Transcript #162 Gaining Business Savvy: Answer vs Solution

Intro: Welcome to Arise2Live Podcast, episode 162. Do you know the difference between an answer and the solution? Savvy business owners do and that’s how they make better decisions. So can you.
Arise2Live’s purpose is to bring clarity and perspective so you can have freedom in both your business and family life.
Let’s improve our business savvy.

Scott Weaver: 

Running a business is a challenging thing. There are many problems to be solved and knowing the difference between an answer and a solution is very important. It makes doing the right thing much easier.

Hello everyone, I am Scott Weaver, the Arise2Live business coach and this is the start of a new, 3-part series to help business owners improve their business acumen. Business savvy or acumen is a key part of running a successful company and an element of my Arise2live profit loop system. This podcast series starts out with the importance of knowing the difference between an answer and a solution, the second episode covers a somewhat controversial approach that says there are no solutions only tradeoffs, and the third in the series deals with your iron triangle, identifying the limitations that each one of us has and finding solutions to overcome them.

This series is addressing the the difficult question: How do business owners make the right decisions for their company in a very complex world?

The starting point is knowing the difference between an answer and a solution.

Let me start out how I learned about this. 

When I was younger and not so young, I didn’t really think about the difference between an answer and a solution. I just naturally assumed that they were the same thing. But one of my first classes that I took in my graduate level business school was accounting, and I had a fantastic professor. He was really good at accounting, I learned a lot, plus his research interest was in fraud – fraud detection, and how you can spot it, and what to do about it. So I learned a lot about financial accounting and fraud prevention.

One day in class, we’re doing an example of calculating the return on investment, that is ROI, of purchasing a new piece of equipment for some made up manufacturing company. And so in class, we did the calculations and somebody yelled out a number – 73%. That was the correct answer. But, oh boy, the professor gave the whole class a stern lecture after that. Does knowing that the ROI of 73% give us the solution to purchasing a new machine? No, ROI is a number. It helps us make the decision, but it cannot make a good choice for us. There are a number of factors that go into purchasing equipment than just some financial return. Does this piece of equipment meet the specs? Can the employees run the machine or do they need to be trained? What about supply issues? Yes, I want this magnificent piece of equipment, but can I wait 2½ years to get it?

The professor in my class just hammered it in: a correct answer of 73% is just an answer, it is not a solution, especially when humans are involved. One of the key takeaways from this class is not to manage by spreadsheet when high impact decision are to be made.

So what is business acumen?       3:56

Well, there are other names for it, such as business sense or savvy. It is basically the ability to size up the situation of what’s going on in your company and find a path forward to overcome problems so that the company still makes money and reaches its goals.

To do this actually requires a pretty broad set of skills. There’s financial skills. There are skills in creating value for customers sometimes through technology, somehow just through know-how. There’s skills like leading your team. And there are skills in communicating the goals of your business and where you want to take things.

So business acumen is not so much having a particular skill, but uniting the unique skills into a single solution, a single direction. In other words, we can say that business savvy is the ability to understand the dynamics and the situation of your business and make smart decisions.

That is why business acumen is so valuable. Like a sports superstar, perhaps it is about how much mojo you have during the game.

We all want to increase our mojo, and improving our business acumen, our business savvy, is one way to do it.

This starts with knowing the difference between an answer and a solution. This is important because business owners often face many of these decisions in a single day.

Let’s explore how we get answers.       5:41

We’re talking about answers, not solutions here. One place we get answers is the Internet. There’s all sorts of knowledge and cool wisdom out there that can help you find an answer. There’s YouTube how-to videos to do almost anything and fix almost anything and in that category is podcast and that includes this podcast. But a point here is a podcast or blog or video can’t cover all the possible situations out there, so we just can’t be lazy and grab the first answer that we think will solve our problems. These sources can point us in the right direction by leading us to say, ‘Hey, you should be thinking about these things’. But we need to take it to the next step. We need to actually take the new knowledge, look at our situation, and apply it.

Another place where we get answers from is from spreadsheets and apps. We put some numbers in and the spreadsheets and apps, they produce numbers and the number seems simple. Like my example, 73% ROI. It’s good that we can get hard data and numbers from calculations, and for the most part, they are very useful to a point. You have to be careful because they are an answer, not a solution.

There are also many people out there that will give you an answer to your problems. Well, maybe I should rephrase that and say, “They will give their answer to your problems” and you have to be careful there. Often their advice is something that seems reasonable and good, but it’s only based on their understanding of the situation and how well you explained the true situation that you’re in to them so that they can give good advice. So there are some caution that needs to be there because you’ll get an answer, not necessarily a solution.

I should add that for most of us who’ve gone through school in America, we’re trained to give and take answers. To get into college we take the SAT or the ACT tests. They ask a question, we give an answer and supposedly that tells us that we are good students. In middle school and high school, you know, we’re taking an Algebra class, we solve for X and then we present X like it’s the answer to the universe. In social science, we parrot the answer to solve things like world poverty that the answer that the teacher wants to hear. So in this process, we are trained to give and receive answers.

So when we’re running a business, especially a business in the real world, we need to recognize our tendency to grab answers, but actually to be successful in business, we need to create solutions.

What gives us a solution? How do we come up with solutions?       8:53

Taking a step back, one definition of a solution could be a method or process to deal with the problem. It is a path to resolution or improvement in your company. The answer is the result. The solution is how the result came about. So we hear a lot in business that we need to have good results. Well, to get good results is we need to have a solution that has a process and method to get there. And that takes business savvy and that takes business acumen.

For us business owners, we need to be creative to come up with solutions so that outsiders only see the results and we give them the answer to their problems and they think it’s easy. To be honest, I think it’s a little hard to accept this emotionally. It just seems so unfair, but that is part of the role of being a leader and being a business owner is to make things look easy when they are not.

Here are some practical things to help you come up with a solution, to create a method to get the results you want. These are at the 30,000 foot level because basically I can’t go any lower because I don’t know your particular situation. So please take these as kind of the starting line and take it further. Think about your situation and apply it so that you can move your company forward. I wish I could give you the answer, but there is so many of you out there and each one of you is in a unique situation. So this is where you go to the next step that I can’t do for you. Take that step to help yourself. Take that step to help your company.

• The first tip is just to spend time thinking about the problem or result that you want. Take some time away. Go for a walk. Take a Saturday morning and go for a hike or fishing, whatever. Just so that your brain can think about it undisturbed.

I think the brain is still the most powerful computer out there, and each one of us has one. We can puzzle out solutions even if they are complex, if we put our mind to it.

• The second tip is to include the intangibles in decision making.

This one is a little tricky and takes some practice. So don’t be afraid to make mistakes early on, because in the end, when you do this right, it is so valuable. Intangible things are not seen, so how do you bring out what’s unseen? This is where looking around, seeing how things operate, seeing how people are doing and how they’re reacting to situations and trying to associate those things to the end result.

For example, you are trying to make an improvement on the shop floor and one of your most experienced employees, let’s say a machine operator, says “Don’t do it” with no other explanation. That becomes an intangible that needs to be looked at closer. What is that employee seeing that you’re not seeing? Often employees cannot articulate problems at the business owner level. So we need to go down to their level. We need to ask questions and really try to figure out why does this machine operator say, “Don’t do it”?

This is a well-known secret that when business owners can account for the intangibles, they make better solutions and they get better results.

• The third tip is many solutions include a gut feeling or using intuition to make the deciding factor.

This one also is kind of hard to explain, but it is my thinking that using your intuition, using your gut feeling is very important. Correct intuition comes from the time thinking and putting your mind into it and including the intangibles. That’s doing tip one and tip two. Somehow, our brain processes all this data, and all this insight, and then it gives us a solution, a feeling, intuition or we just can’t explain. But we need to act on it. All business owners have intuition, and they act on it.

These three things, they are thinking time, including the intangibles, and using your intuition and your gut feeling. All of those combine to lead us business owner into making a judgement call. And making good judgment calls, taking action for a solution to a problem that is based on just a judgment call. Well, that is hard to do. Solutions are hard, answers are easier. This combination, this kind of thinking, this judgment call aspect of things, that is just another term of business acumen. I do think that good business acumen is about making good judgment calls in a complex world. A world where thinking and considering the intangibles and then making an intuitive decision to move forward. That is very important.

Here are some practical action items. It’s not a complete list, but I think just doing these is a good start to increasing your business acumen and your business savvy.

Action items       14:50

1. Number crunching and getting hard data has a lot of value, but remember that they give you an answer. Whether it’s a number or some fact, it is just an answer not a solution.

So do the needed calculations and do the needed research to get that hard data, but make sure that you know where the assumptions came from. What was the biasing? What are the limitations of the research? Where are the assumptions that went into the financial calculations? Understanding this from a business owner is really important especially when you are working with people who only see the numbers, who only give answers .

2. Avoid spreadsheet management.  That is, crank out some financial calculations and get a number. Basing everything off of a number on a spreadsheet leads to bad decisions. Without looking deeper, it is very easy to lose reality and get disconnected from what happens on the shop floor or in the field from where the office where the decision makers are. Another bad thing is I’d say the numbers change. Somebody had an incorrect number. Do the spreadsheet, get a different number. Now you have a different answer and you go do something different and it constantly changes. And that just drives everybody in a company nuts. And that leads to bad, bad things. There’s a lot of cases. I’m not going to go into it.

But the key is what is behind these financial numbers. For your company’s PNL and balance sheet, there is something behind every number and a business owner needs to understand that. And it’s tough to understand everything that goes there, but that’s one of the responsibilities of a business owner and that is how success is brought about. So once again, avoid spreadsheet management.

3. Filter out the smooth talk to get to the truth. There are many smart people and employees out there who have difficulty articulating what they see in their head. There’s also many smart salespeople who are trained with smooth talk to give you the answer that you think you want. But as a business owner, take out the smooth talk from the salespeople. You need to help your smart employees articulate the problems and the issues that they’re seeing. This is especially true in technical skilled workers. Their job is to get things technically correct and get things smooth, not to give eloquent speeches. So we need to dig down to the root of things, filtering out all the smooth talk and poorly articulated things to get down to the truth.  This is firsthand experience. When you start doing this, you will have employees who will poorly state things or even worse. But that’s part of the job and you want to be successful, so you put up with it.

In closing, this episode is about how you can spot the difference between an answer and a solution. An answer gives you the end result of something, and a solution gives you the means by which you get there. Business owners should be focusing on producing good solutions, not cookie-cutter answers. This is where business savvy comes in, business acumen. Building up your business acumen does take time. It takes experience. It takes getting out there and just doing it. But I will say this is that business owners across the world are all doing this. So you can too.

Decide on who you’re going to listen to and then have a good number of advisors that can give you different perspectives, that can feed your brain in so you can process it and to use your intuition. Remember, the buck stops with you. At the end of the day, it’s your decision. It is your company. Use your brain, use your intuition to find the solutions that you need for your company.

When your business acumen increases, you, your family, and your company will Arise2live.

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