Problem-solving skills are crucial for a great strategy?

Problem-solving skills

In this blog, we shall look at the importance of problem-solving skills in building great strategies and how this skill is even more relevant in this uncertain environment.
Complex problem solving skills are the most important qualities that companies look in their prospective employees. As the problems that companies face are more complex and uncertain, it becomes very important to structure the problem and come with solutions with limited data available with the management to make a quick and a better decision.
Problem solving skill is not only essential in business but also equally relevant in personal, social and environmental aspect. The underlying approach for resolving a problem is same whether it is in professional, personal and social aspect.

Problem-solving skills are rare to find

  • According to World economic forum, Complex problem solving skill is the most demanded skill set sought after by the senior management. Companies that have significant capability in problem solving perform better than other companies in providing superior shareholder returns.
  • Today more executives are experts in Finance, Marketing, economics and other domains, but they struggle to apply all the above skills in solving a problem that requires application of these domain knowledge.
  • For instance IBM in 1980s acquired 30% in Intel and had additional 10% in warrants but they later sold their stake in late 80’s for $300 million.After 10 years, Intel value was around $25B.Similarly IBM had an opportunity to invest in Microsoft for $400M but it missed it and later Microsoft was valued at $300B after a decade.This clearly shows that IBM was not able to predict and gain insights on the market dynamics to conclude that PC market is going to explode inspite IBM being a big player in PC business.

Problem-solving skills to build future proof strategies

Some problem solving skills are found to be extremely important to build a very robust and differentiated Strategy. These are:
Ask the right question

  • Problem solving skill requires defining the problem, breaking the problem to smaller parts, analyzing and building hypothesis to come up with work plans for taking action.The part of the problem which would have a major impact to the final solution would be prioritized to take action.
  • In the problem definition phase, it is important that right question is asked to come up with a right strategy.
  • To substantiate this, let us take a business which is in extracting iron ores. Trucks are used to transport the iron ore from the sites to city.Due to the tough terrain, the trucks tyres used to get punctured and hence were frequently needed to get replaced.
  • In the above scenario, the best question would be to find out which company does the best job in replacing new tyres quickly and efficiently. The firm found out that Ferrari technicians had the best capability due to their experience in changing tires in racing. Hence the firm reached out to Ferrari and learnt their best practices to implement in their business in order to improve their productivity.

Talk to Customers and Front line users

  • To solve a problem, it is essential to get more insights from the customers and field executives for whom solutions are needed.
  • A classic instance is the success story of reducing HIV cases in India.It was found out the primary reason for more HIV cases is due to violence.
  • This was found out by focusing on areas in India where HIV rates are high.HIV rates are very high in highways where truck drivers stop for rest.The women in the flesh trade had 25-50 clients on an average.On speaking with these women, it was found out then even though they know it is important to engage in protected sex to avoid transmitting HIV, they were unable to practice because men resorted to violence and threats to finish their acts.Hence each of the women were given a helpline number to reach out to the activists when they faced any violence. More than thousands of such women registered in such helpline groups which resulted in reduction of HIV transmissions in the affected areas.

Incorporate Uncertainty factor

  • In this volatile and ever changing world, uncertainty is permanent and the strategists need to take uncertainty in account when building their plans.
  • There are two ways strategists handle uncertainty, one is accepting that uncertainty is there in all their decisions and hence constantly change their plans as per the circumstances. Others remove the uncertainty factor and build their solutions assuming that there is no uncertainty and then adding risks in final part of their plan.A right approach would be to build a strategy which helps in taking a firm decision.Just because the world is changing does not mean the decision should also change.

Understand your competitors

  • A essential part when resolving a problem is to come up with a solution which also takes into account the competitors.
  • Businesses use Game theory here.They identify their strengths, competitors weakness and add an unpredictability factor when making their moves.Their moves will be a combination of the above three factors so that they are able to come up with a differentiated strategy which cannot be easily emulated by competition.

Use Machine Learning and other algorithms

  • Today a robust problem solving capability requires a combination of cognitive decision making skill and data analytics skills.
  • By running algorithms over the underlying data, one can go deeper into the problem to understand correlation between different factors.
  • One of the practical applications for using machine learning was when understanding the increasing obesity causes in US.Obesity is a function of caloric intake and caloric burn.When data was analysed between people from US and Japan, it was found out that in Japan, their roads were designed in a way that increases walkability.People in Japan walk to go to offices and catch a metro.This walkability factor was one of the primary causes of obesity as in US, people used vehicles even for small distances.Further variances in obesity within US was high with some cities having less scope for walkability are more prone to obesity issues.


  • Complex problem-solving skills requires understanding the complete problem, then able to break it to logical parts and then analyzing each part of the problem to come up with a recommendation followed by an action.
  • With advances in data analytics tools like Machine learning, today problem solving skill is a combination of human and machine learning ability.
  • A combination of mental muscle, which is the cognitive problem solving, and machine muscle will distinguish the better strategies going forward

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