligence, not systematic rules.

The most effective approach combines both. You create systems to handle the predictable majority of cases, which frees up human judgment for the situations that truly require it.

Think about your own decision-making patterns. How many times this week have you been asked to make a decision that followed a pattern you've seen before? Those are candidates for systematization.

The goal isn't to eliminate human judgment—it's to reserve it for the places where it adds the most value.

When you systematize routine decisions, you accomplish two things: you free up mental bandwidth for more complex thinking, and you create consistency in how your organization handles common situations.

But you have to resist the temptation to systematize everything. Some decisions need the full context, relationship history, and intuitive judgment that only humans can provide.

The sweet spot is creating systems that handle the predictable 80% while ensuring humans are available for the complex 20% that requires real thinking.

What's one decision you're making repeatedly that could be systematized? And what's one area where you might be over-systematizing something that actually needs human judgment?

The most effective leaders know the difference—and design their organizations accordingly.

PS: This is the advantage of AI. It Allows people like us to create systemized structure, while building hyper-personalized experiences for customers, team members, and yes, even ourselves.