Companies often throw money, the latest technology or hours of training sessions at a problem. Sadly, they find the results hugely disappointing. What goes wrong? Aren’t more resources, cutting-edge innovations and skilled people the answer to everything? Perhaps not. Kristen Cox, a change instructor at the University of Utah’s David Eccles School of Business, would say that the first mistake of such companies lies in the understanding and the framing of the problem. Cox earned a formidable reputation when she was working as an executive director of the governor’s office of management and budget for the state of Utah, where she orchestrated a 35% improvement across the state’s $20-billion executive branch. She is one of the world’s leading authorities on how to apply the theory of constraints to governments and nonprofits. She is also the co-author of two books — Stop Decorating the Fish and The World of Decorating the Fish — and is currently the executive director of a new initiative on government improvement. In the first of the Masterclass series, part of Outlook Business Leading Edge 2021 organised in association with IDFC FIRST Bank, Cox talks to editor N Mahalakshmi on defining the problem right without getting sidetracked by the ‘Seductive Seven’. Edited excerpts:
Cox: I’d like to start this discussion today with a personal journey. I was working with a state agency which determined if people were eligible for benefits or not and, at the time, it was taking the agency 30 days to do this. Then they purchased an IT system worth $200 million which promised them the world. In the earlier system, the folks were entering all of the information about the client manually and making the determination manually. The new IT system promised to run the calculations behind the scenes and pop out an answer. Sounds great, doesn’t it?
So, they went forward and implemented the $200-million technology. But the question was — was that the right problem to solve? It’s an alluring and sophisticated solution, but was it the right problem to solve?
The new computer system focused only on the 30 minutes that it took to make the decision. But, if an agency’s employee had all the information needed, which are income statements, kind of jobs and so on, he or she could make that decision in 30 minutes, too (even with the earlier system). It was a powerful lesson when we understood that they were solving the wrong problem.
We are bombarded every day with problems and the difference between great leaders and the mediocre ones is to know which problem to solve. My co-author, Dr Yishai Ashlag, and I compared notes on private and public sector, and realised that everywhere there was the same challenge of understanding what problem to solve.
There are key takeaways from the book that we wrote. First, most problems aren’t worth solving. I know that’s hard to believe because we’re almost validated and rewarded by how many problems we can fix, how many plates we can keep spinning in the air, how busy we are. So, this is the trick — to understand that most problems aren’t worth solving and, if you start there, it’s half of your journey.
The other thing is that the breakthrough results we want or those leaps don’t happen by chasing solutions. It happens when we reframe the problem. In that earlier example, it wasn’t about implementing a new and cool piece of technology, but about shortening the time it took to complete a task or what we call the elapsed time.
I want to give you another example. At a big private sector fashion retailer in the US, a few individuals thought that the problem to solve was to improve their forecasting model. So, they invested a lot of energy, time and resources in improving their forecasts. They looked at what the microclimates would be, the state of the economy, demographics of their customers and what they would want in the next fashion season, and planned a year in advance. But, while I’d love to know what people want to buy way into the future, can we really know that?
Zara reframed the problem. They understood that the problem didn’t lie with the forecasting but with the supply chain. They worked on shortening the supply chain. Meaning, when the actual season came, they could respond in real time based on what their customers wanted. They could make that clothing and get it into the store within two weeks versus the six months that other retailers took. The other retailers were trying to predict right and purchase in advance what they hoped people would purchase. If you compare Zara’s results to the rest of the industry, it’s amazing — 12% profitability versus 4% (of the others) and 85% of their inventory is sold at full price while the industry has to put 65% or 35% of their product on sale.
Another thing is that a problem is a problem only within the context of a goal. So, every problem isn’t important. It’s the problem that’s stopping us from achieving the goal that we need to focus on. In the 1940s, a man named Chuck Yeager wanted to travel faster than the speed of sound. It wasn’t possible back then. As he was trying to achieve this amazing goal, he and his team, a bunch of engineers, would take off on the plane and would start to fly. As he went faster, the plane would create sound waves and, because they were travelling slower than the speed of sound, these sound waves would move in front of the plane and create what we now call a sound barrier. They made it impossible to travel faster than the speed of sound. The real problem that they had to solve to achieve their goal was to design a plane that could push through the sound barrier.
There is a massive opportunity cost when we do not understand the problem that we need to solve to achieve our goal. Organisations can spend time, money and energy chasing all the wrong problems, getting marginal improvements and disappointing shareholders, employees and customers.
Recently, when I was working for the governor in Utah and managing the budget for the state, I saw people coming in and asking for more money to buy more technology or a new data system, or for a whole new training programme or to hire more people. While people who needed services weren’t getting them or businesses that needed permits weren’t getting them on time, they kept spending money and energy. So, I started creating this list of what we call the ‘seductive seven’. These are solutions that organisations jump at without understanding the real problem.
We reach for more money and more data hoping that it will reveal the answer to us instead of us asking the right questions. Once we know what the questions are, we can then use data to refute or validate our hypothesis. We jump at more reorganisations: ‘If I just move the organisational chart around, somehow the problem will go away’. In the meantime, we waste so much time of our employees, and create stress and friction. We’ve moved the problem but haven’t solved it yet.
We think we need more technology. Technology can be powerful, but it’s just a tool. We also see organisations thinking that they just need more training and that it’s the lack of information — if the employees were just trained, they would do the right thing. What the organisations do not ask is why it is impossible for them to do their jobs within the current structure. They do not ask questions about pay, the processes or giving them time to actually do the work without interruption. So, we try to train people. How many of us know we shouldn’t eat sugar and still eat sugar? Lack of knowledge usually isn’t the issue. We want to look a little bit deeper into how we’re designing our systems and processes.
We often think that we need a new idea or a new strategic plan. We failed to execute our own old plan well but somehow a new idea is going to solve everything. We need new strategy once in a while but all the innovation happens in execution. The final point is on blaming. ‘I cannot make an impact because my boss won’t let me or because of my board or my employees or the legislature...’ But, understanding the core problem really begins with understanding what we have stewardship over or what we are already responsible for. And, if we can do really well with what we already own, then we can start expanding our circle of influence. I see this behaviour often in the government. It’s easy for states to blame the federal government for not being able to make a difference, with vaccinations, for example. But when you look at how many states have been rolling out vaccinations without proper infrastructure in place, the thing that they can control, you can see that they ignored it and waited for somebody else to solve their problem.
I really encourage you to go back to your work environment and your teams, and you’ll see how these play out. It always begins with what is your goal and what’s blocking you from achieving your goal. When we have clarity on the problem we need to solve, that is half the battle.
I want to end with a personal story. When I was going blind, a lot of people around me, even professionals, believed that lack of vision was the problem. At the beginning, they would have me use magnifying glasses, large prints and everything to compensate for my lack of vision. The reality was that losing my vision was a fact of life and there wasn’t much I could do about it. Then I got lucky and met a mentor who changed my life. He was blind and was one of the smartest men I’ve ever known and he reframed the problem. He said, ‘Kristen, the lack of vision isn’t the problem — it’s the mindset, the negative stereotypes. If you can think differently about your blindness, you’ll see that it is not really a tragedy but an inconvenience... There are lots of ways to access information (and it’s not just with eyes). You can listen and talk, there’s cane travel and many ways to be independent. So, quit using your lack of vision as an excuse.’ That one shift in reframing the problem made the difference between me having the life I have today and the life I was having many years ago.
Mahalakshmi: Thank you, Kristen. That was truly insightful. While your idea of not getting seduced by the seven is unique and interesting, post-COVID especially, digitalisation has accelerated. Every company today is forced to think about more technology, data, strategic thinking, training, skilling and reorganising, and these top the seductive-seven list. How can companies reframe their problem statement, so that they don’t get carried away by what is becoming a necessary tool for business?
Cox: What’s tricky about the seductive seven is that it’s not that we don’t use them or need them. I use technology and data all the time, but they’re tactics in our solution. They, by themselves, are not the solution. Seductive seven are like individual ingredients in a recipe, but they are not the recipe.
Let’s talk about the goal first. In both public and private sectors, we believe in giving before you get. That is, your goal is about what you are going to give to your client, not what you’re going to get. In the private sector, you also have to be profitable but long-term profitability and value start with what you do for the customer and what limitations you remove for the customer. You start with that, the value proposition for the customer, and not just managing the stock price but managing your value in the company. For example, IBM used to be a global tech giant in the country and the second-largest tech company in the world years ago. But it’s the 54th now. Their stock price has stagnated. Why? They started to focus on short-term goals such as earnings per share and stock price. They stopped investing in R&D while their competitors — Intel and Microsoft — ramped up their R&D, and so they could continually find ways to add value. Now IBM has upped their investments in and quantum (computing) but what’s the purpose of AI? They’ve got to make sure AI is solving a problem for their customer, and not just a cool, new, sexy technology. It always comes back to making sure your goal is about what you are going to give, not just what you’re going to get and that, by itself, helps start uncovering the real problem that we want to solve.
I see agencies and organisations confusing means with the end all the time.
Mahalakshmi: In your book, you give this beautiful example about recycling and how creating awareness alone was not delivering results. At an enterprise level, do you really see training and communication doing more harm than good?
Cox: Sharing knowledge is not inherently bad but it tends to put the burden on our employees or the citizens we serve, instead of bearing it ourselves. In an organisation, it is the management’s responsibility to help employees be successful by designing the right process (and not to pass on the responsibility to them by merely communicating what needs to be done). After you fix the problem, you can amplify the solution and cement it with training and communication. But don't rely on communication and training as the primary means of changing somebody’s behaviour.