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Category: Learning from top leaders

Forget solutions, let’s first get the problem right

Forget solutions, let’s first get the problem right

Strategic misalignment often results from leaders disagreeing on what to do: Which solutions to adopt, and which ones to forego.

Instead of focusing on solutions, our research indicates that strategically aligned executives first agree on what problems represent priorities. Only when problems have been well defined and priorities established do they start a conversation on what to do.

In this blog post, we explore expert advice on reaching strategic consensus.

What’s your problem?

Strategy meetings often start with someone asking “what should we do?” As if everyone at the table is already on the same page as to the problems facing the organization. That’s rarely the case.

After all, we have little visibility into other teams’ difficulties. So leaders tend to pitch solutions addressing their individual team’s problems with little knowledge on how it will affect others.

Under a lenient CEO, this translates into each team setting its own priorities, regardless of whether they are conflicting to the organizational strategy.

Examples of misaligned organizations abound. We usually hear about them when a company announces it is “going back to its roots” and divests dozens of unprofitable business units.

Why are we so quick to jump to solutions? For one, our business culture doesn’t reward people for taking the time to properly defining and agreeing on problems. We are rewarded for solving them. Fast.

We thus focus much more energy on solving problems than defining them. A professor from the University of Washington in St.Louis shares in an interview that:

“Our business philosophy is to get to the answer quickly. To formulate a strategy quickly. Yet the result is an implementation that takes forever and rarely succeeds.

If we engage in conversation and reach unity, implementation could be achieved much faster. So the need to get to a solution quickly is an impediment. Jumping to solutions only works when the problem is simple. With regard to complex problems, jumping to solutions quickly is the wrong thing to do.”

To better achieve strategic alignment, he advocates for a process where stakeholders first agree on the problems facing the organization:

“The key is to first have unanimity on problem definition. Not talk about any solution. Reason why people have arguments is because each jumps to solutions on what to do, which tend to be different, and fight over them because they have different views.”

In support of that argument, Russell Eisenstat, strategy consultant and former faculty at Harvard Business School, notes in a HBR article how we can:

“Mobilize commitment to change through joint diagnosis of business problems. As the term task alignment suggests, the starting point of any effective change effort is a clearly defined business problem. By helping people develop a shared diagnosis of what is wrong in an organization and what can and must be improved, a general manager mobilizes the initial commitment that is necessary to begin the change process.”

Aside from successfully reaching alignment, discussing problems without mentioning solutions also decreases the chances of conflict during the strategy process. Jackson Nickerson, a strategy researcher, shares in Microfoundations of Strategic Problem Formulation that:

“By first focusing on identifying relevant symptoms and prohibiting solutions prior to formulating the problem, …it is unlikely that discussions of symptoms will trigger political reactions the way that deriving solutions can (discussing symptoms has fewer direct implications for which actions need to be taken and whom such actions may benefit)…”

Can we agree on the important problems?

Now let’s assume the strategy team has successfully identified the problems facing the organization, how do we decide on which ones to focus on?

Russel L. Ackoff, former Management Professor at the University of Pennsylvania, proposes in Idealized Design to start:

“…with an illustration of all problems facing the company today and foreseeing what would kill the company if we did nothing. What problems would you want to focus on if the survival of the company was at risk?”

Looking at this from a different angle, Prof. Nickerson suggests in The “Problem” of Creating and Capturing Value:

“In selecting problems managers must decide not only which questions represent design challenges to create value but also which problems their organizations have a reasonable likelihood of solving at a low enough cost to create and capture value.”

Prioritizing initiatives that keep a company alive, competitive and profitable sounds elementary. Yet how many activities at our organizations fail this test? Too many in my opinion. For example, why did Instagram change logos?

Stronger together

In the end, the main goal of agreeing on problems is to work together as one unit. As one company. One community. Never letting differences of opinion divide the team.

That’s why the best leaders work to strengthen the organizational bond. Quoting Arie De Geus, former strategist at Shell, in The Living Company:

“A manager of a living company… must let people grow within a community that is held together by clearly stated values. The manager, therefore, must place commitment to people before assets, respect for innovation before devotion to policy, the messiness of learning before orderly procedures, and the perpetuation of community before all other concerns…

The feeling of belonging to an organization and identifying with its achievements is often dismissed as soft. But case histories repeatedly show that a sense of community is essential for long-term survival.”

Because “Working together always works.” – Alan Mulally, former CEO @Ford


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Only 9% of leaders can rely on their peers

Only 9% of leaders can rely on their peers

Bill Belichick, Tom Brady of the Patriots would never have won Superbowl 51 if the rest of the team wasn’t onboard with their plays. Can you imagine if each player had their own plan on how to win? Chaos would ensue. And the Falcons would have been champion.

In sports, just like in business, each player must agree on the strategy to win.

Read More Read More

We suck at choosing and saying no

We suck at choosing and saying no

Having ideas on what to do is easy. What most business leaders find challenging is the act of choosing and saying no to distracting opportunities. This is necessary to keep an organization focused on their key goals.

Why does this matter?

Because companies without a clear strategy fall behind their competitors. Researchers have found evidence that revenue declines when the list of competing priorities grows. So with limited resources, we are most effective when focusing on a few things rather than everything.

And because less is more. During Jack Welch’s reign at GE, he divested 117 business units and re-invested the money in the few businesses where GE could attain the position of No. 1 or No. 2 industry leader. In the process, GE’s market value shot up 4,000%. That’s focus.

Why is it so hard to choose?

Fact is, we do not know if our choice today will actually produce the desired results tomorrow. We also do not know if there will be unintended consequences as result of our decision. Add to the fact our eyes are bigger than our stomach, we tend to try many options and say yes to more opportunities than we can handle.

Forecasts alone don’t help

To compare strategic choices, we often perform forecasts to see how they may impact the future. Yet researchers have found that organizations which rely on forecasting do not operate differently than those that don’t.

In Implanting Strategic Management, Harry Igor Ansoff reviewed how organizations faced the petroleum crisis in the 1970’s and reported that “many firms which do forecasting including scenario building exhibit similar behavior as reactive firms.” 

He attributed the problem to forecasting systems and processes (time spent observing, interpreting, collating, communicating information to managers), to verification delay (organizations waiting for trigger events to happen), to politics (some managers may feel threatened), to rejection of unfamiliar (managers refuse to accept seriousness of a vague threat which has no precedent or they are unfamiliar with).

In other words, forecasts are not the end all be all some data scientists like us to believe. Strategic choices are affected by each leader’s personal preference, impact on their department’s future, and what the organization is actually able to achieve. Since all these extra decision factors are much more subjective, a strategic decision on what the company should do for the next 5 years becomes very challenging.

There are too many unknowns

In complex organizations, a decision often has many unintended consequences. They may frustrate people not included in the decision making process, cause chaos in a part of the organization we neglected to review, or even push customers away. In many cases, side effects will not be visible until after the decision.

Take Starbucks in the late 2000’s as example. Chasing growth, it introduced more products and prioritized speed over personal attention. In the process, it alienated some of its fans who enjoyed a cozy coffee shop atmosphere and personal connection with baristas. As result, it had to close 600 stores as customers took their cups to competing shops.

Executives at Starbucks likely failed to foresee how prioritizing speed and efficiency while adding more products alienates customers.

Organizations recognize this challenge. A strategy professor at Harvard Business School shared in an interview that most organizations send their leaders to executive education prioritize the need to learn how to think holistically:

“They need people to be better strategic thinkers. Need them to think in an integrated systemic way. At the end of the day, if we do this, what else does it impact? Is it aligned with where we want to go? To better tackle problems wrestling with systemic implications.”

When we lack a clear understanding of how a decision might affect the organization, we delay it. Hoping that time will shine more light on the situation.

Our eyes are bigger than our stomach

In a survey by Strategy&, it was reported that 64% of executives report having too many conflicting priorities, with 56% finding it challenging to allocate resources in a way that supports their organization’s strategy. It’s clear leaders find it difficult to make trade-offs.

Why? One reason is that many leaders believe their organizations can always take on one more initiative, tackle one more opportunity. We fail to recognize the limits of our abilities.

A former CEO at US Airways always reminded his executives that “Just because the lid came off the cookie jar doesn’t mean we need to get a tummy ache.

Tackling too many priorities at once has also proven to negatively impact revenue. Paul Leinwand, the strategy consultant who led the survey for Strategy&, reveals that “as an executive team’s priority list grows, the company’s revenue growth in fact declines relative to its peers.”

Top leaders therefore work to keep their teams distraction free.

An executive at Caterpillar shared that “as a leader you constantly have to drive the organization to stay focused on those few things that will make the biggest difference.”

Similarly, a CEO of a Credit Union reported that one of his biggest responsibilities is to “say no to incremental business. To fire customers who don’t help move the company to where it wants to go. To focus energy on the core vision.”

Saying no: A way of life

Speaking with executives and strategy researchers, it became clear some leaders find it easier to choose, make trade-offs, and stay focused on their core objectives than others.

When asked how they achieved such discipline, one described it as his “way of life,” while another mentions it being a “philosophy guiding his everyday.”

Along with discipline, top leaders are also extra clear about what they want. In an interview with a senior consultant at the Boston Consulting Group who worked with Jack Welch at GE, he shared that one of Welch’s strengths as his ability to “keep his organization extremely focused. He said yes or no. Never maybe. Other CEOs said maybe.”

There is no easy solution or an app to help us make strategic choices. An organization’s ability to focus depends on its leaders’ self-discipline and boldness to make trade-offs.

Unfortunately, most leaders fail. Michael Porter, strategy professor at Harvard University, described in an interview how the “worst mistake, most common one, is not having a strategy at all… There are so many barriers that distract, deter, and divert managers from making clear strategic choices.”


 

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