Please read through the article below and answer thequestion at the end of the article.
Strategy as a Wicked Problem
Over the past 15 years, I’ve been studying how companies createstrategy—the most important responsibility of senior executives.Many corporations, I find, have replaced the annual top-downplanning ritual, based on macroeconomic forecasts, with moresophisticated processes. They crunch vast amounts of consumer data,hold planning sessions frequently, and use techniques such ascompetency modeling and real-options analysis to develop strategy.This type of approach is an improvement because it is customer- andcapability-focused and enables companies to modify their strategiesquickly, but it still misses the mark a lot of the time.
Companies tend to ignore one complication along the way: Theycan’t develop models of the increasingly complex environment inwhich they operate. As a result, contemporary strategic-planningprocesses don’t help enterprises cope with the big problems theyface. Several CEOs admit that they are confronted with issues thatcannot be resolved merely by gathering additional data, definingissues more clearly, or breaking them down into small problems.Their planning techniques don’t generate fresh ideas, andimplementing the solutions those processes come up with is fraughtwith political peril. That’s because, I believe, many strategyissues aren’t just tough or persistent—they’re “wicked.”
Wickedness isn’t a degree of difficulty. Wicked issues aredifferent because traditional processes can’t resolve them,according to Horst W.J. Rittel and Melvin M. Webber, professors ofdesign and urban planning at the University of California atBerkeley, who described them in a 1973 article in PolicySciences magazine. A wicked problem has innumerable causes, istough to describe, and doesn’t have a right answer, as we will seein the next section. Environmental degradation, terrorism, andpoverty—these are classic examples of wicked problems. They’re theopposite of hard but ordinary problems, which people can solve in afinite time period by applying standard techniques. Not only doconventional processes fail to tackle wicked problems, but they mayexacerbate situations by generating undesirable consequences.
In the areas of public policy, software development, and projectdesign, experts such as Peter DeGrace, Leslie Hulet Stahl, and JeffConklin have developed ways of spotting wicked problems and copingwith them. DeGrace and Stahl wrote Wicked Problems, RighteousSolutions: A Catalogue of Modern Software EngineeringParadigms (1990); Conklin authored Dialogue Mapping:Building Shared Understanding of Wicked Problems(2006). Policymakers, in particular, have put this powerful concept to good use,but it has been largely missing from strategy discussions. Althoughmany of the problems companies face are intractable, they have beenslow to acknowledge the wickedness of strategy issues.
Between 1995 and 2005, I completed three research projects thatprovided insights into wicked strategy problems. First, as part ofbenchmarking projects that the APQC (formerly known as the AmericanProductivity & Quality Center) and the Hong Kong ProductivityCouncil conducted, I analyzed 22 North American, European, andAsian enterprises that use innovative strategic-planningtechniques. They include ABB, Alcoa, Honeywell, John Deere, PPGIndustries, Royal Dutch Shell, Siemens, Sprint, Whirlpool, andXerox (China and USA). Second, I studied strategy implementation indepth at seven of these enterprises. Third, a colleague, GaurabBhardwaj, and I tracked DuPont’s pharmaceuticals business to learnhow companies draw up strategies when returns will accrue only inthe long run and are highly uncertain. Based on these studies, I’llexplore in the following pages how companies can tame—since theycan’t solve—such problems. I’ll conclude by describing a planningprocess that helps PPG Industries tackle wicked issues.
What Is a Wicked Problem?
There are several ways to define a wicked problem, but accordingto Rittel and Webber, it has some or all of 10 characteristics.(See the sidebar “The 10 Properties of Wicked Problems.”) Caveat:The criteria are not a set of tests that mechanically determinewickedness; rather, they provide insights that help you judgewhether a problem is wicked.
Wicked problems often crop up when organizations have to faceconstant change or unprecedented challenges. They occur in a socialcontext; the greater the disagreement among stakeholders, the morewicked the problem. In fact, it’s the social complexity of wickedproblems as much as their technical difficulties that make themtough to manage. Not all problems are wicked; confusion, discord,and lack of progress are telltale signs that an issue might bewicked.
In my consulting work, I’ve found that when five characteristicsare present in a strategy-related issue, executives agree they havea wicked problem on their hands. I’ll list the key criteria belowand use them to show how the challenge of growth that Wal-Martfaces today may well be wicked.
The problem involves many stakeholders with different values andpriorities.
As Wal-Mart tries to grow faster, numerous stakeholders arewatching nervously: employees and trade unions; shareholders,investors, and creditors; suppliers and joint venture partners; thegovernments of the U.S. and other nations where the retaileroperates; and customers. That’s not all; many nongovernmentalorganizations, particularly in countries where the retailer buysproducts, are closely monitoring it. Wal-Mart’s stakeholders havedifferent interests, and not all of them share the company’s goals.Each group possesses the capacity, in varying degrees, to influencethe company’s choices and results. That wasn’t the case in 1962,when Sam Walton set up his first store in Rogers, Arkansas.
The issue’s roots are complex and tangled.
Wal-Mart’s slowing growth in the U.S. is a consequence of, amongother things, a saturated market, its customers’ limited disposableincomes, and intense competition from rivals such as Target andCostco. Wal-Mart also faces resistance to imports, criticism aboutthe wages and benefits it offers employees, and charges thatillegal aliens work in its stores. All this has generatedunfavorable publicity and strengthened people’s opposition toWal-Mart’s opening stores in urban areas. Compounding thechallenge, some of the company’s advantages have turned intodisadvantages. For instance, Wal-Mart’s large market share in someproduct categories makes it tough to grow same-store sales rapidly.Its low-cost sourcing practices have rendered it vulnerable to thehealth and safety concerns that surround products made in China.Its supply chain expertise doesn’t help in the case of fashion andorganic products, and its low-price image hurts its ability to sellupscale products. Moreover, Wal-Mart’s deep roots in rural Americaare of little use in overseas markets.
The problem is difficult to come to grips with and changes withevery attempt to address it.
Wal-Mart has several options. It can try to boost revenues andprofits by increasing sales from existing stores or raising prices,by expanding into urban markets in the U.S., by entering emergingeconomies, by diversifying into upscale product lines and creatingnew store brands, by forecasting better, or by cutting suppliers’margins. These strategies demand different capabilities, are risky,and sometimes conflict with one another.
Consider two of the least complex options before Wal-Mart. Itcould boost profits by hiking prices, but until now, everyday lowprices have helped the company fend off rivals. If consumers resisthigher prices, the retailer’s sales will fall and profits willdrop. To prevent that, Wal-Mart must first modify its valueproposition, stock some upscale products, and develop a brandpersona that warrants higher prices—challenges that have little todo with boosting profits immediately. Alternatively, Wal-Mart couldenter a fast-growing emerging market, as it has done in India. Ithas found the going tough there, however. In India, local lawsdon’t allow foreign companies to operate multibrand retail outlets,so Wal-Mart has had to develop a special business model:cash-and-carry wholesale stores for local retailers. Besides beingunfamiliar, the strategy contains the nucleus of another problem.When India’s laws change and allow Wal-Mart to sell to consumers,it will have to compete with the retailers it supplies.
The challenge has no precedent.
The two strategies we just discussed pose completely newchallenges for the company. For instance, Wal-Mart would have toalter its brand image—for the first time in its 46-year history—tojustify higher prices. Its recent foray into higher-priced garmentsis an experiment and doesn’t appear to have worked. Similarly,Wal-Mart’s India strategy differs from the M&A strategy it hasused to enter other developing countries. Wal-Mart is a novice atmanaging partnerships, but it has had to team up with an Indianconglomerate, Bharti Enterprises. The group, whose primary businessis telecommunications, wants to tap Wal-Mart’s expertise to set upa supply chain to get Indian produce onto Western tables! Wal-Martwill have to work with India’s bureaucracy to build theinfrastructure that will support its operations, but in the past,dealing with governments hasn’t been the company’s strong suit.
There’s nothing to indicate the right answer to the problem.
In Wal-Mart’s case, going upmarket could boost profits, but itisn’t easy for a discount chain to develop a relationship withhigher-income shoppers. Moreover, the retailer cannot ignore itsexisting consumers, who shop at Wal-Mart for inexpensive products.How much of a focus on higher-margin products and higher-incomecustomers is appropriate? The company has no way of knowing that inthe beginning. In like vein, Wal-Mart’s India strategy may be aneffective way to enter a number of rapidly developing economies.However, the company will lose some of its competitive advantagewhen it shares expertise with local partners. What’s the optimallevel of knowledge transfer? That’s impossible to estimate;Wal-Mart will find out only after it has shared best practices—andpossibly created new rivals.
Growth is a hard problem for many companies, but it may notalways be wicked. In Wal-Mart’s case, as we have just seen, thechallenge bears all the signs of wickedness.
Managing the Wickedness of Strategy
It’s impossible to find solutions to wicked strategy problems,but companies can learn to cope with them. In accordance withOccam’s razor, the simplest techniques are often the best.
Involve stakeholders, document opinions, and communicate.
Companies can manage strategy’s wickedness not by being moresystematic but by using social-planning processes. They shouldorganize brainstorming sessions to identify the various aspects ofa wicked problem; hold retreats to encourage executives andstakeholders to share their perspectives; run focus groups tobetter understand stakeholders’ viewpoints; involve stakeholders indeveloping future scenarios; and organize design charrettes todevelop and gain acceptance for possible strategies. The aim shouldbe to create a shared understanding of the problem and foster ajoint commitment to possible ways of resolving it. Not everyonewill agree on what the problem is, but stakeholders should be ableto understand one another’s positions well enough to discussdifferent interpretations of the problem and work together totackle it.
Companies must go beyond obtaining facts and opinions fromstakeholders; they should involve them in finding ways to managethe problem. Getting a variety of opinions helps companies developnovel perspectives. It also strengthens collective intelligence,which counteracts groupthink and cognitive bias and enables groupsto tackle problems more effectively than individuals, as Tom Atlee,the founder and codirector of the Co-Intelligence Institute, andHoward Bloom, a visiting scholar at New York University, havepointed out. Involving more stakeholders makes the planning processmore complex, but it also expands the potential for creativity.Buy-in is an important result; companies should look not only forcountermeasures but also for stakeholders to get on board with someof them.
Companies believe that shareholders and customers are importantstakeholders, but employees are even more crucial. Their tacitknowledge and commitment often help enterprises develop innovativestrategies. Merrill Lynch Credit Corporation, for example, places agreat deal of emphasis on semistructured social processes,frequently organizing social events and encouraging employees tointeract with one another. Everyone lunches in the companycafeteria, which allows employees to mix with senior executivesroutinely. A company intranet supports virtual social interactionssuch as blog-based discussions.
It may seem trivial, but documenting stakeholders’ assumptions,ideas, and concerns on an ongoing basis is important. It helpsenterprises understand stakeholders’ hidden assumptions and gaugethe effectiveness of the actions they have taken. Documents alsohelp executives communicate ideas, which is essential if plans areto become reality.
All planning processes are, at their core, vehicles forcommunication with employees at all levels and between businessunits. This is particularly true of processes that tackle wickedissues. Smart companies emphasize such communication. At JohnDeere, corporate planners say that the quality of seniorexecutives’ communications with divisions is the most importantindicator of the effectiveness of strategy planning. Whirlpoolbelieves that even the “janitor on the third shift” should befamiliar with the company’s strategic goals. So assembly lines atWhirlpool shut down on a regular basis to enable managers andworkers to discuss the progress of plans. At Shell a globalelectronic network, organized into forums with moderators, allowshundreds of managers and planners to discuss planning issues. AtMerrill Lynch Credit Corporation, the corporate planners’ threemost important rules for effective planning are simple: “One,communicate! Two, communicate! And three, communicate!”
QUESTION:
What is a "Wicked Problem" you have faced in your life.Could be work, home, school ... anything. What particular aspectsmade it a "Wicked Problem" and what did you / could you do/havedone to address it? Provide the answers in a 2 ~ 4 paragraphessay.
