We sometimes create problems more than we encounter them.
A large conglomerate builds a huge packaging facility in the outskirts of Manila. When I visited the plant, I asked the operations manager why such a big facility was built?
“We built the facility to attract customers,” the operations managers said.
“So, it was built, so customers will come?” I asked.
“Yes,” the manager said.
“And have they come?” I asked.
“Not yet,” said the manager.
The operations manager was in charge of entertaining potential clients and making sure the facility was efficient in production and cost.
The large conglomerate advertises the available capacity of the plant through its network of contacts. Over a few years, it got some clients but still had excess capacity.
A large developer constructed a complex of high-rise residential and commercial buildings. The developer depended on brokers and marketing employees to sell the buildings’ office and residential spaces even as construction was hardly underway. The developer provided incentives for every unit sale but despite the efforts, sales was sluggish. Worse, the building complex was beside a man-made river that overflowed during a heavy rain storm. The complex was flooded for a short while but it was enough to turn off would-be customers. To this day, the complex remains low on occupancy. The developer’s marketing team continues to work hard to sell the complex.
Meanwhile, a nearby building complex enjoyed brisk demand even before it was built, and occupancy remains high. The competing complex is located near a major highway and successfully wooed several multinationals to set up their headquarters in several buildings.
A bank opened a new branch in the neighbourhood. The bank assigned the branch manager a minimum monthly quota of new clients and a monthly target of new deposits for the branch. To find the clients, the branch manager went door-to-door around the neighbourhood to sell her branch’s services. Up to the present day, she sometimes meets her monthly targets, but sometimes she doesn’t. “It can be quite hard,” she says.
In the above-mentioned examples, the success of the packaging facility, the high-rise building complex, and the bank branch was measured on how well they got customers. The packaging facility did get some clients but still had capacity for more. The high-rise building complex constructed near an overflowing river ended up a failure. The bank branch and its manager struggle month after month to meet quota.
It is common in business for executives to invest in large projects and then hope that the returns of such investments will be realized right away. In many cases, the executives delegate the responsibility of realizing the returns to their subordinates. The executives package the responsibility as a challenge. For the subordinates, it’s more of a problem given the pressure to perform to meet expectations.
In these three examples, the subordinates work to solve problems stemming from the strategies of executives. The strategy is the real problem and subordinates are stuck with the symptoms.
In many organizations, executives expect their subordinates to just fix the problems even if the executives know their strategies are the causes. To the executives, the strategy is a given and the subordinates just have to solve the problems a strategy may have created.
Strategy shouldn’t be a given and executives should take responsibility for their strategic decisions. The common pitfall in strategic planning is jumping into a plan not only without enough study but also without considering whether it will solve problems or create many more.
Strategic planning can be viewed as a form of problem solving. To put it anther way, the approach to strategic planning can apply similar to problem solving. That is:
- Recognize a fuzzy situation
- Define the problem;
- Brainstorm ideas or solutions;
- Set criteria for the chosen solution;
- Decide on the solution.
Change the word “solution” to “strategy” and one would have an approach to strategic planning.
Ellery's Essays 