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Understanding the challenge is the challenge

Challenges in business and life typically manifest in the form of a symptom of a deeper cause. For example how often do you see someone say “businesses fail because of cash flow issues.” When this is identified as the problem it’s logical to see the solution simply in terms of injecting more cash.

That may be the appropriate course of action but the real cause of the challenge may be poor management that resulted in the business being undercapitalized given its growth profile. That in turn may have arisen because of a serious error when determining market size, pricing, cost structure, marketing and sales tactics, staffing, organization structure, culture and a myriad of other things influenced by choices made by management.

Of course, if the growth profile is strong, margins good, and profitability robust then injecting more capital makes a lot of sense but in other cases it’s probably the worst thing management can do. To avoid high level knee jerk reactions to we need to be aware that the way we see a challenge may be the bigger challenge. We need to ask why, why, why until we get to the root cause and then go to work on that.  The word “why” is the most important tool in a profit turn-around specialist’s toolkit.

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