Strategy As a Wicked Problem

Home , Wicked problem

See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/251880254

Strategy as a Wicked Problem

Article in Harvard business review · May 2008

CITATIONS READS 383 2,256

1 author:

John C. Camillus University of Pittsburgh

42 PUBLICATIONS 1,830 CITATIONS

SEE PROFILE

All content following this page was uploaded by John C. Camillus on 15 November 2019.

The user has requested enhancement of the downloaded file.

www.hbr.org

“Wicked” problems can’t be solved, but they can be tamed. Strategy as a Wicked Increasingly, these are the problems strategists face— Problem and for which they are ill equipped. by John C. Camillus

Reprint R0805G

This article is made available to you with compliments of John Camillus. Further posting, copying or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.

“Wicked” problems can’t be solved, but they can be tamed. Increasingly, these are the problems strategists face—and for which they are ill equipped.

Strategy as a Wicked Problem

by John C. Camillus

Over the past 15 years, I’ve been studying how clearly, or breaking them down into small companies create strategy—the most impor- problems. Their planning techniques don’t tant responsibility of senior executives. Many generate fresh ideas, and implementing the corporations, I find, have replaced the annual solutions those processes come up with is top-down planning ritual, based on macroeco- fraught with political peril. That’s because, I nomic forecasts, with more sophisticated pro- believe, many strategy issues aren’t just tough cesses. They crunch vast amounts of consumer or persistent—they’re “wicked.” data, hold planning sessions frequently, and Wickedness isn’t a degree of difficulty. use techniques such as competency modeling Wicked issues are different because traditional and real-options analysis to develop strategy. processes can’t resolve them, according to This type of approach is an improvement be- Horst W.J. Rittel and Melvin M. Webber, cause it is customer- and capability-focused professors of design and urban planning at and enables companies to modify their strate- the University of California at Berkeley, who gies quickly, but it still misses the mark a lot of described them in a 1973 article in Policy the time. Sciences magazine. A wicked problem has in- Companies tend to ignore one complication numerable causes, is tough to describe, and along the way: They can’t develop models of doesn’t have a right answer, as we will see in the increasingly complex environment in the next section. Environmental degradation, which they operate. As a result, contemporary terrorism, and poverty—these are classic ex- strategic-planning processes don’t help enter- amples of wicked problems. They’re the oppo- prises cope with the big problems they face. site of hard but ordinary problems, which Several CEOs admit that they are confronted people can solve in a finite time period by with issues that cannot be resolved merely by applying standard techniques. Not only do gathering additional data, defining issues more conventional processes fail to tackle wicked OPYRIGHT © 2008 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. BUSINESS SCHOOLOPYRIGHT © 2008 HARVARD PUBLISHING CORPORATION. C

harvard business review • may 2008 page 1

Strategy as a Wicked Problem

problems, but they may exacerbate situations unprecedented challenges. They occur in a so- by generating undesirable consequences. cial context; the greater the disagreement In the areas of public policy, software devel- among stakeholders, the more wicked the opment, and project design, experts such as problem. In fact, it’s the social complexity of Peter DeGrace, Leslie Hulet Stahl, and Jeff wicked problems as much as their technical Conklin have developed ways of spotting difficulties that make them tough to manage. wicked problems and coping with them. De- Not all problems are wicked; confusion, dis- Grace and Stahl wrote Wicked Problems, Righ- cord, and lack of progress are telltale signs that teous Solutions: A Catalogue of Modern Software an issue might be wicked. Engineering Paradigms (1990); Conklin au- In my consulting work, I’ve found that when thored Dialogue Mapping: Building Shared Un- five characteristics are present in a strategy- derstanding of Wicked Problems (2006). Policy related issue, executives agree they have a makers, in particular, have put this powerful wicked problem on their hands. I’ll list the key concept to good use, but it has been largely criteria below and use them to show how the missing from strategy discussions. Although challenge of growth that Wal-Mart faces today many of the problems companies face are in- may well be wicked. tractable, they have been slow to acknowledge The problem involves many stakeholders the wickedness of strategy issues. with different values and priorities. As Wal- Between 1995 and 2005, I completed three Mart tries to grow faster, numerous stakehold- research projects that provided insights into ers are watching nervously: employees and wicked strategy problems. First, as part of trade unions; shareholders, investors, and benchmarking projects that the APQC (for- creditors; suppliers and joint venture partners; merly known as the American Productivity & the governments of the U.S. and other nations Quality Center) and the Hong Kong Productiv- where the retailer operates; and customers. ity Council conducted, I analyzed 22 North That’s not all; many nongovernmental organi- American, European, and Asian enterprises zations, particularly in countries where the re- that use innovative strategic-planning tech- tailer buys products, are closely monitoring it. niques. They include ABB, Alcoa, Honeywell, Wal-Mart’s stakeholders have different inter- John Deere, PPG Industries, Royal Dutch ests, and not all of them share the company’s Shell, Siemens, Sprint, Whirlpool, and Xerox goals. Each group possesses the capacity, in (China and USA). Second, I studied strategy varying degrees, to influence the company’s implementation in depth at seven of these en- choices and results. That wasn’t the case in terprises. Third, a colleague, Gaurab Bhardwaj, 1962, when Sam Walton set up his first store in and I tracked DuPont’s pharmaceuticals busi- Rogers, Arkansas. ness to learn how companies draw up strate- The issue’s roots are complex and tangled. gies when returns will accrue only in the long Wal-Mart’s slowing growth in the U.S. is a con- run and are highly uncertain. Based on these sequence of, among other things, a saturated studies, I’ll explore in the following pages how market, its customers’ limited disposable in- companies can tame—since they can’t solve— comes, and intense competition from rivals such problems. I’ll conclude by describing a such as Target and Costco. Wal-Mart also faces planning process that helps PPG Industries resistance to imports, criticism about the tackle wicked issues. wages and benefits it offers employees, and charges that illegal aliens work in its stores. All What Is a Wicked Problem? this has generated unfavorable publicity and There are several ways to define a wicked strengthened people’s opposition to Wal-Mart’s problem, but according to Rittel and Webber, opening stores in urban areas. Compounding it has some or all of 10 characteristics. (See the the challenge, some of the company’s advan- sidebar “The 10 Properties of Wicked Prob- tages have turned into disadvantages. For in- lems.”) Caveat: The criteria are not a set of stance, Wal-Mart’s large market share in some John C. Camillus ([email protected]) tests that mechanically determine wickedness; product categories makes it tough to grow is the Donald R. Beall Professor of Stra- rather, they provide insights that help you same-store sales rapidly. Its low-cost sourcing tegic Management at the University of judge whether a problem is wicked. practices have rendered it vulnerable to the Pittsburgh’s Joseph M. Katz Graduate Wicked problems often crop up when or- health and safety concerns that surround School of Business. ganizations have to face constant change or products made in China. Its supply chain

harvard business review • may 2008 page 2

Strategy as a Wicked Problem

expertise doesn’t help in the case of fashion boosting profits immediately. Alternatively, and organic products, and its low-price image Wal-Mart could enter a fast-growing emerging hurts its ability to sell upscale products. More- market, as it has done in India. It has found the over, Wal-Mart’s deep roots in rural America going tough there, however. In India, local are of little use in overseas markets. laws don’t allow foreign companies to operate The problem is difficult to come to grips multibrand retail outlets, so Wal-Mart has had with and changes with every attempt to ad- to develop a special business model: cash-and- dress it. Wal-Mart has several options. It can carry wholesale stores for local retailers. Be- try to boost revenues and profits by increasing sides being unfamiliar, the strategy contains sales from existing stores or raising prices, by the nucleus of another problem. When India’s expanding into urban markets in the U.S., by laws change and allow Wal-Mart to sell to entering emerging economies, by diversifying consumers, it will have to compete with the into upscale product lines and creating new retailers it supplies. store brands, by forecasting better, or by cut- The challenge has no precedent. The two ting suppliers’ margins. These strategies de- strategies we just discussed pose completely mand different capabilities, are risky, and new challenges for the company. For instance, sometimes conflict with one another. Wal-Mart would have to alter its brand Consider two of the least complex options image—for the first time in its 46-year history— before Wal-Mart. It could boost profits by hik- to justify higher prices. Its recent foray into ing prices, but until now, everyday low prices higher-priced garments is an experiment and have helped the company fend off rivals. If doesn’t appear to have worked. Similarly, consumers resist higher prices, the retailer’s Wal-Mart’s India strategy differs from the sales will fall and profits will drop. To prevent M&A strategy it has used to enter other devel- that, Wal-Mart must first modify its value prop- oping countries. Wal-Mart is a novice at man- osition, stock some upscale products, and de- aging partnerships, but it has had to team up velop a brand persona that warrants higher with an Indian conglomerate, Bharti Enter- prices—challenges that have little to do with prises. The group, whose primary business is

The 10 Properties of Wicked Problems In 1973, Horst W.J. Rittel and Melvin M. 4. There is no immediate and no ulti- 7. Every wicked problem is essentially Webber, two Berkeley professors, published mate test of a solution to a wicked prob- unique. An ordinary problem belongs to a an article in Policy Sciences introducing the lem. It’s possible to determine right away if class of similar problems that are all solved in notion of “wicked” social problems. The arti- a solution to an ordinary problem is work- the same way. A wicked problem is substan- cle, “Dilemmas in a General Theory of ing. But solutions to wicked problems tially without precedent; experience does not Planning,” named 10 properties that distin- generate unexpected consequences over help you address it. guished wicked problems from hard but ordi- time, making it difficult to measure their 8. Every wicked problem can be consid- nary problems. effectiveness. ered to be a symptom of another problem. 1. There is no definitive formulation of a 5. Every solution to a wicked problem is a While an ordinary problem is self-contained, a wicked problem. It’s not possible to write a “one-shot” operation; because there is no wicked problem is entwined with other prob- well-defined statement of the problem, as can opportunity to learn by trial and error, lems. However, those problems don’t have one be done with an ordinary problem. every attempt counts significantly. Solu- root cause. 2. Wicked problems have no stopping tions to ordinary problems can be easily tried 9. The existence of a discrepancy repre- rule. You can tell when you’ve reached a so- and abandoned. With wicked problems, every senting a wicked problem can be explained lution with an ordinary problem. With a implemented solution has consequences that in numerous ways. A wicked problem in- wicked problem, the search for solutions cannot be undone. volves many stakeholders, who all will have never stops. 6. Wicked problems do not have an ex- different ideas about what the problem really 3. Solutions to wicked problems are not haustively describable set of potential solu- is and what its causes are. true or false, but good or bad. Ordinary tions, nor is there a well-described set of 10. The planner has no right to be wrong. problems have solutions that can be objec- permissible operations that may be incor- Problem solvers dealing with a wicked issue tively evaluated as right or wrong. Choosing a porated into the plan. Ordinary problems are held liable for the consequences of any ac- solution to a wicked problem is largely a come with a limited set of potential solutions, tions they take, because those actions will have matter of judgment. by contrast. such a large impact and are hard to justify. harvard business review • may 2008 page 3

Strategy as a Wicked Problem

telecommunications, wants to tap Wal-Mart’s agree on what the problem is, but stakehold- expertise to set up a supply chain to get Indian ers should be able to understand one another’s produce onto Western tables! Wal-Mart will positions well enough to discuss different have to work with India’s bureaucracy to build interpretations of the problem and work to- the infrastructure that will support its opera- gether to tackle it. tions, but in the past, dealing with govern- Companies must go beyond obtaining facts ments hasn’t been the company’s strong suit. and opinions from stakeholders; they should There’s nothing to indicate the right involve them in finding ways to manage the answer to the problem. In Wal-Mart’s case, problem. Getting a variety of opinions helps going upmarket could boost profits, but it isn’t companies develop novel perspectives. It also easy for a discount chain to develop a relation- strengthens collective intelligence, which ship with higher-income shoppers. Moreover, counteracts groupthink and cognitive bias and the retailer cannot ignore its existing consumers, enables groups to tackle problems more effec- who shop at Wal-Mart for inexpensive prod- tively than individuals, as Tom Atlee, the ucts. How much of a focus on higher-margin founder and codirector of the Co-Intelligence products and higher-income customers is Institute, and Howard Bloom, a visiting appropriate? The company has no way of scholar at New York University, have pointed knowing that in the beginning. In like vein, out. Involving more stakeholders makes the Wal-Mart’s India strategy may be an effective planning process more complex, but it also ex- way to enter a number of rapidly developing pands the potential for creativity. Buy-in is an economies. However, the company will lose important result; companies should look not some of its competitive advantage when it only for countermeasures but also for stake- shares expertise with local partners. What’s holders to get on board with some of them. the optimal level of knowledge transfer? Companies believe that shareholders and That’s impossible to estimate; Wal-Mart will customers are important stakeholders, but em- find out only after it has shared best practices— ployees are even more crucial. Their tacit and possibly created new rivals. knowledge and commitment often help enter- Growth is a hard problem for many compa- prises develop innovative strategies. Merrill nies, but it may not always be wicked. In Wal- Lynch Credit Corporation, for example, places Mart’s case, as we have just seen, the challenge a great deal of emphasis on semistructured so- bears all the signs of wickedness. cial processes, frequently organizing social events and encouraging employees to interact Managing the Wickedness of with one another. Everyone lunches in the Strategy company cafeteria, which allows employees to It’s impossible to find solutions to wicked strat- mix with senior executives routinely. A com- egy problems, but companies can learn to pany intranet supports virtual social interac- cope with them. In accordance with Occam’s tions such as blog-based discussions. razor, the simplest techniques are often the best. It may seem trivial, but documenting stake- Involve stakeholders, document opinions, holders’ assumptions, ideas, and concerns and communicate. Companies can manage on an ongoing basis is important. It helps strategy’s wickedness not by being more enterprises understand stakeholders’ hidden systematic but by using social-planning pro- assumptions and gauge the effectiveness of cesses. They should organize brainstorming the actions they have taken. Documents also sessions to identify the various aspects of a help executives communicate ideas, which is wicked problem; hold retreats to encourage essential if plans are to become reality. executives and stakeholders to share their All planning processes are, at their core, ve- perspectives; run focus groups to better under- hicles for communication with employees at stand stakeholders’ viewpoints; involve stake- all levels and between business units. This holders in developing future scenarios; and is particularly true of processes that tackle organize design charrettes to develop and gain wicked issues. Smart companies emphasize acceptance for possible strategies. The aim such communication. At John Deere, corporate should be to create a shared understanding of planners say that the quality of senior execu- the problem and foster a joint commitment to tives’ communications with divisions is the possible ways of resolving it. Not everyone will most important indicator of the effectiveness

harvard business review • may 2008 page 4

Strategy as a Wicked Problem

of strategy planning. Whirlpool believes that and threats. For instance, in August 2007, even the “janitor on the third shift” should be Campbell Soup decided it would sell off familiar with the company’s strategic goals. So the Godiva business. The company didn’t assembly lines at Whirlpool shut down on a base the decision on financial performance; regular basis to enable managers and workers Godiva is a superpremium chocolate brand to discuss the progress of plans. At Shell a glo- and a profitable business. Trouble is, Camp- bal electronic network, organized into forums bell’s values, competencies, and aspirations with moderators, allows hundreds of managers focus on nutrition and simplicity—and and planners to discuss planning issues. At Godiva chocolates don’t fit in with that Merrill Lynch Credit Corporation, the corpo- self-image. “Although the premium choco- rate planners’ three most important rules for late category is experiencing strong growth effective planning are simple: “One, com- and Godiva is well-positioned for the future, municate! Two, communicate! And three, the premium chocolate business does not fit communicate!” with Campbell’s focus on simple meals,” ex- The documentation process is a good way plained Douglas R. Conant, Campbell Soup’s to generate new ideas. It needn’t be confined CEO, while announcing the decision. In to recording decisions already reached; some December 2007, the company reached an companies have been creative in using the pro- agreement to sell Godiva to Yildiz Holding, cess to communicate the nature of the prob- which owns the Turkish company Ülker lems they face. In 2002 SAE International, an Group, for $850 million. By relying on its organization that sets standards and provides identity, rather than on financial projections, training in the automobile, aerospace, and Campbell made the decision to sell Godiva commercial vehicle industries, was looking for quickly and painlessly. new strategies. It commissioned a case study Focus on action. In a world of Newtonian on its situation and then invited 30 senior exec- order, where there is a clear relationship be- utives with reputations for creative thinking to tween cause and effect, companies can judge discuss the case with its top managers. SAE what strategies they want to pursue. In a recorded the ideas that emerged during the wicked world of complex and shadowy possi- session and has implemented several of them. bilities, enterprises don’t know if their strategies Without the case study that captured the orga- are appropriate or what those strategies’ nization’s dilemma, the brainstorming might consequences might be. They should therefore not have been productive. abandon the convention of thinking through Define the corporate identity. While a com- all their options before choosing a single one, pany dealing with a wicked problem has to ex- and experiment with a number of strategies periment with many strategies, it must stay that are feasible even if they are unsure of true to a sense of purpose. Mission statements the implications. are the foundations of strategy, but in a fast- To pick a starting point, executives can bor- changing world, companies change their “con- row a leaf from policy makers. Bureaucrats cept of business,” “scope of activities,” or focus on the few actions they will be able to “statement of purpose” more often than they take rather than the myriad options before used to. A company’s identity, which serves as them, Yale University’s Charles Lindblom a touchstone against which it can evaluate its pointed out in 1959. Doing so enables policy choices, is often a more enduring statement of makers to analyze options quickly and make strategic intent. decisions that meet the goals of several constit- An organization’s identity, like that of an in- uents. Calling it the science of muddling dividual, comprises the following: through, Lindblom argued that over time, gov- • Values. What is fundamentally important ernments will make progress by constantly to the company? making small policy changes. In a similar way, • Competencies. What does the company do companies can formulate strategies that will better than others do? deliver results in various scenarios—I call these • Aspirations. How does the company envi- robust actions—and use Pareto analysis to sion and measure success? prioritize a small number of them that will An identity provides executives with direc- produce the most impact. That’s what PPG In- tion and focuses attention on opportunities dustries does—as shown in the exhibit below,

harvard business review • may 2008 page 5

Strategy as a Wicked Problem

“PPG’s Framework for Responding to Wicked mistakes from which they can learn. Compa- Issues,” and described later in this article. nies like GE and Fujitsu encourage risk taking However, even executives willing to embark and celebrate thoughtfully implemented initia- on a number of robust actions often become tives even if they turn out to be business fail- indecisive when they realize that every re- ures. These companies believe that unexpected sponse to a wicked issue will alter the problem and even unsatisfactory results contribute to the company faces and necessitate another organizational learning. change in strategy. They keep analyzing the Adopt a “feed-forward” orientation. Com- issue rather than doing something about it. panies design planning systems to work based They would do better to try out some strategy on feedback; they compare results with plans as a starting point; the consequences will give and take corrective actions. Though it’s a pow- them a better handle on the real problem they erful source of learning, feedback has limited face. So, to tackle wicked problems, smart com- relevance in a wicked context. Feedback al- panies conduct experiments, launch innovative lows enterprises to reﬁne fundamentally pilot programs, test prototypes—and make sound strategies; wicked problems require

PPG’s Framework for Responding to Wicked Issues PPG Industries develops strategies after seeking and documenting stakeholders’ assumptions, preferences, and alternate views. It evaluates the appropriateness of the strategies it draws up against its statement of identity and continually scans the environment and tests assumptions to see if it needs to change course. The assessment of possible scenarios helps PPG formulate new options, and its managers apply Pareto analysis to identify a small number of actions that are likely to have a large impact.

Articulate identity ■ Values ■ Competencies ■ Aspirations

modify test strategy appropriateness

evaluate Develop and options reﬁne strategy Apply by documenting Conduct Pareto stakeholders’ formulate scenario options analysis assumptions, analysis choose preferences, and priorities views

envision feed back the future ﬁndings modify validate strategy assumptions

Continuously scan environment

harvard business review • may 2008 page 6

Strategy as a Wicked Problem

executives to come up with novel ones. Feed- suppliers, competitors, potential entrants, and back helps people learn from the past; wicked customers all over the world. problems arise from unanticipated, uncertain, To forge effective approaches to wicked is- and unclear futures. Feedback helps people sues, executives must explore and monitor the learn in contexts such as the movie Groundhog assumptions behind their strategies. One way Day, where the protagonist (Phil Connors) of doing that is through discovery-driven plan- encounters the same set of circumstances ning, where executives list the assumptions un- every day, which enables him to perfect his derlying the revenues and income they expect responses over time. Wicked problems arise and test the validity of each premise. (See Rita in circumstances such as those in the TV se- Gunther McGrath and Ian C. MacMillan, ries Quantum Leap, where the protagonist “Discovery-Driven Planning,” HBR July–August (Sam Beckett) finds himself in an unfamiliar 1995.) By sharing those assumptions, execu- time and place in each episode. Compre- tives can better align decision making through- hending the challenge he faces is itself the out the organization. initial problem. To develop a feed-forward orientation as a Case Study: How PPG Battles complement to the feedback practices they Wickedness currently use, corporations must learn to envi- PPG Industries’ strategic-planning practices sion the future. In this variation of scenario constitute an effective response to wicked planning, enterprises should describe the set of strategy issues. The company, founded over a external and internal circumstances that they century ago as a plate-glass manufacturer, would like to see in the next 10, 20, or 50 years. makes chemicals and coatings too. With 125 This will open executives’ minds to the range manufacturing facilities and partners in 25 and unpredictability of possibilities that the fu- countries, PPG is a global player. Although it ture may bring. Enterprises must then pursue operates in mature industries, the company strategies that will increase the likelihood of has paid dividends every year since 1899—and those circumstances’ becoming reality. For in- has maintained or increased dividends every stance, in the early 1980s, Alcoa envisioned a year since 1972. future in which aluminum, rather than steel, PPG first became aware of strategy’s wicked- would be automobile manufacturers’ metal of ness in the late 1980s. Two missteps taught the choice. In 1982, it allied with Audi to make that company that diversification, be it into other happen. By the mid-1990s, the collaboration industries or countries, is fraught with peril. between the two companies had produced the Realizing that growth was slowing down, PPG breakthrough Audi Space Frame, an alumi- expanded its portfolio by acquiring medical num structure into which car body panels are electronics businesses from Honeywell and Lit- integrated so that they can perform a load- ton Industries in 1986 and from Allegheny In- bearing function, which later became the ternational in 1987. However, the biomedical industry norm. industry’s volatility and the units’ focus on cus- Wicked strategy issues don’t occur accord- tomization didn’t fit the company’s compe- ing to a timetable. Companies must constantly tence in low-cost, standardized production. scan the environment for weak signals rather Seven years later, PPG had to sell the division. than conduct periodic analyses of the business The company’s other wicked challenge was landscape. (See, for example, George S. Day China, where PPG’s initial focus was glass. Al- and Paul J.H. Schoemaker, “Scanning the Pe- though it entered the market in 1987, PPG’s riphery,” HBR November 2005.) It’s increas- operations there were unprofitable until the ingly difficult to identify the boundaries of the mid-1990s. The company then realized that it arenas companies should watch. Changes in would have to focus on coatings if it wanted to one industry or segment often affect compa- make money in China. nies in others. For instance, who could have These experiences changed the company’s imagined that changes brought about by the approach to planning strategy in three ways. computer industry and the internet would af- First, in the mid-1980s, PPG revisited its mis- fect the music industry so radically? Businesses sion and articulated its identity in a document should scan sources of regulatory and tech- called the Blueprint. The company stated that nological change in addition to monitoring it valued steady growth that met stakeholders’

harvard business review • may 2008 page 7

Strategy as a Wicked Problem

expectations; that it believed it was capable of scanning of markets, technologies, and regu- achieving high levels of operational efficiency latory issues by its three business units. PPG’s and using technology to develop innovations; executives say that the planning process is con- and that it aspired to remain a profitable glo- tinuous, with the company constantly identify- bal player in all its businesses. Since then, ing problems and developing responses. The PPG’s identity has been more or less un- company often draws up possible scenarios changed. The 2006 iteration mentioned the and works to create the future it desires. The same core values and expressed a similar aspi- exhibit “PPG’s Alternate Futures” shows the fu- ration, with some modification in PPG’s goals. ture scenarios it drew up in 2004 after making It also identified a richer set of competencies. assumptions about two key variables: the cost Although PPG’s business portfolio has of the energy required for its manufacturing changed, with coatings assuming primacy over operations and the extent of the opportunity glass in the 2000s, its identity has endured. to compete globally through differentiation. Second, PPG’s plans have become living doc- When PPG’s senior executives studied the sce- uments. They change frequently as the result narios, they identified three kinds of actions of technology reviews conducted by teams of that would deliver results in all four cases: senior and R&D executives; examinations of • Emphasize operational excellence through the business portfolio at the corporate level; cost efficiency (using lean manufacturing tech- brainstorming sessions that promote fresh niques and improved logistics) and quality thinking by executives and employees; and (through Six Sigma programs). • Enhance differentiation through technology- based innovations and new services that will meet customer needs. • Generate cash to support strategic initia- PPG’s Alternate Futures tives, to manage the portfolio of businesses, To tackle wicked strategy problems, PPG Industries tries to envisage different futures and to pay dividends. it might face. In 2004, it drew up four possible scenarios by combining the biggest Using Pareto analysis, PPG then identified opportunity—namely, entering emerging markets—and the biggest challenge, the the 20% of strategy options that would have cost of energy, it would face in the next 10 years. 80% of the impact that could be derived from pursuing all of them. Developing a technology that would reduce the minimum efficient Turn up the heat Promised land scale of its manufacturing facilities, execu- Success will depend Success will require on capturing share having the resources tives felt, would be a key action. Reducing the and stable and with new products to pursue new scale would allow PPG to respond to a range opportunities of issues: • It would enable the company to expand into countries and regions that lacked the moderate demand to support the scale of its current Winter of Cool the fire technology.

Cost of energy of Cost discontent Success will require • It would reduce warehousing and in- Success will demand more-efﬁcient ventory levels as well as improve delivery

d volatile a change in strategic processes times by allowing factories to be located closer direction to customers. • It would use less energy in each location high an high and disperse energy consumption. • It would require lower levels of investment weak and slow strong and fast by the company. Opportunity for differentiation and growth • The efforts to reduce the scale would most in emerging markets likely give rise to newer, more efﬁcient, and This allowed PPG to identify three strategies that will deliver results in any of the more reliable technologies. four circumstances: Not surprisingly, PPG has invested heavily • pursue operational excellence by emphasizing cost efﬁciency and quality; in developing such a technology. • enhance differentiation through technology and service innovation; and PPG’s approach to strategy is comprehen- • generate cash. sive, with the various techniques the company harvard business review • may 2008 page 8

Strategy as a Wicked Problem

uses reinforcing one another and enabling it to issues. Moreover, when executives look afresh beat back the wicked challenges it faces. Partly at the problems they face, they shouldn’t be as a consequence, even though PPG operates shocked to ﬁnd so many wicked ones. “The in highly competitive markets, it reported reve- easy problems have been solved. Designing nues of $11.2 billion in 2007—a 13% increase systems is difﬁcult because there is no consen- over 2006—and net income of $834 million, sus on what the problems are, let alone how to compared with $711 million in 2006. solve them,” wrote Mary Poppendieck, the • • • lean-software development guru, in 2002. When confronting frustrating problems, an That’s true for many businesses today. enterprise would do well to recognize that they may be wicked. Moving from denial to ac- Reprint R0805G ceptance is important; otherwise, companies To order, see the next page will continue to use conventional processes or call 800-988-0886 or 617-783-7500 and never effectively address their strategy or go to www.hbr.org

harvard business review • may 2008 page 9

Further Reading The Harvard Business Review Paperback Series

Here are the landmark ideas—both contemporary and classic—that have established Harvard Business Review as required reading for businesspeople around the globe. Each paperback includes eight of the leading articles on a particular business topic. The series includes over thirty titles, including the following best-sellers:

Harvard Business Review on Brand Management Product no. 1445

Harvard Business Review on Change Product no. 8842

Harvard Business Review on Leadership Product no. 8834

Harvard Business Review on Managing People Product no. 9075

Harvard Business Review on Measuring Corporate Performance Product no. 8826

For a complete list of the Harvard Business Review paperback series, go to www.hbr.org.

To Order

For Harvard Business Review reprints and subscriptions, call 800-988-0886 or 617-783-7500. Go to www.hbr.org

For customized and quantity orders of Harvard Business Review article reprints, call 617-783-7626, or e-mail [email protected]

page 10

This article is made available to you with compliments of John Camillus. Further posting, copying or

View publication stats distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.