“If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.” Albert Einstein
It’s annual planning time!
This is the season when the vast majority of teams gather to take stock, look ahead, discuss, debate, and choose their goals and priorities for the coming business year.
The problem is, most teams debate the wrong things.
In my experience, business leaders spend very little—if any—time identifying and clarifying the challenges they’re facing. Rather, they gravitate toward the more comfortable process of discussing which initiatives and projects they should prioritize in the coming year.
This is a huge mistake. If you’re having conversations about solutions and you haven’t clearly identified the significant, addressable challenges you’re facing, the odds are high that your priorities won’t solve the root causes.
The instinct to jump into action is not totally surprising. Our bias to move is hard-wired, dating back millennia to when our ancestors huddled around fires in caves. Your 50x great grandparents didn’t have the luxury of time to think—if they didn’t move, they would have either starved to death or become some predator’s dinner.
The modern-day version of this innate bias to act exists in the can-do entrepreneurial spirit, where founders and leaders feel compelled to “take action or risk failure.” Spoiler alert: This is a false choice!
A thoughtful analysis of your situation a few times a year does not reduce your momentum. In fact, it accomplishes the opposite. If you ask, and thoughtfully answer, the right questions during your planning process, you will accelerate your progress.
Here’s the question that should dominate the conversation during your team’s annual planning session: “What is our firm’s #1 Addressable Challenge in 2024?”
Use this 4-step structured approach to thoughtfully identify, clarify, and articulate your firm’s #1 Addressable Challenge for next year and to transform the value of your annual planning session.
Let’s begin by defining the term Addressable Challenge.
The word “addressable” implies something that is within your control to resolve or change. For example, “the high interest rate environment” is not an Addressable Challenge because this is not something you can control. Dig deeper however, and you may see that high rates could be causing other challenges in your firm that you CAN control.
One way or another, be sure to identify potential challenges you can manage and control, and filter out the ones you can’t.
My use of the term “challenge” also warrants some explanation. It’s easy to think of the word “challenge” as synonymous with “problem.” But it’s also a challenge to successfully pursue an opportunity! Opportunities might include opening new locations, launching a new product, or executing on an aggressive growth plan. After all, the pursuit of a truly worthy opportunity is always a challenge.
When you think about potential Addressable Challenges, be sure to consider your worthiest pursuits, not only your biggest problems.
Step 1: Identify Your #1 Addressable Challenge
Now that you’re clear on what an Addressable Challenge is, take the time to identify the top two or three in your firm.
This is the most difficult step in the process. I’ve found that when I ask my clients to identify Addressable Challenges—even after we’ve clearly defined the term—they rarely come back with actual challenges on the first try. Instead, most suggest projects and initiatives disguised as challenges.
For example, just last week at a client annual planning meeting, the firm’s President suggested: “Our number one Addressable Challenge next year is to replace our ‘XYZ’ software.”
No, it’s not! The software replacement is the SOLUTION to some other challenge, not the challenge itself. What’s more, it might not be the only solution to the root causes of the challenge!
Significant challenges typically require a multitude of changes across an organization. That’s why it’s critical to articulate the challenge as clearly as possible and not get sucked into the simplicity of prioritizing a single component.
A proper Addressable Challenge starts with phrases like “we can’t,” “we don’t,” “we haven’t,” and “it’s been difficult to.” If you can’t put those words in front of your challenge statement, you probably have a solution, not a challenge, on your hands.
Once you and your team have identified the firm’s top two or three challenges for the coming year, force rank them to determine which is the #1 Addressable Challenge by asking: “If we could only resolve ONE of these next year, which would we choose?”
Finally, ensure that your challenge statement is in the form of a complete sentence.
Here’s an example of a well-formed Addressable Challenge statement:
“We cannot reliably deliver on our operational and growth commitments.”
Step 2: Identify the Contributing Factors
Now that you’ve articulated the #1 Addressable Challenge in the form of a sentence, the next step is to identify the contributing factors.
There are always a number of contributing factors or root causes associated with every Addressable Challenge. If you’ve been intellectually honest about your challenge, the contributing factors are going to be quite uncomfortable to name and contemplate.
Root cause contributing factors might include leadership issues like tolerating the wrong people on your team, boundary issues like saying “yes” to every client’s demand, execution issues like getting distracted from priorities with “flavor of the week” fire drills, and process issues like a lack of standardized procedures.
Do your best to thoughtfully identify as many contributing factors as possible with your team, then narrow the list to the most significant three items by asking: “Which THREE of these contribute to 80-90% of our Addressable Challenge?”
Finally, as in the previous step, assemble the contributing factors into a complete sentence.
Here’s our Addressable Challenge statement with a well-formed contributing factors sentence that follows:
“We cannot reliably deliver on our operational and growth commitments. Contributing factors include a culture of “doership” not leadership, a lack of sales leadership, and failing to address project, technical and financial risks.”
Step 3: Articulate the Effect on the Business
Every Addressable Challenge has implications affecting your firm which exact a price (or an opportunity cost) today and in the future.
To move the specificity and rationale of your firm’s challenge to an even deeper level, the next step is to articulate the impact on your business. I urge you to go deep here and uncover the effects that resonate with emotion. While it’s ok to name something like “slow growth” as an impact, it’s more powerful to dig deeper and name the effect of slow growth like “demotivated employees” as the true impact.
Do your best to thoughtfully identify as many effects as possible with your team, then narrow the list to the most significant three items. Finally, as in the two previous steps, assemble them into a complete sentence.
Here’s what a well-formed effects sentence looks like when combined with our example Addressable Challenge and contributing factors:
“We cannot reliably deliver on our operational and growth commitments. Contributing factors include a culture of “doership” not leadership, a lack of sales leadership, and failing to address project, technical and financial risks. The effects on the business include a damaged reputation, rushed work leading to poor decision-making, and frustrated employees.”
Now that you’ve created a complete, three-sentence Addressable Challenge statement, notice how this level of thinking is a far cry from “We need to replace our ‘XYZ’ software next year!” It’s meaningful, it’s specific, and it’s actionable.
Steps 1-3 (75% of this process) clarify the challenge. In the final step, we’ll advance to identify the solution.
Step 4: Identify the Initiatives Required to Solve the Challenge
I’ve found it’s useful to think of the solution as a series of work streams or initiatives that, taken together, resolve your #1 Addressable Challenge. Consider the challenge and identify the two-to-four high-level initiatives that must be executed during the year to get you to an acceptable end-state. These initiatives should sound like more “normal” annual priorities and are the levers you and your team believe must be pulled to fully address the challenge.
For example, here are the initiatives required to solve the Addressable Challenge statement we’ve built through the article:
The final step in this process is to assign single point accountability for each initiative. From there, you can assemble teams, plan and manage them for the year ahead. I suggest that my clients name solving the #1 Addressable Challenge as their sole annual priority, then note the 3 or 4 key initiatives that comprise the solution.
“The ancestor to every action is a thought.” Ralph Waldo Emerson
When executed with discipline, these four steps yield a crystal clear description of the most important challenge your company faces and the work required to effect meaningful resolution. Each time I’ve used this powerful process with a client, there’s some version of utter amazement at the rigor and depth of the challenge, the fit of the solutions, and the motivation to see it all through.
The specificity, clarity, and intellectual honesty this evokes illuminates a path forward and adds both structure and meaning to the annual planning session. Resist the well-worn path and your instinct to jump to solutions before you carefully and clearly identify the challenge at hand.
You’ll find it’s well worth the restraint and investment.
Imagine how great it would be if your employees were more independent, better decision makers, and did the “right things” more often without needing much guidance. Although we intuitively know that these attributes eliminate countless leadership headaches and set the stage to create scale, it’s shockingly easy to elicit the exact opposite behaviors from your team.
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The best strategies and market opportunities in the world mean nothing if you’re not able to execute our plans and get things done. And yet, accountability remains a recurring, frustrating issue for business leaders around the world. Organizations with an accountable culture execute smoothly and without drama, retain high performers, and have an improved sense of collaboration, accomplishment, and fun at work.
Together we will:
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