I got 99 problems, but solving them isn’t one (anymore)
When I graduated 9 years ago, I was clueless about how to solve a problem.
This was despite studying mathematics, behavioral economics, game theory and every other subject I could find to prepare myself.
Unfortunately, as I’m sure you’ve witnessed yourself, this occurrence is widespread and costly. In business alone, experts estimate that companies lose an average of 14.1% of their profits due to poorly managed strategic decisions.
My experience from direct employment, consulting, and investing tells me this number is often underestimated.
And the toll is even greater in the personal sphere: how many couples have you seen arguing about details, carefully avoiding the real problem needing to be addressed ?
Today, we put an end to it! Or a beginning of an end, at least.
I’ll start, and I hope you’ll chime in with your ideas and frameworks.
What is problem-solving?
The term “solutioning” is often used to describe problem-solving. This is misleading, because it implies an action.
My favorite definition from Charles Conn is dead-simple:
Problem-solving is the ability to answer “what should I do?”
And ‘nothing’ is a perfectly acceptable answer.
Say 2 of your competitors start offering extensive promotions, each week increasing to ensure they capture sales from others, including you.
Should you rush to respond with more aggressive promotions, to bolster your sales and protect market share? Maybe!
But what’s the real problem?
A temporary dip in sales? Lost market share?
What about your goal?
Are you trying to reach a short-term objective, or to create a long-lasting base of faithful and happy customers ?
By answering these questions, you’ll take away the urgency and start giving room to your creativity to flourish into smart decisions.
You may decide to not participate in this promotional war, on the basis that it’s destroying margins for your whole industry, while educating customers to expect “deals” that you don’t want to consistently offer.
Or you may decide that you’re well equipped to tire out your competitors, and that long-term it’ll help you consolidate into the industry leader.
In both cases, you will know the WHY behind your decision.
Why should you care?
There isn’t a day in anyone’s life where this skill is not necessary.
Let’s take a look at (some) areas where it has extensive impact, focusing on business.
Employee engagement
In organizations where management is not properly trained at solving problems, employees will gradually lose motivation. They will realize that their personal output is either used to answer an irrelevant question, or plainly not considered.
According to Gallup’s “State of the Global Workplace: 2022 Report” only 21% of employees are engaged at work, with low engagement costing the global economy $7.8 trillion, or 11% of global GDP.
Engaged employees are those who feel their inputs matter, see their ideas brought to life, and believe in their ability to contribute to solving organizational problems.
Innovation
The heart of innovation is problem-solving.
Conceiving a new product or service starts with clearly grasping the problems of your target customer. This is also where most innovations fail!
Bringing a fantastic solution to a problem no one truly cared about achieves exactly nothing.
The same goes for managing technological shift.
When Netflix decided to go all-in on streaming, they correctly identified that customers:
- didn’t want to have to deal with postal services
- wanted a larger content offering
Imagine if they thought the problem was only the second? They would have bought a lot more DVDs, achieving … nothing. (sorry, DVD hoarders!)
Profitability
Two main levers enable achieving of long-term, sustainable profitability.
- Focus: separating signal from noise, and honing in on the right objectives
- Resources: effective problem-solving ensures optimal resource allocation — of time, human capital, and technology.
For example, Google’s 20% time policy, which encourages employees to spend 20% of their time working on projects they’re passionate about, exemplifies how strategic resource allocation can lead to highly profitable innovations like Gmail and AdSense.
If you’ve read this far, I take it you’re convinced about the importance of this skill.
Let’s make progress!
Classifying problems
For today we’ll use four simple criteria for our problems:
- Tactical: immediate and specific, requiring an operational response.
- Strategic: long-term and multi-faceted, affecting overall direction of the org.
- Structured: well-defined, with clear objectives and know variables.
- Unstructured: lack clear parameters, unknown variables presenting high uncertainty.
For the more visual nerdites, a simple matrix with examples:
[Tactical;Structured] Staff shift for retail store during holidays
This is the most common, easiest type of challenge.
- Define constraints and requirements (employee availability, labor law, …)
- Utilize optimization tools (e.g. scheduling software or, you know, your brain) to find the most efficient allocation
- Implement, monitor & adjust based on live new information
[Tactical;Unstructured] Resolving customer complaints on social media
A quick decision is needed in the midst of high uncertainty (how will Karen react to your tweet ?).
- Quickly analyze situation (number of complains, platforms) and potential root-causes
- Decide on a messaging consistent with company’s value
- Craft tailored responses, addressing issues as much as possible on a case-by-case (this is the unstructured part!)
- Move on to addressing root-cause and follow-through w/ customer
[Strategic;Structured] Optimal location for a new production facility
While parameters are clear, this is a decision that immensely affects long-term planning.
- Gather comprehensive data (economic forecast, labor cost, logistics)
- Formulate options based on available locations & above data
- Evaluate quantitively (financial) and qualitatively (against strategic criteria, for instance a target share of domestic production)
- Commit to a decision
[Strategic, Unstructured] Developing a business model in response to disruptive tech
High complexity, high uncertainty. As Gimli famously said
Certainty of death. Small chance of success. What are we waiting for?
- Reach out to customers and experts to understand how the technology will impact its market
- Clearly articulate the business challenge and opportunities that will arise
- Generate innovative ideas through techniques like design thinking
- Prototype the most promising ideas
- Test your prototypes with customers and experts and refine based on feedback until a viable model emerges!
Thanks for reading! 👏
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What else would you like to read about problem-solving ?
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