How to Better Frame Problems

Abstract

Before managers can solve problems or take advantage of opportunities that may arise in their businesses, they must frame those problems or opportunities. Typically, leaders identify and frame problems intuitively and without much conscious deliberation.Framing problems is more an art than a science. It is also profoundly linked with the way our brains work, especially the intuitive processes we use to make sense of the world around us. This technical note illustrates how this process unfolds and how one can find a better frame, thus discovering actions that actually work to solve problems. Excerpt UVA-G-0630 Jul. 13, 2012 How to Better Frame Problems In mid-2009, a global clothing retailer found itself in an unexpected and difficult situation. The past decade had seen unprecedented growth and expansion of the company. The company's number of retail stores in the world had risen from 50 in 1995 to 852 in 2009. Despite this spectacular growth, the company's profits had remained stagnant in recent quarters, and thus its stock price had fallen—in part because investors had lost faith in the company's ability to grow revenues and decrease costs. Executives in the company were also concerned about the decrease in profitability. They framed the problem as one of revenue growth, and as a result, the company began efforts to open more stores, hire more associates, and cross-sell more items to each customer. Despite throwing tens of millions of dollars and hundreds of thousands of employee work hours at the problem, the company's profits continued to decline. At the end of 2010, the board enlisted a new CEO who framed the profitability problem in a different way. For the new CEO, revenues were dropping because the company was not fulfilling its value proposition to customers. When the profitability problem was reframed from a growth problem to a customer satisfaction problem, it became clear to the new CEO and her team that the old tactics used to grow revenues were actually hurting the customer experience and further eroding profitability. Thinking about the problem as a customer satisfaction problem offered different opportunities for action. The new CEO reduced the number of new retail locations, trained new staff to deliver a high-quality customer experience, and reduced the number of items that were available in stores to sell to customers—all in an effort to restore the brand experience and make customers happy. Over the following year, these measures slowly restored profitability to the company. Problem Framing . . .