Strategic Planning

Strategy as
by John C. Camillus
a Wicked Problem
From the Magazine (May 2008)

Summary. Reprint: R0805G In today’s complex world, companies often find

themselves facing confounding strategy problems. These issues are not just tough
or persistent; they’re “wicked”—a label used by urban planners for problems that
cannot be definitively resolved.... more

Over the past 15 years, I’ve been studying how companies create
strategy—the most important responsibility of senior executives.
Many corporations, I find, have replaced the annual top-down
planning ritual, based on macroeconomic forecasts, with more
sophisticated processes. They crunch vast amounts of consumer
data, hold planning sessions frequently, and use techniques such
as competency modeling and real-options analysis to develop
strategy. This type of approach is an improvement because it is
customer- and capability-focused and enables companies to
modify their strategies quickly, but it still misses the mark a lot of
the time.

Companies tend to ignore one complication along the way: They

can’t develop models of the increasingly complex environment in
which they operate. As a result, contemporary strategic-planning
processes don’t help enterprises cope with the big problems they
face. Several CEOs admit that they are confronted with issues that
cannot be resolved merely by gathering additional data, defining
issues more clearly, or breaking them down into small problems.
Their planning techniques don’t generate fresh ideas, and
implementing the solutions those processes come up with is
fraught with political peril. That’s because, I believe, many
strategy issues aren’t just tough or persistent—they’re “wicked.”

Wickedness isn’t a degree of difficulty. Wicked issues are different

because traditional processes can’t resolve them, according to
Horst W.J. Rittel and Melvin M. Webber, professors of design and
urban planning at the University of California at Berkeley, who
described them in a 1973 article in Policy Sciences magazine. A
wicked problem has innumerable causes, is tough to describe, and
doesn’t have a right answer, as we will see in the next section.
Environmental degradation, terrorism, and poverty—these are
classic examples of wicked problems. They’re the opposite of hard
but ordinary problems, which people can solve in a finite time
period by applying standard techniques. Not only do
conventional processes fail to tackle wicked problems, but they
may exacerbate situations by generating undesirable
consequences.

In the areas of public policy, software development, and project

design, experts such as Peter DeGrace, Leslie Hulet Stahl, and Jeff
Conklin have developed ways of spotting wicked problems and
coping with them. DeGrace and Stahl wrote Wicked Problems,
Righteous Solutions: A Catalogue of Modern Software Engineering
Paradigms (1990); Conklin authored Dialogue Mapping: Building
Shared Understanding of Wicked Problems (2006). Policy makers,
in particular, have put this powerful concept to good use, but it
has been largely missing from strategy discussions. Although
many of the problems companies face are intractable, they have
been slow to acknowledge the wickedness of strategy issues.
Between 1995 and 2005, I completed three research projects that
provided insights into wicked strategy problems. First, as part of
benchmarking projects that the APQC (formerly known as the
American Productivity & Quality Center) and the Hong Kong
Productivity Council conducted, I analyzed 22 North American,
European, and Asian enterprises that use innovative strategic-
planning techniques. They include ABB, Alcoa, Honeywell, John
Deere, PPG Industries, Royal Dutch Shell, Siemens, Sprint,
Whirlpool, and Xerox (China and USA). Second, I studied strategy
implementation in depth at seven of these enterprises. Third, a
colleague, Gaurab Bhardwaj, and I tracked DuPont’s
pharmaceuticals business to learn how companies draw up
strategies when returns will accrue only in the long run and are
highly uncertain. Based on these studies, I’ll explore in the
following pages how companies can tame—since they can’t solve
—such problems. I’ll conclude by describing a planning process
that helps PPG Industries tackle wicked issues.

What Is a Wicked Problem?

There are several ways to define a wicked problem, but according
to Rittel and Webber, it has some or all of 10 characteristics. (See
the sidebar “The 10 Properties of Wicked Problems.”) Caveat: The
criteria are not a set of tests that mechanically determine
wickedness; rather, they provide insights that help you judge
whether a problem is wicked.

The 10 Properties of Wicked Problems

In 1973, Horst W.J. Rittel and Melvin M. Webber, two

Berkeley professors, published an article in Policy
Sciences ...


Wicked problems often crop up when organizations have to face
constant change or unprecedented challenges. They occur in a
social context; the greater the disagreement among stakeholders,
the more wicked the problem. In fact, it’s the social complexity of
wicked problems as much as their technical difficulties that make
them tough to manage. Not all problems are wicked; confusion,
discord, and lack of progress are telltale signs that an issue might
be wicked.

In my consulting work, I’ve found that when five characteristics

are present in a strategy-related issue, executives agree they have
a wicked problem on their hands. I’ll list the key criteria below
and use them to show how the challenge of growth that Wal-Mart
faces today may well be wicked.

The problem involves many stakeholders with different values

and priorities.
As Wal-Mart tries to grow faster, numerous stakeholders are
watching nervously: employees and trade unions; shareholders,
investors, and creditors; suppliers and joint venture partners; the
governments of the U.S. and other nations where the retailer
operates; and customers. That’s not all; many nongovernmental
organizations, particularly in countries where the retailer buys
products, are closely monitoring it. Wal-Mart’s stakeholders have
different interests, and not all of them share the company’s goals.
Each group possesses the capacity, in varying degrees, to
influence the company’s choices and results. That wasn’t the case
in 1962, when Sam Walton set up his first store in Rogers,
Arkansas.

The issue’s roots are complex and tangled.

Wal-Mart’s slowing growth in the U.S. is a consequence of, among
other things, a saturated market, its customers’ limited disposable
incomes, and intense competition from rivals such as Target and
Costco. Wal-Mart also faces resistance to imports, criticism about
the wages and benefits it offers employees, and charges that
illegal aliens work in its stores. All this has generated unfavorable
publicity and strengthened people’s opposition to Wal-Mart’s
opening stores in urban areas. Compounding the challenge, some
of the company’s advantages have turned into disadvantages. For
instance, Wal-Mart’s large market share in some product
categories makes it tough to grow same-store sales rapidly. Its
low-cost sourcing practices have rendered it vulnerable to the
health and safety concerns that surround products made in
China. Its supply chain expertise doesn’t help in the case of
fashion and organic products, and its low-price image hurts its
ability to sell upscale products. Moreover, Wal-Mart’s deep roots
in rural America are of little use in overseas markets.

The problem is difficult to come to grips with and changes with

every attempt to address it.
Wal-Mart has several options. It can try to boost revenues and
profits by increasing sales from existing stores or raising prices,
by expanding into urban markets in the U.S., by entering
emerging economies, by diversifying into upscale product lines
and creating new store brands, by forecasting better, or by cutting
suppliers’ margins. These strategies demand different
capabilities, are risky, and sometimes conflict with one another.

Consider two of the least complex options before Wal-Mart. It

could boost profits by hiking prices, but until now, everyday low
prices have helped the company fend off rivals. If consumers
resist higher prices, the retailer’s sales will fall and profits will
drop. To prevent that, Wal-Mart must first modify its value
proposition, stock some upscale products, and develop a brand
persona that warrants higher prices—challenges that have little to
do with boosting profits immediately. Alternatively, Wal-Mart
could enter a fast-growing emerging market, as it has done in
India. It has found the going tough there, however. In India, local
laws don’t allow foreign companies to operate multibrand retail
outlets, so Wal-Mart has had to develop a special business model:
cash-and-carry wholesale stores for local retailers. Besides being
unfamiliar, the strategy contains the nucleus of another problem.
When India’s laws change and allow Wal-Mart to sell to
consumers, it will have to compete with the retailers it supplies.

The challenge has no precedent.

The two strategies we just discussed pose completely new
challenges for the company. For instance, Wal-Mart would have to
alter its brand image—for the first time in its 46-year history—to
justify higher prices. Its recent foray into higher-priced garments
is an experiment and doesn’t appear to have worked. Similarly,
Wal-Mart’s India strategy differs from the M&A strategy it has
used to enter other developing countries. Wal-Mart is a novice at
managing partnerships, but it has had to team up with an Indian
conglomerate, Bharti Enterprises. The group, whose primary
business is telecommunications, wants to tap Wal-Mart’s
expertise to set up a supply chain to get Indian produce onto
Western tables! Wal-Mart will have to work with India’s
bureaucracy to build the infrastructure that will support its
operations, but in the past, dealing with governments hasn’t been
the company’s strong suit.

There’s nothing to indicate the right answer to the problem.

In Wal-Mart’s case, going upmarket could boost profits, but it isn’t
easy for a discount chain to develop a relationship with higher-
income shoppers. Moreover, the retailer cannot ignore its existing
consumers, who shop at Wal-Mart for inexpensive products. How
much of a focus on higher-margin products and higher-income
customers is appropriate? The company has no way of knowing
that in the beginning. In like vein, Wal-Mart’s India strategy may
be an effective way to enter a number of rapidly developing
economies. However, the company will lose some of its
competitive advantage when it shares expertise with local
partners. What’s the optimal level of knowledge transfer? That’s
impossible to estimate; Wal-Mart will find out only after it has
shared best practices—and possibly created new rivals.

Growth is a hard problem for many companies, but it may not

always be wicked. In Wal-Mart’s case, as we have just seen, the
challenge bears all the signs of wickedness.

Managing the Wickedness of Strategy

It’s impossible to find solutions to wicked strategy problems, but
companies can learn to cope with them. In accordance with
Occam’s razor, the simplest techniques are often the best.

Involve stakeholders, document opinions, and communicate.

Companies can manage strategy’s wickedness not by being more
systematic but by using social-planning processes. They should
organize brainstorming sessions to identify the various aspects of
a wicked problem; hold retreats to encourage executives and
stakeholders to share their perspectives; run focus groups to
better understand stakeholders’ viewpoints; involve stakeholders
in developing future scenarios; and organize design charrettes to
develop and gain acceptance for possible strategies. The aim
should be to create a shared understanding of the problem and
foster a joint commitment to possible ways of resolving it. Not
everyone will agree on what the problem is, but stakeholders
should be able to understand one another’s positions well enough
to discuss different interpretations of the problem and work
together to tackle it.

Companies must go beyond obtaining facts and opinions from

stakeholders; they should involve them in finding ways to
manage the problem. Getting a variety of opinions helps
companies develop novel perspectives. It also strengthens
collective intelligence, which counteracts groupthink and
cognitive bias and enables groups to tackle problems more
effectively than individuals, as Tom Atlee, the founder and
codirector of the Co-Intelligence Institute, and Howard Bloom, a
visiting scholar at New York University, have pointed out.
Involving more stakeholders makes the planning process more
complex, but it also expands the potential for creativity. Buy-in is
an important result; companies should look not only for
countermeasures but also for stakeholders to get on board with
some of them.

Companies believe that shareholders and customers are

important stakeholders, but employees are even more crucial.
Their tacit knowledge and commitment often help enterprises
develop innovative strategies. Merrill Lynch Credit Corporation,
for example, places a great deal of emphasis on semistructured
social processes, frequently organizing social events and
encouraging employees to interact with one another. Everyone
lunches in the company cafeteria, which allows employees to mix
with senior executives routinely. A company intranet supports
virtual social interactions such as blog-based discussions.

It may seem trivial, but documenting stakeholders’ assumptions,

ideas, and concerns on an ongoing basis is important. It helps
enterprises understand stakeholders’ hidden assumptions and
gauge the effectiveness of the actions they have taken.
Documents also help executives communicate ideas, which is
essential if plans are to become reality.

All planning processes are, at their core, vehicles for

communication with employees at all levels and between
business units. This is particularly true of processes that tackle
wicked issues. Smart companies emphasize such communication.
At John Deere, corporate planners say that the quality of senior
executives’ communications with divisions is the most important
indicator of the effectiveness of strategy planning. Whirlpool
believes that even the “janitor on the third shift” should be
familiar with the company’s strategic goals. So assembly lines at
Whirlpool shut down on a regular basis to enable managers and
workers to discuss the progress of plans. At Shell a global
electronic network, organized into forums with moderators,
allows hundreds of managers and planners to discuss planning
issues. At Merrill Lynch Credit Corporation, the corporate
planners’ three most important rules for effective planning are
simple: “One, communicate! Two, communicate! And three,
communicate!”

The documentation process is a good way to generate new ideas.

It needn’t be confined to recording decisions already reached;
some companies have been creative in using the process to
communicate the nature of the problems they face. In 2002 SAE
International, an organization that sets standards and provides
training in the automobile, aerospace, and commercial vehicle
industries, was looking for new strategies. It commissioned a case
study on its situation and then invited 30 senior executives with
reputations for creative thinking to discuss the case with its top
managers. SAE recorded the ideas that emerged during the
session and has implemented several of them. Without the case
study that captured the organization’s dilemma, the
brainstorming might not have been productive.

Define the corporate identity.

While a company dealing with a wicked problem has to
experiment with many strategies, it must stay true to a sense of
purpose. Mission statements are the foundations of strategy, but
in a fast-changing world, companies change their “concept of
business,” “scope of activities,” or “statement of purpose” more
often than they used to. A company’s identity, which serves as a
touchstone against which it can evaluate its choices, is often a
more enduring statement of strategic intent.

An organization’s identity, like that of an individual, comprises

the following:
 Values. What is fundamentally important to the company?
Competencies. What does the company do better than others do?
Aspirations. How does the company envision and measure
success?
An identity provides executives with direction and focuses
attention on opportunities and threats. For instance, in August
2007, Campbell Soup decided it would sell off the Godiva
business. The company didn’t base the decision on financial
performance; Godiva is a superpremium chocolate brand and a
profitable business. Trouble is, Campbell’s values, competencies,
and aspirations focus on nutrition and simplicity—and Godiva
chocolates don’t fit in with that self-image. “Although the
premium chocolate category is experiencing strong growth and
Godiva is well-positioned for the future, the premium chocolate
business does not fit with Campbell’s focus on simple meals,”
explained Douglas R. Conant, Campbell Soup’s CEO, while
announcing the decision. In December 2007, the company
reached an agreement to sell Godiva to Yildiz Holding, which
owns the Turkish company Ülker Group, for $850 million. By
relying on its identity, rather than on financial projections,
Campbell made the decision to sell Godiva quickly and painlessly.

Focus on action.
In a world of Newtonian order, where there is a clear relationship
between cause and effect, companies can judge what strategies
they want to pursue. In a wicked world of complex and shadowy
possibilities, enterprises don’t know if their strategies are
appropriate or what those strategies’ consequences might be.
They should therefore abandon the convention of thinking
through all their options before choosing a single one, and
experiment with a number of strategies that are feasible even if
they are unsure of the implications.
To pick a starting point, executives can borrow a leaf from policy
makers. Bureaucrats focus on the few actions they will be able to
take rather than the myriad options before them, Yale University’s
Charles Lindblom pointed out in 1959. Doing so enables policy
makers to analyze options quickly and make decisions that meet
the goals of several constituents. Calling it the science of
muddling through, Lindblom argued that over time, governments
will make progress by constantly making small policy changes. In
a similar way, companies can formulate strategies that will deliver
results in various scenarios—I call these robust actions—and use
Pareto analysis to prioritize a small number of them that will
produce the most impact. That’s what PPG Industries does—as
shown in the exhibit below, “PPG’s Framework for Responding to
Wicked Issues,” and described later in this article.
PPG’s Framework for Responding to Wicked
Issues

PPG Industries develops strategies after seeking and

documenting stakeholders’ assumptions, preferences,
and ...

However, even executives willing to embark on a number of

robust actions often become indecisive when they realize that
every response to a wicked issue will alter the problem the
company faces and necessitate another change in strategy. They
keep analyzing the issue rather than doing something about it.
They would do better to try out some strategy as a starting point;
the consequences will give them a better handle on the real
problem they face. So, to tackle wicked problems, smart
companies conduct experiments, launch innovative pilot
programs, test prototypes—and make mistakes from which they
can learn. Companies like GE and Fujitsu encourage risk taking
and celebrate thoughtfully implemented initiatives even if they
turn out to be business failures. These companies believe that
unexpected and even unsatisfactory results contribute to
organizational learning.

Adopt a “feed-forward” orientation.

Companies design planning systems to work based on feedback;
they compare results with plans and take corrective actions.
Though it’s a powerful source of learning, feedback has limited
relevance in a wicked context. Feedback allows enterprises to
refine fundamentally sound strategies; wicked problems require
executives to come up with novel ones. Feedback helps people
learn from the past; wicked problems arise from unanticipated,
uncertain, and unclear futures. Feedback helps people learn in
contexts such as the movie Groundhog Day, where the protagonist
(Phil Connors) encounters the same set of circumstances every
day, which enables him to perfect his responses over time. Wicked
problems arise in circumstances such as those in the TV series
Quantum Leap, where the protagonist (Sam Beckett) finds himself
in an unfamiliar time and place in each episode. Comprehending
the challenge he faces is itself the initial problem.

To develop a feed-forward orientation as a complement to the

feedback practices they currently use, corporations must learn to
envision the future. In this variation of scenario planning,
enterprises should describe the set of external and internal
circumstances that they would like to see in the next 10, 20, or 50
years. This will open executives’ minds to the range and
unpredictability of possibilities that the future may bring.
Enterprises must then pursue strategies that will increase the
likelihood of those circumstances’ becoming reality. For instance,
in the early 1980s, Alcoa envisioned a future in which aluminum,
rather than steel, would be automobile manufacturers’ metal of
choice. In 1982, it allied with Audi to make that happen. By the
mid-1990s, the collaboration between the two companies had
produced the breakthrough Audi Space Frame, an aluminum
structure into which car body panels are integrated so that they
can perform a load-bearing function, which later became the
industry norm.

Wicked strategy issues don’t occur according to a timetable.

Companies must constantly scan the environment for weak
signals rather than conduct periodic analyses of the business
landscape. (See, for example, George S. Day and Paul J.H.
Schoemaker, “Scanning the Periphery,” HBR November 2005.) It’s
increasingly difficult to identify the boundaries of the arenas
companies should watch. Changes in one industry or segment
often affect companies in others. For instance, who could have
imagined that changes brought about by the computer industry
and the internet would affect the music industry so radically?
Businesses should scan sources of regulatory and technological
change in addition to monitoring suppliers, competitors,
potential entrants, and customers all over the world.

To forge effective approaches to wicked issues, executives must

explore and monitor the assumptions behind their strategies. One
way of doing that is through discovery-driven planning, where
executives list the assumptions underlying the revenues and
income they expect and test the validity of each premise. (See Rita
Gunther McGrath and Ian C. MacMillan, “Discovery-Driven
Planning,” HBR July–August 1995.) By sharing those
assumptions, executives can better align decision making
throughout the organization.

Case Study: How PPG Battles Wickedness

PPG Industries’ strategic-planning practices constitute an
effective response to wicked strategy issues. The company,
founded over a century ago as a plate-glass manufacturer, makes
chemicals and coatings too. With 125 manufacturing facilities and
partners in 25 countries, PPG is a global player. Although it
operates in mature industries, the company has paid dividends
every year since 1899—and has maintained or increased
dividends every year since 1972.

PPG first became aware of strategy’s wickedness in the late 1980s.

Two missteps taught the company that diversification, be it into
other industries or countries, is fraught with peril. Realizing that
growth was slowing down, PPG expanded its portfolio by
acquiring medical electronics businesses from Honeywell and
Litton Industries in 1986 and from Allegheny International in
1987. However, the biomedical industry’s volatility and the units’
focus on customization didn’t fit the company’s competence in
low-cost, standardized production. Seven years later, PPG had to
sell the division. The company’s other wicked challenge was
China, where PPG’s initial focus was glass. Although it entered the
market in 1987, PPG’s operations there were unprofitable until the
mid-1990s. The company then realized that it would have to focus
on coatings if it wanted to make money in China.

These experiences changed the company’s approach to planning

strategy in three ways. First, in the mid-1980s, PPG revisited its
mission and articulated its identity in a document called the
Blueprint. The company stated that it valued steady growth that
met stakeholders’ expectations; that it believed it was capable of
achieving high levels of operational efficiency and using
technology to develop innovations; and that it aspired to remain a
profitable global player in all its businesses. Since then, PPG’s
identity has been more or less unchanged. The 2006 iteration
mentioned the same core values and expressed a similar
aspiration, with some modification in PPG’s goals. It also
identified a richer set of competencies. Although PPG’s business
portfolio has changed, with coatings assuming primacy over glass
in the 2000s, its identity has endured.
PPG’s Alternate Futures

To tackle wicked strategy problems, PPG Industries tries

to envisage different futures it might face. In 2004, it
drew up ...

Second, PPG’s plans have become living documents. They change

frequently as the result of technology reviews conducted by teams
of senior and R&D executives; examinations of the business
portfolio at the corporate level; brainstorming sessions that
promote fresh thinking by executives and employees; and
scanning of markets, technologies, and regulatory issues by its
three business units. PPG’s executives say that the planning
process is continuous, with the company constantly identifying
problems and developing responses. The company often draws up
possible scenarios and works to create the future it desires. The
exhibit “PPG’s Alternate Futures” shows the future scenarios it
drew up in 2004 after making assumptions about two key
variables: the cost of the energy required for its manufacturing
operations and the extent of the opportunity to compete globally
through differentiation. When PPG’s senior executives studied the
scenarios, they identified three kinds of actions that would
deliver results in all four cases:

Emphasize operational excellence through cost efficiency (using

lean manufacturing techniques and improved logistics) and
quality (through Six Sigma programs).
Enhance differentiation through technology-based innovations
and new services that will meet customer needs.
Generate cash to support strategic initiatives, to manage the
portfolio of businesses, and to pay dividends.
Using Pareto analysis, PPG then identified the 20% of strategy
options that would have 80% of the impact that could be derived
from pursuing all of them. Developing a technology that would
reduce the minimum efficient scale of its manufacturing
facilities, executives felt, would be a key action. Reducing the
scale would allow PPG to respond to a range of issues:

It would enable the company to expand into countries and regions

that lacked the demand to support the scale of its current
technology.
It would reduce warehousing and inventory levels as well as
improve delivery times by allowing factories to be located closer
to customers.
It would use less energy in each location and disperse energy
consumption.
 It would require lower levels of investment by the company.
The efforts to reduce the scale would most likely give rise to
newer, more efficient, and more reliable technologies.
Not surprisingly, PPG has invested heavily in developing such a
technology.

PPG’s approach to strategy is comprehensive, with the various

techniques the company uses reinforcing one another and
enabling it to beat back the wicked challenges it faces. Partly as a
consequence, even though PPG operates in highly competitive
markets, it reported revenues of $11.2 billion in 2007—a 13%
increase over 2006—and net income of $834 million, compared
with $711 million in 2006.• • •

When confronting frustrating problems, an enterprise would do

well to recognize that they may be wicked. Moving from denial to
acceptance is important; otherwise, companies will continue to
use conventional processes and never effectively address their
strategy issues. Moreover, when executives look afresh at the
problems they face, they shouldn’t be shocked to find so many
wicked ones. “The easy problems have been solved. Designing
systems is difficult because there is no consensus on what the
problems are, let alone how to solve them,” wrote Mary
Poppendieck, the lean-software development guru, in 2002.
That’s true for many businesses today.
AReview.
version of this article appeared in the May 2008 issue of Harvard Business

JC
John C. Camillus ([email protected]) is the
Donald R. Beall Professor of Strategic
Management at the University of Pittsburgh’s
Joseph M. Katz Graduate School of Business.
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