BigDeal Podcast Episode Summary: "How To Get Paid More: The Problem Size Framework"

Release Date: May 26, 2025
Host: Codie Sanchez

Introduction: The Importance of Solving Big Problems

In this pivotal episode of BigDeal, host Codie Sanchez delves into a crucial strategy for entrepreneurs and business owners: identifying and solving significant problems to drive substantial financial growth. Right from the outset, Sanchez emphasizes that solving big problems is directly correlated with making big money. She states, "If you aren't solving big problems, you won't make big money." [(00:00)] This sets the tone for an in-depth exploration of the Problem Size Framework, a structured approach to prioritizing business challenges that can unlock greater revenue.

Reframing Problems as Growth Opportunities

Sanchez introduces a fundamental shift in perspective: transforming how we view problems. Instead of seeing challenges as obstacles, she encourages listeners to reframe them as growth opportunities. "We're going to reframe. I no longer wanna hear you say, in your business, problems. Instead, we're gonna say there's a growth opportunity." [(03:45)] This mindset change is pivotal, as it aligns problem-solving with business expansion and financial success.

Insights from Marc Andreessen on Elon Musk's Problem-Solving Approach

A significant portion of the discussion centers around insights shared by Marc Andreessen regarding Elon Musk's method for tackling issues across his various ventures. Andreessen highlights Musk’s relentless focus on identifying and addressing the biggest problem each week at his companies. "What Elon does is he shows up every week at each one of his companies. He identifies the biggest problem that the company's having that week, he fixes it. Then he finds a new problem." [(05:30)] This approach, termed the "relentless problem loop," underscores the importance of persistent and proactive problem-solving at the highest levels of an organization.

The Problem Prioritization Matrix: A Framework for Decision-Making

Central to the episode is the introduction of the Problem Prioritization Matrix, a tool Sanchez employs to categorize and prioritize business challenges based on their size and risk. Drawing inspiration from Brad Jacobs, Sanchez explains how to evaluate problems to determine which ones offer the most significant financial rewards with manageable risks.

The matrix consists of four quadrants:

1. Big, Low-Risk Deals: Highly desirable but often non-existent.
2. Small, Low-Risk Deals: Easily achievable but offer limited financial gain.
3. Small, Hairy Deals: High difficulty with minimal rewards, typically to be avoided.
4. Big, Hairy Deals: High rewards paired with significant challenges—the ideal focus for growth.

Sanchez emphasizes, "The bigger the earnings potential, the bigger the problem." [(15:10)] By targeting Big, Hairy Deals, businesses can position themselves for substantial growth while navigating significant but solvable challenges.

The Rice Formula Adapted for Revenue Prioritization

Sanchez introduces a customized version of the Rice Formula to quantify and prioritize problems based on their Revenue potential, Impact, Confidence, and Effort. Unlike the traditional Rice formula that includes "Reach," her adaptation replaces it with "Revenue" to align directly with cash flow and financial outcomes.

Components of Sanchez’s Rice Formula:

• Revenue Impact: Potential earnings from solving the problem.
• Cost Impact: Expenses associated with addressing the issue.
• Confidence: Level of certainty in the estimates (e.g., 80% confidence represented as 0.8).
• Effort: Time and resources required to implement the solution.

Calculation:
[ \text{Rice Score} = \frac{(\text{Revenue Impact} - \text{Cost Impact}) \times \text{Confidence}}{\text{Effort}} ]

For example, "If you have a revenue opportunity of a million dollars, minus a cost of $500,000, with 80% confidence, divided by four weeks of effort, yields a Rice Score that helps prioritize this problem." [(22:45)]

This numerical approach allows businesses to make data-driven decisions about which problems to tackle first, ensuring that efforts are directed toward initiatives with the highest financial return relative to their cost and required effort.

Practical Application: Categorizing and Solving Problems

Sanchez shares her personal methodology for applying the Problem Prioritization Matrix within her teams. She advocates for categorizing every issue and focusing exclusively on solving the high-impact, high-reward problems. "Everybody wants a to-do list like this. They want 452 things that they can do to check things off their list to feel good. But what they actually need to do is solve one problem." [(30:20)]

By adopting this focused approach, businesses can streamline their operations, eliminate bottlenecks, and drive significant growth. For instance, Sanchez describes hiring a new executive team member as a Big, Hairy Problem that, once resolved, can lock the business’s future success.

Embracing a Process-Driven Approach to Business Ownership

Sanchez underscores the isolating nature of business ownership and the importance of having a structured process to manage problems effectively. "If you don't know what to do next, it helps to have a buddy to figure out what to do next. And oftentimes I think that buddy can be an equation. You can have a process..." [(35:00)] By implementing the Problem Size Framework and Rice Formula, business owners can reduce anxiety and make informed decisions, fostering a more resilient and scalable business model.

Conclusion: Leaning Into Challenges for Greater Rewards

Wrapping up, Sanchez reiterates the necessity of embracing big challenges rather than avoiding them. She encourages business owners to lean into big, hairy problems, using the Problem Size Framework to identify and prioritize issues that will drive the most significant financial benefits. "If you want to win, you have to rearrange your brain to lean into those big hairy problems." [(40:15)] This proactive and structured approach to problem-solving is positioned as the key to unlocking substantial business growth and financial success.

Notable Quotes:

• "If you aren't solving big problems, you won't make big money." — Codie Sanchez [(00:00)]
• "What Elon does is he shows up every week at each one of his companies. He identifies the biggest problem that the company's having that week, he fixes it." — Marc Andreessen [(05:30)]
• "The bigger the earnings potential, the bigger the problem." — Codie Sanchez [(15:10)]
• "Everybody wants a to-do list like this... But what they actually need to do is solve one problem." — Codie Sanchez [(30:20)]
• "If you want to win, you have to rearrange your brain to lean into those big hairy problems." — Codie Sanchez [(40:15)]

This episode of BigDeal offers a comprehensive guide for business owners aiming to scale their operations and increase their earnings by focusing on solving the most impactful problems. By adopting the Problem Size Framework and utilizing the adapted Rice Formula, entrepreneurs can systematically identify and prioritize challenges that offer the greatest financial rewards, positioning their businesses for sustained growth and success.