On Problem Setting.


On Problem Setting.

“Looking back, I think it was more difficult to see what the problems were than to solve them.” (Charles Darwin)

“The greatest challenge to any thinker is stating the problem in a way that will allow a solution.” (Bertrand Russell)

“By now we are all beginning to realize that one of the most intractable problems is that of defining problems” (Horst Rittel and Melvin Webber)

“The mere formulation of a problem is far more essential than its solution.” (Albert Enstein)

“A problem well put is half solved.” (John Dewey)

Problem setting. In our focus on solving problems we leave too often neglect this key stage.

Richard Rumelt, whose book Good Strategy/Bad Strategy: The Difference and Why it Matters is one of the best on strategy of the past decade, is very clear on the importance of problem definition. In his book he proposes a framework which he refers to as a ‘kernel’, emphasising the need for a strategy output itself to include a definition of the problem:

A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action. The guiding policy specifies the approach to dealing with the obstacles called out in the diagnosis. It is like a signpost, marking the direction forward but not defining the details of the trip. Coherent actions are feasible coordinated policies, resource commitments, and actions designed to carry out the guiding policy.

Too often, strategies skip over the problem definition – the diagnosis of the problem – containing only a plan of action. limiting any ability to assess the effectiveness of the plan:

For a strategy to have any bite, it must chart a direction based on a diagnosis of the situation. Absent a diagnosis, one cannot judge one’s own choice of an overall guiding policy, much less someone else’s choice.

However this type of behaviour is relatively rare.

Most strategies spend the majority of time developing the ‘plan’ – reducing strategy itself to action, and through this process, seeing strategy work become about defining action rather than defining the problem.

People normally think of strategy in terms of action—a strategy is what an organization does. But strategy also embodies an approach to overcoming some difficulty. Identifying the difficulties and obstacles will give you a much clearer picture of the pattern of existing and possible strategies. Even more important, you will gain access to how changes in some factors may radically alter the mix of efficacious strategies. To gain this change in perspective, shift your attention from what is being done to why it is being done, from the directions chosen to the problems that these choices address.

However the second issue is that good problem diagnosis often takes time, requiring deep immersion in the context, allowing an understanding to emerge. Brian Arthur, one of the fathers of complexity economics, articulate the process well while describing his time at McKinsey in 1970.

To McKinsey’s credit, it didn’t go in there and just reorganize on day one. They went into large companies like Deutsche Bank, or BASF, and they just sat and sat. They didn’t do anything. They just sat and observed and interviewed and observed and thought and went back and observed. It cost plenty to do this, but they were quite patient. This would go on for months until they had what I would now call a complex picture of what was going on. The opposite of that would be to come in with some cognitive picture saying, “You need to be reorganized this or that way.” They actually let a picture emerge, and this wasn’t lost on me. I would now call this an inductive rationality rather than deductive rationality. Rather than laying a framework on top, they simply let the framework emerge.

And this is where Rumelt’s approach is similar to that which Arthur describes above at McKinsey, and is shared by any great strategist.

And here, Rumelt argues for starting with the problem.

There are those who prefer to begin their approach to strategy with action. My own insights, however, normally don’t start with action. I tend to use a problem-first structure. I am better at starting with a frame or diagnosis of the situation and then working through the guiding policy and action elements of the kernel. At the start of most consulting engagements, the client wants an appraisal of a particular course of action or wants advice on what to do. I almost always back up and try to create a better diagnosis of the situation before getting into recommendations.

This focus on problem definition aligns with that employed by designers – unsurprising given strategy is a class of design problem (despite their distinct academic backgrounds).

Here, IDEO’s Tim Brown explains the value of ‘design thinking’ in emphasising problem framing:

The methodology long championed by the company is design thinking. This is an approach to solving problems which argues that you should initially invest time in framing the question well, because if you frame the question badly the only certainty is that you’re going to get bad answers. Typically, companies under-invest in getting the question right. 

And here Boland and Callopy describe the nature of a design (or strategy) problem – or more generally most problems faced by businesses today. Feel free to replace the word ‘designer’ with ‘strategist’:

It is widely accepted … that design problems are characterized by being ill-defined. An ill-defined problem is one in which the requirements, as given, do not contain sufficient information to enable the designer to arrive at a means of meeting those requirements simply by transforming, reducing, optimizing or superimposing the given information alone. Some of the necessary further information may be discoverable simply by searching for it, some may be generateable by experiment … and some may be actually unknowable. In addition, once known, some of the requirements may turn out to be incompatible with one another.

The US Army have also explored the role of design thinking in Operational Design in a number of publications (some listed here by Roger Martin). In one of these, Field Manual 5-0: The Operations Process,part of their their Training and Doctrine Command, the explain the difference between design and planning:

While both activities seek to formulate ways to bring about preferable futures, they are cognitively different. Planning applies established procedures to solve a largely understood problem within an accepted framework. Design inquires into the nature of a problem to conceive a framework for solving that problem. In general, planning is problem solving, while design is problem setting. Where planning focuses on generating a plan—a series of executable actions—design focuses on learning about the nature of an unfamiliar problem.

When situations do not conform to established frames of reference — when the hardest part of the problem is figuring out what the problem is—planning alone is inadequate and design becomes essential. In these situations, absent a design process to engage the problem’s essential nature, planners default to doctrinal norms; they develop plans based on the familiar rather than an understanding of the real situation. Design provides a means to conceptualize and hypothesize about the underlying causes and dynamics that explain an unfamiliar problem. Design provides a means to gain understanding of a complex problem and insights towards achieving a workable solution.

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What they mean here is that planning focuses on speccing out the actions required to solve the problem, defining what needs to happen, when and how.

And just to double-down on this, one of the originators of user-centred design, Don Norman, explains design thinking similarly here – emphasising the role of stepping back and considering the problem holistically through deep immersion – sounding a lot like Arthur’s description of how McKinsey approached their problems:

What is design thinking? It means stepping back from the immediate issue and taking a broader look. It requires systems thinking: realising that any problem is part of larger whole, and that the solution is likely to require understanding the entire system. It requires deep immersion into the topic, often involving observation and analysis.

What they mean here is that planning focuses on speccing out the actions required to solve the problem, defining what needs to happen, when and how.

The fundamental point here is that to do strategy work well, you need to build a deep empathy for the context; making sense of the world and developing a mental model for ‘what is happening’. And this can only come through time spent wrestling with the problem, and time spent living in the world of the organisation trying to deal with it.

James Carlopio summarises the point in his book Strategy by Design: A Process of Strategy Innovation, drawing from a whole host of design theorists (e.g. Cross, Cougar, Rittel, Webber, Archer).

The first part of the task of creating a solution or strategy innovation, therefore, is to properly formulate the problem. The method designers often use to clarify the vague and ill-defined problems they get is to question the initial representation of the problem and the basic assumptions that surround it.
This questioning of the problem is not the designer being difficult or obstructionist. It results from recognizing the fact that the initial expression of a design problem or a strategy problem is often misleading. By definition, the person with the problem is not thinking about it in a way that allows them to solve it easily or they would have done so already. It is the task of the designer or strategy developer to think about the problem in a new way that can result in an innovative solution. Designing creative solutions is not really anything impossibly amazing. It is a disciplined way of questioning what is going on. It is a way of looking to see if what is perceived as the problem initially really is the problem, before trying to find a solution to it.

US Army puts eloquently here:

The underlying premise is this: when participants achieve a level of understanding such that the situation no longer appears complex, they can exercise logic and intuition effectively. As a result, design focuses on framing the problem rather than developing courses of action.

And Steve Jobs puts even better in this famous quote:

“That simplicity is the ultimate sophistication . . . when you start looking at a problem and it seems really simple with all these simple solutions, you don’t really understand the complexity of the problem. And your solutions are way too oversimplified. Then you get into the problem, and you see it’s really complicated. And you come up with all these convoluted solutions . . . that’s where most people stop, and the solutions tend to work for a while. But the really great person will keep on going and find . . . the key, underlying principle of the problem. And come up with a beautiful elegant solution that works.

Arthur continues on this theme, echoing Jobs:

The merely good scientists are able to take existing frameworks and overlay them on to some situation. The first-rate ones just sit back and allow the appropriate structure to form. My observation is that they have no more intelligence than the good scientists do, but they do have this other ability, and that makes all the difference.

A good scientist says, for instance, in economics, “This is the principal-agent problem, this is a game-theory problem, this is an overlapping-generations problem” .

First-rate people are saying something deeper. They wait and they don’t say anything. They go as deep as they can. They’re examining fundamental beliefs and saying, “Well, I could really move this company as a shrink-wrapped application, but it needs a lot of change.” A first-rate person says, “Is that what we need to do? Is that the business anymore? Hasn’t it changed, and aren’t we really going to get into such and such?”

To reverse this argument, neglecting the process going through a process to engage with the essential nature of the problem and frame it appropriately severely hinders the ability to exercise logic and intuition effectively, resulting in bad strategy.

But by and large, strategy projects don’t look like this.

This approach sits in direct contrast with that normally practiced by strategists and consulting firms. Most strategists/consultants/organisations serially underinvest in upfront problem definition before diving into solution development. Strategy work today focuses primarily on coming up with a solution – a plan of action – rather than spending time sitting with the problem.

This is manifested in the ‘strategy sprints’ we see, with a consulting team parachuted in, generally for 6-12 weeks, with this time including introduction to the client to final presentation of solution. Admittedly a lot of the upfront problem definition thinking will come in the proposal development phase – something done at arms’ length, only sometimes with client data available.

To put this timing in context though, this implies only a couple of weeks to source data, another couple to sit with it and build some empathy for the context and organisation and build (or validate) the problem hypothesis, one-to-two to define some options and determine the most attractive (normally validating a pre-existing hypothesis), finally the iterations and socialisation with busy executives and Board endorsement.

So why don’t strategy projects look like this?

Well, this is something I’ll answer in another post. However, I’ll expand on one of the lesser-known reasons here. Specifically the one most related to the above point on the nature of design/strategy problem solving – is that this work is hard, messy, non-linear, and most people aren’t trained to do it*.

First, it requires a way of thinking not often taught in business schools nor encouraged in business. Carlopio articulates it here well:

While, in practice, the design process has a start and an end, once the process begins, it requires a three-dimensional mode of thinking. The two-dimensional world of linear thinking, numerical analysis, and rational problem-solving wherein we logically move from start to finish in a straight line, is not the world of the designer. Designers engage in a nonlinear, iterative dance, constantly balancing opportunities with anticipated problems, creativity with restrictions, conception

Roger Martin describes here the issue that few people are comfortable thinking like designers, i.e. creating new solutions:

“Most people, whatever their background, are more comfortable reapplying a formula that has worked in the past than at generating new possibilities. They just try to use a template from an existing success, which is the chief reason we see so many copycat products and copycat strategies.”

Martin continues here (paraphrased by Dev Patnaik):

“The trouble is, when confronted with a mystery, most linear business types resort to what they know best: They crunch the numbers, analyze, and ultimately redefine the problem “so it isn’t a mystery anymore; it’s something they’ve done 12 times before,”

This is the business equivalent of what the US Army referred to as ‘defaulting to doctrinal norms’, i.e. for strategists to fall back on using existing mental models, simplifying the problem to one they have seen before and applying a pre-existing framework.

You see this in the obsession with ‘best practice’ approaches and leveraging of past frameworks – drawing on previous examples where they have solved similar problems. While useful in accelerating projects – and often there are useful learnings – when done poorly they result in a superficial application of solutions to different contexts.

The problem is, for strategy problems, every situation is unique, with different organisational capabilities and performance, customer needs, competitive context and broader environment and market trajectory. (It’s worth noting that this critique applies primarily to strategy problems, as opposed to operational productivity problems, where data exists and an analytical approach is effective.). And the answer isn’t lying there in any data, but has to be invented.

I’ll finish with this quote from Brian Arthur. It’s in this articulation of Sam Walton’s process that you can see the ‘strategist as designer’ at work, piecing together a business model from its components – developing a configuration of parts – not through an analytical process but through one of creativity and invention.

You can see this in business as well. Sam Walton didn’t just use some old framework to create Wal-Mart. He said “Well, hang on here. We’ve got computers, we’ve got inventory, and we’ve got a whole network, so what are we really trying to do?” It may take months or a year to figure that out. You cognize things or piece together the framework from a different perspective, and if it is appropriate then it works

As I said at the beginning, this isn’t meant to provide a solution. Instead, it brings together a range of viewpoints on strategy, design and the role of problem setting and lets a perspective emerge.

*This needs a whole separate post on design synthesis, sensemaking and mental models as an expansion on this topic – how this process occurs – and the logic of abductive reasoning as one of the key processes in problem setting. All of these present challenges to ‘normal’ business processes.



(On the way)

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