Improving the problem formulation is the key

There are few management skills more powerful than the discipline of clearly articulating the problem you seek to solve before jumping into action.

It’s hard to pick up a current business publication without reading about the imperative to change. The world, this line of argument suggests, is evolving at an ever-faster rate, and organizations that do not adapt will be left behind. Left silent in these arguments is which organizations will drive that change and how they will do it. Academic research suggests that the ability to incorporate new ideas and technologies into existing ways of doing things plays a big role in separating leaders from the rest of the pack,1 and studies clearly show that it is easier to manage a sequence of bite-sized changes than one huge reorganization or change initiative.2 But, while many organizations strive for continuous change and learning, few actually achieve those goals on a regular basis.3 Two of the authors have studied and tried to make change for more than two decades, but it was a frustrating meeting that opened our eyes to one of the keys to leading the pack rather than constantly trying to catch up.

In the late 1990s, one of the authors, Don Kieffer, was ready to launch a big change initiative: implementing the Toyota production system in one of Harley-Davidson Inc.’s engine plants. He hired a seasoned consultant, Hajime Oba, to help. On the appointed day, Mr. Oba arrived, took a tour of the plant, and then returned to Don’s office, where Don started asking questions: When do we start? What kind of results should I expect? How much is it going to cost me? But, Mr. Oba wouldn’t answer those questions. Instead he responded repeatedly with one of his own: “Mr. Kieffer, what problem are you trying to solve?” Don was perplexed. He was ready to spend money and he had one of the world’s experts on the Toyota production system in his office, but the expert (Mr. Oba) wouldn’t tell Don how to get started.

The day did not end well. Don grew exasperated with what seemed like a word game, and Mr. Oba, tired of not getting an answer to his question, eventually walked out of Don’s office. But, despite the frustration on both sides, we later realized that Mr. Oba was trying to teach Don one of the foundational skills in leading effective change: formulating a clear problem statement. Since Mr. Oba’s visit, two of the authors have studied and worked with dozens of organizations and taught over 1,000 executives. We have helped organizations with everything from managing beds in a cardiac surgery unit to sequencing the human genome.4Based on this experience, we have come to believe that problem formulation is the single most underrated skill in all of management practice.

There are few questions in business more powerful than “What problem are you trying to solve?” In our experience, leaders who can formulate clear problem statements get more done with less effort and move more rapidly than their less-focused counterparts. Clear problem statements can unlock the energy and innovation that lies within those who do the core work of your organization.

As valuable as good problem formulation can be, it is rarely practiced. Psychologists and cognitive scientists have suggested that the brain is prone to leaping straight from a situation to a solution without pausing to define the problem clearly. Such “jumping to conclusions” can be effective, particularly when done by experts facing extreme time pressure, like fighting a fire or performing emergency surgery. But, when making change, neglecting to formulate a clear problem statement often prevents innovation and leads to wasted time and money. In this article, we hope to both improve your problem formulation skills

How Our Minds Solve Problems

Research done over the last few decades indicates that the human brain has at least two different methods for tackling problems, and which method dominates depends on both the individual’s current situation and the surrounding context. A large and growing collection of research indicates that it is useful to distinguish between two modes of thinking, which psychologists and cognitive scientists sometimes call automatic processing and conscious processing (also sometimes known as system 1 and system 2). These two modes tackle problems differently and do so at different speeds.

Conscious Processing

Conscious processing represents the part of your brain that you control. When you are aware that you are thinking about something, you are using conscious processing. Conscious cognition can be both powerful and precise. It is the only process in the brain capable of forming a mental picture of a situation at hand and then playing out different possible scenarios, even if those scenarios have never happened before. With this ability, humans can innovate and learn in ways not available to other species.

Despite its power, conscious processing is “expensive” in at least three senses. First, it is much slower than its automatic counterpart. Second, our capacity to do it is quite finite, so a decision to confront one problem means that you don’t have the capacity to tackle another one at the same time. Third, conscious processing burns scarce energy and declines when people are tired, hungry, or distracted. Because of these costs, the human brain system has evolved to “save” conscious processing for when it is really needed and, when possible, relies on the “cheaper” automatic processing mode.

Automatic Processing

Automatic processing works differently from its conscious counterpart. We don’t have control over it or even feel it happening. Instead, we are only aware of the results, such as a thought that simply pops into your head or a physical response like hitting the brake when the car in front of you stops suddenly. You cannot directly instruct your automatic processing functions to do something; instead, they constitute a kind of “back office” for your brain. When a piece of long-sought-after information just pops into your head, hours or days after it was needed, you are experiencing the workings of your automatic processing functions.

When we tackle a problem consciously, we proceed logically, trying to construct a consistent path from the problem to the solution. In contrast, the automatic system works based on what is known as association or pattern matching. When confronted with a problem, the automatic processor tries to match that current challenge to a previous situation and then uses that past experience as a guide for how to act. Every time we instinctively react to a stop sign or wait for people to exit an elevator before entering, we rely on automatic processing’s pattern matching to determine our choice of action.

Our “associative machine” can be amazingly adept at identifying subtle patterns in the environment. For example, the automatic processing functions are the only parts of the brain capable of processing information quickly enough to return a serve in tennis or hit a baseball. Psychologist Gary Klein has documented how experienced professionals who work under intense time pressure, like surgeons and firefighters, use their past experience to make split-second decisions. Successful people in these environments rely on deep experience to almost immediately link the current situation to the appropriate action.

However, because it relies on patterns identified from experience, automatic processing can bias us toward the status quo and away from innovative solutions. It should come as little surprise that breakthrough ideas and technologies sometimes come from relative newcomers who weren’t experienced enough to “know better.” Research suggests that innovations often result from combining previously disparate perspectives and experiences.8 Furthermore, the propensity to rely on previous experiences can lead to major industrial accidents like Three Mile Island if a novel situation is misread as an established pattern and therefore receives the wrong intervention.

That said, unconscious processing can also play a critical and positive role in innovation. As we have all experienced, sometimes when confronting a hard problem, you need to step away from it for a while and think about something else. There is some evidence for the existence of such “incubation” effects. Unconscious mental processes may be better able to combine divergent ideas to create new innovations. But it also appears that such innovations can’t happen without the assistance of the conscious machinery. Prior to the “aha” moment, conscious effort is required to direct attention to the problem at hand and to immerse oneself in relevant data. After the flash of insight, conscious attention is again needed to evaluate the resulting combinations.

The Discipline of Problem Formulation

When the brain’s associative machine is confronted with a problem, it jumps to a solution based on experience. To complement that fast thinking with a more deliberate approach, structured problem-solving entails developing a logical argument that links the observed data to root causes and, eventually, to a solution. Developing this logical path increases the chance that you will leverage the strengths of conscious processing and may also create the conditions for generating and then evaluating an unconscious breakthrough. Creating an effective logical chain starts with a clear description of the problem and, in our experience, this is where most efforts fall short.

A good problem statement has five basic elements:

1.     It references something the organization cares about and connects that element to a clear and specific goal;

2.     it contains a clear articulation of the gap between the current state and the goal;

3.     the key variables — the target, the current state, and the gap — are quantifiable;

4.     it is as neutral as possible concerning possible diagnoses or solutions; and

5.     it is sufficiently small in scope that you can tackle it quickly.

Is your problem important? The first rule of structured problem-solving is to focus its considerable power on issues that really matter. You should be able to draw a direct path from the problem statement to your organization’s overall mission and targets. The late MIT Sloan School professor Jay Forrester, one of the fathers of modern digital computing, once wrote that “very often the most important problems are but little more difficult to handle than the unimportant.” If you fall into the trap of initially focusing your attention on peripheral issues for “practice,” chances are you will never get around to the work you really need to do.

Mind the gap. Decades of research suggest that people work harder and are more focused when they face clear, easy-to-understand goals. More recently, psychologists have shown that mentally comparing a desired state with the current one, a process known as mental contrasting, is more likely to lead people to change than focusing only on the future or on current challenges. Recent work also suggests that people draw considerable motivation from the feeling of progress, the sense that their efforts are moving them toward the goal in question.A good problem statement accordingly contains a clear articulation of the gap that you are trying to close.

Quantify even if you can’t measure. Being able to measure the gap between the current state and your target precisely will support an effective project. However, structured problem-solving can be successfully applied to settings that do not yield immediate and precise measurements, because many attributes can be subjectively quantified even if they cannot be objectively measured. Quantification of an attribute simply means that it has a clear direction — more of that attribute is better or worse — and that you can differentiate situations in which that attribute is low or high. For example, many organizations struggle with so-called “soft” variables like customer satisfaction and employee trust. Though these can be hard to measure, they can be quantified; in both cases, we know that more is better. Moreover, once you start digging into an issue, you often discover ways to measure things that weren’t obvious at the outset. For example, a recent project by a student in our executive MBA program tackled an unproductive weekly staff meeting. The student began his project by creating a simple web-based survey to capture the staff’s perceptions of the meeting, thus quickly generating quantitative data.

Remain as neutral as possible. A good problem formulation presupposes as little as practically possible concerning why the problem exists or what might be the appropriate solution. That said, few problem statements are perfectly neutral. If you say that your “sales revenue is 22% behind its target,” that formulation presupposes that problem is important to your organization. The trick is to formulate statements that are actionable and for which you can draw a clear path to the organization’s overarching goals.

Is your scope down? Finally, a good problem statement is “scoped down” to a specific manifestation of the larger issue that you care about. Our brains like to match new patterns, but we can only do so effectively when there is a short time delay between taking an action and experiencing the outcome. Well-structured problem-solving capitalizes on the natural desire for rapid feedback by breaking big problems into little ones that can be tackled quickly. You will learn more and make faster progress if you do 12 one-month projects instead of one 12-month project.

To appropriately scope projects, we often use the “scope-down tree,” a tool we learned from our colleague John Carrier, who is a senior lecturer of system dynamics at MIT. The scope-down tree allows the user to plot a clear path between a big problem and a specific manifestation that can be tackled quickly.

Narrowing a Problem’s Scope

Good structured problem-solving involves breaking big problems into smaller ones that can be tackled quickly. In this “scope-down tree,” developed by John Carrier of MIT, the overall problem of excessive equipment downtime at a company’s plants is broken down first into two types of equipment (rotating and nonrotating), and then further into different subcategories of equipment, ultimately focused on a specific type of pump in one plant. The benefit of reducing the problem’s scope is that instead of a big two-year maintenance initiative, a team can do a 60-day project to improve the performance of the selected pumps and generate quick results and real learning. Then they can move on to the next type of pump, and hopefully, the second project will go more quickly. Following that, they move to the third type of pump, and so on.

Narrowing a Problem’s Scope

Managers we work with often generate great results when they have the discipline to scope down their projects to an area where they can, say, make a 30% improvement in 60 days. The short time horizon focuses them on a set of concrete interventions that they can execute quickly. This kind of “small wins” strategy has been discussed by a variety of organizational scholars, but it remains rarely practiced.

Four Common Mistakes

Having taught this material extensively, we have observed four common failure modes. Avoiding these mistakes is critical to formulating effective problem statements and focusing your attention on the issues that really matter to you and your organization.

1.     Failing to Formulate the Problem : The most common mistake is skipping problem formulation altogether. People often assume that they all already agree on the problem and should just get busy solving it. Unfortunately, such clarity and commonality rarely exist.

2.     Problem Statement as Diagnosis or Solution : Another frequent mistake is formulating a problem statement that presupposes either the diagnosis or the solution. A problem statement that presumes the diagnosis will often sound like “The problem is we lack the right IT capabilities,” and one that presumes a solution will sound like “The problem is that we haven’t spent the money to upgrade our IT system.” Neither is an effective problem statement because neither references goals or targets that the organization really cares about. The overall target is implicit, and the person formulating the statement has jumped straight to either a diagnosis or a solution. Allowing diagnoses or proposed solutions to creep into problem statements means that you have skipped one or more steps in the logical chain and therefore missed an opportunity to engage in conscious cognitive processing. In our experience, this mistake tends to reinforce existing disputes and often worsens functional turf wars.

3.     Lack of a Clear Gap : A third common mistake is failing to articulate a clear gap. These problem statements sound like “We need to improve our brand” or “Sales have to go up.” The lack of a clear gap means that people are not engaging in clear mental contrasting and creates two related problems. First, people don’t know when they have achieved the goal, making it difficult for them to feel good about their efforts. Second, when people address poorly formulated problems, they tend to do so with large, one-size-fits-all solutions that rarely produce the desired results.

4.     The Problem Is Too Big : Many problem statements are too big. Broadly scoped problem formulations lead to large, costly, and slow initiatives; problem statements focused on an acute and specific manifestation lead to quick results, increasing both learning and confidence. Use John Carrier’s scope-down tree and find a specific manifestation of your problem that creates the biggest headaches. If you can solve that instance of the problem, you will be well on your way to changing your organization for the better.

Formulating good problem statements is a skill anybody can learn, but it takes practice. If you leverage input from your colleagues to build your skills, you will get to better formulations more quickly. While it is often difficult to formulate a clear statement of the challenges you face, it is much easier to critique other people’s efforts, because you don’t have the same experiences and are less invested in a particular outcome. When we ask our students to coach each other, their problem formulations often improve dramatically in as little as 30 minutes.

Why American Management Rules the World

Why American Management Rules the World

by Nicholas Bloom, Rebecca Homkes, Raffaella Sadun, and John Van Reenen JUNE 13, 2011

After a decade of painstaking research, we have concluded that American firms are on average the best managed in the world. Over the past decade, a team from Harvard Business School, London School of Economics, McKinsey & Company, and Stanford has systematically surveyed global management. We have developed a tool to measure management practices across operational management, monitoring, targets, and people management. We scored each dimension on a range of practices to generate an overall management score, surveying over 10,000 firms in 20 countries. This has allowed us to create the first global database of management practices.

Well managed firms thrash their poorly managed competitors. They make more money, grow faster, have far higher stock market values, and survive for longer.

Second, when it comes to overall management, American firms outperform all others. This U.S. dominance occurs in the manufacturing, retail, and healthcare sectors (but interestingly, not in high schools). Japanese, German, and Swedish firms follow closely behind. In contrast, developing countries like Brazil, China, and India lag at the bottom of the management charts. Southern European countries like Portugal and Greece appear to have management practices barely better than those of most developing countries. In the middle stand countries like the UK, France, Italy, and Australia, which have reasonable but not brilliant management practices.

While the ranking of countries is certainly eye-catching, the real story lies within the countries. Almost 90% of the cross-country differences are driven by the size of the “tail” of really badly managed firms within each country. Countries like the U.S. that excel have hardly any badly managed firms, while those like India that have low average scores have a mass of very badly managed firms pulling down their averages.

Every country has some world-class firms. But while there are many of these extremely badly managed, every country also hosts some excellent firms. Even bottom-ranking India has dozens of firms that use worldclass management practices. A key takeaway is that individual companies are not trapped by the national environments in which they operate — there are top performers in all countries surveyed. Conversely, being in a world-class environment like the U.S. does not guarantee success. Even in America, more than 15% of firms are so badly managed that they are worse than the average Chinese or Indian firm.

What is the secret sauce of management success? One of the biggest drivers of these differences is variation in people management. American firms are ruthless at rapidly rewarding and promoting good employees and retraining or firing bad employees. The reasons are threefold (1) The U.S. has tougher levels of competition. Large and open U.S. markets generate the type of rapid management evolution that allows only the best-managed firms to survive. (2) Human capital is important. America traditionally gets far more of its population into college than other nations. (3)  The U..S has more flexible labor markets. It is much easier to hire and fire employees.

Many developing-country firms, even while trying to implement new techniques like Lean Management, ignore the fact that labor is different from other “inputs.” Many of the Chinese firms surveyed did not even employ managers who spoke the same language as the workers, relying on interpreters or basic sign-language for communication. As you can imagine, this does not lead to a feeling of mutual support between management and workers.

But the U.S. should not be complacent. Other countries equal or better the U.S. in some of the other areas of management we examined, such as careful monitoring, lean production, and sensible targets. The manufacturing prowess of Germany, has helped it weather the recent downturn so well, is built upon such advantages. Furthermore, although Chinese management practices are well below U.S. standards, they showed the fastest improvement since 2006 of any country we have looked at.

What lessons emerge for others wanting to reach the top of the ranking? Across all countries, organizations that properly incentivize talented workers, whether through promotion, pay, or other rewards, outperform others. As best practices spread and firms continue to implement these techniques they will narrow the existing gaps, reaping huge growth and profitability gains.

How To Hire A Great Product Marketing Manager

A Product Marketing Manager is a key position. A great one can be invaluable. A bad one can set your marketing back by at least one year. Therefore you must be choosy and try to get a good one. I suggest 3 things need to be investigated : ideally through 3 different interviews. If not , there different people can ask these 3 types of questions.

1. Knowledge of Product Management : Estimating. Business Modeling, Marketing Data 
2. Leading : Customer Leadership and communication, Team Leadership
3. Working cross-functionally : within the org chart, in difficult situations

Knowledge of Product Management:
Whether the candidate can solve problems and think critically

Estimating skills (15 Minutes ) 

Product Managers should be able to process a wide variety of data and hypothesis quickly

using making assumptions and simple back-of-the-envelope estimates. Questions
 

1. What is the total annual revenue of a snack stall at a railway station.
2. What is the total annual revenue of a typical movie theater in Mumbai?
3. What must be the total manpower cost of each of these ?

How Business Model Ties Up Everything (15 Minutes )
Product managers must know that the success does not lie only in features, technology, pricing and communication but also in how all these operate within the context of Business model as a whole. Questions

a)      Based on what you know, how would you identify and validate the best business model for us to pursue for one of our products? Then, for each of the following as “Why did you choose this model? What other alternatives you considered and discarded?

i)        Revenue model

ii)      Gross margin model

iii)    Operating model

iv)    Working capital model

v)      Investment model

Based on the answer you can conclude ( trainee level : focuses only on product features, price and communications, Junior level : uses “ business model” as a checklist, Expert : understands various components and how they interact and  reinforces each other. Master : capable of disrupting )

Marketing Data for Problem Solving (15 Minutes)
Smart product managers use data effectively to make better decisions.

c)      Ask open ended question like “Tell me about how you use data to make decisions”. What you want hear is if the candidate talks of how decisions are linked to what you want to find, quantitative and qualitative research, interviews, questionnaires, discussion guides, focus groups, cross tabulations, dashboards, actionable metrics (not vanity metrics).

d)     If the candidate cannot figure this out alone, ask direct questions : How to build a dashboard for XYZ?  What metrics would you track for ABC decision?   What you want to hear is lifetime value, per-customer metrics, events, funnel analysis and cohort metrics.

e)      Can you walk me through how you might do a funnel analysis for one of our products? Rapidly and clearly doing this exercise will tell you a lot about the candidate’s ability to think on-the-fly and how smart he or she is about data analysis.

Leading through communication and interpersonal skills

To evaluate the ability to influence and motivate, advocacy for customers and key stakeholders, confidence and assertiveness, Attitude and pace, Sociability and team skills, Honesty and integrity

Customer Leadership & Communication Skills ( 15 minutes) 

a)      Can we talk about how you interacted with customers in your most recent product role? What you expect to hear is the readiness to “get out of the office” to talk  directly to  customers, running experiments, and iterating to improve the product and selling nas quickly as possible,

b)      Imagine you get this job and I am a prospective customer for the product XYZ and I know nothing about your product or your company. How would you interview me about my “must have” problems and whether or not your product solves them for me.

c)      Your customer feedback shows that they prefer a particular feature but it does not align with your company’s long term strategy. How do you respond to your users – what would you exactly say? Make sure the candidate can say no to a customer when necessary: Can you talk to me about a time when you had to say no to a customer? Why did you have to say no? How did you handle it?

d)     If the candidate will manage an existing product, ask : imagine you’re taking over a mature product and you find out that customer issues are being dealt with reactively and much of the team that built the product is no longer with the company. What would you do to be more proactive about prioritizing fixes and enhancements?

e)      Test the candidate’s customer communication skills under pressure: Imagine you have recently deployed a major release of an enterprise software-as-a-service product. Unfortunately, you have found a bug that was missed in testing. Your QA group tells you this will impact less than 1% of users, but for those 1% it will be very bad. What do you do? Ask to actually write the email (during the interview).

Team (Engineering and Design) Leadership Skills (15 Minutes)
Find out how the candidate would interact with engineering in different situations:

a)      Imagine you give your engineering team requirements for 8 features for a product release. Engineering tells you 2 of your requirements are not possible, but they can implement the other 6. They also say they would like to add two additional requirements of their own. How do you respond? (You want a candidate  who is open to ideas from engineering, especially if they are good ideas and would make the product much better). How does the candidate deal with requirements engineering says are not possible?

b)      Ask the candidate to give an example of when he or she had to influence engineering to build a specific feature: Can you talk to me about a time when you had to influence engineering to build a particular feature? You are looking for evidence that the candidate can influence engineering and earn their respect: How do you earn respect from the engineering team? How do you get a team to commit to a schedule? Get a sense for the candidate’s breadth of experience in working with engineering teams: Can you talk to me about some of the challenges of working with product development teams?

c)      Has the candidate worked with rock star engineers before? Does the candidate know how to work with great engineers, stand up to them when necessary, and get out of their way when they’re doing what they do best? Talk to me about the best engineer you’ve ever worked with. Why was the engineer so good? What results did you achieve together?

d)     You have provided your design team with a set of initial requirements, and they have turned around a first set of mocks. Unfortunately, the mocks are not what you had been hoping for. In addition, the design team added a bunch of features that were not in your requirements. How do you respond? You want to see how the candidate’s skills in leading designers. Does the candidate dictate to them? Or does the candidate listen to suggestions with an open mind? Does the candidate get results by raising concerns and asking questions about issues that the current mocks don’t address? With both engineering and design, it is usually more effective for the product manager to define the problems and let the respective team come up with a proposed solution.

Cross Funacitonal Leadership and Management

 
Cross-Functional Management (15 Minutes) :
A good product manager must provide leadership, advocacy and support to the executive team, sales, business development and any other stakeholders that your company might have. To succeed, product managers needs  interpersonal skills and leadership of key company stakeholders.

1)      Can you draw a quick org chart for a position where you played a key leadership role?

c)      Talk to me about a time when the team was not working well together. Why did this happen? What did you learn?

d)     Can you give an example of you coaching others on your team?

e)      Is consensus always a good thing?

f)       What kind of people do you like working with?  What kind of people have you had difficulty working with in the past?

g)      What about an example when you were being coached? What did you learn? How did you improve?

h)      In your mind, what is the difference between management and leadership? Some things you should be looking for: A solid understanding of how to achieve results by working with and through others . How much process the candidate expects (and if this is a good match for your company). Good negotiation skills. Now spend some time on a scenario where the candidate disagrees with a boss or senior executive:

i)        Imagine you and the design team have come up with the interaction design of a new feature. Unfortunately, your boss doesn’t agree and believes it should work differently. You and the design team are confident in your opinion and think the suggestion from your boss will be inferior. What do you do? Follow this up with the scenario of when a senior stakeholder or boss demands more in a given time frame than the candidate can possibly deliver: Can you talk to me about a time when a senior stakeholder or boss demanded more of you than you could possibly deliver? How did you handle the situation?

2)      Can you talk to me about the sales model of a product you have managed? How did you find prospects for the product? What did you do that made it easier for the sales team to sell the product? Can you talk about a situation where you were instrumental in closing a sale? What did you do? You want to know that the candidate understands what it takes to sell products and that he or she can work effectively with your sales team. Did the candidate “get out of the building” frequently and interact actively with customers? Did the candidate take the time to really understand and internalize the sales team’s pains? And while engaging with customers and the sales team is critical, a product manager must be very careful about being non-strategic and reactive. Imagine you are nearing code freeze on a release, but the sales team tells you a key customer will not buy it unless you add a specific feature. What do you do?

3)      Similarly, a product manager has to be very cautious about over-promising: Imagine the VP Sales has been pestering you to send her an updated product roadmap before she talks to a very desirable prospect. You have a draft, but haven’t prioritized it or built internal consensus around it yet. How do you help your VP Sales?

4)      When a company is cash-strapped and a sales team is under extreme pressure to deliver revenue, it can be easy to become sales-driven and non-strategic. This is a sign of a serious problem in the company, and usually happens when a company is scaling prematurely and has hired senior sales and business development people too early. An important role of the product manager is to help the sales team not sign the company up for things that can’t be delivered, shouldn’t be delivered, or that are not strategic.