Values. What is fundamentally important to the company?
Competencies. What does the company do better than others do?
Aspirations. How does the company envision and measure success?
An identity provides executives with direction and focuses attention on opportunities and threats. For instance, in August 2007, Campbell Soup decided it would sell off the Godiva business. The company didn’t base the decision on financial performance; Godiva is a superpremium chocolate brand and a profitable business. Trouble is, Campbell’s values, competencies, and aspirations focus on nutrition and simplicity—and Godiva chocolates don’t fit in with that self-image. “Although the premium chocolate category is experiencing strong growth and Godiva is well-positioned for the future, the premium chocolate business does not fit with Campbell’s focus on simple meals,” explained Douglas R. Conant, Campbell Soup’s CEO, while announcing the decision. In December 2007, the company reached an agreement to sell Godiva to Yildiz Holding, which owns the Turkish company lker Group, for $850 million. By relying on its identity, rather than on financial projections, Campbell made the decision to sell Godiva quickly and painlessly.
Focus on action.
In a world of Newtonian order, where there is a clear relationship between cause and effect, companies can judge what strategies they want to pursue. In a wicked world of complex and shadowy possibilities, enterprises don’t know if their strategies are appropriate or what those strategies’ consequences might be. They should therefore abandon the convention of thinking through all their options before choosing a single one, and experiment with a number of strategies that are feasible even if they are unsure of the implications.
To pick a starting point, executives can borrow a leaf from policy makers. Bureaucrats focus on the few actions they will be able to take rather than the myriad options before them, Yale University’s Charles Lindblom pointed out in 1959. Doing so enables policy makers to analyze options quickly and make decisions that meet the goals of several constituents. Calling it the science of muddling through, Lindblom argued that over time, governments will make progress by constantly making small policy changes. In a similar way, companies can formulate strategies that will deliver results in various scenarios—I call these robust actions—and use Pareto analysis to prioritize a small number of them that will produce the most impact. That’s what PPG Industries does—as shown in the exhibit below, “PPG’s Framework for Responding to Wicked Issues,” and described later in this article.
Sidebar IconPPG’s Framework for Responding to Wicked Issues
However, even executives willing to embark on a number of robust actions often become indecisive when they realize that every response to a wicked issue will alter the problem the company faces and necessitate another change in strategy. They keep analyzing the issue rather than doing something about it. They would do better to try out some strategy as a starting point; the consequences will give them a better handle on the real problem they face. So, to tackle wicked problems, smart companies conduct experiments, launch innovative pilot programs, test prototypes—and make mistakes from which they can learn. Companies like GE and Fujitsu encourage risk taking and celebrate thoughtfully implemented initiatives even if they turn out to be business failures. These companies believe that unexpected and even unsatisfactory results contribute to organizational learning.
Adopt a “feed-forward” orientation.
Companies design planning systems to work based on feedback; they compare results with plans and take corrective actions. Though it’s a powerful source of learning, feedback has limited relevance in a wicked context. Feedback allows enterprises to refine fundamentally sound strategies; wicked problems require executives to come up with novel ones. Feedback helps people learn from the past; wicked problems arise from unanticipated, uncertain, and unclear futures. Feedback helps people learn in contexts such as the movie Groundhog Day, where the protagonist (Phil Connors) encounters the same set of circumstances every day, which enables him to perfect his responses over time. Wicked problems arise in circumstances such as those in the TV series Quantum Leap, where the protagonist (Sam Beckett) finds himself in an unfamiliar time and place in each episode. Comprehending the challenge he faces is itself the initial problem.
Competencies. What does the company do better than others do?
Aspirations. How does the company envision and measure success?
An identity provides executives with direction and focuses attention on opportunities and threats. For instance, in August 2007, Campbell Soup decided it would sell off the Godiva business. The company didn’t base the decision on financial performance; Godiva is a superpremium chocolate brand and a profitable business. Trouble is, Campbell’s values, competencies, and aspirations focus on nutrition and simplicity—and Godiva chocolates don’t fit in with that self-image. “Although the premium chocolate category is experiencing strong growth and Godiva is well-positioned for the future, the premium chocolate business does not fit with Campbell’s focus on simple meals,” explained Douglas R. Conant, Campbell Soup’s CEO, while announcing the decision. In December 2007, the company reached an agreement to sell Godiva to Yildiz Holding, which owns the Turkish company lker Group, for $850 million. By relying on its identity, rather than on financial projections, Campbell made the decision to sell Godiva quickly and painlessly.
Focus on action.
In a world of Newtonian order, where there is a clear relationship between cause and effect, companies can judge what strategies they want to pursue. In a wicked world of complex and shadowy possibilities, enterprises don’t know if their strategies are appropriate or what those strategies’ consequences might be. They should therefore abandon the convention of thinking through all their options before choosing a single one, and experiment with a number of strategies that are feasible even if they are unsure of the implications.
To pick a starting point, executives can borrow a leaf from policy makers. Bureaucrats focus on the few actions they will be able to take rather than the myriad options before them, Yale University’s Charles Lindblom pointed out in 1959. Doing so enables policy makers to analyze options quickly and make decisions that meet the goals of several constituents. Calling it the science of muddling through, Lindblom argued that over time, governments will make progress by constantly making small policy changes. In a similar way, companies can formulate strategies that will deliver results in various scenarios—I call these robust actions—and use Pareto analysis to prioritize a small number of them that will produce the most impact. That’s what PPG Industries does—as shown in the exhibit below, “PPG’s Framework for Responding to Wicked Issues,” and described later in this article.
Sidebar IconPPG’s Framework for Responding to Wicked Issues
However, even executives willing to embark on a number of robust actions often become indecisive when they realize that every response to a wicked issue will alter the problem the company faces and necessitate another change in strategy. They keep analyzing the issue rather than doing something about it. They would do better to try out some strategy as a starting point; the consequences will give them a better handle on the real problem they face. So, to tackle wicked problems, smart companies conduct experiments, launch innovative pilot programs, test prototypes—and make mistakes from which they can learn. Companies like GE and Fujitsu encourage risk taking and celebrate thoughtfully implemented initiatives even if they turn out to be business failures. These companies believe that unexpected and even unsatisfactory results contribute to organizational learning.
Adopt a “feed-forward” orientation.
Companies design planning systems to work based on feedback; they compare results with plans and take corrective actions. Though it’s a powerful source of learning, feedback has limited relevance in a wicked context. Feedback allows enterprises to refine fundamentally sound strategies; wicked problems require executives to come up with novel ones. Feedback helps people learn from the past; wicked problems arise from unanticipated, uncertain, and unclear futures. Feedback helps people learn in contexts such as the movie Groundhog Day, where the protagonist (Phil Connors) encounters the same set of circumstances every day, which enables him to perfect his responses over time. Wicked problems arise in circumstances such as those in the TV series Quantum Leap, where the protagonist (Sam Beckett) finds himself in an unfamiliar time and place in each episode. Comprehending the challenge he faces is itself the initial problem.