Reframing
Framing is how we look at the world. Everyone has their own frame. In business, framing is how we look at problems. Often, reframing a problem results in better decisions because you get a deeper understanding of the problem. Like Charles Kettering said, "A problem well-stated is a problem half-solved."
How do you reframe a problem? Deconstruct the framing into three elements - assumptions, optionality, and constraints - and analyze what can be changed in the three elements to create a new way of looking at the problem.
The three elements of framing are defined as follows:
1. Assumptions: What assumptions are embedded in the framing and how are they leading to conclusions?
2. Optionality: What are the other possibilities?
3. Constraints: What are the constraints embedded in the framing and how they can be changed?
Thinking through and analyzing these elements with a diverse group of people often results in reframing and better decisions.
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Following is a popular business example of framing and reframing:
Framing:
GE [NYSE: GE] earnings growth strategy was for all its business units to operate in #1 or #2 market position in the markets they served. Otherwise, the business unit was to be closed or sold.
Let's deconstruct the framing:
Assumptions:
1) The strategy will lead to continuous growth in earnings.
2) There is only one way to define a market.
3) Business unit leaders can execute on the strategy.
4) Earnings growth will continue with maintaining #1 or #2 position in the market.
5) Market position is the best indicator of earnings.
6) Earnings growth can't be achieved without #1, #2 position in the market.
7) Market position is defined as size of market share. So, #1 means that GE had the highest market share.
Optionality:
1) Find other ways to get more earnings from existing businesses
2) Launch new products
3) Serve new markets
4) Acquire new businesses
Constraints:
1) Why is #1, #2 market position a constraint? What if we removed that constraint?
2) Is time horizon a constraint? #1 or #2 in a market in what time period?
3) Is market definition a constraint?
4) Are the served markets growing? What can be done to grow them?
What actually happened with framing and reframing at GE? The story goes like this:
After a while the business unit leaders started defining markets narrowly so that they were #1 or #2 in the market [Most likely, the leaders incentives were aligned with achieving and maintaining the market position].
When being #1 or #2 in every market strategy (framing) stopped showing earnings growth, GE CEO at the time, Jack Welch, asked the business unit leaders to redefine the markets in such a way that each business unit did not have more than 10% market share in their respective market (reframing).
Earnings growth followed with reframing.
ProACT-URL is another technique for better decision making.
Adapted from The Economist Education.
