We encounter all kinds of problems every day. And they go by different names, such as:
- Dilemmas
- Situations
- Emergencies
- Obstacles
- Opportunities
- Illnesses
- Chaos
- Curiosities
- Puzzles
- Conflicts
- Projects
- Competitions
- Controversies
- Complaints
- Burning Platforms
These problems, especially while managing our enterprises, end up as either of two types:
- Challenges
- Crises
We categorise the issues clamouring for our attention as crises or challenges depending on how urgent and important either one is.
A crisis demands our immediate attention and response. If we don’t address a crisis, serious adversities would result. Running low on cash to pay bills, for example, is a crisis that can (and will) lead to the shutting down of the business.
A challenge is a problem which we resolve to make progress towards our goals. Challenges emerge whenever we plan strategies and set targets. We need to overcome challenges to get whatever we want and reach wherever we want to go. How to price products competitively, for instance, is a challenge as the enterprise has profit goals to attain.
A crisis can be a looming threat or the aftermath of a catastrophe. It can be a risk that manifested itself or a probable danger in the very near future. Whenever we face a crisis, we put priority to alleviate or mitigate it. We don’t stop until we at least have tamped down the effects of the crisis. A fire in the building is a crisis and even if we put it out, we’d have to deal with the impact of the damage afterward. A crisis is not over until we are back on our feet.
A challenge can either be a roadblock, or simply a requirement. Challenges are either foreseeable or unanticipated but when we tackle them, we work to get around them or beat them. We don’t grow or meet our goals unless we hurdle challenges. We, therefore, take challenges seriously as we work to accomplish our objectives. We, for instance, plan the employment of skilled people needed for our businesses and we lay out a strategy to offer & negotiate attractive compensation packages to hire & retain the best employees we can find.
In crises, we go into survival or defensive mode. We confront a crisis now otherwise we will suffer potentially irreversible damage or significant setbacks to our business. We don’t review roadmaps or long-term visions because in a crisis, we are under threat or busy doing damage control. In a crisis, our immediate task is to end it before it ends us. If we’re on a boat and we see a storm coming, for example, we batten down the hatches. We don’t dilly-dally otherwise our boat sinks.
With challenges, we review our present states versus our future states. We assess a challenge’s impact to our roadmaps and timelines, and we plan how to hurdle them. When we buy a house, for instance, we foresee how we’ll be living in it in the next twenty (20) years versus today. Do we allow for future expansion or do we plan to move out when our children grow up? How much would it cost to live in the house over time?
Crises demand our urgent attention.
Challenges demand planning based on what are important for us.
The problems we face as professionals stem from crises and challenges. How well we solve our problems starts with determining whether one is a crisis or a challenge. Sometimes (if not most of the time), however, we make the mistake of mixing up one with the other.
And making that mistake can be dangerous.
The treasurer of a commercial building association noticed from the property’s annual financial statements that there was a cash-flow discrepancy of PhP 6 million ($USD 107,000). The treasurer could not trace where the cash went and requested the building’s property management to immediately find the money. The property management contractor, however, took more than a year to make a report, despite continued urgent follow-ups and complaints from the treasurer. Exasperated, the treasurer asked an external auditor to take over the investigation. The external auditor, however, also took so long to report, which left the treasurer very frustrated.
The missing cash caused delays in investments in building improvements. An elevator broke down and was not fixed. The building’s fire protection system had sprinklers that did not work. Worse, as time passed, it got harder to trace where the missing cash went.
The missing cash was a crisis but, unfortunately, was treated more as a challenge. The result was the likelihood that the building wouldn’t recover the money and services for the owners & occupants would not be up to par.
In another example, a large manufacturing corporation had a warehouse full of slow- to non-moving inventories of materials and products. The chief executive officer (CEO) assigned the problem to task force to handle what to do with the non-moving inventories. The task force, after several months of study, recommended that the corporation invest in an enterprise resource planning (ERP) software system to streamline its inventory management system. After many weeks of planning and implementation, however, the ERP system failed to reduce the non-moving inventories.
The corporation’s chief finance officer sounded the alarm that the non-moving inventories were dragging down the company’s cash flow. But the CEO didn’t think it was a crisis and he delegated the problem back to the task force for further study.
The CEO saw the non-moving inventories as a challenge as the non-moving inventories didn’t pose an immediate threat to the corporation’s business. But because he didn’t put much importance to it, the corporation didn’t grow as much as it could have because of the inventories’ drag on the company’s finances.
What we see as challenges can really be crises. And what we see as crises can just be challenges. But challenges can evolve into crisis if we don’t address their importance and crises can downgrade into challenges when we respond to them and mitigate their immediate threats.
We deal with all sorts of problems every day. In the course of doing our jobs, we categorise problems as either a crisis or a challenge, depending on their urgency and importance.
We must be careful, however, to know the difference between crises and challenges. In the end, it depends on how much we value our enterprises that would determine how we distinguish between the two.
Ellery's Essays 