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10 Step Process for Effective Business Problem Solving

Posted august 3, 2021 by harriet genever.

When you start a small business or launch a startup, the one thing you can count on is the unexpected. No matter how thoroughly you plan, forecast , and test, problems are bound to arise. This is why as an entrepreneur, you need to know how to solve business problems effectively.

What is problem solving in business?

Problem solving in business relates to establishing processes that mitigate or remove obstacles currently preventing you from reaching strategic goals . These are typically complex issues that create a gap between actual results and your desired outcome. They may be present in a single team, operational process, or throughout your entire organization, typically without an immediate or obvious solution. 

To approach problem solving successfully, you need to establish consistent processes that help you evaluate, explore solutions, prioritize execution, and measure success. In many ways, it should be similar to how you review business performance through a monthly plan review . You work through the same documentation, look for gaps, dig deeper to identify the root cause, and hash out options. Without this process, you simply cannot expect to solve problems efficiently or effectively. 

Why problem solving is important for your business

While some would say problem-solving comes naturally, it’s actually a skill you can grow and refine over time. Problem solving skills will help you and your team tackle critical issues and conflicts as they arise. It starts from the top. You as the business owner or CEO needing to display the type of level-headed problem solving that you expect to see from your employees.

Doing so will help you and your staff quickly deal with issues, establish and refine a problem solving process, turn challenges into opportunities, and generally keep a level head. Now, the best business leaders didn’t just find a magic solution to solve their problems, they built processes and leveraged tools to find success. And you can do the same.

By following this 10-step process, you can develop your problem-solving skills and approach any issue that arises with confidence. 

1. Define the problem

When a problem arises, it can be very easy to jump right into creating a solution. However, if you don’t thoroughly examine what led to the problem in the first place, you may create a strategy that doesn’t actually solve it. You may just be treating the symptoms.

For instance, if you realize that your sales from new customers are dropping, your first inclination might be to rush into putting together a marketing plan to increase exposure. But what if decreasing sales are just a symptom of the real problem? 

When you define the problem, you want to be sure you’re not missing the forest for the trees. If you have a large issue on your hands, you’ll want to look at it from several different angles:

Competition 

Is a competitor’s promotion or pricing affecting your sales? Are there new entrants in your market? How are they marketing their product or business?

Business model 

Is your business model sustainable? Is it realistic for how fast you want to grow? Should you explore different pricing or cost strategies?

Market factors

How are world events and the nation’s economy affecting your customers and your sales?

Are there any issues affecting your team? Do they have the tools and resources they need to succeed? 

Goal alignment 

Is everyone on your team working toward the same goal ? Have you communicated your short-term and long-term business goals clearly and often?

There are a lot of ways to approach the issue when you’re facing a serious business problem. The key is to make sure you’re getting a full snapshot of what’s going on so you don’t waste money and resources on band-aid solutions. 

Going back to our example, by looking at every facet of your business, you may discover that you’re spending more on advertising than your competitors already. And instead, there’s a communication gap within your team that’s leading to the mishandling of new customers and therefore lost sales. 

If you jumped into fixing the exposure of your brand, you would have been dumping more money into an area you’re already winning. Potentially leading to greater losses as more and more new customers are dropped due to poor internal communication.

This is why it’s so vital that you explore your blind spots and track the problem to its source.

2. Conduct a SWOT analysis

All good businesses solve some sort of problem for customers. What if your particular business problem is actually an opportunity, or even a strength if considered from a different angle? This is when you’d want to conduct a SWOT analysis to determine if that is in fact the case.

SWOT is a great tool for strategic planning and bringing multiple viewpoints to the table when you’re looking at investing resources to solve a problem. This may even be incorporated in your attempts to identify the source of your problem, as it can quickly outline specific strengths and weaknesses of your business. And then by identifying any potential opportunities or threats, you can utilize your findings to kickstart a solution. 

3. Identify multiple solutions with design thinking

As you approach solving your problem, you may want to consider using the design thinking approach . It’s often used by organizations looking to solve big, community-based problems. One of its strengths is that it requires involving a wide range of people in the problem-solving process. Which leads to multiple perspectives and solutions arising.

This approach—applying your company’s skills and expertise to a problem in the market—is the basis for design thinking.

It’s not about finding the most complex problems to solve, but about finding common needs within the organization and in the real world and coming up with solutions that fit those needs. When you’re solving business problems, this applies in the sense that you’re looking for solutions that address underlying issues—you’re looking at the big picture.

4. Conduct market research and customer outreach

Market research and customer outreach aren’t the sorts of things small business owners and startups can do once and then cross off the list. When you’re facing a roadblock, think back to the last time you did some solid market research or took a deep dive into understanding the competitive landscape .

Market research and the insights you get from customer outreach aren’t a silver bullet. Many companies struggle with what they should do with conflicting data points. But it’s worth struggling through and gathering information that can help you better understand your target market . Plus, your customers can be one of the best sources of criticism. It’s actually a gift if you can avoid taking the negatives personally .

The worst thing you can do when you’re facing challenges is isolating yourself from your customers and ignore your competition. So survey your customers. Put together a competitive matrix . 

5. Seek input from your team and your mentors

Don’t do your SWOT analysis or design thinking work by yourself. The freedom to express concerns, opinions, and ideas will allow people in an organization to speak up. Their feedback is going to help you move faster and more efficiently. If you have a team in place, bring them into the discussion. You hired them to be experts in their area; use their expertise to navigate and dig deeper into underlying causes of problems and potential solutions.

If you’re running your business solo, at least bring in a trusted mentor. SCORE offers a free business mentorship program if you don’t already have one. It can also be helpful to connect with a strategic business advisor , especially if business financials aren’t your strongest suit.

Quoting Stephen Covey, who said that “strength lies in differences, not in similarities,” speaking to the importance of diversity when it comes to problem-solving in business. The more diverse a team is , the more often innovative solutions to the problems faced by the organization appear.

In fact, it has been found that groups that show greater diversity were better at solving problems than groups made up specifically of highly skilled problem solvers. So whoever you bring in to help you problem-solve, resist the urge to surround yourself with people who already agree with you about everything.

6. Apply lean planning for nimble execution

So you do your SWOT analysis and your design thinking exercise. You come up with a set of strong, data-driven ideas. But implementing them requires you to adjust your budget, or your strategic plan, or even your understanding of your target market.

Are you willing to change course? Can you quickly make adjustments? Well in order to grow, you can’t be afraid to be nimble . 

By adopting the lean business planning method —the process of revising your business strategy regularly—you’ll be able to shift your strategies more fluidly. You don’t want to change course every week, and you don’t want to fall victim to shiny object thinking. But you can strike a balance that allows you to reduce your business’s risk while keeping your team heading in the right direction.

Along the way, you’ll make strategic decisions that don’t pan out the way you hoped. The best thing you can do is test your ideas and iterate often so you’re not wasting money and resources on things that don’t work. That’s Lean Planning .

7. Model different financial scenarios

When you’re trying to solve a serious business problem, one of the best things you can do is build a few different financial forecasts so you can model different scenarios. You might find that the idea that seemed the strongest will take longer than you thought to reverse a negative financial trend. At the very least you’ll have better insight into the financial impact of moving in a different direction.

The real benefit here is looking at different tactical approaches to the same problem. Maybe instead of increasing sales right now, you’re better off in the long run if you adopt a strategy to reduce churn and retain your best customers. You won’t know unless you model a few different scenarios. You can do this by using spreadsheets, and a tool like LivePlan can make it easier and quicker.

8. Watch your cash flow

While you’re working to solve a challenging business problem, pay particular attention to your cash flow and your cash flow forecast . Understanding when your company is at risk of running out of cash in the bank can help you be proactive. It’s a lot easier to get a line of credit while your financials still look good and healthy, than when you’re one pay period away from ruin.

If you’re dealing with a serious issue, it’s easy to start to get tunnel vision. You’ll benefit from maintaining a little breathing room for your business as you figure out what to do next.

9. Use a decision-making framework

Once you’ve gathered all the information you need, generated a number of ideas, and done some financial modeling, you might still feel uncertain. It’s natural—you’re not a fortune-teller. You’re trying to make the best decision you can with the information you have.

This article offers a really useful approach to making decisions. It starts with putting your options into a matrix like this one:

Use this sort of framework to put everything you’ve learned out on the table. If you’re working with a bigger team, this sort of exercise can also bring the rest of your team to the table so they feel some ownership over the outcome.

10. Identify key metrics to track

How will you know your problem is solved? And not just the symptom—how will you know when you’ve addressed the underlying issues? Before you dive into enacting the solution, make sure you know what success looks like.

Decide on a few key performance indicators . Take a baseline measurement, and set a goal and a timeframe. You’re essentially translating your solution into a plan, complete with milestones and goals. Without these, you’ve simply made a blind decision with no way to track success. You need those goals and milestones to make your plan real .

Problem solving skills to improve

As you and your team work through this process, it’s worth keeping in mind specific problem solving skills you should continue to develop. Bolstering your ability, as well as your team, to solve problems effectively will only make this process more useful and efficient. Here are a few key skills to work on.

Emotional intelligence

It can be very easy to make quick, emotional responses in a time of crisis or when discussing something you’re passionate about. To avoid making assumptions and letting your emotions get the best of you, you need to focus on empathizing with others. This involves understanding your own emotional state, reactions and listening carefully to the responses of your team. The more you’re able to listen carefully, the better you’ll be at asking for and taking advice that actually leads to effective problem solving.

Jumping right into a solution can immediately kill the possibility of solving your problem. Just like when you start a business , you need to do the research into what the problem you’re solving actually is. Luckily, you can embed research into your problem solving by holding active reviews of financial performance and team processes. Simply asking “What? Where? When? How?” can lead to more in-depth explorations of potential issues.

The best thing you can do to grow your research abilities is to encourage and practice curiosity. Look at every problem as an opportunity. Something that may be trouble now, but is worth exploring and finding the right solution. You’ll pick up best practices, useful tools and fine-tune your own research process the more you’re willing to explore.

Brainstorming

Creatively brainstorming with your team is somewhat of an art form. There needs to be a willingness to throw everything at the wall and act as if nothing is a bad idea at the start. This style of collaboration encourages participation without fear of rejection. It also helps outline potential solutions outside of your current scope, that you can refine and turn into realistic action.

Work on breaking down problems and try to give everyone in the room a voice. The more input you allow, the greater potential you have for finding the best solution.

Decisiveness

One thing that can drag out acting upon a potential solution, is being indecisive. If you aren’t willing to state when the final cutoff for deliberation is, you simply won’t take steps quickly enough. This is when having a process for problem solving comes in handy, as it purposefully outlines when you should start taking action.

Work on choosing decision-makers, identify necessary results and be prepared to analyze and adjust if necessary. You don’t have to get it right every time, but taking action at the right time, even if it fails, is almost more vital than never taking a step.  

Stemming off failure, you need to learn to be resilient. Again, no one gets it perfect every single time. There are so many factors in play to consider and sometimes even the most well-thought-out solution doesn’t stick. Instead of being down on yourself or your team, look to separate yourself from the problem and continue to think of it as a puzzle worth solving. Every failure is a learning opportunity and it only helps you further refine and eliminate issues in your strategy.

Problem solving is a process

The key to effective problem-solving in business is the ability to adapt. You can waste a lot of resources on staying the wrong course for too long. So make a plan to reduce your risk now. Think about what you’d do if you were faced with a problem large enough to sink your business. Be as proactive as you can.

Editor’s note: This article was originally published in 2016. It was updated in 2021.

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Harriet Genever

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Why Problem-Solving Skills Are Essential for Leaders in Any Industry

• 17 Jan 2023

Any organization offering a product or service is in the business of solving problems.

Whether providing medical care to address health issues or quick convenience to those hungry for dinner, a business’s purpose is to satisfy customer needs .

In addition to solving customers’ problems, you’ll undoubtedly encounter challenges within your organization as it evolves to meet customer needs. You’re likely to experience growing pains in the form of missed targets, unattained goals, and team disagreements.

Yet, the ubiquity of problems doesn’t have to be discouraging; with the right frameworks and tools, you can build the skills to solve consumers' and your organization’s most challenging issues.

Here’s a primer on problem-solving in business, why it’s important, the skills you need, and how to build them.

Access your free e-book today.

What Is Problem-Solving in Business?

Problem-solving is the process of systematically removing barriers that prevent you or others from reaching goals.

Your business removes obstacles in customers’ lives through its products or services, just as you can remove obstacles that keep your team from achieving business goals.

Design Thinking

Design thinking , as described by Harvard Business School Dean Srikant Datar in the online course Design Thinking and Innovation , is a human-centered , solutions-based approach to problem-solving and innovation. Originally created for product design, design thinking’s use case has evolved . It’s now used to solve internal business problems, too.

The design thinking process has four stages :

• Clarify: Clarify a problem through research and feedback from those impacted.
• Ideate: Armed with new insights, generate as many solutions as possible.
• Develop: Combine and cull your ideas into a short list of viable, feasible, and desirable options before building prototypes (if making physical products) and creating a plan of action (if solving an intangible problem).
• Implement: Execute the strongest idea, ensuring clear communication with all stakeholders about its potential value and deliberate reasoning.

Using this framework, you can generate innovative ideas that wouldn’t have surfaced otherwise.

Creative Problem-Solving

Another, less structured approach to challenges is creative problem-solving , which employs a series of exercises to explore open-ended solutions and develop new perspectives. This is especially useful when a problem’s root cause has yet to be defined.

You can use creative problem-solving tools in design thinking’s “ideate” stage, which include:

• Brainstorming: Instruct everyone to develop as many ideas as possible in an allotted time frame without passing judgment.
• Divergent thinking exercises: Rather than arriving at the same conclusion (convergent thinking), instruct everyone to come up with a unique idea for a given prompt (divergent thinking). This type of exercise helps avoid the tendency to agree with others’ ideas without considering alternatives.
• Alternate worlds: Ask your team to consider how various personas would manage the problem. For instance, how would a pilot approach it? What about a young child? What about a seasoned engineer?

It can be tempting to fall back on how problems have been solved before, especially if they worked well. However, if you’re striving for innovation, relying on existing systems can stunt your company’s growth.

Related: How to Be a More Creative Problem-Solver at Work: 8 Tips

Why Is Problem-Solving Important for Leaders?

While obstacles’ specifics vary between industries, strong problem-solving skills are crucial for leaders in any field.

Whether building a new product or dealing with internal issues, you’re bound to come up against challenges. Having frameworks and tools at your disposal when they arise can turn issues into opportunities.

As a leader, it’s rarely your responsibility to solve a problem single-handedly, so it’s crucial to know how to empower employees to work together to find the best solution.

Your job is to guide them through each step of the framework and set the parameters and prompts within which they can be creative. Then, you can develop a list of ideas together, test the best ones, and implement the chosen solution.

Related: 5 Design Thinking Skills for Business Professionals

4 Problem-Solving Skills All Leaders Need

1. problem framing.

One key skill for any leader is framing problems in a way that makes sense for their organization. Problem framing is defined in Design Thinking and Innovation as determining the scope, context, and perspective of the problem you’re trying to solve.

“Before you begin to generate solutions for your problem, you must always think hard about how you’re going to frame that problem,” Datar says in the course.

For instance, imagine you work for a company that sells children’s sneakers, and sales have plummeted. When framing the problem, consider:

• What is the children’s sneaker market like right now?
• Should we improve the quality of our sneakers?
• Should we assess all children’s footwear?
• Is this a marketing issue for children’s sneakers specifically?
• Is this a bigger issue that impacts how we should market or produce all footwear?

While there’s no one right way to frame a problem, how you do can impact the solutions you generate. It’s imperative to accurately frame problems to align with organizational priorities and ensure your team generates useful ideas for your firm.

To solve a problem, you need to empathize with those impacted by it. Empathy is the ability to understand others’ emotions and experiences. While many believe empathy is a fixed trait, it’s a skill you can strengthen through practice.

When confronted with a problem, consider whom it impacts. Returning to the children’s sneaker example, think of who’s affected:

• Your organization’s employees, because sales are down
• The customers who typically buy your sneakers
• The children who typically wear your sneakers

Empathy is required to get to the problem’s root and consider each group’s perspective. Assuming someone’s perspective often isn’t accurate, so the best way to get that information is by collecting user feedback.

For instance, if you asked customers who typically buy your children’s sneakers why they’ve stopped, they could say, “A new brand of children’s sneakers came onto the market that have soles with more traction. I want my child to be as safe as possible, so I bought those instead.”

When someone shares their feelings and experiences, you have an opportunity to empathize with them. This can yield solutions to their problem that directly address its root and shows you care. In this case, you may design a new line of children’s sneakers with extremely grippy soles for added safety, knowing that’s what your customers care most about.

Related: 3 Effective Methods for Assessing Customer Needs

3. Breaking Cognitive Fixedness

Cognitive fixedness is a state of mind in which you examine situations through the lens of past experiences. This locks you into one mindset rather than allowing you to consider alternative possibilities.

For instance, your cognitive fixedness may make you think rubber is the only material for sneaker treads. What else could you use? Is there a grippier alternative you haven’t considered?

Problem-solving is all about overcoming cognitive fixedness. You not only need to foster this skill in yourself but among your team.

4. Creating a Psychologically Safe Environment

As a leader, it’s your job to create an environment conducive to problem-solving. In a psychologically safe environment, all team members feel comfortable bringing ideas to the table, which are likely influenced by their personal opinions and experiences.

If employees are penalized for “bad” ideas or chastised for questioning long-held procedures and systems, innovation has no place to take root.

By employing the design thinking framework and creative problem-solving exercises, you can foster a setting in which your team feels comfortable sharing ideas and new, innovative solutions can grow.

How to Build Problem-Solving Skills

The most obvious answer to how to build your problem-solving skills is perhaps the most intimidating: You must practice.

Again and again, you’ll encounter challenges, use creative problem-solving tools and design thinking frameworks, and assess results to learn what to do differently next time.

While most of your practice will occur within your organization, you can learn in a lower-stakes setting by taking an online course, such as Design Thinking and Innovation . Datar guides you through each tool and framework, presenting real-world business examples to help you envision how you would approach the same types of problems in your organization.

Are you interested in uncovering innovative solutions for your organization’s business problems? Explore Design Thinking and Innovation —one of our online entrepreneurship and innovation courses —to learn how to leverage proven frameworks and tools to solve challenges. Not sure which course is right for you? Download our free flowchart .

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How to Solve Business Problems

The ultimate guide to finding and solving your biggest challenges

What are common business roadblocks?

While every business faces unique challenges, common roadblocks that affect many organizations include:

• changing customer and market needs;
• lack of internal collaboration and alignment; and
• ineffective decision making.

Underpinning each of these challenges is a failure to proactively identify and solve business problems, leading to   inefficient internal processes , sluggish   product innovation   and   diminished employee engagement .

Creating a bottom-up system for finding and solving business problems — a process also known as discovery — is essential to tackling any roadblock that may arise.

Why does having a system for solving business problems matter?

To solve problems effectively, businesses must maintain a scalable and repeatable system to explore problems and implement high-impact solutions. A complete problem-solving system is comprised of your  culture, processes and technology , which work together to empower employees to discover problems and drive solutions forward.

If you want innovative solutions that solve meaningful problems and tackle promising opportunities, you need a culture that promotes creativity and supports individuals in exploring problems and testing solutions. Your culture should   empower   everyone   in the process of identifying, prioritizing and solving challenges, driving meaningful change and buy-in from the bottom up.

The processes that enable your problem-solving system are crucial. For example, standardized processes for   exploring a problem   set the groundwork for better, more consistent solutions, while processes for running experiments and gathering data will help you make faster, smarter and more confident decisions. Your problem-solving processes should be efficient, eliminating any unnecessary bottlenecks or redundancies to maintain momentum.

It goes without saying that any technology you use in your problem-solving system should make your job easier, not harder. The technology you use should support collaboration, communication and transparency, and it should allow for process-driven workflows and simple administration.

How to foster a problem-solving culture

Building a   problem-solving culture   requires alignment, trust and long-term strategies that empower employees to engage in meaningful discovery. Here are four steps that will help you get started:

Step 1: Create missionaries

Before you can enable discovery, you must ensure your employees are bought into and understand the high-level objectives that underpin their problem-solving efforts. In other words, what is your organization trying to achieve? How can your employees help you move closer to those goals through discovery? Defining and communicating these guiding principles will motivate employees to solve high-value problems.

Step 2: Make discovery a priority

Once your discovery objectives have been defined, you'll need to make discovery a priority for employees. The key to making discovery a priority is a balance of discipline, permission and action:

• Discipline   means clarity and consistency around purpose, objectives and processes.
• Permission   means providing employees with frequent opportunities to engage in discovery, and continuously supporting, promoting and celebrating that engagement.
• Action   means outcomes; doing something!

Step 3: Balance structure and freedom

As you enable discovery, you'll want to strike a delicate balance between structure and freedom. Too many restrictions or excessive micromanagement will stifle creativity and consequently influence outcomes. On the other hand, too much freedom during the discovery process will lead to scattered efforts that don't align with your company mission and objectives.

Step 4: Reward curiosity

Employees that consistently identify problems worth solving and constructively help solve those problems are critical to your business' success. Organizations should reward curiosity, encouraging successful problem solvers — and others — to keep going.

How to Test and Validate Business Ideas

Tools that enable business problem solving

While discovery is very much a problem-solving mindset, the tools you use along the way are equally important in helping you drive efficient and effective outcomes. During the problem-solving process, you'll want to employ tools that can:

• organize and track problem-solving efforts;
• centralize communications and provide open feedback loops;
• support repeatable, process-driven workflows; and
• document progress toward checkpoints and goals.

These tools can help streamline collaboration, boost accountability and enable best practices — but remember, less is more. Too many tools can create unnecessary silos, inefficiencies and blind spots leading to missed opportunities and lost momentum. Ideally, you want a   single source of truth   that encompasses all of the functionality above and eliminates extra steps.

Pitfalls of not using a problem-solving solution

Without a dedicated problem-solving solution, you may struggle to coordinate your discovery efforts across a disjointed array of tools. For example, your team might communicate in a messaging platform, organize sprints in a project management tool and accept idea solutions via a form on your website. While this strategy isn't necessarily wrong, it's easy to see how using so many different tools in different locations can exacerbate   silos, bottlenecks, redundancies and inefficiencies.

For example, if someone on your sales team recognizes an opportunity to improve the sales-to-service handoff process, they should be able to quickly and easily collaborate with teammates from the services, customer success and operations departments to explore the opportunity further. But without a dedicated problem-solving solution, how would they go about starting that conversation? Should they start a new email thread? Drop their idea into an existing group message full of other ideas? Route it through management and hope it lands in the right place? And what if someone from another department with valuable insights is left out of the thread?

As you can see, failure to use the right tools can stop a valuable idea in its tracks at any point in the discovery journey.

Key features of a business problem solving solution

Any business problem solving solution should contain some key features that will empower your team to work effectively and efficiently. The first of which is   open collaboration . This feature is essential because as organizations scale, it becomes harder to facilitate cross-functional problem solving. A platform that allows everyone — regardless of their department, role or experience — to provide and cross pollinate ideas and feedback will eliminate silos and help your team design better solutions.

Additionally, your solution should support   ease of administration . With a steady stream of incoming ideas and multiple projects happening simultaneously, it's easy for projects to slip through the cracks, miss deadlines or be abandoned entirely. Your problem-solving solution should enable administrators to easily track and manage projects throughout the innovation lifecycle, ensuring ideas move efficiently from submission to implementation.

What to look for in a solution

As you evaluate potential solutions,   keep an eye out for the following attributes :

1. Open, visible communication

Imagine trying to solve a puzzle with a group of friends, but you can only communicate in silos and no one can see the entire puzzle. Unfortunately, this is exactly what happens when your problem solving solution does not support open, visible communication.

When evaluating team collaboration tools on the basis of communication, keep in mind:

• How organized the communication is: is engagement categorized, sorted and searchable? Are communications easy to find and preserved within the tool?
• How visible the communication is: does the tool break down communication silos and increase visibility for everyone? Are feedback loops clear and consistent?

2. Repeatable, process-driven workflows

The true value of a collaboration tool lies in its ability to support repeatable, process-driven workflows. Some key criteria to look out for include:

• the ability to break down projects into repeatable, clear, deadline-driven sprints;
• the ability to easily understand project status and progression;
• the ability to manage engagement and project life cycles, and
• the ability to measure success and continuously improve the workflows over time.

3. Simple, efficient management

Your team collaboration tools should also make it easy to administer collaboration projects. This includes the ability to:

• design and modify projects efficiently;
• coordinate and view participants ;
• outline and update clear deliverables and expectations;
• respond to and incorporate changes with agility;
• manage communications and feedback loops;
• administer and conduct evaluations; and
• view, sort and export data for reporting and analytics.

These features save administrators countless hours on manual tasks and project management, allowing them to spend more time evaluating the success of their projects and workflows. Moreover, these features allow administrators to see which projects and contributors are out-performing the rest, helping them improve collaboration over time.

Business Problem Solving Solution Providers

Output is a leading provider of business problem solving and engagement software. Our platform is scalable, agile and optimized for both end-users and administrators. While some solution providers function as little more than an idea submission box or project management platform, Output provides tools to support the full lifecycle of innovation — from communicating objectives and organizing ideas, to process-driven workflows that bring your best ideas over the finish line.

Key Benefits of Output

• create purpose-driven Challenges that organize employee discovery around your objectives and goals;
• consolidate communication across your entire organization with clear feedback loops and streamlined collaboration;
• advance ideas efficiently with repeatable workflows and clearly defined project lifecycles;
• simplify administration with agile tools to organize and evaluate engagement; and
• track engagement metrics and export data in a click.

Output Business Problem Solving Features

Output is designed to take your innovation to the next level by engaging employees across your entire organization in mission-driven discovery. Administrators can design Challenges that address high-value problems or opportunities, setting clear criteria for idea submissions with supporting tools such as images, videos, data sheets and more.

Output also ensures projects move forward efficiently by empowering administrators to manage end-user permissions, coordinate evaluations and set clear deadlines for each stage of the innovation process. Along the way, the platform enables administrators to view, organize and export idea submissions, manage engagement and improve their repeatable processes.

Perhaps most importantly, Output enables transparency and collaboration, allowing Challenge participants to work cross-functionally on submissions and gather clear feedback on why their ideas were selected to advance or not. Over time, Output helps your organization innovate smarter, providing the flexibility to improve your problem-solving workflows using historical data and analytics.

Infographic: How Output Helps You Grow

See Output in Action

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How Entrepreneurs Can Find the Right Problem to Solve

As an entrepreneur, how confident are you that you fully understand your customer’s pain points or their job to be done? Entrepreneurs I first meet tend to start selling me on their solution before explaining the problem they are trying to solve. There is little evidence that they’ve done true discovery work to validate the problem or their target customers.

While gut feel or personal experience with a problem can be a strong signal there is a problem to solve, without proper product discovery work you won’t truly know if you have a winning solution.

For those who profess having done proper discovery to validate a problem but don’t yet have a product, my follow-up question is: “How do you know people or companies will use your product?” Answers are equally discouraging. More often than not, I hear examples of interest tests, such as hits on social media posts or answers to surveys that are so biased it’s hard to trust the results. Further, entrepreneurs may have a good hunch there’s a job to be done that needs improving or replacing, but they can’t describe where in the customer journey they can truly make an impact.

I’m a big fan of confident founders who are passionate about their idea, but a little humility and a lot of discovery work can determine whether there’s a winning solution and save a lot of wasted time and money building the wrong thing. If fundraising is also a consideration, being able to have real data vs. gut feelings and biased test results can be the difference between a modest angel round and a strongly led seed- or A-round.

I’ve recently written an in-depth look at this topic, Product Discovery 101 , which I encourage you to read. Here are some highlights.

Interest vs. problem testing

“We had 1,000 clicks on our Facebook ad in the first 48 hours.”

“Our conversion rate from click to sign-up was 50 percent.”

“We interviewed a bunch of people and they said they’d use our product if we built it.”

These quotes suggest the entrepreneurs may have found an audience interested enough to click on an ad and provide an email addresses, but they still haven’t proven anything about the usefulness of their product, that it solves a real pain point, or that their target customer is willing to pay for the fix. If you plan to do interest tests, here are several approaches (among many) to consider:

• Social media . Great for finding your audience, social outreach should be done on multiple platforms and carefully crafted to answer only one or two hypotheses. These hypotheses are commonly, “Is this where we can reach this audience if we want to market to them?” and “Are they interested enough to click and learn more?”
• Website landing pages . These are the best locations to capture interest, email addresses, and demographic data. If your potential customers found you through social media tests or googling, you’ve proven they were interested enough to learn more, that your search engine optimization works, and that they trust you or care enough about the problem you wish to solve that they’ll provide insight into who they are.
• Surveys . Surveys are difficult to design and often capture random and subjective information instead of getting real data to inform your product. Great surveys are 10 questions or less, reflective in nature (“How many times did you buy “X” in the last month?”) and data-centric (“How often do you order takeout for dinner?).

Problem validation

Early in the process, more important than interest tests are tests that validate there is a problem worth solving and where exactly a product can be most successful in solving that problem. Validating hypotheses about the problem through a variety of methods is going to lead to a far better outcome than clicks on a Facebook ad.

Consider trying these different types of problem-validation tests in your discovery process:

• Interviews . Similar to surveys, interviews are as much art as science. It is incredibly easy to lead a witness, bias answers, and hear what we want to hear in an interview. The best guide for conducting a proper discovery interview is Rob Fitzpatrick’s book The Mom Test , which I encourage every entrepreneur and product manager I work with to read.
• Ethnography . Observing prospects performing the job you hope to improve or replace can be extremely insightful. You may find hacks they would never tell you about in an interview or discover a whole new set of problems in their process.
• Emotional journaling or mapping . Having a prospect journal or map out their process and highlight how they feel along the way can pinpoint exactly where they are most frustrated in their process. This is also a great technique if you can’t observe the prospect in the setting where the problem exists.
• Journey mapping . Bring together all your discovery work to identify where you found patterns of highs and lows. These may surprise you; often, where you hypothesized there was the most pain in a process may be somewhere completely different.
• (Don’t do) focus groups . I am generally not a fan of this form of discovery. It lends itself to groupthink and can produce false results. Focus groups can be useful later in the product cycle when you want to get reactions to branding or observe groups of people using your product if it’s a tangible item.

Prototype testing

The best way to validate that a problem exists is to actually insert yourself into the process and learn by doing. These tests lean toward solution building, but the idea is that you’re doing tests without building anything, or building very little, to get clarity on the problem and the customer. Common forms of these tests include:

• Lo-fidelity concierge testing . Jump right in and assume part of the role that your product might fill in the future. If you were coming up with a new restaurant reservation system, this may involve a phone conversation with the party needing a reservation and having you do the actual booking for them, perhaps even texting them to confirm their reservation. The key to success of these early tests is to resist the temptation to correct your customer—just go with them on their user experience. You can tweak things along the way as you learn more about what works and what doesn’t.
• Wizard of Oz (WoZ) testing . WoZ allows you to test a product without the need for a fully built-out prototype. The customer won’t know that you are working behind the scenes to simulate the experience. A former student of mine with a software engineering background resisted the temptation to code a solution and instead created a WoZ test by cobbling together Soundcloud, Dropbox, texting, and a high-fidelity mock front-end. After dozens of people used this method and she understood what they needed, she officially built and launched the product .
• Prototypes . Build small runs of your future product using 3D printing, sewing, or even a pop-up restaurant as ways to test your concept and receive feedback before spending too much money.
• Competitive analogs . Having target customers use existing similar products can be as telling as using the product you hope to create. Try tools like UserTesting , which allows prospects to walk through how they use a current competitive product. Having target customers use a competitive product for a week or two can also be insightful.
• Expert testing . You may be working in an area where you are no expert, but you have a hunch it’s a white space ripe for disruption. If you don’t have access to the experts or their customers, find or create a space for them to connect and observe through their experiences. This could be as simple as finding them on Quora or Reddit and looking at threads of questions that are related to what you’re exploring.

Test early, test often!

With all the options available, there is no excuse for weak validation of problems and target customers early in your product development process. One test, or even a few tests, does not qualify a product as marketable or fundable. The more objective tests you do up front, and iterate on those tests often, the higher the likelihood you’ll land on a great solution that people want to use and buy. To see my full set of recommendations, visit Product Discovery 101 .

This blog post is largely inspired by my course, PM101 at Harvard Business School. I have open-sourced the syllabus for this course here .

About the author

Julia Austin is a Senior Lecturer in the Entrepreneurial Management Unit at the Harvard Business School.

[Image by: iStock Photo ]

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The 38 Biggest Business Challenges Growing Companies Face

Growing a business is complicated. According to SBE Council , 89% of all businesses employ fewer than 20 employees. And scaling a company further is contingent on solving a number of business challenges — most of those being common across all organizations out there.

Businesses in their first year or two, under 10 to 20 employees, and making less than $500,000 in revenue are still validating their business model. Once a certain sense of stability is met, several repetitive challenges keep haunting organizations, over and over again.

This is why I’ve compiled this comprehensive list of the most impactful business challenges that companies have to deal with. Resembling the feast or famine cycle freelancers are notorious for, the balancing act requires juggling with multiple challenges at a time, often across different categories.

And in addition to the current spectrum of the ecosystem, keep yourself up to speed with the best business strategy books .

For easier navigation, here’s a table of contents you can refer to for every section in this long-form guide:

1.1. Designing Systems and Processes

1.2. lack of direction/vision, 1.3. coping with market competition, 1.4. keeping up with market transformations, 1.5. reducing dependencies on the founding team, 1.6. balancing quality and growth, 1.7. leveraging consultants and business advisors, 2.1. building effective marketing strategies, 2.2. properly allocating marketing resources, 2.3. measuring marketing initiatives, 2.4. building a corporate brand, 2.5. relying on marketing for lead generation, 3.1. hiring new employees, 3.2. founding new departments, 3.3. retaining top talent, 3.4. embracing diversity at work, 3.5. nurturing a thriving company culture, 4.1. time management, 4.2. working on the business, 4.3. communication, 4.4. motivating employees, 4.5. strategic leadership, 4.6. hybrid work, 4.7. limited focus mode, 5.1. landing new business, 5.2. retaining customers (lifetime value), 5.3. maximizing word of mouth, 5.4. identifying new sales channels, 5.5. handling pricing negotiations, 5.6. building strategic partnerships & networking, 6.1. solving productivity problems, 6.2. automating business processes, 6.3. deploying technology for innovation, 6.4. training staff at large, 6.5. keeping up to speed with innovations, 7.1. tax management, 7.2. gdpr/ccpa, 7.3. employment overhead.

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The list is broken down into 6 core categories, each of them describing a painful challenge growing organizations struggle with throughout their growth journey.

1. Business Strategy

Equally valid for small enterprises and large corporations, staying ahead of the game is fine art for any organization out there.

Risk too much and you’re running at loss. Remain comfortable in your position and competition will steal your most valued customers. Defining an effective business strategy that can scale and evolve with time is paramount for a profitable venture eager to stay ahead.

Business process management , as defined in Wikipedia, is the discipline responsible for applying techniques and methods to discover, model, analyze, measure, improve, optimize, and automate business processes.

Aside from professional consultancies , BPM is a leading challenge across growing organizations. Processes evolve over time as the business penetrates new markets and hires employees.

New recruits affect the company’s hierarchy, often leading to new tiers of management, operational procedures, and management workflows.

While the requirement for in-depth MBA understanding is evident, mainstream education is not the only way, as it may be confusing and expensive for some people, Luckily, people like Josh Kaufman provide concise books like The Personal MBA where they touch on systems and processes in entrepreneurship and traditional business.

An ineffective set of processes will impact in-house and external communication, the company’s morale, the efficiency of hiring new people at scale, and the profitability across the onboarding of new roles.

Organizations clearly threaten companies wandering around without a long-term vision with a clear agenda in place.

Kodak passed on the opportunity to release the first digital camera . They felt secure in their photography world while neglecting the drawbacks of traditional cameras in the era of evolving digital innovations.

Toys R Us faded away for good while millennials and generation Z embraced video games and online shopping. Smaller stores sold the same products at a discounted price, in neighborhoods all around the world.

Even billion-dollar enterprises can easily drop out of a competitive landscape unless they keep innovating, attracting new markets, and staying on top of the latest innovations.

Executives and senior managers can leverage the power of SWOT analysis frameworks and identify the missing links in their leadership strategy. This could be instrumental as an exercise for team leaders and even individual employees across the organization as a “ reality check ” instrument for self-assessment.

An old branding rule states that the best businesses are:

• The first in a category
• Or the best in a category

Younger startups fail to define their unique competitive advantage among established giants. Industry leaders, on the other end, miss stealth startups rapidly aiming at their target market, revealing their weaknesses, and coming up with a counter-offer.

A smart workaround is targeting foreign markets for higher profit margins. Acquiring the majority of a market in a less competitive area can generate enough buzz to bootstrap the business in “red ocean” territories harder to penetrate at first.

One of my favourite reading materials regarding market competition is Alex Hormozi’s $100M Leads: How to Get Strangers to Want to Buy Your Stuff . The book is full of actionable frameworks and hook-and-retain systems that help you land more customers. I have two physical copies of the book in the DevriX office.

Differentiating while niching down is a common strategy for starting businesses that want to overcome the challenges of a broad pool of successful vendors in the space.

Adapting to market transformations and technological innovations isn’t easy at scale.

US companies with hundreds of employees abandoned EU markets after the introduction of GDPR in May 2018. Old-school businesses who couldn’t train their staff basic computer operator skills struggle to operate in a competitive digital environment. The same legal framework is now penetrating the US, causing friction and problems for smaller businesses.

Advertising in newspapers and social media is a different game. Just like adapting a traditional “car salesman” process to a modern business development workflow given a transformed buyer’s journey.

Being “ up to speed ” with the latest business, digital, economic and political trends isn’t easy. We may be following the industry journals, but groundbreaking innovations are deployed quietly, emerging globally once they get enough traction for scale.

A common problem for startups and smaller businesses where founders are heavily involved in day-to-day operations.

Smart founders are aware of the benefits of working “ on ” the business instead of “ in ” the business. But implementing this in practice is complicated .

If founders want the business to be more independent of them, they must create a business parable for their start-ups that won’t trap them when they want to sell it .

Inefficient execution leads to blockers and broken workflows, swamping the founding team , delaying deliverables, capping growth, and reducing the level of institutional knowledge in the team.

Designing a recruitment and growth strategy around building a leadership team of intrapreneurs is a lesser-known solution to this common business challenge.

Growing startups and SMEs often report reduced quality while scaling, especially the fast-growth ones.

During the first year or two, a small handful of people are in charge of all operations. Skilled professionals start a business, deliver outstanding quality, work day and night on execution, and build a client base.

To become a high-performing SME , founders develop clarity, generate energy, raise necessity, increase productivity, develop influence, and demonstrate courage.

Throughout the growth period, new roles are created — support, business development, marketing, management. As recruitment and onboarding processes are still in their infancy, this creates a separation between the level of quality across different team members.

Moreover, hiring A-players isn’t sustainable at scale. A large corporation can only survive with a complex set of repetitive workflows, easy to follow by anyone who jumps on board. Relying on creativity, self-management, and proactivity is risky and nearly impossible for multinational enterprises.

Athletes work with coaches, musicians rely on producers to advise on trends, enterprises work under boards.

The equivalent of scaling a business effectively for small and medium-sized enterprises are consultants and advisors .

Finding a business mentor is one of the most productive tips that Suhail, founder of a 300+ person Mixpanel , suggests:

5/ Find a great mentor: Pick someone you want to impress. Find someone who will lift you up when you're down & take you down a notch when you're over confident. Ideally, they've been a CEO/founder before so they can empathize. Remember though: they offer guidance, not a script. — Suhail (@Suhail) May 21, 2018

Efficiency at scale is paramount. Mistakes cost a fortune, time is of the essence, allocating time often involves multiple divisions. Even with a small army in your control, assigning the right strategic activities is far easier when you work with a digital or business consultant .

2. Marketing

Marketing is a blended term encompassing a broad set of professional activities. It’s not a necessity for tiny teams.

Growing further? It’s absolutely paramount .

Here are the main marketing challenges that businesses face while growing.

What is the #1 problem with generic terms like “Marketing”, “Negotiations”, “Management”?

Everyone assumes they get the gist out of them.

You don’t have to be certified or spend 4 years in a college to manage a couple of people. But managing two people in an SMB is completely different than managing a team of top-tier engineers in Google, for example.

Organizations often rely on rumors and common trends online, including:

• Blogs are mandatory for success
• An omni-channel approach from the start is required
• You should spend a lot of time on social media
• Video will rule
• Marketing transforms to AI

The lack of any strategy in place, setting up adequate key performance indicators, and producing actionable business results are major bottlenecks for many businesses, especially traditional ones.

To produce such results, one must learn to create simple and fast marketing strategies . They might not be perfect, but a working viable strategy is better than nothing.

Making the first step to refining your marketing strategy is important. Don’t miss out.

Investing in marketing isn’t intuitive at first. There are plenty of options for launching marketing initiatives:

• Hiring a marketing co-founder
• Onboarding a director of marketing
• Starting with an assistant or two
• Working with freelancers
• Signing with an agency

Businesses in different stages can apply marketing in various forms. Without the right strategy in place, marketing will be chaotic, generating minimum (if any) ROI, and more expensive than useful.

And exploring the alternatives between outsourcing or building marketing teams is the best next step.

Setting up the right KPIs (key performance indicators) is an art .

The most common response I get while chatting with clients regarding KPIs is “ revenue “.

Of course, revenue growth is the ultimate goal for almost any business. But, it is achievable through multiple channels. Each represents a chain of techniques and events leading to a sale or a conversion.

The lack of direction — and the vagueness of a strategy — won’t lead to a tight process, a measurable one that gets the job done.

This is why one important content marketing lesson is that professional marketers must outline a s uccessful content strategy that is broken down into multiple phases, over time, with certain indicators in place. Traffic, conversion rates, sign-ups, email open rates, brand searches — and hundreds of other factors contributing to generating a purchase.

A powerful brand can go a very, very long way.

Most reputable and well-known brands in the world can afford to:

• Receive tons of PR attention
• Get thousands of job applications at no cost
• Present at the best events out there
• Land customers with little friction
• Receive free backlinks (being quoted and pointed as an example all the time)
• Rank high in Google as a result
• Gather a loyal, enormous group of followers online

Brand building is a complex, long-term initiative, and measuring results isn’t easy. But the effects of a powerful brand are indisputable.

Employer branding is an extremely powerful weapon for recruitment, especially at rapidly growing organizations .

The return on investment in brand building for large corporations is the leading reason hundreds of millions are poured into street billboards and TV ads. Believe it or not, it pays off with time.

As discussed a bit earlier, defining optimal strategies and measuring KPIs is complex. As a result, businesses know that marketing is essential — but they remain unsure of its efficiency.

They can’t predictably hire and grow revenue thanks to marketing initiatives.

They can’t retain or generate new leads .

They can’t scale budgets sustainably due to fluctuating results.

And this impacts their sales and business development processes as a result. This stagnation reflects on revenue growth, salary increments, and employees’ mental health at the workplace .

Successful businesses have the right processes in place, measure KPIs related to actual purchases, and can pump up additional resources to predictably increase their revenue.

3. Recruitment

Starting businesses care a lot more and more frequently about landing new customers. Once they build a small team and form a couple of recurring revenue streams, scaling the company becomes a bigger challenge.

And what are the main recruitment hassles businesses complain about?

You’ve closed a strategic partnership or closed a massive deal — but you lack the manpower to execute. How quickly can you scale the team?

Unless your brand speaks for itself or your budgets are through the roof, competing with everyone on the market for top talent is a shark pool.

Top talent can start anywhere. They get the perks, the salary package, probably some flexible time off or remote working opportunities , along with a nice title and some growth opportunities. Top national brands and bleeding-edge startups both compete for them, with tens of thousands of open jobs online.

Hiring at scale is even more challenging. The overhead is multiplied if you need to make compromises in a really competitive market.

Following the practical guide to hiring employees will overcome some of the leading obstacles for you.

When I discuss business process outsourcing with prospects or potential partners, hiring in-house always comes up. And my response to this is:

Are you ready to build and nurture an entire new department?

This is equally valid for production, development, marketing, and logistics.

With marketing, getting the job done is contingent on strategy and leadership, combined with a team of top performers across different disciplines (copywriting, social media, email marketing, etc.)

In web development, building a project, unless they are great insta pages , requires front-end and back-end developers, quality assurance experts, tech-savvy project managers, systems engineers, and creative artists.

Starting a new department is a challenging undertaking that is to be evaluated carefully and incorporated with regular and reliable feedback plans .

This is especially important if you’re bootstrapped and building a new department with a limited budget until generating positive ROI .

Arranging an interview with top talent isn’t easy. Getting them to accept an offer is a form of luck.

Retaining them? Even the largest brands struggle to retain talent . In competitive disciplines like software engineering,

Facebook’s average retention period is 2.5 years while Google’s is 3.2 years. Complying with the most common recruitment challenges in IT will mitigate a portion of the churn rate.

With all the perks and top-tier salaries, exciting projects, and businesses worth hundreds of billions, keeping talent around is still a leading risk across business organizations.

Diversity has been a painful topic for ages. It has gained a lot more attention during the past decade, with some groundbreaking revelations for pay cuts, sexual harassment, unlawful firing, gender or racial discrimination (to name a few).

Companies like Uber have sunk billions in valuation due to poor management and reputation on the grounds of diversity.

Making sure that the culture is thriving is one of the leading problems. And enriching the workspace without placing artificial constraints is a natural continuation.

Building a great culture is a compound process that covers every step of the way:

• Strategy and core leadership
• Definition of the culture’s goals
• Careful and thorough recruitment
• Appropriate and balanced onboarding workflow
• Integration within existing processes and teams
• Ongoing nurturing and mentorship
• Giving freedom and opportunities
• Personal and professional development across talent

At DevriX, we’ve been mastering the culture development process since day 1. Company culture is the leading factor for building a successful remote team .

While a time-consuming endeavor, neglecting talent will decrease retention rates and the overall efficiency within the organization .

4. Management

Management takes multiple forms in a business organization. It entails the control and coordination of processes, people, time, resources, vendors, budgets, and a broader area of activities across the company.

Along with business strategy in the first chapter, management touches every point of the organization. And some of the key managerial problems businesses face are enumerated in this section.

Effectively allocating time to the right initiatives is a craft.

And this is a valid problem for virtually every industry. Regardless of whether you run a cab company, a software agency, an event management consultancy, or a law firm.

Productive time management maximizes the potential of every single employee. Within a team, the power law kicks in: two slow parties will exponentially drag an assignment further and incur communication overhead.

This entails the time of the founders, senior management, supervisors, and every end unit of the business.

This is closely related to the dependency of the founding team.

Business owners and the C-Suite should quickly transition from operations to strategic leadership as the team grows.

At first, owners must run the day-to-day of the business .

They set the tone and create the initial processes. Bring the actual value to the business by delivering results. Building the product or delivering the service.

It’s only natural — and this is what freelancers and consultants do for the better part of their careers.

But scaling a company and hiring people? Delegation and freeing up time on strategy and growth are paramount. This is where building partnerships and outsourcing come in handy. A business cannot scale if the founders work in the business instead of determining and setting the direction for the entire organization.

A communication study reported by the Society for HR Management includes 400 companies with 100,000 employees each. Inadequate communication incurs an average of $62.4M in loss caused by overhead, misaligned work, incorrect deliverables, and more.

Communication problems easily make it to the top 10 critical business challenges across all organizations.

Many decision-makers seem to be incapable of connecting with their team and being on the same page.

And there are so many contributing factors: lack of enough experience, vague requirements, fear of disappointing management (or losing one’s job), ego, poor processes.

Establishing a streamlined communication protocol and straightforward processes is what management consulting and operational management are all about.

A critical challenge for both startups and large corporations.

An inefficient, demotivated employee in a startup may be worth 20% of the entire manpower of the firm. This may very well cause the startup to go bankrupt. Luckily, small teams work closely together every day and noticing the trend is easier than overseeing tens of thousands of employees.

The challenge for large corporations is the law of power . If multiple departments get disconnected from the general purpose of the business, this may result in hundreds of employees investing the bare minimum to stay employed. And the combined expenses for the corporation are staggering — let alone the missed opportunities from closing new business.

Whenever capital isn’t there, creative recruitment and management techniques are available for startups and smaller enterprises.

The role of strategic leadership is defining the right roadmap for the business (or a department), breaking it down into actionable items, delegating the goals to the responsible parties, uniting the team together, motivating each member , and moving the needle both short-term and in the long run.

Strategic leadership touches on other important aspects of management. It covers the business needs through ideation and execution, envisioning trends and seeking opportunities.

It also respects each team member, recognizing valuable skills and developing new opportunities for growth.

Effective leadership improves company morale and progressively moves the business forward.

The “new normal” since the beginning of 2020 changed a lot of paradigms, including the global shift to remote work , working across different time zones, and hiring internationally (to name a few). It looks different now in 2023 with most people back at the office – but still a leading remote or hybrid-first environment and multinational organizations at scale.

While global managers grew into their new role of managing remote talent, the new transition to hybrid work poses its own challenges.

Introducing new tooling to facilitate asynchronous communication across teams enabled better time allocation in-between Zoom calls and Slack/Teams huddles. And establishing a better workflow that strengthens on-site meetings with inclusivity toward remote employees is the next step.

According to different studies, managers spend nearly 20 hours a week in meetings. Blocking time for focus work is challenging.

How to increase productivity while maintaining collaboration across teams?

One way to combat meetings fatigue is by mastering multitasking . Understanding how and when to focus matters – but being a master in multitasking carries its own weight.

Additionally, fighting procrastination will help you and your teams build resilience on the job.

Sales are a necessity to fuel the corporate engine.

A successful sales strategy unlocks growth opportunities across all business departments — hiring new team members, investing in brand building, training for current employees, raises and bonuses, and a safety net if something goes off.

Here are the most pressing sales challenges for most businesses out there.

Every business struggles with closing new customers (small and large alike). Even enterprises have to compete for large government contracts.

Startups haven’t proven themselves yet , lack a fully trained sales team on-site, and need to compete with large, well-known organizations. Especially true if the founder has no sales expertise .

Enterprises are expensive . Their operational costs are high which affects their price point. Also, most enterprises can’t innovate fast enough, allowing competitors to chime in or startups to launch, acquiring some of their existing users.

Even when an established sales process is in place , the landscape of the market evolves at a fast pace. Consumers get access to new opportunities (or competitors). Some profitable channels get oversaturated. Retaining top salespeople is expensive and eats up the business margins.

Here’s the starter guide to generating sales designed for covering the basic techniques for introvert founders and CEOs.

Since sales and marketing get more expensive, retaining existing customers is the focus of SaaS businesses, service companies, support firms, and any other business able to continuously deliver to the same customer.

Customer retention can be disrupted with a drop in the quality, increase of prices, the inception of more lucrative competitors.

And many businesses simply haven’t found effective channels to keep customers happy (and willing to pay) continuously . Luckily, different techniques are available for continuously prolonging the lifetime value per customer.

Similarly to customer retention, unlocking new sales opportunities from satisfied customers is a common problem for businesses.

Companies traditionally don’t have an effective process for receiving introductions to other leads or invitations to special industry events.

This can be supplemented with case studies, video reviews, and testimonials increasing the credibility of a business.

According to Nielsen, 92% of consumers trust word of mouth more than any other form of advertising. Maximizing this channel is worth conceptualizing.

Most small and medium businesses leverage one or two sales channels. These are usually insufficient and risky.

On top of that, they may be expensive. Attending trade shows for closing a couple of leads requires a lot of preparation, travel, and accommodation, and building a team capable of closing.

Over time, new sales channels emerge . Are you actively seeking them?

The same goes for regularly experimenting with channels that didn’t work back in the day.

If cold calling wasn’t efficient a year ago, it may work better now. A new hire may be more competent in reaching out through LinkedIn. Your brand may have contributed to the better positioning of your business, contingent on having the right offer to pitch.

Even the most experienced salesmen often struggle with price haggling .

While you know what your product is worth, this doesn’t necessarily translate into your prospect’s mind.

With new competition on board and innovative ways to solve existing business problems, retaining the value of your solution isn’t easy. Lucrative potential partnerships may justify reducing the cost in some cases, but identifying the right partnership opportunities requires a good amount of experience and predicting the corresponding opportunities.

One of the easiest ways to bootstrap a new business or launch a brand new product is leveraging partnerships (and networking with the right vendors).

Partnerships are one of the four most important lead generation channels for both of my businesses. Starting a meaningful collaboration with an existing business that serves the same audience can be an incredible win-win for both parties: you reach your ideal audience and your partner can upsell or cross-sell their services.

Marketplaces are an intermediate medium that gets the job done. But a real partnership enables you to run joint webinars, leverage press together, and maximize ad spend effectively.

And when it comes to effective networking , here’s what you need to know.

6. Technology

Technology sits at the intersection of management and operations.

Businesses of all types and forms deploy software solutions for online positioning, marketing automation, customer relationship management, resource planning, application tracking, project management (to name a few).

Understanding how and when technology can increase the productivity of the business is a key skill.

Productivity loss is a combination of inefficient processes, poor tracking, communication overhead, incomplete onboarding.

All of these challenges can be solved with the right technology stack in place. Here’s how to do it.

• Processes can be optimized with business process management solutions , carefully refining your set of processes, delegating each step to a team member, and tracking progress over time.
• Tracking and project management may be handled with PM systems, a team messenger application, and time trackers whenever applicable.
• Onboarding may be handled through documentation or online courses, email training, demo applications, and virtual conferencing whenever external consultants are involved.
• Leverage tools for multitasking and asynchronous communication

Repetitively solving productivity problems will have an accumulative positive impact on business growth (and company morale).

Day-to-day operations can always be optimized. Reducing administrative friction is a “best practice” when creating a business plan for the company or a new product.

Back in the day, logistic companies weren’t leveraging GPS devices and tracking software optimizing their routes throughout the day. They used to fill out waybills on paper, using a finite set of receipt numbers, carrying over to accounting which spent days to merge these before the end of the month.

Accounting used to be handled on paper, by hand. Sales presentations are led over the phone or on-site due to the lack of video conferencing and presentations.

Eventually, new technical solutions emerged, solving day-to-day processes, reducing the error rate of manual mistakes, simplifying calculations, and designing predictions.

Even when tools are available, deploying them at work may turn out to be a complex set of processes.

Growing organizations use dozens (if not hundreds) of software tools responsible for different activities, aiming to maximize the use of incorporating technology to solve business problems . Effective applications talk to each other, pulling data from financial software tools, cross-checking with marketing applications, and generating reports in ERPs or CRMs.

Finding the right technical stack may be tricky. Evaluating the return on investment for restructuring certain portions of the technical landscape in favor of improving processes and saving time is an ongoing challenge for information officers and business leaders.

Aside from the technical logistics, teaching employees new software applications is an expensive investment.

While the younger generation is more comfortable switching between applications (thanks to the adoption of laptops, tablets, smartphones), that’s not the case for everyone, especially for the older generation.

This is why training may take weeks, months, or even over a year for complex ERPs or other business process applications delivering tens of thousands of features.

Considering the adoption of a software solution is always top of mind for business leaders looking for ways to optimize processes and reduce the hiring overhead for operations that could easily be automated (at least partially).

Due to the challenges of deploying new software, organizations often get too comfortable using outdated tools or applications.

This creates a false sense of “ efficiency “. A software application is in place and some of the work gets done. Oftentimes, this is not the most optimal way forward.

Moreover, identifying the right technical solutions to deploy is questionable. Organizations with limited tech-savvy leaders may miss out on great opportunities. Or get mislead by expensive PR and advertising campaigns started by less promising market alternatives.

One of the leading reasons we deploy WordPress solutions to enterprises is the bulletproof backward compatibility . Ensuring the longevity of your software solution will improve the adoption and decrease the documentation overhead for every new release.

Missing out on key opportunities may degrade the efficiency of the organization and impact the work quality as a result. Tech-driven businesses relying on the latest tech may deliver similar results at a fraction of the cost or time.

7. Compliance

The fastest way to tank a successful company at scale is a massive legal or financial violation.

Failing to report taxes accurately, especially internationally, or violating human laws can turn into an absolute nightmare for every organization.

Starting businesses are not as prone to regular audits. Doing business at a small scale is considered less risky, involves fewer employees, doesn’t include syndicates or lobbies.

Handing taxes becomes a burden early in – and complying with federal, state, national, and international tax regulations is a notable challenge.

Digital companies adhere to different tax codes depending on whether they deliver services or products, the origin of the deal, selling to individuals vs. companies, and their geographical location. That creates a number of edge cases that commerce software needs to support and keep up to date with as taxes change over time.

Privacy laws and regulations have contributed to legal overhead and digital popup blindness ever since the adoption of the General Data Protection Regulation (GDPR) in 2016, followed by the California Consumer Privacy Act (CCPA) in 2018.

While privacy policies have always been important, strictly limiting sensitive and personally identifiable information is on the rise. Following violations can cost 10 million euros (around $11M) or 2% of the global turnover of an organization. For context, Amazon was fined $877M in 2021and Facebook $275M.

Growing businesses depend on collaboration. Headcount is directly proportional to revenue growth and success – as scaling operations is nearly impossible without continuous hiring.

But employment laws aren’t easy, either. There are continued conflicts between applicants and organizations, involving labor laws and authorities. Between demand for public salary ranges and diversity conversations, parenting leave demands, increasing age for retirement, mandatory annual leave, and providing a healthy environment at work, HR managers and executives have to navigate a complex set of requirements.

This also facilitates an easier onboarding environment for freelancers, contractors, and agencies , further growing the entrepreneurial space out there.

What’s Next?

Over the next couple of months, I’ll be supplementing the list with additional business challenges companies face across other growth areas, including sales, management, technology, and finances.

And most topics will receive an in-depth overview of techniques and leading industry practices.

If you are interested in the evolution of the comprehensive business checklist covering the leading challenges haunting growing businesses, make sure you sign up for my free 8-week business training .

Over the course of 16 lessons, I’ll discuss the most pressing business challenges, structured in an easy-to-follow way for executives and managers operating in different industries.

This is suitable management training for aspiring leaders in your organization as well.

37 thoughts on “The 38 Biggest Business Challenges Growing Companies Face”

Excellent article Mario! Very comprehensive. You’re spot on regarding your point about market transformations. With so many aspects to consider, it’s certainly a task to keep up with every change. Another major challenge I’ve seen companies facing is adhering to all the compliance protocols. Many businesses have trouble staying on the right side of the law and avoiding major potential future issues.

Thanks, Iris!

Legal is one of the aspects I’d like to talk about as well. But due to the complex, ever-changing legislation in different countries, this may backfire. That’s why I’m trying to cover some of the broader areas that overlap between industries.

Amazing content here – so clear and concise

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What Is Problem Solving in Business?

Problem-solving in business is defined as implementing processes that reduce or remove obstacles that are preventing you or others from accomplishing operational and strategic business goals.

In business, a problem is a situation that creates a gap between the desired and actual outcomes. In addition, a true problem typically does not have an immediately obvious resolution.

Business problem-solving works best when it is approached through a consistent system in which individuals:

• Identify and define the problem
• Prioritize the problem based on size, potential impact, and urgency
• Complete a root-cause analysis
• Develop a variety of possible solutions
• Evaluate possible solutions and decide which is most effective
• Plan and implement the solution

Why Is Problem-Solving Important in Business?

Understanding the importance of problem-solving skills in the workplace will help you develop as a leader. Problem-solving skills will help you resolve critical issues and conflicts that you come across. Problem-solving is a valued skill in the workplace because it allows you to:

• Apply a standard problem-solving system to all challenges
• Find the root causes of problems
• Quickly deal with short-term business interruptions
• Form plans to deal with long-term problems and improve the organization
• See challenges as opportunities
• Keep your cool during challenges

How Do You Solve Business Problems Effectively?

There are many different problem-solving strategies, but most can be broken into general steps. Here is a six-step method for business problem solving:

1) Identify the Details of the Problem: Gather enough information to accurately define the problem. This can include data on procedures being used, employee actions, relevant workplace rules, and so on. Write down the specific outcome that is needed, but don’t assume what the solution should be.

• Use the Five Whys: When assessing a problem, a common strategy is to ask “why” five times. First, ask why the problem occurred. Then, take the answer and ask “why” again, and so on. The intention is to help you get down to the root cause of the problem so you can directly target that core issue with your solution.

2) Creatively Brainstorm Solutions:   State every solution you can think of. Write them down. Seek input from those who possess in-depth knowledge of or experience with the problem you’re trying to solve. These insights will provide you with valuable perspectives you can transform into tangible and impactful solutions.

3) Evaluate Solutions and Make a Decision:   Assess the feasibility of each solution. Is the deadline realistic? Are there readily available resources you can leverage to successfully implement the solution? What is the return on investment of each solution? If necessary, come up with alternative solutions or adjust the initial ones you brainstormed in step 2.

4) Make a Decision: Finally, make a firm decision on one solution. This final solution should clearly address the root cause of the problem.

• Perform a SWOT Analysis: You can use a SWOT analysis to help you decide on the best solution. A SWOT analysis involves identifying the strengths, weaknesses, opportunities, and threats linked to a specific decision. With this framework, your team can assess a decision from various angles, thereby gaining a holistic view of it.

5) Take Action:   Write up a detailed plan. This involves developing a comprehensive roadmap that outlines the steps required to implement your solution. The steps should specify milestones, deadlines, roles, and how to obtain the necessary approvals. To ensure accountability, your entire team should have access to this action plan. Each team member should be able to track and share their progress with the group.

6) Gather and Share Feedback: Problem-solving is not a “set it and forget it” process. It’s a dynamic journey that necessitates ongoing attention, deliberation, and refinement to achieve optimal results. Thus, periodic feedback is critical in validating whether the chosen solution creates the desired impact. It allows key stakeholders to check in and make any necessary changes.

What Are Problem-Solving Skills?

Problem-solving skills are specific procedures that can be used to complete one or more of the six general steps of problem-solving (discussed above). Here are five important examples:

Using Emotional Intelligence: You’ll solve problems more calmly when you learn to recognize your own emotional patterns and to empathize with and guide the emotions of others. Avoid knee-jerk responses and making assumptions.

Researching Problems: An effective solution requires an accurate description of the problem. Define simple problems using quick research methods such as asking, “What? Where? When? and How much?.” Difficult problems require more in-depth research, such as data exploration, surveys, and interviews.

Creative Brainstorming: When brainstorming with a group, encourage idea creation by listening attentively to everyone, and recognizing everyone’s unique contributions.

Logical Reasoning: Develop standard logical steps for analyzing possible solutions to problems. Study and apply ideas about logical fallacies, deductive reasoning, and other areas of analytical thought.

Decisiveness: Use an agreed-upon system for choosing a solution, which can include assigning pros and cons to solutions, identifying mandatory results, getting feedback about solutions, choosing the decision-maker(s), and finishing or repeating the process.

How Can You Improve Your Problem-Solving Skills?

Learning how to solve business problems takes time and effort. Though some people appear to have been born with superior problem-solving skills, great problem-solvers usually have taken the time to refine their abilities. You can develop high-level skills for solving problems too, through the following methods:

Ask and Listen: Don’t expect to solve every problem alone. Ask for advice, and listen to it carefully.

Practice Curiosity: Any time you’re involved in solving a problem, practice researching and defining the problem just a little longer than you would naturally.

Break Down Problems: Whenever possible, break large problems into their smallest units. Then, search for solutions to one unit at a time.

Don’t Label Yourself Negatively: Don’t allow a problem to mean something negative about you personally. Separate yourself from it. Look at it objectively and be part of the solution.

Enhance Your Problem-Solving Skills with CMOE

Problem-solving skills in business are not developed overnight. Developing then takes ongoing practice and the right guidance to get right. We encourage you to leverage CMOE’s Problem-Solving and Decision Making in the Workplace workshop to further develop your skills. We’ll help you identify new ways to solve problems methodically so you can create greater impact.

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Home » Business Cycle » Common business problems

Overcome your business problems

Your business is chugging along delivering its products and services and then BAM! You hit a brick wall. Whether it’s an employee matter, a delivery problem, or a logistics issue, the impact spreads across the rest of your business. Sound familiar? You’re not alone. If you’re running a small company or startup, you’ve probably faced a range of common business problems – and if you haven’t, you most likely will soon. Solving business challenges requires preparation, early identification and a plan to address any issues.

Discover your strengths as a business owner – and crush your problems

Identifying common business problems

Determining your company’s issues helps to break your business challenges into two sections: surface-level business problems (easy fixes) and core business problems (more intensive solutions).

Surface-level business problems

Surface-level problems in business typically affect day-to-day business management and manifest as employee or customer dissatisfaction. These issues can also occur naturally in the market. Examples of common business problems in this category include:

High employee turnover rate

Increase in competition

Falling sales or lack of growth

Supply chain issues

Poor financial management

Low customer loyalty

Core business problems

These arise when we dig deeper into the reasons behind surface-level issues, which – at first glance – seem easier to fix. However, they’re both related, and to fix surface-level problems permanently, you must get to the core of what’s really holding your company back.

Tony tells us, “Success is 80% psychology and 20% mechanics,” which means failure is also about your psychology . Overcoming common business problems will take more than putting up an ad or increasing your marketing budget – dig deeper, take action, and amazing things will happen.

The 9 most common business problems

Every business experiences problems, regardless of your industry, business size or the phase of your business cycle. If your business is stagnant, you feel stuck, or you’re not experiencing the growth you desire, determine if you’re experiencing one of these common business problems.

1. Finding your purpose

Does your company feel adrift? Do you change your mission statement constantly? If so, you’re experiencing a lack of purpose, one of the most common problems in business. After all, how can you expect to create raving fan employees if you don’t wake up every morning excited for the day ahead? In addition, a lack of purpose can create employee retention problems .

Being a strong leader is synonymous with having a sense of purpose , and a genuine belief in personal success will help your business thrive. Your purpose gives you passion, drive, certainty, and the ability to overcome towering obstacles. A business is only as strong as the psychology of its leader – it’s up to you to do the work and bring purpose to your company.

2. Developing your brand identity

Developing your brand identity is vital to marketing and sales success, and struggling to establish an identity is one of the biggest business problems you’ll experience during the growth stage. Your identity epitomizes your company’s core values , mission and goals and profoundly affects company culture, impacting your ability to hire and retain the best employees.

Your brand identity drives the emotional connection with your consumer and ultimately creates customer loyalty . With a strong brand identity, you know who you are and your direction. Without it, you’ll be lost in the dark and struggle to inspire raving fan customers .

3. Providing value

Shrinking profits is a common business problem that can sometimes lead to bankruptcy. It’s easy to blame the market, but there’s always a reason for significant market shifts. If customers are flocking to competitors, then take note – you probably lack specific services or features they deem valuable.

To be successful in business, you must practice constant strategic innovation . Determine your X-factor – what sets you apart from the competition? How do you bring more value to your customers? What makes your company different ? If you don’t know the answers to these questions, it’s time to sit down and think about them.

4. Planning ahead

Purpose and identity are crucial to your success, but also remember to make a massive action plan (MAP), which allows you to stay agile in response to business challenges while keeping your eye on the prize. For example, most business owners aren’t prepared for a recession even though the economy is in recession 60% of the time. It’s easy to feel confident during good times, but it’s the hardships that matter.

A MAP outlines how your business will survive an income downturn, irrespective of whether it’s caused by a recession or the shifting valuation of your product or service. If your business isn’t built to weather the storms, it’ll be dead in the water. Get prepared for a recession and other adverse economic possibilities before they happen.

5. Creating an exit strategy

No one wants to think about the collapse of their business, which is why so few owners bother with developing an exit strategy . However, in many cases, leaving the business at some point is the ultimate goal, whether through a leveraged buyout , passing the business onto your children, or selling to key employees. Knowing your preferred endgame will help you develop the best path to get there.

Forty-five percent of business owners spend over 40 hours weekly in the office and never find a way to extricate themselves. Does that sound like you? If so, it’s time to start working on your exit strategy.

6. Controlling your fear

New business owners often allow the fear of uncertainty to affect how they run their organizations. Fear of failure, not being a good enough leader, and fear of the economy’s future can create a scarcity mindset and negatively affect decisions and behaviors. Hyper-focusing on these things will set your business up for failure and reduce the chances of achieving success.

If you have these limiting beliefs , it’s time to change them to empowering beliefs that can help you thrive as a leader. Use fear to push your business to greater heights . Decide that success will happen no matter what, and many business problems will resolve themselves along the way.

7. Harnessing the power of technology

New entrepreneurs often have an old-school mindset and make the mistake of thinking they don’t need technology. Others believe they’re in a business that doesn’t need technology to succeed. In today’s economy, it’s essential to harness the power of technology to avoid being disrupted by competitors.

From artificial intelligence to automation, emerging tech has a place in every business. Address these common business problems with strategic innovation team meetings to discuss incorporating new technology into your business to beat your competition .

8. Developing your skills

While it’s crucial to shift your mindset, control your emotions and be decisive in business, it’s also important to take a realistic look at your strengths and weaknesses. To be successful, business owners need skills like reading financial statements , hiring the right employees and scaling mindfully .

Your psychology and skillset are the foundation you’ll build for the rest of your business. You can’t build a sturdy structure without sealing the cracks and strengthening the base. You can personally develop these skills or outsource them to focus on other aspects of the business. Being honest about current and future challenges allows you to scale your business sustainably.

9. Asking for help

When entrepreneurs lack specific skills, the inability to reach out to available resources is one of their biggest problems in business. Being a great leader means using everything at your disposal to get the job done. Resourcefulness is one of a leader’s top traits . When it comes to business, the best leaders leverage what they have to fill in the gaps.

Stop convincing yourself that “strong leaders don’t ask for support,” and you’ll find that business help is out there. Sign up for a free CEO Strategy Session and discover new strategies to supercharge your success. You’ll find resources to solve your current business problems and create a blueprint for lasting organizational change .

Examples of companies experiencing problems

Even the most prominent businesses were scrappy startups at the beginning. Irrespective of industry, you’ll experience the same universal challenges businesses worldwide face. How you view these business problems is critical: Are they obstacles or opportunities for growth ?

Apple overcame numerous business challenges – and near bankruptcy – before becoming a force of nature, and they didn’t do it by thinking small. When sales were down, Apple turned to marketing and innovation to solve problems, which led to the creation of the society-changing iPhone.

Starbucks is another household name that triumphed over business problems. During the 2008 recession, the earnings of this billion-dollar coffee chain dropped by more than 50%. In response, the company brought back CEO Howard Schultz, who showed exemplary crisis leadership . Schultz examined Starbucks’ practices and concluded they were in the customer business, not the coffee business. He put the focus back on customers and dragged the company back from the brink of failure.

Remember, business problems are just opportunities in disguise. It’s time to stop living in fear and start building the skills and mindset you need to overcome any challenge .

Ready to crush your business problems?

Discover how to defeat common business problems with Tony Robbins’ free 7 Forces of Business Mastery content series.

© 2024 Robbins Research International, Inc. All rights reserved.

Artificial intelligence in strategy

Can machines automate strategy development? The short answer is no. However, there are numerous aspects of strategists’ work where AI and advanced analytics tools can already bring enormous value. Yuval Atsmon is a senior partner who leads the new McKinsey Center for Strategy Innovation, which studies ways new technologies can augment the timeless principles of strategy. In this episode of the Inside the Strategy Room podcast, he explains how artificial intelligence is already transforming strategy and what’s on the horizon. This is an edited transcript of the discussion. For more conversations on the strategy issues that matter, follow the series on your preferred podcast platform .

Joanna Pachner: What does artificial intelligence mean in the context of strategy?

Yuval Atsmon: When people talk about artificial intelligence, they include everything to do with analytics, automation, and data analysis. Marvin Minsky, the pioneer of artificial intelligence research in the 1960s, talked about AI as a “suitcase word”—a term into which you can stuff whatever you want—and that still seems to be the case. We are comfortable with that because we think companies should use all the capabilities of more traditional analysis while increasing automation in strategy that can free up management or analyst time and, gradually, introducing tools that can augment human thinking.

Joanna Pachner: AI has been embraced by many business functions, but strategy seems to be largely immune to its charms. Why do you think that is?

Subscribe to the Inside the Strategy Room podcast

Yuval Atsmon: You’re right about the limited adoption. Only 7 percent of respondents to our survey about the use of AI say they use it in strategy or even financial planning, whereas in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent. One reason adoption is lagging is that strategy is one of the most integrative conceptual practices. When executives think about strategy automation, many are looking too far ahead—at AI capabilities that would decide, in place of the business leader, what the right strategy is. They are missing opportunities to use AI in the building blocks of strategy that could significantly improve outcomes.

I like to use the analogy to virtual assistants. Many of us use Alexa or Siri but very few people use these tools to do more than dictate a text message or shut off the lights. We don’t feel comfortable with the technology’s ability to understand the context in more sophisticated applications. AI in strategy is similar: it’s hard for AI to know everything an executive knows, but it can help executives with certain tasks.

When executives think about strategy automation, many are looking too far ahead—at AI deciding the right strategy. They are missing opportunities to use AI in the building blocks of strategy.

Joanna Pachner: What kind of tasks can AI help strategists execute today?

Yuval Atsmon: We talk about six stages of AI development. The earliest is simple analytics, which we refer to as descriptive intelligence. Companies use dashboards for competitive analysis or to study performance in different parts of the business that are automatically updated. Some have interactive capabilities for refinement and testing.

The second level is diagnostic intelligence, which is the ability to look backward at the business and understand root causes and drivers of performance. The level after that is predictive intelligence: being able to anticipate certain scenarios or options and the value of things in the future based on momentum from the past as well as signals picked in the market. Both diagnostics and prediction are areas that AI can greatly improve today. The tools can augment executives’ analysis and become areas where you develop capabilities. For example, on diagnostic intelligence, you can organize your portfolio into segments to understand granularly where performance is coming from and do it in a much more continuous way than analysts could. You can try 20 different ways in an hour versus deploying one hundred analysts to tackle the problem.

Predictive AI is both more difficult and more risky. Executives shouldn’t fully rely on predictive AI, but it provides another systematic viewpoint in the room. Because strategic decisions have significant consequences, a key consideration is to use AI transparently in the sense of understanding why it is making a certain prediction and what extrapolations it is making from which information. You can then assess if you trust the prediction or not. You can even use AI to track the evolution of the assumptions for that prediction.

Those are the levels available today. The next three levels will take time to develop. There are some early examples of AI advising actions for executives’ consideration that would be value-creating based on the analysis. From there, you go to delegating certain decision authority to AI, with constraints and supervision. Eventually, there is the point where fully autonomous AI analyzes and decides with no human interaction.

Because strategic decisions have significant consequences, you need to understand why AI is making a certain prediction and what extrapolations it’s making from which information.

Joanna Pachner: What kind of businesses or industries could gain the greatest benefits from embracing AI at its current level of sophistication?

Yuval Atsmon: Every business probably has some opportunity to use AI more than it does today. The first thing to look at is the availability of data. Do you have performance data that can be organized in a systematic way? Companies that have deep data on their portfolios down to business line, SKU, inventory, and raw ingredients have the biggest opportunities to use machines to gain granular insights that humans could not.

Companies whose strategies rely on a few big decisions with limited data would get less from AI. Likewise, those facing a lot of volatility and vulnerability to external events would benefit less than companies with controlled and systematic portfolios, although they could deploy AI to better predict those external events and identify what they can and cannot control.

Third, the velocity of decisions matters. Most companies develop strategies every three to five years, which then become annual budgets. If you think about strategy in that way, the role of AI is relatively limited other than potentially accelerating analyses that are inputs into the strategy. However, some companies regularly revisit big decisions they made based on assumptions about the world that may have since changed, affecting the projected ROI of initiatives. Such shifts would affect how you deploy talent and executive time, how you spend money and focus sales efforts, and AI can be valuable in guiding that. The value of AI is even bigger when you can make decisions close to the time of deploying resources, because AI can signal that your previous assumptions have changed from when you made your plan.

Joanna Pachner: Can you provide any examples of companies employing AI to address specific strategic challenges?

Yuval Atsmon: Some of the most innovative users of AI, not coincidentally, are AI- and digital-native companies. Some of these companies have seen massive benefits from AI and have increased its usage in other areas of the business. One mobility player adjusts its financial planning based on pricing patterns it observes in the market. Its business has relatively high flexibility to demand but less so to supply, so the company uses AI to continuously signal back when pricing dynamics are trending in a way that would affect profitability or where demand is rising. This allows the company to quickly react to create more capacity because its profitability is highly sensitive to keeping demand and supply in equilibrium.

Joanna Pachner: Given how quickly things change today, doesn’t AI seem to be more a tactical than a strategic tool, providing time-sensitive input on isolated elements of strategy?

Yuval Atsmon: It’s interesting that you make the distinction between strategic and tactical. Of course, every decision can be broken down into smaller ones, and where AI can be affordably used in strategy today is for building blocks of the strategy. It might feel tactical, but it can make a massive difference. One of the world’s leading investment firms, for example, has started to use AI to scan for certain patterns rather than scanning individual companies directly. AI looks for consumer mobile usage that suggests a company’s technology is catching on quickly, giving the firm an opportunity to invest in that company before others do. That created a significant strategic edge for them, even though the tool itself may be relatively tactical.

Joanna Pachner: McKinsey has written a lot about cognitive biases  and social dynamics that can skew decision making. Can AI help with these challenges?

Yuval Atsmon: When we talk to executives about using AI in strategy development, the first reaction we get is, “Those are really big decisions; what if AI gets them wrong?” The first answer is that humans also get them wrong—a lot. [Amos] Tversky, [Daniel] Kahneman, and others have proven that some of those errors are systemic, observable, and predictable. The first thing AI can do is spot situations likely to give rise to biases. For example, imagine that AI is listening in on a strategy session where the CEO proposes something and everyone says “Aye” without debate and discussion. AI could inform the room, “We might have a sunflower bias here,” which could trigger more conversation and remind the CEO that it’s in their own interest to encourage some devil’s advocacy.

We also often see confirmation bias, where people focus their analysis on proving the wisdom of what they already want to do, as opposed to looking for a fact-based reality. Just having AI perform a default analysis that doesn’t aim to satisfy the boss is useful, and the team can then try to understand why that is different than the management hypothesis, triggering a much richer debate.

In terms of social dynamics, agency problems can create conflicts of interest. Every business unit [BU] leader thinks that their BU should get the most resources and will deliver the most value, or at least they feel they should advocate for their business. AI provides a neutral way based on systematic data to manage those debates. It’s also useful for executives with decision authority, since we all know that short-term pressures and the need to make the quarterly and annual numbers lead people to make different decisions on the 31st of December than they do on January 1st or October 1st. Like the story of Ulysses and the sirens, you can use AI to remind you that you wanted something different three months earlier. The CEO still decides; AI can just provide that extra nudge.

Joanna Pachner: It’s like you have Spock next to you, who is dispassionate and purely analytical.

Yuval Atsmon: That is not a bad analogy—for Star Trek fans anyway.

Joanna Pachner: Do you have a favorite application of AI in strategy?

Yuval Atsmon: I have worked a lot on resource allocation, and one of the challenges, which we call the hockey stick phenomenon, is that executives are always overly optimistic about what will happen. They know that resource allocation will inevitably be defined by what you believe about the future, not necessarily by past performance. AI can provide an objective prediction of performance starting from a default momentum case: based on everything that happened in the past and some indicators about the future, what is the forecast of performance if we do nothing? This is before we say, “But I will hire these people and develop this new product and improve my marketing”— things that every executive thinks will help them overdeliver relative to the past. The neutral momentum case, which AI can calculate in a cold, Spock-like manner, can change the dynamics of the resource allocation discussion. It’s a form of predictive intelligence accessible today and while it’s not meant to be definitive, it provides a basis for better decisions.

Joanna Pachner: Do you see access to technology talent as one of the obstacles to the adoption of AI in strategy, especially at large companies?

Yuval Atsmon: I would make a distinction. If you mean machine-learning and data science talent or software engineers who build the digital tools, they are definitely not easy to get. However, companies can increasingly use platforms that provide access to AI tools and require less from individual companies. Also, this domain of strategy is exciting—it’s cutting-edge, so it’s probably easier to get technology talent for that than it might be for manufacturing work.

The bigger challenge, ironically, is finding strategists or people with business expertise to contribute to the effort. You will not solve strategy problems with AI without the involvement of people who understand the customer experience and what you are trying to achieve. Those who know best, like senior executives, don’t have time to be product managers for the AI team. An even bigger constraint is that, in some cases, you are asking people to get involved in an initiative that may make their jobs less important. There could be plenty of opportunities for incorpo­rating AI into existing jobs, but it’s something companies need to reflect on. The best approach may be to create a digital factory where a different team tests and builds AI applications, with oversight from senior stakeholders.

The big challenge is finding strategists to contribute to the AI effort. You are asking people to get involved in an initiative that may make their jobs less important.

Joanna Pachner: Do you think this worry about job security and the potential that AI will automate strategy is realistic?

Yuval Atsmon: The question of whether AI will replace human judgment and put humanity out of its job is a big one that I would leave for other experts.

The pertinent question is shorter-term automation. Because of its complexity, strategy would be one of the later domains to be affected by automation, but we are seeing it in many other domains. However, the trend for more than two hundred years has been that automation creates new jobs, although ones requiring different skills. That doesn’t take away the fear some people have of a machine exposing their mistakes or doing their job better than they do it.

Joanna Pachner: We recently published an article about strategic courage in an age of volatility  that talked about three types of edge business leaders need to develop. One of them is an edge in insights. Do you think AI has a role to play in furnishing a proprietary insight edge?

Yuval Atsmon: One of the challenges most strategists face is the overwhelming complexity of the world we operate in—the number of unknowns, the information overload. At one level, it may seem that AI will provide another layer of complexity. In reality, it can be a sharp knife that cuts through some of the clutter. The question to ask is, Can AI simplify my life by giving me sharper, more timely insights more easily?

Joanna Pachner: You have been working in strategy for a long time. What sparked your interest in exploring this intersection of strategy and new technology?

Yuval Atsmon: I have always been intrigued by things at the boundaries of what seems possible. Science fiction writer Arthur C. Clarke’s second law is that to discover the limits of the possible, you have to venture a little past them into the impossible, and I find that particularly alluring in this arena.

AI in strategy is in very nascent stages but could be very consequential for companies and for the profession. For a top executive, strategic decisions are the biggest way to influence the business, other than maybe building the top team, and it is amazing how little technology is leveraged in that process today. It’s conceivable that competitive advantage will increasingly rest in having executives who know how to apply AI well. In some domains, like investment, that is already happening, and the difference in returns can be staggering. I find helping companies be part of that evolution very exciting.

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Are You Solving the Right Problem?

• Dwayne Spradlin

Most firms aren’t, and that undermines their innovation efforts.

Reprint: R1209F

The rigor with which a problem is defined is the most important factor in finding a good solution. Many organizations, however, are not proficient at articulating their problems and identifying which ones are crucial to their strategies.

They may even be trying to solve the wrong problems—missing opportunities and wasting resources in the process. The key is to ask the right questions.

The author describes a process that his firm, InnoCentive, has used to help clients define and articulate business, technical, social, and policy challenges and then present them to an online community of more than 250,000 solvers. The four-step process consists of asking a series of questions and using the answers to create a problem statement that will elicit novel ideas from an array of experts.

• Establish the need for a solution. What is the basic need? Who will benefit from a solution?
• Justify the need. Why should your organization attempt to solve this problem? Is it aligned with your strategy? If a solution is found, who will implement it?
• Contextualize the problem. What have you and others already tried? Are there internal and external constraints to implementing a solution?
• Write the problem statement. What requirements must a solution meet? What language should you use to describe the problem? How will you evaluate solutions and measure success?

EnterpriseWorks/VITA, a nonprofit organization, used this process to find a low-cost, lightweight, and convenient product that expands access to clean drinking water in the developing world.

“If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it,” Albert Einstein said.

• DS Dwayne Spradlin is the president and CEO of InnoCentive , an online marketplace that connects organizations with freelance problem solvers in a multitude of fields. He is a coauthor, with Alpheus Bingham, of The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise (FT Press, 2011).

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15 Major Problems In India That Can Be Solved by Entrepreneurs

What do Urban Company, Paytm, Delhivery, Cred, Ola, etc. have in common – they’re Indian start-ups. They are success stories that inspire entrepreneurs to hold on to their vision. The main reason these ventures succeeded in light of the many challenges faced by start-ups in India is that they attacked a real need. There are a number of pressing issues in the country today. Let’s take a look at the 15 major problems in India that can be solved by entrepreneurs as mentioned below.

15 Major Problems in India that can be solved by Entrepreneurs in 2024

• Urban Waste Management
• Adult Education
• City Pollution
• Public Transportation
• Women & Child Safety
• Water Management
• Disabled Friendly Infrastructure
• Energy Crisis
• Expensive Office Space
• Access to Healthcare
• Financial Inclusion
• Agricultural Solutions
• Employment Generation
• Urban Infrastructure

1. Urban Waste Management

Back in 2016, a report showed that India generated 62 million tonnes of waste each year with a 4% average annual growth rate. This includes organic waste, dry waste, plastics, etc. 

Source: EPW

This is a problem that is too big to be left unaddressed. The mountain of garbage in Delhi that frequently self-combusts is proof of this. There are a number of entrepreneurs attacking this problem already. The solutions they have found range from home composting kits to making incense sticks from discarded flowers. But, there is still plenty that can be done.

2. Adult Education

The silver lining of the pandemic is proof that almost everything can indeed be digitized. This includes education. According to a 2017-18 survey, 9 large states in India had a literacy rate less than the national average.

Source:  ORF

While there are a number of start-ups focussing on education for children, the attention given to adult education is limited. The government has started many initiatives to overcome this challenge and today’s entrepreneurs can give it the boost it needs.

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3. City Pollution

As winter approaches air pollution becomes one of biggest problem in India. Whether it is because of crops burning in the fields or vehicular exhausts, we need smarter solutions to air pollution. Efforts being made currently range from planting green corridors under flyovers to using carbon dust from exhausts to create industrial products. Startups need to work harder to find a way to keep our city air clean. 

4. Public Transportation

2 cars per household is not an exception but the norm in many Indian cities. This causes trouble with street congestion, pollution, etc. And, it all comes down to a lack of public transportation. Only 18.1% of Indians take public transportation to work .  With the construction of metro lines and the introduction of air-conditioned buses, this number is increasing but there are still miles to go before our roads can feel less congested. 

5. Sanitation

The lack of sanitation is one of the less-talked-about major problems for start-ups in India.

Source: ResearchGate

Often considered an issue that must be tackled by the government, it is time for the private sector to step up and lend a hand in tackling the problem. Examples of efforts already being made include the Sulabh shauchalayas that have been installed across the country. While this has helped, there are still many people who do not have access to clean toilets.

6. Women & Child Safety

Women and children are often told not to step out alone after dark. The main reason for this is a fear for their safety. Unfortunately, India has a notorious relationship with crime against women and children statistics. This is a concern for every entrepreneur, man or woman and must be tackled. Some of the solutions being worked on include personal safety apps, GPS tracking devices for public transport vehicles, etc.

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7. Water Management

Not very long ago, Bengaluru was in the news for being at risk of running dry by 2020. Thankfully, that did not happen but improper water management is one of the major problem in India nowadays.

Source: NewSecurityBeat

We need to find ways to reduce water wastage and water treatment for recycling.  Today, most housing societies have water recycling plants but many of them do not function as efficiently as they should. The water wastage in the manufacturing industry needs to be addressed too. Did you know that it takes about 3000 liters of water to produce a single shirt!

8. Disabled Friendly Infrastructure

We also need to pay attention to the specially-abled population of India. Wheelchair ramps are now quite common for residential and commercial establishments. We also need to look at people who cannot see, hear, etc. Some of the other interesting solutions that are being worked upon include swivel seats in cars and braille laptops.

9. Energy Crisis

Whether you talk of the rising cost of fuel or electricity, it comes down to the limited non-renewable resources available. Solar power is being used to power homes and even airports but we need to do more. Entrepreneurs need to look into alternative energy sources and design practical solutions centred around them.

10. Expensive Office Space

There are a number of problems that start-ups can solve but one of the main problems they themselves face is the lack of affordable office space. An organization needs a physical space for employees to brainstorm together if they are to design effective solutions. 

11. Access to Healthcare

With a vast population and limited access to healthcare facilities in India, entrepreneurs have developed innovative solutions like telemedicine platforms (e.g., Practo, mfine) to connect patients with doctors remotely, healthcare delivery services (e.g., Portea Medical,), and affordable medical devices. 

12. Financial Inclusion

Entrepreneurs have leveraged technology to provide financial services to the unbanked population through digital payment platforms (e.g., Paytm, PhonePe & Google Pay), microfinance institutions, and peer-to-peer lending platforms. 

13. Agricultural Solutions

India being primarily agrarian, entrepreneurs have developed solutions to address the problems faced by farmers in India, such as agricultural technology startups providing farm management tools, market linkage platforms (e.g., AgroStar), and supply chain optimization solutions. 

14. Employment Generation

Indian Entrepreneurs can reduce the unemployment problem in India. Entrepreneurship has been a key driver of job creation in India, with startups across various sectors contributing to employment generation, especially among the Indian youths. 

15. Urban Infrastructure

With rapid urbanization, entrepreneurs have focused on developing solutions for urban infrastructure challenges such as smart city solutions, urban mobility solutions, and affordable housing projects. 

Working out of garages and cafes is fine as a stop-gap arrangement but it lacks professionalism. One of the solutions emerging is a shift from traditional, independent office spaces to shared and coworking spaces . The Office Pass (TOP) is one such coworking space where start-ups can rent desk space according to their needs and access shared infrastructure at affordable cost. 

A coworking space allows start-ups to pay less attention to day-to-day administration and instead focus on the biggest problems in India and their solutions. The Office Pass (TOP) has coworking spaces in Delhi , Gurgaon and Noida. To know more, reach out at 08999 828282 .

FREQUENTLY ASKED QUESTIONS (FAQS):

Question: what are the major problems in india that can we solve by entrepreneurs.

Answer: Entrepreneurship solves a wide range of problems and can bring about various benefits to individuals, society, and the economy. Here are some of the problems that entrepreneurship can solve include Unemployment, Innovation, Economic growth, Social issues, Wealth creation, Competition and Regional development.

Question: What are the challenges faced by present india?

Answer: India is a large and diverse country with numerous challenges across various sectors. Some of the major challenges faced by India today include Poverty, Unemployment, Healthcare, Education, Infrastructure and Environmental degradation.

Question: What are the major problems in india that can be solved by technology?

Answer:  There are numerous major problems in India that can be solved by technology. Here are some examples like: Healthcare, Education, Agriculture, Transportation and Waste management.

Question: How do entrepreneurs solve problems differently?

Answer:  Successful Entrepreneurs approach are problem-solving with a unique combination of creativity, resourcefulness, persistence and risk-taking, which allow them to tackle challenges in a way that sets them apart from others.

Question: What are three social problems can be solved by entrepreneurs?

Answer: Entrepreneurs can help solve a wide range of social problems. Here are the top three social problems can be solved by entrepreneurs include Unemployment, Environmental sustainability and Access to healthcare.

Question: What solutions exist for the problem of unreliable electricity supply in many parts of India?

Answer: Entrepreneurs have introduced off-grid solar power solutions, such as solar microgrids and portable solar lanterns, providing reliable electricity to communities without access to the main power grid.

Question: How can India improve healthcare accessibility in rural areas?

Answer: Entrepreneurial ventures have introduced telemedicine platforms, connecting rural patients with doctors through mobile technology, thereby overcoming the barrier of distance and improving healthcare access.

Question: What initiatives are addressing the challenge of unemployment among youth in India?

Answer: Entrepreneurial ventures focusing on skill development and vocational training have emerged, offering courses tailored to market demand and equipping young people with employable skills.

Question: How can address the challenge of pollution in indian cities?

Answer: Entrepreneurs have introduced electric vehicles, air purifiers, and waste management solutions, promoting cleaner transportation and sustainable urban development.

Question: What initiatives are addressing the issue of low agricultural productivity in India?

Answer: Entrepreneurs have developed precision agriculture technologies, including IoT devices and AI-powered analytics, to optimize resource usage and enhance crop yields.

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Sandeep Sharma

Sandeep Sharma is a seasoned entrepreneur and thought leader in the coworking industry. With over a decade of experience, he has played a pivotal role in shaping the evolution of collaborative workspaces globally.

Latest posts from Sandeep Sharma

• How to Provide More Value to Your Customers And Scale Your Company? - April 11, 2024
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• 10 Tips for Starting an Online Business in 2024 - March 11, 2024

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The Office Pass or TOP as it is popularly known, is a Coworking & Managed Offices company for Indian Small & Medium Businesses (SMBs).

Company’s vision is to build a vast network of Coworking & Managed Offices for over 30 million under-services SMBs in India. Offices that are accessible, affordable, hi-quality and flexible. TOP’s offices are spread across the city in CBD areas and around residential neighborhoods – so one can reach the closest TOP office in less than 20 minutes. You can think of TOP as a convenient store for Coworking (like 7-ELEVEN).

TOP’s Coworking & Managed spaces take care of all expenses associated with operating an office. This includes office furnishing & equipment, rental, electricity, WiFi, security, housekeeping, printing & scanning, compliances etc. This save companies time, effort and money, which can be used to enhance business. Companies using TOP Coworking offices can save between 15-24% of their office operational costs.

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‘you can solve anything’.

Priyanka Pillai wants to take on big problems — and has learned how good design can help

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Part of the Commencement 2024 series

A collection of stories covering Harvard University’s 373rd Commencement.

Growing up in India, Priyanka Pillai witnessed the immense and varied struggles many impoverished people faced in their daily lives, such as getting prenatal care and protecting children from labor exploitation.

As an undergraduate in Bangalore studying industrial design, she wondered whether good design could help ease at least parts of these and other challenges. She came to Harvard Graduate School of Design two years ago and got her answer, discovering she could take on big problems “that you don’t even realize … could be tackled with design.”

Pillai wanted to do something to help address the refugee crisis in Uganda for her independent design engineering project. Those projects span two semesters and call for students seeking a master’s in design engineering (a joint GSD and John A. Paulson School of Engineering and Applied Sciences program) to identify complex, real-world problems and develop solution prototypes.

“For the first time, I truly felt like I was doing work that was very in touch with what GSD wants people to do, which is working with communities.”

Conducting fieldwork in Uganda, Pillai saw the difficulties that South Sudanese refugees were having reuniting with their families. The plight of those fleeing the ongoing civil war in the northeast African nation has become one of the largest refugee crises in the world, with more than half a million living in Uganda alone, mostly in camps.

More than 60 percent are children separated from parents who are looking for them, Pillai said, and need multiple layers of support. While non-governmental organizations (NGOs) are providing some assistance, much more help is needed.

“One thing that really stood out was agency. There’s currently a lack of agency when it comes to finding their family members on their own,” said Pillai, who graduates later this month. Many refugees use informal, ad hoc methods such as phone calls, WhatsApp, and photo sharing to try to find relatives.

“The second part, which is extremely critical, is that we need to move from a Western-centric way of finding a family member,” such as cataloguing names, ages, and date of separation done by NGOs, because it doesn’t capture vernacularor local geography, vital details that may speed up reunification, she said, noting that learning more about how to design for “the Indian context” and the Global South more generally was a key reason she came to Harvard.

“A lot of cultural nuances were missing in connection to the data to find missing family members,” she said. “And that’s the kind of solution that we’re moving toward.”

Given the ubiquity of cellphones there, Pillai and classmate Julius Stein designed and built an online platform for refugees to enter information about themselves using text, photos, and audio. The platform generates a series of questions that can lead to possible matches while minimizing the risk of exploitation by malign actors.

“For the first time, I truly felt like I was doing work that was very in touch with what GSD wants people to do, which is working with communities,” she said. “It was just a life-changing experience.”

Earlier this month, one startup Pillai is involved in, Alba, won an Ingenuity Award as part of the Harvard President’s Innovation Challenge. The team designed a special wipe so the visually impaired can better detect when their menstrual period has begun without relying on outside assistance.

In 2023, Pillai was part of a student project that won gold in the Spark International Design awards. The design team created Felt, a haptic armband that turns sound and visual clues into movement. The device assists people who are deaf blind to independently catch emotional nuances or subtexts in conversations, which often get lost in Braille or other translations.

During her time in the program, Pillai also jumped at the opportunity to take courses at the Harvard Kennedy School, Harvard Law School, and Harvard Graduate School of Education to learn more about things such as accessibility, ethical design, and negotiation.

“I knew that I was limiting myself because I didn’t know all these different things,” she said.

When not focused on her own studies, Pillai has been a teaching fellow for a design studio at GSD and at SEAS for a course led by her IDEP adviser, Krzysztof Gajos, Gordon McKay Professor of Computer Science.

“I love teaching,” she said. “It’s one of my favorite experiences.”

Reflecting on her time at GSD, Pillai has been deeply inspired by the faculty and her fellow students. This group from many different backgrounds with different interests and perspectives, working in many different disciplines, has been like a “dream” design studio where she’s been able to share and borrow ideas and practices from others and see how other fields look at things such as collaboration, sustainability and accessibility. It has been intellectually liberating to experience such fearlessness, she said, after years of feeling so “constrained” in her prior practice, which had been “rooted in ‘realistic goals.’”

“People tackling very huge issues that you don’t even realize 1) is a problem that could be tackled with design, and 2), they’re almost your age and they’re doing it somehow. That was very important to see,” she said.

“People really think that you can solve anything.”

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Millennials have a fresh take on the FIRE movement, and it's less about taking it easy in retirement

At age 36, Jace Mattinson is already over retirement . Four years ago, he sold his lumber company for seven figures, and he had enough saved that he never needed to work again.

He said that was an enticing idea after five "extremely tough" years of owning a business. During that time, he was away from his home in Austin a few nights a week and hustling to run the 135-year-old company he'd acquired. After selling the company, he needed a long break from anything laborious.

"I was golfing three, four times a week. I was going to the lake. I was doing all my hobbies that I really cared about and enjoyed, ones that for the greater part of a decade I didn't have as much time to do," Mattinson told Business Insider.

But after eight months, he decided retirement was not nearly as fulfilling as he'd imagined. He returned to a job in lumber distribution and revived his financial podcast. He said he wanted to continue to model a good work ethic for his kids.

Mattinson has all the trappings of someone in the FIRE movement . The acronym, which stands for financial independence, retire early, was coined in the 1990s in the book "Your Money or Your Life" and popularized on blogs like Mr. Money Mustache and the investment site Motley Fool. The idea was to work hard, ideally with multiple income streams, live a life of austerity, invest prudently, and build a big enough nest egg to walk away from work well before the average retirement age of 64.

But millennials, including Mattinson, who finds himself happiest when he has a balance of work and leisure, said they're not as interested in early retirement — and are creating their own versions of life after work.

Millennials often want the FI without the RE

Devotees of the FIRE movement often save or invest the majority of their income . Some take on extra jobs or delay major life milestones like marriage or having kids.

It's an exclusive club, and many hungry millennials are eager to join it. ChooseFI's Facebook group has over 108,000 members, while the r/financialindependence subreddit has 2.2 million members. But for some FIRE wannabes, the "FI" part of the equation is the biggest focus, and the "RE" half seems to be less of a foregone conclusion.

A popular rule of thumb among this group is the "4% rule," which says you should aim to save 25 times your annual expenses so you can withdraw 4% of your funds each year after you quit working. Some FIRE participants told BI that their target savings goal is between $1.5 million and $2.5 million, though many are working toward more for even greater security.

To be sure, early retirees are a small slice of the population. According to Business Insider's analysis of American retirees, just 2.2% are 50 or younger. Less than 1% are below age 35. Just 0.75% of all Americans over 18 and under 50 are retired. Still, many BI spoke with retire unofficially or partially retire, taking on less responsibility at a company or moving to a lower-stakes position.

BI spoke to a dozen millennials who have achieved or are on track to achieve financial independence. While some have retired and told BI they're enjoying it, most feel retirement is pointless and still want to build their careers or give back to their communities.

"The thing I have noticed shift most is the emphasis on FI and less on RE," Scott Rieckens, the executive producer of the film " Playing With FIRE ," said. "I think it's awesome to see, as it signals that financial independence is the key motive, which it is, and that work and purpose are actually really important. Retiring early to nothing is a bad idea."

Brad Barrett, the host of the "ChooseFI" podcast, said "vanishingly few" people with the wherewithal to reach financial independence are retiring early. To him, reaching financial independence allows someone to live the life they want, but retiring early signifies turning away from everything you've worked toward.

For many, financial freedom goes beyond quitting a job you don't like. Some said it's the ability to spend on travel or leisure without much stress — which has become even more important after the pandemic's peak. Others said it helps them lead a life of purpose, whether that means educating people on a podcast or leading charity efforts.

The problem with retirement seems to be that people want to add value to their communities and within their own lives — and they believe work is the way to do that. As Bill Schaninger, a speaker, author, and thought leader on the future of work, found in research he conducted with Naina Dhingra for McKinsey , 70% of people who were surveyed said they define their purpose through work.

"Many people figured out one of the things that I get a lot of validation from is being clever, solving problems, participating, and working on something bigger than me," Schaninger told BI.

COVID-19 may have amplified this, he added. "The fragility of our condition, I think, was brought home in a way that maybe many of us had taken for granted," he said. "And so now it's like, 'Well, if I'm going to do this, it has to matter.'"

The millennial version of early retirement

Mitch, 37, said he is about to quit his high-stress job and take a mini-retirement — he has a 22-stop national parks trip planned this summer.

The Minnesota resident and vice president of a building-maintenance company, who asked that only his first name be used because of an ongoing job transition, has a net worth of about $2 million but said he's only planning to take a few months off before returning to the workforce in a lower-stress position. All the sources BI spoke with provided documentation of their net worth.

Mitch said he stumbled into the online personal-finance community in his early 30s, which inspired him and his wife to increase their savings to at least 75% of their income by avoiding spending on luxury items. He said even his high savings won't affect his decision to quit working.

"I think a lot of traditional retirees lack purpose — they take a year or two of retirement and hate it because they do whatever and lose purpose," Mitch said. "The ones that volunteer, continue to coach and consult, or do whatever it is to sharpen their brain and really have a purpose tend to be some of the happiest retirees."

Brian Luebben, a financially independent millennial , described having a panic attack shortly after he hit FI and quit his sales job.

"If you have anxiety, financial freedom is not going to solve it," he said. "If you have depression, financial freedom is not going to solve it. Be careful of the mountaintop moments. When you become a millionaire, when you become financially free, when you do all this stuff, no mariachi band follows you around and performs."

He argued that achieving financial independence and hitting a specific number is "the simplest part." After all, there's a playbook for wealth-building strategies like investing in real estate or building an e-commerce business.

"The most difficult part is figuring out what you do when you have nothing to do all day," he said. "What do you choose to work on?"

Luebben, who hosts a podcast and runs the entrepreneur resource The Action Academy to help other people achieve financial freedom, said people should think through four core questions before they're even close to achieving financial independence: "What does the perfect day look like? What does the perfect week look like? Who was with you? And where?"

Going through that exercise can help ensure that your identity doesn't become wrapped up in achieving FIRE, which is something that Grant Sabatier, who took a year and a half off from work after achieving financial independence, struggled with.

"I defined myself by the pursuit of financial independence," Sabatier, the author of " Financial Freedom ," said. "Then, once I reached it, it was like, now I no longer had to do that thing, so what am I going to do? I encourage people on the path to do that inner work. Don't delay figuring out what you really want, why you're pursuing financial independence, and what you want to do after."

Balancing work and fun

Instead of a traditional retirement, many financially independent millennials are finding a balance between work and leisure that works for them.

For Sabina Horrocks, 41, becoming a millionaire was "quite boring." She and her husband worked in six-figure managerial positions, recently achieving a net worth of about $2 million, then had a daughter in 2021. They "plowed money into investments early on," kept daily expenditures low, and purchased rental properties they eventually sold.

She quit her sales operations job but has no intention of stopping work. She's a stay-at-home mom and plans to continue her blog The Moneyaires ; she'd also like to become a financial coach or planner.

Blogging and coaching were common post-FI pursuits among the would-be early retirees BI spoke to. Michelle Schroeder-Gardner, 34, runs the blog Making Sense of Cents , and over the past decade, she and her husband have lived mostly in an RV or a sailboat.

By 2017, their blog, advertising sales, and a course they created called Making Sense of Affiliate Marketing had generated nearly $1.2 million in revenue. By 2018, they had achieved financial independence. After years of 100-hour workweeks, she now spends 10 hours a week on her business, which generates $600,000 a year.

"I'm able to travel whenever I want. I can work whenever I want. Nothing's really dependent on my work hours," she said. "My plan is pretty much to continue doing this while I like it and continue to make a little bit more money and save as much as I can."

Lauren and Steven Keys, who quit their full-time jobs in their 20s , have a similar outlook.

Steven does freelance work for his former employer but spends much of his time on an online-tutoring service called CramBetter that he cofounded in 2023. Lauren has one social-media client she works with a couple of hours a month. They also run a financial-independence blog, Trip of a Lifestyle , and earn rental income from a fully paid-off investment property.

"There's this misconception about early retirement that you'll never make another penny ever again and just sit on the beach all day for the rest of your life," Steven said. "We're never going to stop making any money whatsoever."

Are you part of the FIRE movement or living by some of its principles? Reach out these reporters at [email protected] or [email protected] .

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The 7 Biggest Business Challenges Every Company Is Facing In 2023

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As a futurist specializing in the intersection of business and technology, it’s my job to look ahead and advise companies on how they can prepare for a rapidly changing world.

Here are the seven greatest challenges every company should be ready for in 2023:

1. Inflation and Economic Downturn

The headlines are already filled with talk of skyrocketing inflation, and that trend will likely continue in 2023. Many economies will stagnate or shrink, and businesses need to prepare for that reality.

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, reported that the organization had downgraded its forecast for 2.9 percent global growth in 2023. The IMF cited rising risks of financial instability and recession.

Companies can face inflation by establishing end-to-end, actionable visibility of spending by business process, function, cost category, and business unit, as well as reducing spending.

Best High-Yield Savings Accounts Of 2024

Best 5% interest savings accounts of 2024, 2. supply chain security.

Supply chain security is another key issue. Challenges began with COVID-related backlogs and have been made worse by Russia's invasion of Ukraine and labor shortages due to the Great Resignation. This has made parts and products harder to obtain, as well as pushed prices up (e.g., energy, grains, computer chips, oil, and so on).

According to a report by Accenture, supply chain issues could result in a potential €920 billion cumulative loss to the gross domestic product (GDP) across the Eurozone by 2023.

Companies should resist the urge to over-order to compensate for backlogs, which could worsen the situation. Instead, focus on long-term recovery and restructure your needs to prevent similar shortages in the future.

3. Increasing Customer Expectations

Customers are demanding more immersive customer experiences in the real world as well as in the metaverse.

Customers entering brick-and-mortar stores aren’t just looking to buy products — they want memorable in-store experiences. If your company has physical shops, consider adding more immersive experiences.

Online retailers should consider adding extended reality (XR) experiences like virtual dressing rooms that allow customers to “try on” clothing, accessories, and makeup without leaving their homes.

No matter how you engage with consumers (online, offline, or a mix of both), ask yourself, “How can we add even more value for our customers by turning this interaction into an experience?”

4. Accelerated Digital Transformation

Artificial intelligence (AI) is already starting to augment all of our businesses, and that trend will continue to accelerate next year. At the same time, other technologies like 5G, blockchain, the cloud, and the Internet of Things (IoT) are building and speeding up AI, and all of them are enhancing each other.

This is rapidly creating a world of ever-faster technological developments. In response, every business must think of itself as a tech business. Companies need to re-design their processes and ensure their people have the skills needed for a world where we increasingly collaborate with and work alongside capable and intelligent machines.

5. The War for Talent Will Intensify

Speaking of workers — companies in 2023 must be ready to cope with a continued talent shock. We’ve been hearing about the “War for Talent” for years, but now it feels like the war is deepening.

Companies across industries are facing massive gaps for vital future skills, and they will need to re-skill or upskill massive sections of their workforce to get ready for the 4th industrial revolution. Companies can and should take on the onus of training talent by taking steps like hiring people straight out of school, employing low-code or no-code software for critical needs, and instilling cultures of continuous learning.

On top of that, the pandemic has made many people reevaluate their jobs, leading to mass resignations in many sectors.

To attract top talent, employers must offer a working environment that is appropriate for the new world of work, including job flexibility, authentic leadership, diversity, etc.

6. Data and Device Security

Cyberattacks are on the rise, and ransomware and phishing scams are now a common occurrence. As businesses become more digital, they accumulate more data, which becomes highly attractive to cybercriminals that intend to steal it and hold organizations hostage to monetary demands.

Mobile and IoT devices are not immune to cybersecurity threats. Additionally, quantum computing is now emerging, which could render existing security systems obsolete.

Companies can take steps to protect themselves by taking proactive measures like evaluating their data backup and recovery processes, conducting penetration testing and vulnerability scanning, and taking proactive steps to protect sensitive data and prevent cyberattacks.

7. Sustainability

Climate change is the world’s largest business challenge, and consumers are demanding transparency in sustainability practices as well as more eco-friendly products and services.

Companies can respond by viewing the whole picture of their business practices and auditing their full supply chains. They should also consider switching to renewable energy, moving to more sustainable packaging, and allowing people to work remotely when appropriate (which can help lower emissions).

Becoming demonstrably more sustainable can not only satisfy consumers’ needs but also help you spot efficiencies and savings that can have a positive effect on your bottom line.

To stay on top of the latest on new and emerging business and tech trends, make sure to subscribe to my newsletter , follow me on Twitter , LinkedIn , and YouTube , and check out my books ‘ Tech Trends in Practice ’ and ‘ Business Trends in Practice , which just won the 2022 Business Book of the Year award.

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Why RAG won’t solve generative AI’s hallucination problem

Hallucinations — the lies generative AI models tell, basically — are a big problem for businesses looking to integrate the technology into their operations.

Because models have no real intelligence and are simply predicting words, images, speech, music and other data according to a private schema , they sometimes get it wrong. Very wrong. In a recent piece in The Wall Street Journal, a source recounts an instance where Microsoft’s generative AI invented meeting attendees and implied that conference calls were about subjects that weren’t actually discussed on the call.

As I wrote a while ago, hallucinations may be an unsolvable problem with today’s transformer-based model architectures. But a number of generative AI vendors suggest that they can be done away with, more or less, through a technical approach called retrieval augmented generation, or RAG.

Here’s how one vendor, Squirro, pitches it :

At the core of the offering is the concept of Retrieval Augmented LLMs or Retrieval Augmented Generation (RAG) embedded in the solution … [our generative AI] is unique in its promise of zero hallucinations. Every piece of information it generates is traceable to a source, ensuring credibility.

Here’s a similar pitch from SiftHub:

Using RAG technology and fine-tuned large language models with industry-specific knowledge training, SiftHub allows companies to generate personalized responses with zero hallucinations. This guarantees increased transparency and reduced risk and inspires absolute trust to use AI for all their needs.

RAG was pioneered by data scientist Patrick Lewis, researcher at Meta and University College London, and lead author of the 2020 paper that coined the term. Applied to a model, RAG retrieves documents possibly relevant to a question — for example, a Wikipedia page about the Super Bowl — using what’s essentially a keyword search and then asks the model to generate answers given this additional context.

“When you’re interacting with a generative AI model like ChatGPT or Llama and you ask a question, the default is for the model to answer from its ‘parametric memory’ — i.e., from the knowledge that’s stored in its parameters as a result of training on massive data from the web,” David Wadden, a research scientist at AI2, the AI-focused research division of the nonprofit Allen Institute, explained. “But, just like you’re likely to give more accurate answers if you have a reference [like a book or a file] in front of you, the same is true in some cases for models.”

RAG is undeniably useful — it allows one to attribute things a model generates to retrieved documents to verify their factuality (and, as an added benefit, avoid potentially copyright-infringing regurgitation ). RAG also lets enterprises that don’t want their documents used to train a model — say, companies in highly regulated industries like healthcare and law — to allow models to draw on those documents in a more secure and temporary way.

But RAG certainly  can’t stop a model from hallucinating. And it has limitations that many vendors gloss over.

Wadden says that RAG is most effective in “knowledge-intensive” scenarios where a user wants to use a model to address an “information need” — for example, to find out who won the Super Bowl last year. In these scenarios, the document that answers the question is likely to contain many of the same keywords as the question (e.g., “Super Bowl,” “last year”), making it relatively easy to find via keyword search.

Things get trickier with “reasoning-intensive” tasks such as coding and math, where it’s harder to specify in a keyword-based search query the concepts needed to answer a request — much less identify which documents might be relevant.

Even with basic questions, models can get “distracted” by irrelevant content in documents, particularly in long documents where the answer isn’t obvious. Or they can — for reasons as yet unknown — simply ignore the contents of retrieved documents, opting instead to rely on their parametric memory.

RAG is also expensive in terms of the hardware needed to apply it at scale.

That’s because retrieved documents, whether from the web, an internal database or somewhere else, have to be stored in memory — at least temporarily — so that the model can refer back to them. Another expenditure is compute for the increased context a model has to process before generating its response. For a technology already notorious for the amount of compute and electricity it requires even for basic operations, this amounts to a serious consideration.

That’s not to suggest RAG can’t be improved. Wadden noted many ongoing efforts to train models to make better use of RAG-retrieved documents.

Some of these efforts involve models that can “decide” when to make use of the documents, or models that can choose not to perform retrieval in the first place if they deem it unnecessary. Others focus on ways to more efficiently index massive datasets of documents, and on improving search through better representations of documents — representations that go beyond keywords.

“We’re pretty good at retrieving documents based on keywords, but not so good at retrieving documents based on more abstract concepts, like a proof technique needed to solve a math problem,” Wadden said. “Research is needed to build document representations and search techniques that can identify relevant documents for more abstract generation tasks. I think this is mostly an open question at this point.”

So RAG can help reduce a model’s hallucinations — but it’s not the answer to all of AI’s hallucinatory problems. Beware of any vendor that tries to claim otherwise.

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