Problem Definition – Lessons from the Music Industry

Bernard Garrette, Corey Phelps and Olivier Sibony have written a must-read how-to guide on solving complex problems. The book, Cracked It! – How to Solve Big Problems and Sell Solutions Like Top Strategy Consultants, presents an easy-to-follow and powerful process called the 4S model (State-Structure-Solve-Sell) that managers can use to solve problems that are non routine and ambiguous in nature. The authors present three paths to solving tough challenges – the hypothesis-driven path, the issue-driven path and the design thinking path. The book presents lots of tips, tools, real life case studies, methods and guidelines to help managers solve a complex problem using one of the paths.

The book stresses that defining the problem correctly is all-important and uses Einstein’s famous quote to reinforce the message – “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” If this thought is good enough for Einstein, it’s certainly applicable to managers in today’s organizations. Garrette, Phelps and Sibony use the recent history of the music industry to make their point. The authors take us back to 1997 when file-sharing was rampant among college students. Napster arrived on the scene in 1999 and became an instant hit. The book states, “Even the least business-savvy observer could tell the business of music was under pressure and the record industry wasn’t blind to the threat. It fought an all-out battle against the file-sharing revolution.”

Garrette, Phelps and Sibony believe that the record companies defined their problem in the wrong way, writing that, “the battle they had fought – and won – (Napster ceased to exist in 2001) wasn’t the right one.” The music industry invested heavily in lobbying the Department of Justice and Congress to shut down file-sharing sites to little avail, alienating their younger client base in the process. According to the authors, music industry executives defined their problem as “How do we stop (or drastically reduce) the illegal sharing of music files to protect the business of selling CDs?” Garrette, Phelps and Sibony suggest that the real problem was: “How can we make money in a world where technology is changing the distribution of music?”

It was Apple that asked this very question and, as a result, launched the iPod in 2001 and the iTunes store in 2003.  Apple “created a new business model for digital music distribution” that saw the iTunes music store sell tracks, not albums, created a seamless and portable experience for consumers and introduced digital rights management (DRM) to limit piracy.” What were the business results for Apple of focusing in on the more relevant and broader problem? Cracked It! reveals that “sales of music downloads took off, peaking at $4 billion in 2012…The real business opportunity for Apple wasn’t in the sale of music tracks, but of iPods: with over 50 million units sold annually from 2006 to 2010, Apple generated annual revenues of around $8 billion and laid the groundwork for the iPhone and its phenomenal success”.

Companies and indeed entire industries get caught up in old business models, ignoring the impact of new trends and competitors in the process. Think of the Big Three US auto manufacturers in the 1960s, sticking to selling highly profitable gas guzzlers while Japanese car manufacturers stole market share by selling fuel efficient autos that a large segment of US consumers wanted. The authors reinforce this point by writing that, “The contrast between the record companies and Apple illustrates the importance of stating the right problem. The problem as the music industry defined it wasn’t one it could solve. As soon as technology made it possible to compress a music track into a digital file of a few megabytes, and Internet access became widespread, it should have been clear that forcing consumers to buy entire albums for $14 was a dying business model.”

Indeed, “flawed problem definition is the first pitfall of problem solving.” Cracked It! is an important contribution to management literature and best business practices and I highly recommend it.

For more information on  Cracked It! – How to Solve Big Problems and Sell Solutions Like Top Strategy Consultants, click on www.cracked-it-book.com. You will be able to download the first chapter for free.

 

 

 

2018-11-04T08:41:54+00:00