Step Back and Re-frame Your Toughest Problems
As CEOs and business owners gain knowledge and experience, they find their problem-solving skills growing. We gain confidence and make decisions with less stress and greater speed. Then we encounter a particularly vexing problem where our knowledge seems inadequate. When this occurs, it often helps to re-frame the problem. Let’s look at an example.
WeWork recently attempted to raise additional financing through an IPO to accelerate its sales growth. As you likely know, they were forced to pull the IPO and replace the CEO. A look at WeWork’s financials makes the problem clear. WeWork did not have a sales growth problem or a funding problem. Wall Street’s disdain for their IPO forced the company’s Board to re-frame the problem. Rather than a sales problem, WeWork had a spending issue. They would never become profitable with their cost structure. In the most recent quarter WeWork reported revenue of $934 million, a run rate of nearly $4 billion a year. However, the company lost $1.25 billion during that quarter, $5 billion a year as a run rate. On a run rate basis their Income Statement looks like this:
Revenue $ 3.7 billion
Expenses $ 8.7 billion
Profit (Loss) $(5.0 billion)
WeWork had some of the most sophisticated venture capital investors supporting it. Yet, they apparently did not see what the Wall Street analysts (and possibly you) so easily saw. It is not uncommon for the best and the brightest to use the frames that have worked so well for them in the past. They are blind to what others with different experiences and perspectives may see.
Look for different ways to frame your vexing business problems. However, old habits and frames are hard to break. A coach or a CEO peer group can be of tremendous value in re-framing your most challenging business issues.
(Note: It may very well be that WeWork's VC investors had already re-framed the problem as one of cost structure and tried unsuccessfully to dump it on the public market.)
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Preston Sumner | President | CEO Focus of Nevada
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