When you’re a hammer, every problem looks like a nail.

Picture the scene.

You’re the CEO of an international music business. Throughout your career, your instincts and capabilities have helped you overcome huge obstacles. Despite all the negativity in the media, you’re achieving solid commercial performance. Yet you have what appears to be a wicked problem: your company still hasn’t made good on its internal promise of ‘digital excellence’, and delivery of digital ideas is at a standstill.

You talk to some famous management consultants. They investigate, and tell you that you have a complex set of structural and operational constraints that will cost millions to fix. You think they might be right, but want a second opinion. You ask your executive coach. He investigates, and tells you that you have a morale problem amongst your senior team, because business is tougher now than it was, and that leadership development is necessary to reignite creative momentum. That also feels plausible. Bemused, you have dinner with the Chairman of your marketing agency, who has often been a sensible sounding board. He investigates, agrees that digital excellence is a big concern, and proposes overcoming it by transcending your knotty internal problems and empowering external creative partners.

Twelve months and several million dollars later, you’re still no closer to ‘digital excellence’. Creativity is stagnant, and even the outlier successes, such as the YouTubers whose musical ambitions you’ve bankrolled, aren’t quite breaking through in the way you’d hoped. Your digital competition continues to grow, despite the obvious failings in their own business models.

To paraphrase Socrates, when you choose your advisor, you choose your answer. So that’s what you do – blame your advisors. You’ve been told that you have a problem with morale, a problem with structure, a problem with your operational processes, and a problem with leadership. You’ll accept that, but no-one actually seems capable of developing a strategy to overcome them and refocus your team on delivering digital excellence.

Yes, digital excellence is a wicked problem, but how hard can it be?

The above is a story from my own consulting work, and typical of the issues that get my phone ringing. An intelligent, well-meaning leader engages intelligent, (mostly) well-meaning third parties to try and solve a difficult but by no means impossible problem – and no-one gets anywhere fast.

In such situations, it’s common that the third parties attract the blame for failure. “They promised us a fix; they didn’t deliver” is an all-too-human response to disappointment, but it ignores two critical factors. Firstly, no leader can or should wholly outsource important strategic initiatives to third parties. They don’t know your business as well as you do, and aren’t as vested in its success. Blaming them when it all goes wrong is an abdication of leadership.

Secondly – and this is the critical point – time and again I have seen that a lack of action is not the issue in failed projects. Wrongly guided action is. I am not talking here about a lack of strategy. I’m talking about the fact that many businesses fundamentally misdiagnose their problems.

Misdiagnosed problems render strategy, and action, worthless. As our music industry story proves, bright people can still get nowhere if they aren’t working on the right issues.

I am going to argue that misdiagnosis is caused by two overarching factors. The first is the ‘outside in’ problem, to do with the role of advisors and the business culture in which they, and everyone else for that matter, have to operate. The second is the ‘inside out’ problem, to do with human nature itself, which often blinds us to the truth of our predicaments.

The ‘outside in’ problem

I’m writing this article in the airport at San Francisco, having driven here via Mountain View and Palo Alto. This is the global epicentre of digital innovation, where business after business sets out to disrupt its chosen industry by coming up with better ideas than its predecessors have, and getting them to market quicker and more cost-effectively.

This corner of the world has shown a remarkable ability to fuse technology with hyper-capitalism, and this has fundamentally altered a great deal of our collective thinking and conversation about business. To be successful in the 21st century, we believe that we must continually disrupt, or risk being disrupted. We must move fast and break things. We must understand that strategy is delivery.

This view of the world can lead to a sort of constant, low-level panic in many businesses, where doing anything, even the wrong thing, is better than pausing to determine what’s right. This might be fine in some contexts (software development, for example – although that’s not a given), but it isn’t a panacea for all ills. Complex problems require comprehensive thought, and for those doing the thinking to remain calm.

Survey the business press, and calmness feels in short supply – hardly a month goes by without the HBR reporting on the next major threat to your business. (And just imagine the pervading sense of panic if you are working within the music industry…)

It suits many advisors to ramp up the hysteria by asserting that the world is speeding up every day – that you must disrupt, or be disrupted – and that the only solution is to embrace their solution.

This solution-first approach impedes the ability of these advisors to accurately diagnose the problems that they have been hired to solve. Indeed, many third party diagnosis (or ‘discovery’) phases of projects are structured solely to satisfy the knowledge gaps of the supplier so that they can tailor their pre-determined solution to the business in question. When you’re a hammer, every problem looks like a nail.

So we have advisors who, consciously or otherwise, have diagnostic processes that can never be objective, in a cultural context where fast action is often seen as more valuable than careful thought.

And that’s not the end of it.

The ‘inside out’ problem

The way that the human mind works can easily blind us to the root causes of our issues. This is because we are simply not programmed to see the world around us rationally and objectively. From a diagnostics standpoint, there are usually three factors at work.

1. Everybody lies. Human beings, when questioned about their behaviour, inevitably start making things up. This is because 75% of our decision-making is non-conscious, which makes it hard for us to understand why we behave as we do – and therefore almost impossible to explain it accurately to anyone else. Furthermore, you can imagine the incentive to start making things up when you feel under scrutiny, or that your survival is at risk. Fear distorts truth.

Many diagnostic processes fail because they lack appropriate context, and do not sufficiently account for unreliable witnesses.

2. Everybody is overly influenced by stories. Even if unreliable witnesses did not exist, the majority of what you hear in a classic ‘diagnostic’ process would not be useful, because human beings are trained to attach explanations to events that are just not borne out in reality. “We are failing because consumers don’t want physical albums these days” is a plausible-sounding explanation for poor performance. The problem is that it may not be true. But because easy explanations are attractive to us, and because we are influenced by well-told stories more than by messy facts, cause and effect can get incorrectly blended at every turn.

3. Extreme outliers are hard to forecast, and harder to rationalise. In a world where “no one’s buying physical albums these days”, Adele shows up, selling millions of CDs. No one forecast this, and no one has yet landed on a plausible explanation of its implications for the music industry. But Adele is significant: she proves that artists can still sell albums by the bucketload. No discussion of the music industry’s future would be complete without her, yet classic statistical thinking would suggest that we need to look away from the outliers for answers.

This is also true of the average diagnostic process: one seemingly random, often hidden event usually contains much bigger insights for the whole. But our brains are not equipped to detect this kind of insight. They are hardwired to prefer the simpler narrative.

Taken together, these inside-out and outside-in factors create a context in which solving complex problems is all but impossible. To summarise: you’ve got changing consumer behaviour, a fast-moving competitive set, and a grumbling Board to deal with. Every media outlet, and most of your peers, say you need to move faster, as do your business advisors. Consciously or otherwise, their analysis of your problems is prejudiced by the solutions they want to sell. And no one, inside or outside your business, is mentally wired to be able to give accurate answers to critical questions.

Yes, bad diagnosis is a wicked problem – but at least it’s the right one.

The CEO finished explaining his predicament.

And I felt as though he’d said a lot, but had also failed to claim and own the root of the problem. So I asked him a question: “when you say ‘digital excellence’, what do you mean?”. He paused, and said “that’s interesting. No one has ever asked me that before”.

As obvious as it might sound in the telling, the hidden cause of many of the issues was everyone concerned second guessing a fundamental lack of clarity from the leader. The management consultancy had assumed that digital excellence meant business model. The executive coach had assumed that digital excellence was primarily a question of leadership. The agency had assumed that digital excellence meant better digital ideas. In all cases, these assumptions were hard-wired into their DNA. And digital excellence was and is all of these things — but together the issues were simply too big to be solvable. The term itself was a barrier to understanding and success. And no one internally had ever dared to question the CEO’s own perspective on the ‘digital excellence’ agenda, because their jobs were on the line. Fight or flight ruled.

The start of the solution for this client was nothing more, nothing less, than establishing some common language around the problem that they were trying to solve. This led to a much clearer set of objectives for the senior team, and the beginnings of a change programme which is finally starting to deliver the results that the business needs.

Unfortunately, it’s not always as easy as this. Accurate diagnosis of business and marketing issues is often very difficult, and I have spent years developing unique tools and techniques to ensure that it can be done quickly and reliably.

Wicked problems are often wicked problems precisely because their root causes aren’t accurately understood. Diagnosing them is specialist work. It often requires sophisticated tools and techniques.

My intention in future posts is to talk more about the principles behind accurate and helpful problem diagnosis, and point towards tools and techniques that might be useful for those who are responsible for it (and if you want to learn more, in a shorter space of time, you might be interested in this).

But in this case, in this case all it took was one simple question. And that question points to a bigger concern: how many millions of dollars, and how much pain, would be saved by leaders getting uncomfortable, and asking themselves and their teams one simple question every day: “Are we absolutely sure that we are solving the right problem?”

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