Why Do Businesses Misidentify Their Challenges?

Business Challenge Analysis and Strategy Formulation [Part 1]
Why Do Businesses Misidentify Their Challenges?

When people hear the term "business strategy," they might imagine impressive presentation materials or meetings filled with jargon. However, when you think about it essentially, it is a simple matter. Do you clearly understand what you are doing, who you are selling to, and what you are selling? That is all there is to it.

But reality is always ironic. The very people who should understand their own business best are the ones who misidentify the "challenges." Why is that? Perhaps it is because many companies do not want to know the truth; they want to hear "the story they want to hear."

I once witnessed an interesting scene while attending a management meeting at a certain company. In a session discussing why performance was sluggish, the managers were listening to reports from each department. Every report was neatly organized and conveniently blamed the causes on "changes in the external environment" or "intense moves by competitors." The words "our own negligence" or "strategic errors" did not appear in any of the reports. It was as if they were fighting some invisible enemy.

Humans are creatures that want to look away from realities that are inconvenient for them.
To correctly grasp business challenges, one first needs the courage not to run away from that reality. True strategy can only begin by accepting one's true state.

There is another major reason why challenges are misidentified.
It is that the distinction between a "problem" and a "challenge" is not understood.

For example, suppose sales are down. This is certainly a "problem," but it is not a challenge in itself. A challenge is the cause that is triggering that problem, and it involves thinking through what must be done to improve that cause. In other words, a challenge is "what needs to be done next."

But in reality, many managers mistake the fact that "sales have dropped" for the challenge itself and order their teams to "increase sales." This is like a doctor ordering a patient with a fever to "lower their body temperature." A high temperature is merely a symptom of an illness, and the patient will not recover if you only lower the temperature without treating the root cause.

Problems remain problems because people only look at the superficial symptoms and do not dig deep into the root causes. However, facing the root cause is painful for everyone. That is precisely why organizations unconsciously avoid that "pain" and jump at superficial solutions. In this way, the essential challenge is always lost.

What should be done to break out of this vicious cycle? The key is actually simple.Start by sharing the determination to "find the truly correct challenge" throughout the entire organization.

For example, even just "asking why five times" is enough. Sales dropped. "Why?" Customer traffic decreased. "Why did customer traffic decrease?" The product is not attractive. "Why is it not attractive?" We are not responding to market changes. "Why can't we respond?" Feedback from the front lines is not reaching us. ... By simply repeating these simple questions, the essence of the challenge becomes visible.

In the upcoming installments of this series, I will explain in order how to analyze these "challenges" and incorporate them into strategy. We must not forget that correctly grasping business challenges is the starting point for everything.