Learning to love – and solve – multivariate problems

When I was 5 or 6 years old, I did not understand what ‘the straw that broke the camel’s back’ meant. One day, my father made a simple experiment. He made a mini-table from card paper, then loaded several matchsticks one by one on its surface till the table collapsed under their weight. Since I had observed the process, I knew the table did not collapse due to one matchstick. That small experiment demonstrated to me how we may wrongly attribute causation – or apportion blame – to one factor, when the real problem may be more complex. 

Political expediency can often lead to multivariate problems being framed as black-and-white issues. Such reductionist framing further leads to ineffective, single point solutions.

These days, we are seeing much evidence of this logically flawed way of thinking. The UK economy is tanking? Blame Gordon Brown! The banks screwed up? Flog Fred Goodwin and strip him of his knighthood*! Don’t understand where the economy is headed? All we need is political will and we will be magically out of this mess! 

Now that governments have shored up banks’ balance sheets – a phenomenon reported as “taxpayers now own the banks”, never mind UKFI or our considerable fiscal deficit, which just means that some random foreign country creditor really owns our collective derrières, but I digress – they are indulging in piecemeal ‘fixing’ of problems. Limit executive compensation, ordered Mr Obama. Why, in the UK, our own Mr Brown is reportedly cross at the mention of bonuses, never mind banks are contractually bound to pay bonuses to many, such as sales people in parts of the bank that are not investment banks. Labour Party’s deputy leader, Harriet Harman, rashly declared a former bank chief’s bonus unacceptable in the ‘court of public opinion’. It is worth noting that as a lawyer and an elected MP, Ms Harman should have greater regard for the courts of law than the court of public opinion. 

All these knee-jerk reactions point to one thing. That few have the intellectual capacity to comprehend the complexity of strategic problems, leave alone solve them using perfect rationality. In a rush to populism, politicians are wont to framing problems in a black-and-white, or you-are-with-us-or-you-are-against-us mode.  

Multivariate problems are nothing to be scared of. They provide an opportunity for creative problem-solving, provided the goals are clear.

Business problems, like political ones, are complex and multivariate too. There are strategic goals, problems, people and their agendas, limited executive time and resources, to name but a few. External factors such as competitors and regulators are also to be considered in framing and solving strategic problems. Can businesses afford to focus on one variable and ignore all the others? Probably not, for that would not be very different from the politicians’ handling of the current crisis and would result in equally arbitrary, quick-fix solutions. 

Multivariate problems are nothing to be scared of. The more the variables, the more the ways to combine and permute them, to build trade-offs, to be creative in problem-solving, provided the goal, the objective is clear!

I know some of my clients are currently working on their growth plans. Which of the many variables mentioned earlier can they afford to ignore? Probably none. But can they prioritise some goals over others? Definitely. With home markets stagnating, many British companies are working on their international growth and consolidation. How might they allocate scarce resources? Well, the goals would drive the allocation of resources and executive time. What about risk and uncertainty? Businesses take calculated risks and deal with uncertainty at all times not just in tough times like the present, when they might have to be a tad more cautious. 

Politicians can learn to love – and solve – multivariate problems. It may however need them to admit they were wrong in the first place. 

All this does not mean that businesses never make sub-optimal decisions or mistakes. They do. After all, some banks did allow unbridled trading in mortgage assets with obscure risk profiles which has contributed greatly to the current economic crisis. But mostly, they are acutely aware that complexity is unavoidable and reductionism is not the best answer. Accountability in businesses, contrary to popular press, is enforced quite strictly. 

Perhaps businesses can teach politicians to love – and solve – our multivariate problems. But that would first require the politicians to admit that they were wrong about something and that their responses were knee-jerk and driven by no clear goals except populism.

Making them admit it? Now that is a multivariate problem quite in its own league.

*Never mind Lord Black, Lord Archer and Sir Allen (Stanford) are all retaining their honours.

Related reading:

Language: a challenge in becoming a global business

Beyond privilege: Managing information asymmetries

Gut feel: irrationality or beyond rationality?

7 thoughts on “Learning to love – and solve – multivariate problems

  1. SY,
    Every allegation that opposition makes against a ruling party would involve an issue that had been building up for years and that it just happened to ‘break the thresh hold level’ during the current rule.And the issue would have been caused by both the ruling and opposition parties when they ruled.
    For a problem that the opposition highlights, one of the causing variables may have been the opposition itself(when they ruled).Intellectual capabilities do not come into picture here.That defeats the purpose /existence of ‘opposition’.

    -Nikhil

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  2. Shefaly, I believe in this too. Life is very complex and in fact there is never any one reason for anything. Whether for a falling economy, a failed project or a failed relationship.

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  3. Shefaly,

    In the solutions of problems, sometimes there is a principle that we often overlook. Occam’s Razor.

    It very simply states that when there are multiple solutions to a problem, the simplest one is the best.

    Getting politicians to agree to the truth is net to impossible, because they are precisely that – politicians! Has they been better, they would have graduated to statesmen..

    @Milind: Thanks for your note. Occam’s Razor is often the common denominator to which business or political leaders may often resort. But I prefer HL Mencken’s wisdom here: “There is always an easy solution to every human problem – neat, plausible, and wrong.”.

    Truth is a relative construct too based on how the various publics frame the problem and see the world, as well as assess priorities and resource allocation. Those differences need to be understood and negotiated around, not just in politics but in business too. On statesmen versus politician, I think they are essentially people whose ethical frameworks, time lines and worldview differ greatly.

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  4. Always learn a thing or two reading your blog, Shefaly. Thanks for writing so clearly.

    In recent months, particularly in light of the controversy surrounding reforms to the American health care system – certainly a multivariate problem if ever there was one – I have been alarmed by the very harsh and, at times, vitriolic stance that politicians, business leaders and even some journalists (mostly TV presenters) have taken with only what seems to be only the most minimal of understanding of the overall issues at hand. This seems to be happening on both sides of the political spectrum.

    That so many people feel so vehemently about what they don’t really understand must surely make finding the best possible solution even more difficult. With everyone shouting and stamping their feet, often in very divisive ways, it seems unlikely that our key decision makers (i.e., Congress) will have an opportunity to table an open, honest and constructive conversation in which to progress insight into possible solutions.

    Just as in politics, strategic business decisions should not be approached from an emotional standpoint. I wonder how many poor business decisions were made because a senior manager could not admit that his or her project was wrong-headed or out-of-touch? Difficult business issues require a logical and methodical approach, not an outburst of heated words and emotions. This is true even in the best of economic climates, but even more so in difficult times.

    (On a side note, I certainly don’t claim to have a thorough understanding of all the issues surrounding health care reform. However, I am willing to learn about and debate the various points in a calm and constructive manner.)

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