Every generation of consumers affects the market with its nuanced expectations. With Millennial purchasing power rapidly increasing, their needs are predominantly shaping a new market full of challenges. Lately, environmental impact has become a topic that could make or break a deal. Consumers have become increasingly aware of where things are made and how. They choose to be loyal to brands that care about the environment. Customers started urging for transparency and companies had to find ways to show what they do without being accused of greenwashing.
As your business grows and changes, the challenges you face become more complex. Predicting a challenge before it arises allows a business the time to turn it into an opportunity. Here are eight ways you can accomplish that.
Know what to expect
What do Patagonia, Amazon, Ericsson, and Unilever have in common? These four companies all went from being small, boot-strapped companies to well-known successful multinationals. Amazon’s challenges while scaling from 30 to 1.000 employees were comparable to Ericsson’s. However, the challenges Amazon faced when growing from 1.000 to 10.000 workers couldn’t compare to their beginner obstacles.
According to Adizes’ Corporate Lifecycle, every business goes through the same phases of development. Being able to recognize the phase your business is in will help you predict and define the type of challenges you’ll be facing. Knowing what to expect and knowing how to act every step of the way to transition to the next phase can help managers make hard decisions.
Figuring out how to successfully solve one type of challenge doesn’t necessarily mean the same approach will work every other time. Learning how to address these with flexibility and creativity could be the key difference between the success and failure of the business.
Consider the strategy
Your company has probably already defined its business objectives. Before you start to work on a solution to your challenge, you need to make sure you’re prioritizing the right one. The solution has to be aligned with the company’s long and short term goals in order to optimize its performance.
The strategy of your company already defined opportunities and resources, as well as vulnerabilities. Considering those will serve as a pointer for what ideas to focus on and what to leave behind.
Don’t see challenges as problems
How you name something affects how something will appear. When we call the situation a problem, the negative, burdensome connotation attached to the word instantly makes us feel hopeless and overwhelmed. When faced with an obstacle on the way, the sooner we define it as a challenge, the better. Challenge, unlike problem, represents a process of discovery, growth, and development. It’s a circumstance that demands that we get out of our comfort zone and seek creative solutions. It’s a condition that will be overcome with the right tools and the right approach.
Before starting to think of solutions, it’s important to understand what it is that you are coming up against. A crucial mistake in addressing a challenge can be simply not defining it well enough. One of the ways to do so is to apply the 5 Whys technique. This simple approach was defined by Sakichi Toyoda and successfully used in managing obstacles within Toyota Motor Corporation’s production process.
By applying the 5 Whys, you uncover the root cause of the challenge in front of you. Let’s take a computer crashing at the office as an example.
Why? – The computer crashed. (First why)
Why? – There was a power outage. (Second why)
Why? – The power generator didn’t work. (Third why)
Why? – The alternator’s lifespan was exceeded and it was not replaced. (Fourth why)
Why? – The power generator was not maintained according to the recommended service schedule. (Fifth why, the root cause)
Understanding the real root cause will help you avoid assumptions and stay on the right track when tackling the challenge.
Put Collaboration First
The business case for diversity has been made time and time again. McKinsey’s 2018 report notes that ethnically and culturally diverse companies are 33% more profitable than their counterparts. Companies with gender-diverse executive teams perform 21% better than their counterparts.
The (not so secret) secret of their accomplishment is in the diversity of their teams’ range of ideas. For a team to be successful, the members need to collaborate. However, the members also need to contrasting outlooks. This variety of thought processes and attitudes yields creative solutions to challenges.
When having discussions about challenges and possible solutions, make sure your team is practicing De Bono’s hats method. According to the 6 hats method, every member of the team needs to wear and switch the “hats”. Wearing each of the thinking hats symbolizes focusing on something different. The white hat focuses on information. The yellow hat brings optimism to the table and concentrates on the benefit. The black hat sports difficulties and threats. The red hat is directed on feelings and intuition. The green hat is all about creativity and alternatives. And finally, the blue hat is the one that manages the whole thinking process.
This thinking process encourages exploring the situation from different points of view and coming up with complementary solutions. It reduces conflict in teams, maximizes productive collaboration and stimulates innovation.
Be creative
New challenges ask for new solutions. Challenges that arise as a consequence of climate change are a good example. Lavazza management was struggling to come up with the solution for coffee price volatility. The company imports coffee from the most biodiverse, but at the same time most fragile and impacted regions of the world. Extensive rain seasons and unexpected droughts cause coffee prices to be so unpredictable. The harsh weather changes affect the coffee yield which in turn affects the availability on the market.
This urged Lavazza to adapt the business model and come up with a solution that could secure more predictable profits. The company’s Foundation decided to implement innovative development projects on coffee plantations they were buying from. In this way, they could observe the conditions more carefully, train the farmers in dealing with unexpected weather and ensure a stable income.
Innovation comes when you let the ideas flow, without trying to limit them. Design thinking is a solution-based approach. It is based on the process that designers use to create concepts, products, and services, but it can be applied to any imaginable challenge. Numerous Australian financial institutions started using it to discover gaps in the market.
The method itself consists of five steps: empathize, define, ideate, prototype, test. In each of the steps, your team can use a variety of brainstorming methods to come up with new ways to approach an obstacle. A good way to discover opportunities on the market is by mapping the gap. If you plot companies in your niche against two different values (ex. price and social impact of a product), you can see what products/services have been launched successfully and what solutions are missing on the market.
Don’t fall in love and don’t judge
The most dangerous thing that can happen to a team is to fall in love with an idea. It often happens that an idea sounds like the best solution to the challenge at hand. This quick-fix prevents further search, inquiry, innovation, and it could avert your team from coming up with the right answer.
Improbable ideas are the best ones. Don’t judge your team members for what they think of during brainstorming sessions. The more out of the box the idea is, the more space it leaves for other collaborators to build upon it. In the first round of brainstorming, try to see all ideas as equal. You will have time to rank them later.
Hire consultants
Your company may not be able to solve all its challenges alone. It is helpful to get an unbiased, third-party perspective from someone with expertise in the areas you may be learning about as a team.
If you’re stuck on something, don’t hesitate to drop me a line. I’d be thrilled to chat.
Learn from your mistakes
“We are all failures – at least the best of us are.” J.M. Barrie’s quote tells a lot about the growth mindset that every one of us has to possess to make it in the business. Those who don’t act, don’t make mistakes. And those who don’t make mistakes, cannot succeed. This might as well be the most important part of the process of turning challenges into opportunities. It’s crucial to create an atmosphere in your team where you can all explore possibilities and not be afraid to make mistakes, learn from them and improve in the process.
