If there are two fatal flaws in businesses, one is confusing profits with purpose, and the other is leaving customers out of purpose statements. Both flaws manifest at the coal face when teams are focused on selling their products and making their budgets, rather than solving customer problems. However, you can’t ignore that this is a failure of leadership, and the real problems arise when management teams, executives, and boards spend more time talking about their products and profits than they do reflecting on how well they’re delivering on their purpose.
Most people who have sat through their share of internal business meetings will tell you there is often a lot more time spent reviewing budget spreadsheets than reflecting on purpose and the problems experienced by customers and the community. No business can exist for long without keeping an eye on the bottom line, but when results and profit dominate the narrative, there is a significant risk of alienating employees and customers, who are the lifeblood of any organization.
And it’s easy to forget that purpose drives profit. Deloitte's Global Human Capital Trends highlights that purpose-driven companies report 73% employee engagement compared to just 23% in non-purpose-driven organizations. They also experience a 30% increase in innovation, a 49% improvement in workplace retention, and a 56% success rate in transformation initiatives, compared to just 16% in companies lacking a clear purpose. Despite these obvious benefits, a McKinsey survey of 1,200 managers and front-line employees revealed that only 42% believe their organization’s purpose drives the right actions and impact.
At their core, businesses exist to solve problems. While making money and providing an income for employees, shareholders, and the tax office is a key output, successful businesses have evolved beyond money-making enterprises and embraced the idea of a ‘purpose’ – their reason for existing. Leading organizations tend to ground their purpose in solving problems for one or more groups of people, including customers, communities, and society at large.
Even in the age of advanced digitization and AI, most problem-solving environments must be built and sustained by leaders and their people, so businesses must rely on psychology – the scientific study of the human mind and its functions For centuries, psychologists have studied how people solve problems, and this is at the core of all the various schools of psychology. Led by our founder, Dr. Paul Phillips, TGS Leadership took this concept and analyzed it through the psychological lens of problem-solving to provide leaders with insight into the nuanced processes of how leaders create high-functioning teams that excel at every stage of problem-solving.
While problem-solving is at the core of most businesses today, it was only in the late 20th century that science evolved as a problem-solving endeavour. After nearly 300 years of John Locke’s empirical science, the work of Sir Karl Popper ushered in post-empirical science – an iterative process where a problem is identified, a theory is developed, a solution is refined, and in the process, new problems are identified. When we unpack business as a problem-solving mechanism, we see a similar process: identifying the problem, understanding it, choosing a solution, executing the solution, and evaluating the results. The principal mechanic of the problem-solving machine is the leader – they must tend to the machine, oil the gears, check the filters, and ensure the machine is running efficiently and effectively.
If the leader has the right personality to operate the machine, then their people function better at critical stages of problem-solving, enabling the organization’s purpose and optimizing outcomes. However, some leaders drive results in a way that puts ‘sand in the gears’ of the machine, slowing it down, and others are so toxic that the machine breaks down completely because the leader creates more problems than they solve. Until recently, the impact of the leader was largely subjective; however, using science-based diagnostic tools like The GreyScale Leadership Assessment, it can now be measured and managed to optimize business performance.
Identifying the problem
The first and critical stage is ‘Identifying’ problems, which requires ‘Interest’ and ‘Intensity’. This is where good organizations differ from great ones - a team that is interested in other people’s problems (rather than their own) will be continually curious about where, when, and how the problem occurs. Teams must be interested in the problem before they will put intense effort into recognizing the contributing factors and root causes. If people apply intense effort by asking questions and examining data, then the cause and effect of the problem can be accurately identified. In simple terms, organizations with a strong purpose centred on the customer will have everyone focused on the customer problem, not the product they are selling or the profit they are generating.
The big risk at this critical stage is teams having high levels of anxiety, being more focused on their own problems than they are on the problems they need to solve for the business and customers. An effective leader with the right personality will lower anxiety by checking how the team is functioning, what they’re focused on, what they’re distracted by, and keep the team interested in the problems they’re meant to solve. Leaders who intentionally or unintentionally create excessive worry in the team will slow this process down or create more problems than they solve.
Understanding the problem
The second stage is ‘Understanding’, which requires ‘Knowledge’ and ‘Know-how’. Knowledge is knowing what is required to solve the problem, while know-how is knowing how to apply the knowledge and having the applicable skills. Anyone who drives a car knows to press the accelerator to go faster (knowledge), but few people have the know-how to be a Formula One driver (know-how). While this sounds straightforward, it represents several challenges, particularly when people may perceive the problem in one way while the actual cause of the problem, and the real business opportunity, is very different. Even small misperceptions of the problem can result in an organization missing out on substantial revenues, taking far too long to get a solution to market, or major reworks that erode profit and customer confidence.
A common issue at this stage is the presence of leaders with great know-how (subject matter experts) who aren’t great at communicating and coaching others, which creates high levels of ambiguity and impairs the team’s ability to develop their own knowledge and skills to understand and solve the problem. Organizations limit their growth and survival prospects if they struggle to scale and compound key person risk because they can’t transfer the knowledge and know-how of key individuals. This is where many business owners and founders need to step back, check their egos, and bring in leaders with the right personality to take their business to the next level.
Choosing the right solutions
‘Choosing’ solutions is the third stage, which comprises ‘Dialogue’ and ‘Decisions’. Even when the problem is well identified and understood, there will usually be several solution options to choose from. Having the right dialogue and making the right decisions requires healthy conflict – genuine, robust discussion and debate, and an effective methodology for making decisions people are truly aligned to. And these decisions must deliver the right outcomes for the business, customers, and the community. This is often a major risk area for businesses, as high levels of conformity and a fear of conflict can lead to poor collaboration, limited innovation, and false alignment – people saying they agree when they really don’t – all of which lowers their buy-in to the solution. Organisations need to arrive at the best choice but also make the choice in the best way to ensure alignment and commitment to executing the solution.
Conformity at this stage kills innovation and creativity. Leaders who don’t actively implement strategies and structures to ensure collaboration will limit the quantum of new ideas, and a leader who lacks the ability to listen to feedback and take on board different points of view will drown in their own eco-chamber and finish with false alignment. An effective leader with the right personality will lower conformity by role-modelling and encouraging healthy conflict amongst the team and have the skillset and mindset to genuinely take on board feedback. Leaders who intentionally or unintentionally foster conformity will limit innovation and ultimately create more problems for the business.
Executing solutions
The fourth stage is ‘Executing’ solutions, which includes ‘Planning’ and ‘Performance’. When a business goes to market with a solution it is highly likely that customers, suppliers, competitors, and the market itself will throw up countless challenges largely outside the control of the business. The lack of control over so many variables makes robust planning and performance essential. Planning requires the setting of objectives and targets for inputs and outputs, which must be shaped into a plan to create clarity on what will be done, who will do it, how it will be done, and where, when and how often things will happen – all of which must be supported by the right leadership. Performing (activating the solution) requires the skills and know-how to execute the plan in a timely manner and monitoring it to ensure that if things do not go to plan alternative actions are taken to keep the process moving forward.
The big risk in the execution stage is a lack of energy and focus on solving the problem, particularly when things get tough. The easiest option for leaders is to push people harder and continue to drive for results rather than focusing them on changing and improving the inputs that will deliver the outputs. Effective leaders are acutely aware a pure focus on results risks burning people out, and they understand the importance of keeping their team in ‘flow’ – supporting them with the right strategies, skills and motivation to meet the challenges thrown up by the market, customers, and competitors. Ineffective or toxic leaders who push too hard or leave them to sink or swim will inevitably and unintentionally create more problems for the team to solve.
At the end of the four stages, someone will want to conduct an evaluation of the solution, which almost always identifies more problems. Perhaps the market or customer needs have evolved and there is a need for a better version of the executed solution, or perhaps unrelated problems have been identified which require a different solution. Additionally, new problems are likely to be identified throughout the four stages. Like the Apollo moon missions, the trajectory of the problem-solving process must be continuously evaluated and course-corrected to ensure it is on course and on track to achieve its objective.
To achieve their purpose and commercial outcomes, businesses must be effective across the four stages of problem-solving. There are countless external and internal forces which can derail this process and these forces can affect the team’s ability to solve problems. Leaders are the key to creating high-performing, psychosocially safe workplaces where people can function effectively to identify and understand problems, then choose and execute the best solutions. To gain a genuine competitive advantage in problem-solving, organizations must measure whether their leaders are capable of unlocking the problem-solving potential of their people.
To find out more and measure the problem-solving potential of your leaders and their impact on the psychosocial safety of their teams, check out The GreyScale Leadership Assessment tool and resources at http://tgsleadership.com
