Strategy as a Problem Solving Process
“The old paradigm of strategy departments and planning cycles has been overthrown by agile and rapid team-based problem solving, providing better solutions and better organization alignment to implement.” These comments by Mehrdad Baghai, strategist and author, commend our book Bulletproof Problem Solving: The One Skill that Changes Everything. But what does it mean to adopt agile and rapid team-based problem solving, where strategy becomes a problem solving process?
Teams and agile methodology have become the dominant form of organization for environments featuring high uncertainty and rapid change, where business models are challenged by disrupters. In these settings the most effective teams follow the 7 steps process for bulletproof problem solving, by asking themselves the following questions:
1. Are we working on the right problem? Defining a problem well is often said to take you more than halfway to the solution. This invariably leads to a clear problem statement of the challenges you have to address, the decision context, problem boundaries and success criteria.
2. Have we broken down the problem into key issues to address? Complex problems can rarely be solved without breaking the larger problem into parts. How you disaggregate or cleave a problem has a big impact on the insight you get into a problem. We show numerous examples from return on invested capital logic trees, to logic trees that help you decide whether to put solar panels on your roof.
3. Are our priorities for analysis the right ones? For efficient use of team resources you need to be working on the issues where the impact is high and you have a significant ability to influence the outcome. This may require a lot of debate in the team. That’s important too.
4. Have we brought outside perspectives and diversity of views to bear in the team? We urge teams to have hypotheses about the answer but open them to challenge in the team, by having diverse perspectives, role playing and actively tapping expertise outside the team. Really good teams porpoise frequently between the hypothesis and the data, sharpening the hypothesis along the way. The data comes in the form of facts and analysis. Yes facts and analysis still make a huge difference to problem solving outcomes.
5. Do we have the right analytic toolkit for the problem? Teams will, and should, make use of heuristics and rules of thumb to scope problems and knock out infeasible solutions. At times, to solve a problem involves understanding root causes or predicting an outcome. That’s when you have to bring out the analytic big guns such as regression, simulation, A/B experiments and machine learning. You can even crowdsource your solutions with Kaggle competitions.
6. Are we carefully synthesizing our findings? We like the way the successful investor Ray Dalio expresses it ‘The quality of your synthesis will determine the quality of your decision making.’ The process we follow is to draw together findings on the key issues into an overall picture, ideally with visualization to show linkages and highlight key drivers or root causes.
7. Have we presented our findings in a compelling narrative that is likely to lead to action? This final step is so often underdone and the source of team disappointment. Doing it the right way involves choosing a governing thought from the synthesis, accompanied by a logical argument structure that may be based on inductive or deductive reasoning.
When this process is complete, teams have reached the holy grail of strategy as a problem solving process as Richard Rumelt put it in Good Strategy Bad Strategy: The Difference and Why It Matters. Rumelt succinctly describes ‘a strategy is a coherent set of analyses, concepts, policies, arguments and actions that respond to a high stakes challenge.’ We agree and know that the way to get there is through a 7-step problem solving process.
About the Author
Robert McLean is co-author, with Charles Conn, of Bulletproof Problem Solving: The One Skill That Changes Everything (Wiley 2019). McLean is a Director Emeritus of McKinsey and Company and led the Australian and New Zealand McKinsey practice for eight years.
While using problem-solving techniques won’t always result in a resolution, they can aid you along the way.