What’s at the heart of your organization’s biggest challenge? How can you cut through complexity to find a solution that actually works?<\/p>\n\n\n\n
Strategy expert Richard Rumelt shares a powerful approach in The Crux: How Leaders Become Strategists<\/em>. His method helps leaders identify the core problem<\/a> behind complex issues and build effective strategies to solve them.<\/p>\n\n\n\n Continue reading for an overview of this practical book<\/a>.<\/p>\n\n\n\n\n\n\n\n Do you have a complex problem<\/a> you can\u2019t seem to crack? According to Richard Rumelt in The Crux: How Leaders Become Strategists<\/em><\/a>, you have to first identify its core problem (which Rumelt refers to as \u201cthe crux\u201d). From there, you can build a successful strategy that not only solves the problem, but also keeps you from getting bogged down by less important issues.<\/p>\n\n\n\n Rumelt is a strategy expert and professor emeritus at UCLA Anderson School of Management. He has decades of experience in strategic consulting and is the author of Good Strategy Bad Strategy<\/em><\/a>, a guide to formulating a powerful business strategy. The Crux<\/em> was published in 2022, building on Rumelt\u2019s previous work and responding to the increasing complexity of modern business environments. It\u2019s written for business leaders, strategists, and anyone facing complex challenges in their professional or personal life.<\/p>\n\n\n\n In our overview, we\u2019ll explain what core problems are and how to identify them. We\u2019ll also explain how to use your understanding of the core problem to devise a strategy for overcoming your broader issue, and we\u2019ll detail Rumelt\u2019s advice for implementing that strategy.<\/p>\n\n\n\n (Shortform note: Rumelt discusses different levels of issues that an organization may face. For clarity, we\u2019ll use the term \u201cbroad issue\u201d to refer to large-scale, multifaceted issues; the term \u201cchallenge\u201d to refer to the smaller-scale issues that comprise a broad issue; and \u201cobstacle\u201d to refer to the smallest-scale issues that comprise a challenge. The \u201ccore problem\u201d is a type of challenge.)<\/p>\n\n\n\n All businesses will face major issues in their operations. For example, a company may create a new market<\/a> with an innovative product but find that, despite high demand, they\u2019re unable to turn a profit. Or a longstanding company might see their competitors overtaking their market share despite doing everything they can to remain competitive. <\/p>\n\n\n\n Rumelt focuses on complex, broad issues<\/strong>, which he says don\u2019t have:<\/p>\n\n\n\n To illustrate what a broad issue might look like, imagine a pharmaceutical company that needs to develop a drug for a rare, novel disease. The disease doesn\u2019t respond to any existing treatment (so there are no known alternatives), and the nature of the disease makes it impossible to test the drug on living subjects (so there are no options for testing). This company is facing a broad issue<\/em> that will require a brand new approach.<\/p>\n\n\n\n Every broad issue can be broken down into a number of smaller challenges<\/em>. Rumelt explains that, in order to overcome a broad issue, you need to examine all these challenges and decide which one is the <\/strong>core problem <\/em><\/strong>(which he refers to as \u201cthe crux\u201d). <\/strong><\/p>\n\n\n\n He goes on to explain that a core problem is:<\/p>\n\n\n\n For example, imagine a small restaurant struggling with the broad issue of insufficient revenue. They identify several challenges comprising this issue, including food waste from fresh ingredients going bad, an unfavorable location with limited parking, and inefficient kitchen operations leading to long wait times and customer dissatisfaction. Upon examining these challenges, they determine that reducing food waste wouldn\u2019t make enough of a difference to solve their issue (not impactful), and that moving the location of the restaurant isn\u2019t feasible with their current resources (not solvable). <\/p>\n\n\n\n They decide that the core of their broad issue is inefficient kitchen operations. This core problem is both highly impactful and within their power to solve. Overcoming this challenge will not only resolve their broad issue, but will also substantially improve the future of their business.<\/p>\n\n\n\n Rumelt explains that, when businesses attempt to tackle a broad issue without identifying and building a strategy around the core problem, they end up wasting time and resources <\/strong>on challenges that either don\u2019t have a significant impact on the issue or turn out to be unsolvable. <\/strong>By focusing on the core problem, strategists can concentrate their efforts and resources on the most crucial aspects of their situation. This approach allows organizations to make meaningful progress on complex issues by identifying and working on the points of the issue that will lead to the best results.<\/p>\n\n\n\n Now that we\u2019ve explained what the core problem is and why it\u2019s important, we\u2019ll discuss how you can identify it. According to Rumelt, the purpose of this process is to fully explore and examine the broad issue you\u2019re facing. If you don\u2019t understand<\/a> what challenges the broad issue comprises, you can\u2019t identify which of those challenges is the most significant. <\/p>\n\n\n\n Once you\u2019ve confirmed you have a broad issue, you can begin identifying all the smaller challenges that comprise it.<\/strong> This process consists of three steps: 1) gathering information<\/a>, 2) grouping your challenges, and 3) distilling these into your core problem.<\/p>\n\n\n\n To gather information about your broad issue, make a list of every aspect of that issue.<\/strong> That includes not only the challenges it involves, but also the potential solutions and the opportunities your solutions might lead to. Seek input from your executive team and any employees who may have insight into the broad issue. These tactics will help you avoid the tunnel vision that causes you to focus only on the first few problems that you think of.<\/p>\n\n\n\n Rumelt provides some specific tools you can use to gather information about your core problem. These include thinking about the situation from different perspectives and using comparisons. <\/p>\n\n\n\n According to Rumelt, strategists should look at the broad issue from different perspectives to reveal aspects of the issue that weren\u2019t immediately obvious.<\/strong> It can also help you uncover underlying assumptions and biases you weren\u2019t aware of, question the established way of doing things, and extend your thinking beyond current constraints and mental boundaries.<\/p>\n\n\n\n Rumelt says that, to take on a new perspective about your broad issue, you should consider the many different ways other people in different positions might view your situation.<\/strong> This includes stakeholders, employees at all levels, customers, outside analysts, and competitors. Any of these perspectives could provide you with a brand new insight that helps you crack your core problem. <\/p>\n\n\n\n For example, imagine a retail chain that\u2019s struggling to maintain its customer base. Looking at the issue purely from the perspective of an executive, it may seem inexplicable. But when the business asks frontline employees for input, they may discover that outdated inventory management<\/a> is causing stock issues and lost sales. This perspective adds an essential insight to the business\u2019s understanding of their overall broad issue and helps them zero in on the core problem.<\/p>\n\n\n\n Rumelt also advises using comparisons to assess your core problem. He emphasizes that comparisons across industries, countries, or even seemingly unrelated fields can offer valuable insights into organizational issues.<\/strong> This broader scope of comparison can help identify inefficiencies, uncover hidden opportunities, and challenge long-held assumptions. By comparing situations or issues to similar cases in different contexts, strategists can recognize patterns that might not be apparent when they focus solely on their specific situation. <\/p>\n\n\n\n For example, a university with declining enrollment might compare its recruitment strategies to those of tech companies attracting top talent, inspiring new approaches to student outreach and program design.<\/p>\n\n\n\n Consider the following comparisons you could make:<\/p>\n\n\n\n Rumelt says that once you have all this information, you should group your identified challenges into related categories.<\/strong> For example, you may have one group of challenges related to product design, one group related to customer satisfaction, and one group related to increasing revenue. These groupings will help you identify the differences in your identified challenges, including which aspects of the organization they relate to, how important they are, and how easy they\u2019ll be to solve. This will then give you a better understanding of the overall broad issue and prepare you for the next step: distilling.<\/p>\n\n\n\n At this stage, you\u2019ll likely find that the list of challenges you\u2019ve identified is far too long for you to address all of them. That\u2019s why you\u2019ll need to narrow your list to find the core problem.<\/strong> Your core problem will be impactful and difficult (but not impossible) to solve. In addition, Rumelt says, your core problem will also be urgent<\/em>\u2014something that you need to address right away.<\/p>\n\n\n\n Check each item on your list to see if they\u2019re impactful and difficult to solve, and rank them according to urgency. If an item is missing one of the three criteria, eliminate it. This will lead you to your core problem.<\/p>\n\n\n\n Once you\u2019ve correctly identified the core problem of the broad issue you\u2019re facing, you can begin working toward a solution for that issue. Rumelt explains that the way to overcome issues is through a powerful <\/strong>strategy<\/em><\/strong>\u2014a combination of policy and actions geared toward problem-solving.<\/strong> The core problem tells you what challenge to focus on, but the strategy tells you how to approach it. <\/p>\n\n\n\n After identifying the core problem, create a strategy that will guide your actions in addressing this critical challenge.<\/strong> This strategy should 1) be based on solving a problem, not achieving a goal, 2) include near-term objectives, 3) utilize your organization\u2019s unique advantages, and 4) be strategically coherent. We\u2019ll discuss each of these characteristics in detail next.<\/p>\n\n\n\n A powerful strategy is focused on solving a problem, not achieving a goal, explains Rumelt.<\/strong> A goal establishes what the organization is striving for, but if it\u2019s not grounded in an understanding of the problem you\u2019re trying to solve, it will be arbitrary and unproductive. When you examine your core problem, determine what specific obstacles <\/em>comprise that problem, as well as what you\u2019ll need to solve them and what you\u2019ll gain from solving them. Then, prioritize these obstacles based on their relevance to your core problem and whether you can solve them with your current resources and capabilities. <\/p>\n\n\n\n Many leaders make the mistake of devising their strategy according to the organization\u2019s pre-existing goals, but since those goals aren\u2019t designed to solve the core problem, this approach can distract from the core problem and lead you to focus your energy on the wrong objective. This doesn\u2019t mean you shouldn\u2019t establish goals; rather, you should formulate your strategy based on your broad issue, and then set your goals according to that strategy.<\/strong><\/p>\n\n\n\n For example, a startup might find that their phone app is receiving low user engagement; they identify poor functionality as their core problem. Instead of setting an arbitrary, achievement-focused goal to \u201cdouble revenue,\u201d they form a strategy to enhance the app\u2019s functionality and set a goal based on that, such as \u201cincrease user engagement by 50%.\u201d This goal is more clearly linked to solving their problem and will help them determine where to direct their resources and energy.<\/p>\n\n\n\n Strategy isn\u2019t just about ideas: It\u2019s a combination of both policy and actions<\/em>. Rumelt explains that, once you have your core problem, you\u2019ll establish near-term, achievable goals<\/a> that make progress toward addressing the problem.<\/strong> He suggests focusing on what you can accomplish in one to three years rather than thinking about what you want to see in 10 years. This is because the prospect of achieving an important goal in the near future is more motivating than a long-term vision and allows leaders to quickly set successive, similarly motivating goals to keep the team engaged. It also makes it easier for teams to put certain goals on hold, knowing they\u2019ll still be able to pursue them in a year or two. <\/p>\n\n\n\n For example, a software company might determine that the core problem they\u2019re facing is customer turnover. Based on the strategy they\u2019ve devised, the company sets a one-year objective to reduce customer churn by 20% through improved onboarding and customer support processes. After achieving this goal within the allotted year, the company is energized and ready to tackle their next challenge. On the other hand, if they set a longer-term goal not based on their strategy, such as increasing sales by 50% within five years, they may feel like they\u2019re on an endless trek toward a nebulous goal many years in the future.<\/p>\n\n\n\n As you formulate your strategy, explains Rumelt, you should incorporate ideas and actions that play into your organization\u2019s strengths and current advantages.<\/strong> This will help you create a strategy that keeps you profitable against competitors. Such advantages may include specialized information or knowledge, better placement in the market, superior efficiency, or superior management. For example, if you know your organization produces a higher quality of products at the same price as your competitors, you should capitalize on this strength as part of your strategy.<\/p>\n\n\n\n According to Rumelt, a powerful strategy must also be coherent. This means that every action you take in pursuing your strategy must align with the policy you\u2019ve set forward.<\/strong> If you\u2019re acting in opposition to your policy, you\u2019ll slow your progress toward overcoming your broad issue because your actions won\u2019t be focused on your core problem. <\/p>\n\n\n\n For example, if a fashion brand\u2019s strategy centers around environmental sustainability, all of its actions\u2014from sourcing materials to manufacturing operations to marketing campaigns\u2014must consistently align with its eco-friendly policy. If they begin using materials from non-renewable sources, their strategy will lose coherence.<\/p>\n\n\n\n Once you\u2019ve identified your core problem and used it to devise a powerful strategy, it\u2019s time to put that strategy into action. <\/strong>Rumelt says this requires you to overcome resistance within your organization and authoritatively make decisions that may not always be popular.<\/p>\n\n\n\n Rumelt explains that the biggest roadblocks in effective strategy implementation often come from the organization itself.<\/strong> This is particularly true of larger, more successful organizations. Such establishments are strong in that they\u2019ve figured out how to run on a large scale, but this success can lead to organizational inertia<\/a><\/em>: They become complacent, and they\u2019re resistant to changing traditions and established systems due to bureaucracy, a lack of clear guidelines, and a culture that values conformity over creativity. <\/p>\n\n\n\n For example, a long-established bank may have found that during their inception, their personal interactions with customers gave them an edge over their competitors. However, as technology in the industry advances, the company struggles to adopt digital banking solutions due to outdated IT systems and resistance from employees accustomed to traditional banking methods.<\/p>\n\n\n\n To overcome organizational resistance, you must get commitment from leadership and cut out distractions. <\/p>\n\n\n\n It\u2019s difficult to break out of traditions and routines, so you need a committed leadership team who is consistently working to implement the strategy and monitor progress<\/strong>. For example, an established university might be working on a comprehensive curriculum overhaul. The leadership, such as the university president and board, can champion the project by engaging with faculty, students, and alumni to build support and address concerns.<\/p>\n\n\n\n You can also overcome resistance by refining your organization\u2019s focus and cutting out distractions<\/strong>, Rumelt explains. Cut down on activities that don\u2019t serve your strategy, either by delegating them to third parties or eliminating them altogether. Additionally, narrow your company\u2019s focus by discontinuing products and services that impede progress or interfere with your strategy. <\/p>\n\n\n\n For example, a software company might discontinue support for legacy products, allowing it to reallocate resources to developing new, more competitive offerings. Or a restaurant chain may simplify its menu, eliminating low-margin items to focus on signature dishes, thus improving kitchen efficiency and food quality.<\/p>\n\n\n\n In addition to overcoming organizational inertia, implementing your strategy requires you to make, communicate, and enforce strong leadership decisions\u2014some of which may be unpopular. Rumelt explains that you\u2019ll have to prioritize certain projects over others, devoting more time, resources, and personnel to the actions that align with your strategy<\/strong>. This may be challenging for a leader who isn\u2019t comfortable telling people what to do and frustrating for team members who feel committed to those lower-priority projects. However, if you can\u2019t make and enforce these difficult decisions<\/a>, your strategy won\u2019t succeed.<\/p>\n\n\n\nOverview of The Crux: How Leaders Become Strategists\u00a0<\/em><\/h2>\n\n\n\n
What Is the Core Problem in Strategy?<\/strong><\/h3>\n\n\n\n
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Broad Issues Comprise Challenges<\/strong><\/h4>\n\n\n\n
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Why Does Identifying the Core Problem Matter?<\/strong><\/h4>\n\n\n\n
How to Identify the Core Problem <\/strong><\/h3>\n\n\n\n
Step 1: Gather Information<\/strong><\/h4>\n\n\n\n
Different Perspectives<\/h5>\n\n\n\n
Comparisons<\/h5>\n\n\n\n
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Step 2: Group the Information<\/strong><\/h4>\n\n\n\n
Step 3: Distill the Information<\/strong><\/h4>\n\n\n\n
How to Use Your Core Problem to Formulate Your Strategy<\/strong><\/h3>\n\n\n\n
Focus on Solving, Not Achieving<\/strong><\/h4>\n\n\n\n
Near-Term Objectives<\/strong><\/h4>\n\n\n\n
Use Your Organization\u2019s Advantages<\/strong><\/h4>\n\n\n\n
Strategic Coherence<\/strong><\/h4>\n\n\n\n
Implementing Your Strategy<\/strong><\/h3>\n\n\n\n
Overcoming Organizational Resistance<\/strong><\/h4>\n\n\n\n
Commitment From Leadership<\/h5>\n\n\n\n
Cutting Out Distractions<\/h5>\n\n\n\n
Making Unpopular Decisions <\/strong><\/h4>\n\n\n\n
When You Lack the Authority to Lead<\/h5>\n\n\n\n