Alert managers often sense problems early. A study by Majorie A Lyles and Ian I Mitroff included data from case histories from upper level managers of major organizations. Eighty percent of these managers said they had become aware of the existence of a major problem before it showed up on financial statements or in other formal indicators and before it was presented to them by others. Informal communication and in tuition were described as the sources of their information.
Problem finding is not always straightforward. Sara Kiesler and Lee Sproull have identified some of the most common errors managers make in sensing problems. They describe three main categories of pitfalls that managers often encounter: false association of events, false expectation of events, and false self perceptions and social image. For example, during the 1960s and early 1970s managers at mainframe computer manufacturers had false expectations: They believed that a significant demand for personal computers did not and probably never would exist. Their expectations were at odds with the reality that developed. Here is a case where these managers past experiences were not a reliable guide to future events. The past can play an important part in decision making but that does not mean that what happened in the past will automatically continue to happen in the future.
It is not always clear whether a situation faced by as manager presents a problem or an opportunity. As we have noted, the two are often intertwined. For example, missed opportunities create problems for organizations, and opportunities are often found while exploring problems. David B Gleicher, a management consultant, provides a useful distinction between the two terms. He defines a problem as something that endangers the organization’s ability to reach its objectives and an opportunity as something that offers the chance to exceed objectives.
The dialectical inquiry method, sometimes called the devil’s advocate method, is useful in problem solving and opportunity finding. In this method the decision maker determines possible solutions and the assumptions they are based on, considers the opposite of all of the assumptions, and then develops counter solutions based on the negative assumptions. This process may generate more useful alternative solutions and identify unnoticed opportunities.
An enormous amount of research has been devoted to problem solving, whereas very little research concerns problem finding and even less concerns opportunity finding. Yet, as Peter Drucker makes clear, opportunities rather than problems are the key to organizational and managerial success. Drucker observes that solving a problem merely restores normality whereas progress must come from the exploitation of opportunities. Drucker links exploitation of opportunities to effectiveness finding “the right things to do, and concentrating resources and efforts on them. When decision making is linked to opportunity finding, it clearly involves choosing actions that can help make a future for the organization. At Nike, Knight and his colleagues turned a problem into an opportunity when they used the NBA rule about the acceptable color of basketball shoes as an opportunity to market the shoe more cleverly.
Among those who have identified an opportunity to exploit are young entrepreneurs Todd Holmes and Louis Amorosa. Noting that many people seemed to be drinking less beer but experimenting with and enjoying a wider range of beers, the two friends founded “Beer Across America”, a microbrewery beer of the month club, in 1991, when they were 23. By 1994 theirs was one of a half dozen beer clubs around the country allowing access to a wide range of brewers and beers. Members receive selected beers, both domestic and imported, via UPS for about the same price as charged by retailers. In 1993 Beer Across America reported $12 million in sales.