The trick is in adopting a problem-finding approach, as a precursor to solving it, says Vasudevan Kidambi
Maximising financial growth and efficiency is a top priority for businesses seeking to achieve long-term success. “The Art of Problem Finding” is a powerful tool for uncovering hidden value and optimising
financial performance. This article explores how adopting a problem finding mindset can help businesses unlock hidden value and drive financial growth, illustrated through practical, real-life scenarii.
Shifting the focus: Beyond traditional financial metrics
Problem-finding involves exploring beyond traditional financial metrics and delving into deeper aspects of business operations to identify opportunities for value creation. While financial reports and performance indicators provide valuable insights, they may not reveal the full picture of financial potential. Problem-finding encourages businesses to look beyond the obvious and discover hidden value that can drive financial growth.
Take, for instance, a case from a trading company specialising in luxury goods. Despite enjoying a strong gross profit margin, the company noticed a discrepancy between gross profits and net profits. A problem-finding approach led to a deep dive into the financials, uncovering that routine bank charges and payment processing fees were silently eroding the company’s profitability. By renegotiating these fees and restructuring payment terms, the company saved substantial costs, directly improving its bottom line.
Unlocking customer-centric insights
One approach to unlocking hidden value is to analyse customer data and market trends. Understanding customer preferences, behaviours and pain points can provide valuable insights into opportunities for new products or services. For example, in the jewellery industry, a retailer had been offering significant discounts, often due to sales closing pressures from the salespeople. Since the average ticket size of each transaction was quite high, the management often gave in to these pressures.
However, a problem-finding approach revealed that the key issue was a lack of understanding of the impact of a one per cent discount. If the salespeople had employed more convincing communication techniques to limit the discounting rate, the company could have significantly increased its net profits due to the value of every one per cent saved.
By recalibrating the incentive scheme to benefit both the company and the salespeople, the retailer dramatically improved net profits. The sales team also benefited, going home happily with hefty incentive
amounts, creating a win-win situation for all involved.
In another scenario, a facilities management company analysed customer feedback and operational data to identify pain points in service delivery. The data highlighted a pattern where maintenance requests were being delayed due to inefficient scheduling practices. By restructuring the workflow and prioritising urgent requests, the company improved service delivery times, leading to higher customer satisfaction and, consequently, increased contract renewals and upsells.
Internal operations: A goldmine waiting to be explored
Another valuable source of hidden value is internal operational data. Analysing data from various departments, such as sales, marketing and operations, can uncover inefficiencies and areas for improvement. For example, a detailed analysis of sales data at a tyre distribution company revealed that certain products were consistently underperforming in specific regions. Further investigation showed that these regions had unique climate conditions that the tyres were not suited for. By introducing a product line better suited to these conditions, the company was able to boost sales and improve customer satisfaction.
Similarly, a leading company in the facility management sector faced high operational costs due to leasing its fleet of vehicles. Upon reviewing the cost structure, a problem-finding approach suggested
purchasing the vehicles instead of leasing them. This change not only reduced long-term costs but also provided the added benefit of branding the vehicles, contributing to nearly a million dollars’ worth of
brand visibility.
Exploring new business models: Think beyond the status quo
Problem-finding also involves exploring new business models and revenue opportunities. Traditional approaches may focus on incremental improvements to existing products or services, but problem-finding encourages businesses to think creatively about new possibilities. For example, a retail company that traditionally sold products exclusively through brick-and-mortar stores explored online sales channels as part of a problem-finding exercise. This shift not only opened up a new revenue stream but also allowed the company to reach a broader customer base, significantly boosting its financial performance.
Fostering a culture of innovation and experimentation
To effectively unlock hidden value, businesses should foster a culture of innovation and experimentation. Encouraging employees to explore new ideas, challenge existing processes and experiment with different approaches can lead to valuable discoveries. A software company, for example, held regular innovation workshops that encouraged crossfunctional teams to collaborate on solving persistent customer issues. This initiative led to the development of a new feature that became a unique selling point for the company, driving customer acquisition and retention.
Leveraging advanced analytics for deeper insights
Leveraging advanced analytics and data science techniques can further enhance the ability to identify hidden value. Data analytics tools and machine learning algorithms can analyse vast volumes of data to uncover patterns and trends that may not be immediately visible. For example, a retail chain used predictive analytics to forecast seasonal demand for specific products, allowing them to optimise inventory levels and reduce overstock costs. Similarly, a manufacturing company utilized business intelligence tools to analyse energy consumption patterns, identifying opportunities for significant cost savings by optimising their production schedule.
Conclusion: Embrace problem-finding to unlock financial growth
In summary, adopting a problem-finding mindset can help businesses unlock hidden value and drive financial growth. By analysing customer data and internal operations, exploring new business models and fostering a culture of innovation, businesses can uncover opportunities for improvement and enhance financial performance. Embracing problem-finding enables organisations to discover and capitalise on hidden value that traditional approaches may overlook.
In a world where every financial advantage counts, the ability to uncover and capitalise on hidden value can make the difference between staying competitive and falling behind.
Vasudevan Kidambi is Managing Director, Navo Management Consultants and Director, Zenesis Corp. He is a Certified Independent Director and acclaimed author of books on Generative AI and corporate strategy. He may be reached at vasudevan.k@navoinc.com
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