CHAPTER 2

Problem Faceting

To facet something is to add a face to it, to give it structure and shape. The term problem faceting is inspired by the craft of faceting diamonds. The diamond cutter takes a shapeless mineral and follows its crystalline structure to skillfully facet a diamond [1].

Similarly, we start with an unstructured, ill-defined business situation and from it we facet the most effective problem that we should be solving.

Recognizing the Need to Problem Solve

Obvious though it may seem, business problem solving begins with recognizing the need to solve a problem. We can fail to do so due to inattention, neglect, or hubris. The problem can grow in scope, becoming more difficult and costlier to solve later.

In business school teaching, we skip over recognizing the need to solve a problem because our problem solving takes place at an appointed hour – when the class meets, and the problem and needed information are laid out in a written case that everyone discusses and solves. In the workplace, it is easy to miss that a situation calls for problem solving. Assorted tasks, commitments, deadlines impose on our finite time and attention. It is easy to miss changes taking place (e.g., rising sales of a competitor) that may require us to act. Or, we may be neglectful because we are dealing with other more pressing issues or even routine ones. Sometimes, we dismiss the need to respond by misjudging the implications of changing circumstances. Sumner Redstone, who took over the major movie studio Paramount in 1994, dismissed the possibility that the emerging internet would alter the movie business [2]. He continued to do so for years. Today, the internet has transformed the movie business, several new players have entered, and Paramount has been reduced to a minor player with a questionable future.

Before we fall into the plunging-in trap, we can go through a long phase of inaction and neglect.

Making Sense of the Situation

Once we recognize that our current circumstances or situation require us to act, to do things differently, problem solving begins. Many business situations can be difficult to grasp well because they are unstructured or ill-defined. There are many factors at play. It is not clear which of them are important and which are not; which are relevant and which are random. The information we need to make sense of the situation is incomplete and ambiguous. Judgment is involved in how changes and trends will play out and what effects they may have. Uncertainty, ambiguity, complexity, dynamism are some of the terms used to characterize unstructured situations.

To make sense of the situation we find ourselves in, we have to do three related things:

From the information we have, sort what is important and what is not
Gather missing information that we think may be useful
Link together all the important factors into a cogent story.

This is making sense of an unstructured situation and articulating the problem from it. It is creating structure. The process involves subjectivity and judgment. From the same situation, different people can articulate or frame the problem differently. Using a framework can help you do it well. A handful are available. I will list and describe them elsewhere, if you wish to learn about them. Here, I will describe the Problem Faceting Framework [1]. Then, using an example, I will show how it can be applied.

Problem Faceting Framework

Making sense of an unstructured situation starts with the accomplishment gap, then goes to hurdles and enablers, next to considerations of time. Finally, pulling together the work related to the first four elements, the problem is framed as a question. The process is not meant to be linear but iterative, which means we should go back and forth across the elements as we encounter new information or have new insights. In practice, we tend to take a linear approach in applying frameworks, working our way through categories one by one and not returning to a category already considered.

Accomplishment Gap. Start with a high-level view of the situation or circumstances you are in. What is it that you are trying to accomplish relative to the way things are currently? In a few points, capture what is essential about the current situation. Then, think about how you wish things to be different. What do you envision? What is the desired state? State it in a few points. The difference between the two states is the accomplishment gap. It is common to use performance measures (e.g., financial, market related) to describe the two states. Adding what is strategic about the two states will provide a more complete picture. Conclude by specifying, briefly, the need to change, act, problem solve. Why will not changing anything not take us to the desired state? Why is momentum or the current trajectory not enough? What is the dissatisfaction with the status quo?

Hurdles and Enablers. Next, consider details. What factors prevent you from getting from your current state to the desired state? These are hurdles. Conversely, what factors might help you move from the current to the desired state? These are enablers. You will find more points under these two categories than under the accomplishment gap.

Sometimes, it is not obvious whether a factor is a hurdle or an enabler. It might have aspects of both. Sort those aspects in categories where they belong. For example, a new competitor can be a hurdle. But it is also possible that through its innovation it may have created a new customer segment that you could target, which is an enabler. As research has shown, pioneering companies often do not survive and their innovation is imitated and improved by established firms, which continue to thrive [3].

Similarly, you may wonder whether a point belongs under hurdles or current situation. The same can be true of an enabler. In such instances, place it where you think it adds the most analytical value. You can always move it later. Problem faceting is an iterative process. Hurdles and enablers are factors that lie in between the current and desired states. They have meaning only in the context of, or relative to, the two states.

Time. The next element in the framework is time. We often fail to account for how long it will take to solve a strategic problem. Finance, through the concept of discounted cash flow, is centered on the notion of time. Other business disciplines generally don’t account for time explicitly in their frameworks. Neither do most frameworks for framing problems. Because we hew closely to the particulars of a framework in applying it, we neglect time when it is not part of it. Its absence in framing a problem creates conflict later as people develop varying views of how long it should take to solve a problem. It creates disagreements in evaluating progress, allocating resources, and awaiting returns. Thinking deliberately about the appropriate time frame and building agreement at the start can preclude these later conflicts.

Photo by Jeffrey Hamilton/DigitalVision / Getty Images

Time, therefore, is the fourth element in the Problem Faceting Framework. In making a judgment about how long it might take to solve the problem, we must incorporate information and insights from our work on current state, desired state, hurdles, and enablers. Factors from those categories imply varying time pressure. Pulling it all together to decide a single time frame again requires judgment.

Core Question. Finally, drawing upon information and insights from accomplishment gap, hurdles, enablers, and time, the problem to be solved is framed as a question. This final element of the framework is called the core question. It is a question because it is answered with data and analysis. The answer is not presumed. “Core” indicates that the question is central or foundational. (Sub-questions will emerge from it, as chapter 4 will show.) We habitually describe problems using statements, not questions. Human nature is to accept statements as given, as facts, and to not evaluate their validity. It is not conducive to critical thinking. Framing as a question makes it more likely that we may discover we are solving the wrong problem.

The core question is also a single sentence. Its brevity is useful in communicating it across teams and organization, in having everyone involved understand and assimilate it.

The core question is neither too abstract nor too specific – it is a “Goldilocks” question. If it is too abstract and broad in scope, it would exclude little. It is hard to solve a problem well if everything is included in it. If it is too detailed and narrow in scope, it would include too little. It is again unlikely that the problem will be solved well. At a mid-level of abstraction and scope, it can encompass the important points from the other four elements of the framework. Further, it allows unexpected discoveries and events to be incorporated, if they are relevant. For example, while you are problem solving, the R&D lab makes an unexpected discovery. It could be an enabler. Or, the stock market crashes and is followed by an economic slowdown, globally. These could be hurdles. Making these additions to hurdles and enablers may mean modifying the choice about time. In turn, that should result in modifying the core question.

The core question is framed such that, after all the analysis is done, it could lead to either a “yes” or a “no” for an answer. This important characteristic precludes the confirmation bias that all of us are susceptible to [4]. It is possible for us to hold subconscious beliefs so strongly that we don’t seek evidence for it because we find it self-evident. When presented with information that goes against our belief, we either ignore the information or dismiss its validity. When presented with any information that confirms our belief, we accept it gladly even if the evidence is tenuous. Confirmation bias can sneak into the way a problem is framed such that the problem can only result in a favored solution. “How” questions generally reflect confirmation bias. For example: How can we enter the electric car business? The solution here has already been decided and it is embedded in the way the problem is framed. Solving it is about how best to do it. A yes-no question would be framed differently. It would be: Should we enter the electric car business? Data and analysis could take us to either a “yes” answer or a “no” answer. Asking yes-no questions is uncommon. Most of us naturally gravitate to “how” questions in stating problems.

To recapitulate, the core question is the framing of the problem. Answering it is solving the problem. The core question is a single-sentence, Goldilocks question with either a yes or a no as potential answer, and a time frame for solving it.

Applying the Framework Well

The Problem Faceting Framework can be applied well by practicing the ideas below:

1] The process of application is iterative. We should go back and re-do earlier work if later information or new insights so merit.

2] A related idea, and one that goes against our instinct and common practice, is to treat the core question as provisional, as a hypothesis. As new information emerges and we draw conclusions from various analyses, we should be willing to recognize that perhaps the core question needs to be framed differently. The framing of the problem, therefore, is a hypothesis that should be retained or discarded based on data and analysis. Treating the framing of a problem as provisional goes against the common practice of linear thinking. Once we have framed a problem, we move on to later tasks of solving it and making a decision. We rarely consider the possibility that we may be solving the wrong problem. The more complex the problem, the greater the lack of data, the more important it is that we treat our problem framing as provisional and remain alert to the possibility that better framing is possible later.

Similarly, we should treat our time estimate as provisional. The longer the time frame, the more we should be alert to the possibility that our estimate may be off. Over long time frames, lots of unexpected things can happen, both desirable and not. For instance, years of R&D work may yield no useful patents or products. New competitors may emerge by taking advantage of technological or regulatory changes. Should we reconsider time?

Both the iterative and provisional approaches to problem solving are very important because the solution options we generate depend on the problem framing, which then drives what kind of data we gather and analyses we do. We should be willing to return to earlier tasks to improve our work so that we end up with the best choices possible. In other words, the quality of our solution depends on the quality of problem framing.

3] In applying the five elements of the framework, draw upon your disciplinary knowledge to ask questions that strengthen thinking. This is especially important to avoid falling into the trap of using a framework to merely sort data given to us. A framework should guide seeking new information as well. Doing the former does not differentiate your thinking; doing the latter does. For example, in a business situation, you may have been given data on the product being sold and its price. Do those two reflect hurdles or enablers? Hard to say. You have to draw upon your knowledge of marketing and competition to seek further information on relative sales, relative prices, trends, and then decide whether the product and its price reflect hurdles or enablers. The two should also remind you of the 4Ps of marketing, leading you to seek information you were not given. How is the product being promoted? What “place” is being used to sell it? Disciplinary knowledge helps us do two things: seek deeper information and seek new information. Both are essential to understanding and framing the problem well.

REFERENCES

[1] Bhardwaj, G., Crocker, A., Sims, J., & Wang, R. D. (2018). “Alleviating the plunging-in bias, elevating problem solving,” Academy of Management Learning & Education, vol. 17, no. 3, pp. 279-301.

[2] New York Times, “Paramount was Hollywood’s ‘mountain.’ Now it’s a molehill,” January 17, 2019.

[3] Tellis, G. J., & Golder, P. N. (1996). “First to market, first to fail? Real causes of enduring market leadership,” MIT Sloan Management Review, vol. 37, no. 2, pp. 65-75.

[4] Nickerson, R. S. (1998). “Confirmation bias: A ubiquitous phenomenon in many guises,” Review of General Psychology, vol. 2, no. 2, pp. 175-220.

Story of the Situation

In November 2008, Mohamed Nasheed, the newly elected President of the archipelagic nation of Maldives in the Indian Ocean announced that he wanted to buy land in Sri Lanka or India to provide a haven for Maldivians from rising sea levels [1]. Others suggested Australia. Global reaction was skeptical. It seemed implausible that any nation would sell land to another to create a new homeland. Australia had recently turned down a similar idea from the island nation of Tuvalu in the South Pacific [2]. Low-lying, low-income island countries like Maldives, Tuvalu, Kiribati, and Marshall Islands were expected to be among the first to become uninhabitable as sea levels rise due to global warming [3].

Located about 500 miles southwest of Sri Lanka, the Maldives archipelago comprised 1,192 coral reef islands that were scattered over an area spanning 510 miles north to south and 80 miles east to west [4]. About 250 islands were uninhabited. Just twenty had more than a thousand people living on them. A third of the country’s 386,000 people lived in the 1-sq. mile area of the capital Malé [1]. The rest were dispersed across 941 islands.

The islands were mostly less than 3 feet above sea level. The country’s highest point was less than 6 feet. The 10-foot high waves from the 2004 tsunami fully submerged several islands [1]. A third of the population was affected, 20,000 were left homeless, 83 died, and 25 were missing [5]. Destruction to home, property, and infrastructure was widespread and estimated to be about a billion dollars. It was almost equivalent to the country’s 2004 GDP of $1.2 billion. Fishing boats were lost and tourism dropped off in the months that followed, badly affecting the two leading sectors of the economy.

Worries about the islands being inundated were not new. In April 1987, unusually high waves swept across the islands, despite there being no storm [6]. Two-thirds of Malé was submerged. There was significant damage to property and infrastructure. By 2000, warming ocean waters had started to bleach corals and erode fish stock. Rising temperatures and sea levels were expected to harm fishing and tourism. Sea levels were predicted to rise by a meter by the end of the century but harm from warmer waters, higher waves, intense and frequent storms, and storm surges was expected to occur in a much nearer future. Coral reefs could be destroyed and beaches disappear from erosion and higher sea levels. Saltwater could reach farther inland due to tidal surges, destroying vegetation and reducing land suitable for food production.

Although Nasheed had support among some Maldivians for his idea to use income gained from tourism to buy a new homeland elsewhere, he also had dissenters. Some did not wish to emigrate and be treated as second-class citizens in a new country while losing their homes, traditions, culture, and communities [2]. We have lived here for 3,000 years, we will be just fine, they said. Not everyone believed in global warming. Even if it were true, said others, it will happen over decades. Nasheed was overreacting, making a spectacle of himself, and embarrassing us internationally [7].

Three months later, the president of Kiribati, an archipelagic nation in South Pacific, announced that he, too, would try to relocate citizens.

REFERENCES

[1] New York Times (2008). “Maldives considers buying dry land if seas rise,” November 10.

[2] The Economist (2008). “O give me a home…” November 13.

[3] New York Times (2011). “Life after land,” July 18.

[4] https://www.britannica.com/place/Maldives; accessed February 7, 2019.

[5] New York Times (2005). “For 5 minutes, just water and few signs of an island,” January 5.

[6] New York Times (1990). “Malé Journal; 1,190 islands in danger: Sea could drown them,” November 26.

[7] New York Times Magazine (2009). “Wanted: A new home for my country,” May 8.

Applying the Problem Faceting Framework

Accomplishment Gap

Current State

President Nasheed is worried about the long term survival of the people of Maldives due to global warming. Over the years, life is expected to become increasingly difficult and then impossible as the islands submerge. His idea to buy land in another country and move Maldivians there has been met with disbelief and derision.

Desired State

Protect Maldivians from global warming.

Need for Change

With the infeasibility of buying a homeland, a new solution is needed. Otherwise, inaction will leave the islands and its people defenseless against the effects of global warming, threatening their very survival.

Hurdles

Some Maldivians are unaware of global warming or don’t believe in it and its predicted effects. Nasheed is solving a non-existent problem, in their view.

There are people in every country who don’t believe in global warming, its effects, or that any solution is necessary or possible.

Some Maldivians are unwilling to relocate to another country where they may be treated as second-class citizens. Uprooting would destroy their traditions, culture, family links, community ties, and ways of life.

The number of islands, their wide geographical spread, and varying density of inhabitants will make protecting them costly. It will also slow response time in an emergency.

Maldives’s location, far from any major land mass, adds to transportation and logistical costs and response time.

Warming waters are already bleaching coral reefs and reducing fish stock. It could harm tourism and fishing, the leading economic sectors, over the next few years as global warming accelerates.

Global warming will bring frequent, intense storms and tidal surges which will cause destruction. Beaches could disappear and food production reduced due to land erosion and saltwater moving farther inland.

With its small economy, Maldives lacks financial resources, limiting its capacity to address any disaster, whether sudden (tsunami, hurricane) or slow building (global warming).

Reliance on tourism is precarious. Tourists can disappear quickly after a natural disaster.

Tsunamis, which result from earthquakes, present a separate threat. Their impact can be sudden and disastrous due to the height of waves.

Enablers

At 386,000 people, the country’s population is small.

Some Maldivians recognize that global warming threatens their survival and support Nasheed’s attempts at finding solutions.

Varying segments of the population across countries recognize the existential threat that global warming poses and the need to collaborate, find solutions, and act.

Tourism brings foreign exchange and puts Maldives in the consciousness of people globally.

Could fishing and tourism somehow be leveraged as assets?

Socio-economic ties with Sri Lanka and India could be leveraged to involve them in the solution.

Potential to join forces with other island nations similarly affected.

time

The factors listed above impose varying time pressure to act and solve. Sea levels rising by a meter by the end of the century is misleading because harm from global warming will occur far sooner in the low-lying islands. Warming ocean is already having an effect and it will get worse in the next few years as temperatures continue to rise. Over the same period, storms and tidal surges are likely to increase in frequency and intensity. Hence, a time frame of 15-20 years seems reasonable. It can be modified later as more information is gathered.

Tsunamis are unpredictable but geographically Maldives, unlike Japan or Indonesia, is not in an area of high earthquake activity and tsunamis. The 2004 tsunami was a rare event, originating with an earthquake with its epicenter off Sumatra. There is no credible way to attach a time frame to when the next one may occur. It doesn’t look like Maldives experienced a tsunami in the decades before 2004. Protecting and preparing the islands from tsunamis can also be achieved within the same 15-20 years.

Core Question

In the next 15-20 years, can Maldivians be protected from tsunamis and the effects of global warming?

Explanation

Current state is about facts, about what is happening. Desired state is about goal, vision, and what you would like to make happen.

How you describe the desired state will make a difference in later thinking and choices. For example, I have described it in terms of people. Alternately, I could have done it in terms of place. But protecting the Maldives is different from protecting Maldivians. This difference will influence how I continue to think about the problem, the solution possibilities I generate, and choices I make. Words matter, framing matters.

The more difficult the problem, the more important it is to persuade people about the need to act. It is helpful to have a sentence or two on the need for change, why the status quo or the momentum of today’s choices is insufficient to reach the desired state.

Hurdles and enablers are the factors that lie in between the current and desired state. Hurdles prevent you from reaching the desired state while enablers can help you get there. In general, people find it easier to state hurdles than to recognize enablers. Enablers are often about possibilities, which can be difficult to see right away. For example, under enablers I have raised the possibility that tourism or fishing can somehow be leveraged in solving the problem.

The Maldives story really underlines the value of explicitly stating the time needed to solve the problem. It will take many years, if not decades. People can have widely ranging ideas about how long it will take. When these perceptions vary and are left unsaid, it can create all kinds of preventable challenges later. Surprisingly, frameworks to conceptualize problems often do not include time. If it is not part of a framework, it will generally not be part of our thinking.

Judgment is involved in estimating the time frame. At this early stage, it is possible to under or overestimate time needed. Hence, we should be alert to new information that may cause us to modify our estimate.

If Maldives were located in an area with high earthquake activity, tsunamis would be more frequent. In that case, I would have used two time frames: a shorter one related to tsunamis and a longer one related to global warming. I am, however, open to new information, discovering that I got this wrong, and modifying the time frame, if needed.

The core question doesn’t have to be a surprise. After all the work above, it is unlikely to be. But it has to be the most effective framing of the problem, in our judgment, such that solving it will take us from the current to desired state in the best manner possible. No one can credibly claim to have the best framing of a multifaceted, dynamic situation with ambiguous and incomplete information. As explained above, I am going to treat this core question as provisional and I am willing to modify it if new information or insight so suggest later.

A final point: it is not just the core question that is important to our continuing work but also the contours of the problem which are reflected in the previous four elements of the Problem Faceting Framework. It is common for people to only remember the core question and forget the work done related to accomplishment gap, hurdles, enablers, and time. In such instances, the solution often solves the problem quite poorly.

hospital tubes — Tube Mix-Ups in Hospitals in 2010

Application When You Have to Develop the Story

In the Maldives example, the story was fully laid out so we could apply the problem faceting framework to structure information and frame the problem. It is similar to case analysis in business school where all the information we need is presented in a case comprising several pages of text and exhibits.

But situations we encounter at work are not accompanied by a case laying out the full story with data. Typically, we know just some aspects of the situation. Assuming that what we know is all there is to know to solve the problem would ensure falling in the

plunging-in decision trap, especially when dealing with new, non-routine, or unfamiliar situations. In such circumstances, we should assume that what we know is incomplete and treat it just as a starting point to explore further and develop a valid and cogent story of the situation. With the story developed, we can frame the problem.

Tube mix-ups in hospitals is an example of a situation where you have to discover missing information and develop the full story [1]. How well you solve the problem will depend on how well you develop the story.

The Situation

It is 2010 and you have been given an assignment by an insurance company. The company has made several payments as a consequence of tube mix-ups in hospitals that have severely injured or killed patients. The frequency of these mistakes suggests that these are not random or rare events. Perhaps there is something systematic going on that could be fixed.

Clear plastic tubes, each serving a different purpose, are attached to patients admitted to a hospital. They may be connected and disconnected several times a day. The tubes either deliver or remove something from a patient’s body. Medicine, nutrition, blood, fluids, and gases flow through the tubes to veins, arteries, stomach, skin, lungs, bladder, etc. Although they serve different functions, the tubes look similar and can be misdirected, especially under high pressure or due to fatigue among hospital staff who often work very long hours without sufficient break or sleep.

Three examples from 2006 illustrate tube mix-ups [1].

A pregnant woman was admitted to a hospital because she was vomiting and losing weight. She had to be fed liquid food through a tube. By mistake, the feeding tube was connected to another leading into her vein instead of the tube being led into her stomach. Liquid food went into her bloodstream causing agonizing pain. It was later described as pouring concrete in a drain. She lost her baby. Soon after, she also died.

While giving birth, a 16-year old had to be given a spinal anesthetic. A nurse who had worked two 8-hour shifts the day before mistakenly connected the tube delivering anesthesia to a vein. The patient died.

Feeding and intravenous tubes were switched for a baby born prematurely. It caused widespread blood clotting, profuse bleeding, and seizures that lasted months. The baby survived after extensive, costly care.

Tube mix-ups are not uncommon. In a 2006 survey, one out of six hospitals admitted to mixing up feeding tubes. Tube interchangeability and consequent mix-ups have existed for decades. Some manufacturers tried solving the problem by using color codes on tubes but they did not use the same color scheme.

Avoiding the Plunging-In Trap

Upon learning the story about tube mix-ups, it is natural to jump to a solution because the problem seems clear and obvious. It is a design problem. A consistent color coding scheme should be used. Further, tubes should be redesigned to look dissimilar. Both actions would eliminate mix-ups. On the face of it, both solutions are correct. Yet the story presented is incomplete – hearing it should raise questions in our minds. Solutions that strike us right away and are based on a partial story are unlikely to succeed in reality.

If the problem were just technical in nature (in being just about design), it would have been solved long ago. Three aspects of the story should make us wonder whether there are critical aspects of the story that we do not know. First, the survey data about one in six hospitals refers only to feeding tube mix-ups. What about other kinds of mix-ups, such as spinal anesthetic being introduced in veins as shown in the second example? What is the extent of the problem if we consider all tube mix-ups and not just those involving feeding tubes? Second, tube mix-ups have been occurring for decades despite the harm done. Why is that? There must be more to the problem than just the careless design of tubes. Three, using color codes seems to be a reasonable solution and some manufacturers do use them yet they don’t use the same coding scheme. That seems to defeat the purpose of having color codes in the first place. These gaps in the story should tell us there is much we do not know and must find out. Without this understanding, we may fail to solve the problem.

In addition to these gaps in the story that were immediately evident to me, there may be others that I don’t yet recognize. My continued ignorance may result in solving the problem poorly. So, I need to think about what information I am missing that I need to develop a valid, accurate, and complete story of tube mix-ups. The ideas in the left column below and their application in the right column show how a cogent story may be developed.

How to Discover Information to Develop the Full Story

There are several approaches to discover missing information and develop a valid, accurate story of the situation. You can start applying the problem faceting framework as you develop the story. Toggle between the two. It is more efficient than waiting to complete the story to start applying the framework. In fact, the framework is one guide to building the story.

Loose-Thread Questions Based on Curiosity

As we learn about any situation, some gaps or loose threads in the story should immediately become evident to us and spark questions. Seeking information to answer these loose-thread questions will help us fill out the story. This approach is based on our curiosity and sense of what will make the story complete.

On the right, I have listed loose thread questions that immediately came to my mind as I learned about tube mix-ups in hospitals. You may have thought of others. It is a good start to building out the story. We may still be unaware of other important aspects of the story. The suggestions below will help discover some of them.

Problem faceting framework’s elements as broad guides

Because the problem faceting framework is applied to structure information and frame the problem, it is a useful guide for also discovering information. Its components – current vs. desired state, hurdles, enablers, and time – indicate areas to explore for useful missing information. We need more guidance, though. Any number of factors could be acting as hurdles or enablers. There is bound to be variance in views about how long it will take to solve the problem and even what is to be accomplished. Clearly, there is a lot of information missing when we think using the elements of problem faceting. How do we discover it? Advice from Charlie Munger of Berkshire Hathaway is helpful.

draw upon a diversity of disciplines to discover information

Charlie Munger is Warren Buffet’s partner in making investments at the legendary Berkshire Hathaway. Both self-made billionaires have generated extraordinary returns over decades with a thoughtful, reasoned approach to investing. Munger has described his ideas for insightful thinking and decision making. Among them is one about mental models that is especially useful here.

Munger believes that a good thinker possess a “latticework” (or collection) of mental models that he or she draws upon selectively to understand situations and make decisions. He has shared his list of mental models. Although he makes investment decisions, few of Munger’s mental models come from finance or business. Reflecting his polymath nature, they are drawn from disciplines as wide ranging as physics, history, economics, and several others. His wide-ranging list implies that there should be no boundaries to our thinking if we want our thinking to give us a competitive edge in whatever work we do. If our knowledge is the same as that of others we compete with, our decisions will be similar to theirs. To get an edge, to differentiate ourselves, we have to think differently. Each of us should therefore develop our own latticework of mental models that are not limited to any business function or discipline.

Research on managerial decision making shows that most managers do not take Munger’s approach. In addition to falling in the plunging-in trap, they tend to use the same framework or two no matter what the situation [2]. For example, applying SWOT to every situation and jumping to solutions. Or, using no framework at all to think and jumping straight to solutions. No wonder a high proportion of decisions are sub-par or failures [3]. These two approaches correspond well with System 1 and System 2 thinking (or reflexive vs. deliberate thinking) described by pioneering psychologists Daniel Kahneman and Amos Tversky [4]. In routine tasks, reflexive thinking is fine because situations don’t differ much so neither do solutions need to. In non-routine, novel, unfamiliar tasks, we need deliberate thinking in the manner Munger advises. Instead, if we reflexively use the same or no framework and plunge into solutions, we are unlikely to do well.

Having a collection of frameworks does not mean applying all of them to whichever situation confronts us. In business school, we often fall in the trap of using frameworks as a checklist. Instead, we should adopt the approach taken by physicians. They have a wide knowledge base of diseases, tests, and treatments learned in medical school but they do not have the same diagnosis for every patient, or run every test for every one of them, or prescribe the same handful of treatment no matter what the underlying cause. Instead, they use a patient’s symptoms and responses to their questions to determine what question to ask next and which test to run. To begin diagnosis, physicians use some standard questions and tests – it is called history taking – but subsequently they draw upon what they know selectively, as a patient’s symptoms, responses, and basic test results suggest. Think of the problem faceting framework as a something that helps history taking in the manner of physicians. Then selectively draw upon your collection of mental models to fully understand the situation, frame the problem, do any further analyses that are needed, generate solution options, and then prescribe the one that is likely to be most effective.

On the right, I am drawing upon a handful of disciplines for ideas to explore the tube mix-up story further. The list is illustrative. You can think of other disciplines and frameworks to generate questions to explore the situation.

switch altitudes (or move across concentric circles)

Suppose you are traveling to a place where you have not been before. You decide to use Google Maps. Typing the address yields a certain default view of the location and its neighborhood. Most of us will then zoom in and out, or switch altitudes, to get a better sense of the surrounding areas. The same approach is useful for understanding new, unfamiliar, non-routine situations. Whatever information you know at the start, it helps to explore the surrounding neighborhoods. Switch altitudes by zooming in and out conceptually to learn the macro and micro contexts.

Alternately, you can think of the situation you are trying to understand as comprising concentric circles. Move to the outer circles to understand the larger macro context; move to inner circles to get to the narrower micro context.

On the right, you can see how switching altitudes or moving across concentric circles helps us explore the tube mix-up story better. At each level, you gather information and explore hunches.

where to seek information

Identifying where to seek information is another useful approach to discover what is going on and build a more complete story of the situation. A rule of thumb is to seek information from or about people, organizations, activities, and documents. Think like an investigative journalist.

Documents are the best place to start. Find those that are publicly available to learn more about the situation. Examples include news stories and reports. The knowledge you glean will enable you get more out of interviews you later conduct. It is especially difficult to get time with senior executives so being well informed before you conduct an interview is essential. It will give you credibility with people whose cooperation you need. Internal documents can be invaluable but they are not always easy to get. It is worth trying to acquire them, though.

Reading about tube mix-ups will generate names of people and organizations you should approach to expand your understanding. You can ask each person you speak with for suggestions about who else you should talk to (this is called snowball sampling). You can also take the concentric circles approach. Start with those directly involved with the situation, then others in the organization who affect their work, then people outside organizations.

It would also be worth looking at activities to understand the nature of the problem.

The key is to seek multiple types of information from multiple sources.

Basic Question Types

What, how, why, when, where, who...

We tend to mainly ask what-questions in trying to understand a situation. How-questions are also useful. Why-questions are infrequently asked but they can uncover reasons and causes which are invaluable in solving problems well. For example, why has the tube mix-up problem not been solved for so many decades? I doubt this particular problem can be solved effectively without an answer to this why-question.

When, where, and who questions tend to be asked infrequently but can generate critical information as examples on the right show.

Choose a broad area or domain and then ask different types of questions about it. For example, one important area to explore is regulation of medical devices (plastic tubes fall in that category). Or choose economics and look into the economics of innovation and commercialization for plastic tubes manufacturers. Do regulations and economics present hurdles? Do they also provide some enablers?

In asking questions of people, you have to be careful about how the question is worded. Value-laden terms can make people defensive and leading questions can result in obliging answers. Asking open-ended questions in a non-judgmental manner is good practice. Ask for stories and draw conclusions for yourself. Here, too, an investigative journalist’s approach can be powerful.

Logic of Complements to Generate Questions

Some questions come easily, even instantly, to us. Others need more mental effort. Some never occur to us. After we have exhausted the first kind, the logic of complements can be used to generate questions of the other two kind. An example best illustrates how the logic of complements can be used to develop questions and also draw conclusions.

You receive your monthly electricity bill for June and notice that it is much lower than it was a year ago. You are pleased that you are using less electricity. It’s a reasonable conclusion but it could be wrong. A complementary conclusion is that electricity rates have gone down while your usage has not. Because the monthly amount is a product of usage x rate, the lower bill could be due to either usage or rate or perhaps both. We all jump to conclusions in any situation. It is worth pausing to ask whether a complementary conclusion could also be valid.

This idea of complements is applied to develop questions about tube mix-ups on the right.

conclusion

Building a story takes time but if the stakes are high then the time, money, and effort expended are worth it.

We sometimes have incorrect impressions of how much time and effort it takes to solve problems. Much of our work involves routine, familiar problems which don’t take much time and solutions typically don’t differ much from what we have done previously. But the need is different when we face new, unfamiliar, non-routine situations. When Meg Whitman became CEO of long-declining Hewlett Packard, she explained that it would take her a year to just understand the company’s problem [5]. The more complex a problem, the more effort and time it takes to solve it.

Although business school cases simulate important aspects of reality, an unintended consequence of learning from cases is that the problem is neatly laid out on page 1 and takes less than a minute to recognize. And we solve it in an hour. It creates subconscious expectations about time and effort that clash with the realities of solving non-trivial problems in real life.

Meg Whitman’s approach is consistent with Albert Einstein’s advice that if you have an hour to solve a thorny problem, you should spend 59 minutes understanding it so that it then takes just a minute to solve it well [6]. Munger and Buffet spend much of their time reading widely, talking to a variety of people, and thinking. They are not day traders, they are slow, deliberate thinkers and investors. Kahneman and Tversky would approve.

Applying the Ideas to Tube Mix-Ups

To illustrate the story-building suggestions in the left column, I am applying them to the incomplete tube-mix-up story in this column.

What information does the insurance company have, based on its experience in dealing with tube mix-ups? What information does it have on other types of hospital errors? The causes of errors may overlap.

The 2006 survey is about feeding tubes. Is data available from any source on mix-ups of all kinds of tubes?

Why has the problem remain unsolved over so many decades? Who has made what kind of attempt to solve it? What are the stories of those attempts?

Why don’t all manufacturers use color coding? Why do they use inconsistent coding schemes?

Why have tubes not been made incompatible?

To begin with, the accomplishment gap is about eliminating or at least drastically reducing tube mix-up errors. It’d be valuable to learn from the people and organizations involved their views of the need for change. Why has the problem not been solved for so many decades? That takes us to hurdles where we know that fatigue, high pressure, and being short-staffed may play a role. Other hurdles are: tubes look alike even though they serve very different functions, not all tube manufacturers use color coding, and when they do the schemes are not consistent. Enablers, we can guess, include both economic and human factors. But we know so little at this stage, given the problem’s decades-long existence. And we just don’t know enough to credibly say how long it might take to solve the problem.

Operations management would suggest that we look at how work is organized and conducted in hospitals. Is that a cause for tube mix-ups? How many hours do staff members work? How many patients do they attend to?

Because the story notes several players (patients, hospital staff, manufacturers, insurance company), we should wonder whether this is an incomplete list in an incomplete story? We can use the concepts of organization structure and ecosystem to think about which people, functions, and organizations we should look at to more fully understand what is going on. Applying these concepts would suggest considering additional players: hospital administrators, purchasing function, manufacturers and their trade association, and the Food and Drug Administration (because health care is a regulated industry).

What regulations govern medical devices like plastic tubes? How do regulations act as hurdles or enablers? What regulations would an innovator face? What has the FDA done to address tube mix-ups?

Legal aspects are critical. How many lawsuits have there been and what has been the outcome? Who has been held accountable?

Because tube mix-ups have existed for decades, it is worth looking into the economics of the plastic tubes business. Are profit margins and how prices and reimbursement determined creating hurdles for innovating solutions? What are the costs involved in bringing redesigned tubes to market?

Switching to higher altitudes or moving across wider concentric circles:

Feeding tube mix-ups ——o all tube mix-ups ——o all hospital errors

Hospitals where tube mix-ups have occurred ——o hospitals where errors have not occurred ——o overall industry to also look at manufacturers and their trade group ——o regulatory bodies, law firms involved in filing lawsuits

Switching to lower altitudes or to smaller concentric circles

Hospitals where tube mix-ups have occurred ——o how work is conducted and managed ——o circumstances of individuals who made errors vs. of those who did not

Documents

The insurance company that has given you this assignment may have documents generated from their work. Newspapers, magazines, trade publications may have reported on tube mix-ups. Perhaps there are publicly available reports on the problem. Hospitals where tube mix-ups occurred may have done internal studies. In general, it will not be easy getting people to share information about this error but it is worth trying. Effective problem solving comes from good information. Without it, the situation will continue just as it has for decades.

People and Organizations

Doctors, nurses, patients, hospital administrators, purchasing department, plastic tube manufacturers and their trade group, any standards setting organization, and regulators. Actually being able to talk to members of these groups may not be easy due to fears of liability but it is worth trying.

Activities

What were the nurses and doctors doing when these mix-ups occurred? What were the circumstances? Were they sleep deprived? Were they dealing with emergency situations? Were they short staffed?

What is the process of regulatory approval if a manufacturer were to modify a tube?

Are there particular circumstances when tube mix-ups are more likely to happen?

Why has this problem existed for so many decades? What kinds of attempts have been made to solve it? What was done and why did it not succeed?

Healthcare is heavily regulated. What regulations govern medical devices? Has federal oversight of medical devices been lax for tube mix-ups to have occurred for so many decades?

Who has been held accountable for these errors?

How reminds me of process, which reminds me of activities, so I would look into the activities and processes associated with tube mix-ups to learn causes.

Where indicates location or place, which raises a couple of questions in my mind. Are some activities or parts of a hospital more prone to errors than others? Does the location or type of hospitals where errors occur vs. not reveal something?

A survey tells us that one out of six hospitals reported feeding tube mix-ups. The term feeding tube mix-ups implies at least three complements that can generate a question each. Feeding tubes are not the only kinds of plastic tubes used in hospitals. So, it raises the question: What is the error rate for mix-ups involving all kinds of tubes? Further, tube mix-ups are not the only kinds of errors in a hospital. We could ask: What is the overall error rate at hospitals and what portion of those are tube mix-ups? One out of six hospitals reports feeding tube errors, so it raises the question (assuming there is no hiding of errors): What practices do the remaining hospitals follow to not make feeding tube mix-up errors?

references

[1] New York Times. 2010. “U.S. inaction lets look-alike tubes kill patients,” August 20.

[2] Courtney, H., Lovallo, D., & Clarke C. 2013. “Deciding how to decide,” Harvard Business Review, 91(11): 62-70.

[3] Nutt, P. C. 1999. “Surprising but true: Half the decisions in organizations fail,” Academy of Management Executive, 13(4): 75-90.

[4] Kahneman, D. 2011. Thinking, Fast and Slow. New York: Farrar, Straus, and Giroux.

[5] Wall Street Journal. 2012. “H-P is punished for grim outlook,” October 3, 2012.

[6] Spradlin, D. 2012. “Are you solving the right problem?” Harvard Business Review, 90(9): 84-93.