Reframing

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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. 

Reframing


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.




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