by Ron Ashkenas | HBR Blog
Managers have little choice about facing challenges, whether they come from competitors, economic conditions, or customer demands. However, they can choose whether they treat those challenges as problems or opportunities.
Here’s an example of two managers faced with the same challenge one approached it as a problem to overcome, and the other, a possibility for reinvention:
Although in different industries, both managers’ firms count on the U.S. Federal government for a substantial portion of their business. This means that they both have to deal with the impending downturn in government spending. As background, the Federal government doesn’t actually have an official budget, but the pressure to reduce deficits along with mandated cuts from previous budget legislation suggest that Federal agencies will have significantly decreased funds in the coming year. So how do you respond to the challenge of knowing that a major customer is likely to reduce spending by as much as 20% in the coming year?
The first manager explained that his organization was responding by cutting their own budget. Taking a hard, analytic approach, his team projected likely places where orders (and revenue) would decrease, and then created scenarios for downsizing their organization to fit the new revenue models. It seemed a sensible and realistic way to proceed, albeit painful. But given the sensitivities about potential job losses, the work was being done by a small group while morale deteriorated in the broader team.
In contrast, the second manager decided to use the budget crisis as a catalyst for reinventing the company’s business with the Federal Government. At an offsite, she challenged her team to identify what it would take to grow revenues be it taking market share from competitors, meeting unmet customer needs, or some other undiscovered direction. This led her people to re-think their entire go-to-market approach and come up with ways of shifting shrinking business to third-party partners, while redeploying their own resources to potential growth areas. In parallel, a sub-team is now looking at possible layoffs and restructuring options in case the growth ideas don’t bear fruit. The second manager explained to me that even though everyone understood the severity of the situation, most of her organization was engaged in trying to figure out a solution.
Given the uncertainty of the Federal government budget and marketplace, we won’t know the outcomes for these two companies until sometime next year. In fact it’s quite possible that both managers will be forced to hunker down and shrink their company’s footprints. The second organization, however, at least has a chance to emerge as a stronger, more effective enterprise because the manager turned the budget reductions from a problem into an opportunity. And in the interim, she has a more motivated and focused set of leaders and professionals.
Unfortunately, this kind of contrast is not unusual. Many managers respond to challenges literally. When something happens in the external environment their default position is to continue the current way of doing things, but just ratchet the resources up or down as conditions change. As such, they treat their problems as temporary issues that need to be solved in order to get back to business as usual.
But other managers see problems in a different light as a signal from the environment that it’s time for fresh thinking. For them it’s not just a matter of resolving the immediate issue, but using the problem to reassess the current way of doing business, to identify new customer needs, and to innovate. In this way, problems can open new worlds.
To what extent do you view problems as opportunities?
Ron Ashkenas is a managing partner of Schaffer Consulting and a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.