Lately I've been giving a lot of consideration to the topic of problems. You might think that thinking about answers would be more constructive. You would be right, except for one minor point that you may overlook when trying to answer your own problems. The question that I've really been honing in on lately is this; Am I solving the right problem? (I saw that question on some article on LinkedIn and it got me thinking.) That question has been like a lens coming into focus on my thinking. I can see everything so much more clearly now. If I don't solve the right problem it won't matter how brilliant my answer is. Also, if I'm spending time and resources solving the wrong problem there is a high probability that the right problem is getting worse right under my nose. In fact my answer may even be causing the real problem to grow directly.
I'll give you an example. Let's say there's a company that has made lots of money in the past through a very risky construction of contracts in a high growth industry. Let's say our fictitious corporation has now had a downturn in that business and that the upside that was built into the contracts has now left a very high down side open. It would be tempting for our company to think that it's issue was a change in market conditions that have left it with a poor cost structure. A company in that position might look at expenditures and try to cut back in every way conceivable. If the problem was that the company was spending too much on office supplies then the easy answer would be to spend less. But in this example is that really the case? Could it be that simple? Sometimes it is, but most of the time it isn't. The real problem isn't on the cost side. Most reasonable corporations have enough cost controls in place after the Enron era to make sure that no one is buying $500 pens. The real problem is in how the company structured its revenue stream. The real problem is much more complex than spending less. It involves an actuarial type knowledge of how risk plays in the market and how macro economics can sink a booming business. The real problem is much more likely rooted in short sighted success.
Now we're getting somewhere. The real problem arose because the company probably wasn't focused on what it needed to be. In our make believe company the leaders focused on top line revenue growth and maintaining a high margin. These seem like admirable goals for any business. That's the grand irony though. I read an article recently where the author reminded us of what Kipling said in his poem If. Kipling talks about how success and failure are both impostors. Here's a secret, even when things are going just like you had hoped you still have problems that need to be addressed. Sometimes the problems covered by success are even more of an issue than the problems that are obvious when you're in trouble. So what should our fictitious leaders focus on? Building a company on a model that lasts. If you're going to take on the risk of always letting your chips ride when you're winning you have to be okay with losing large sums of money you could have walked away with. So many companies don't adequately factor risk when making decisions. If our make believe company had, it would have realized that it needed some contracts that weren't designed to maximize margin, but were designed to protect the fixed costs in a down-slide. Risk assessment was vital and necessary to producing a long term winner.
Here's the interesting application. You can apply this same thought process to almost any area of your life. Personal problems, professional problems, whatever they are. Are you really identifying the right problem? More importantly, before something ever has the chance to become a problem, are you focusing on what you should be? Have you calculated all the factors, including risk, correctly?
Some thoughts to think about. Let me know what you come up with.
