Success in business is tightly related to solving everyday business problems efficiently and effectively. Unfortunately, managers often fail because they are unable to solve the right problems. I have derived a simple framework to address the root causes of these failures. Approach-ing problem solving through, 1) framing, 2) formulating, 3) contextualizing, and 4) solving provides a proven approach leading to success.
Solving business problems is at the heart of the everyday activities of any senior manager. Therefore one would think that managers are good at solving business problems. Unfortunately, experience shows that this is not the case. Most failures identified can be explained by one of the following three procedures or a combination thereof.
Jumping to a solution before the actual problem is identified
A manager is confronted with poor sales figures. He over-eagerly concludes that his sales force must be insufficiently qualified. Therefore, additional sales training is deemed necessary. But maybe the real problem is that the product or service to be sold does not offer any perceived value to the customers.
Dealing with symptoms rather than root causes
The number of failed transaction settlements has increased significantly during the recent market turmoil. An in-depth analysis of the processes performed shows that most mistakes occur during system entry by middle-office employees. As a consequence an additional control process is introduced, each entered transaction requiring validation by a second employee. But maybe the real problem is that the used software is cumbersome in supporting the data entry processes of the middle-office employees, which leads to a natural percentage of errors.
Re-interpreting a business problem as a technical problem
The head of the investment management division is concerned with the poor investment performance. Analysis shows that risks which materialized were beyond what was expected. From this, he concludes that the efficiency of risk management system used is insufficient and orders the implementation of a state-of-the-art risk management software. But maybe the problem was that investment decision taken were not in line with the investment product’s value proposition and the used risk management software consistently translated them into portfolio positions.
In Figure 1, I illustrate these three common, but flawed approaches. In the first approach, managers believe they have seen it all in the past and therefore no analysis is necessary. But if that were so, why was there a problem at the first place. More thorough managers start by analyzing the problem and identifying the symptoms that lead to it. But they fail to distinguish between symptoms and root causes. In the third approach, which is by the way more common that you think, managers rephrase a business problem as a technology problem. This is very common with managers having a technical background. But also non-technical managers resort to this approach in order to blame the tech-guy. The problem with this approach is that the assumption of the business problem going away if the technical problem is solved is in most of the cases flawed.
Problem formulation profoundly determines what problem is solved and ultimately the quality of the solution.
A simple framework
Based on research by M. Baer et al. (2013), I have developed a simple four step framework, called the FFCS (Framing – Formulating – Contextualizing – Solving) framework, which helps assuring that the right problem is solved.
- Framing – Conceptualize the problem by identifying all its symptoms through asking questions, rephrasing, and identifying patterns.
- Formulating – Identify the root causes associated with the identified symptoms without discussing possible solutions.
- Contextualizing – Define the constraints and requirements a solution must meet to be implementable. Set realistic boundaries.
- Solving – Develop possible solutions to the formulated problem, focusing on quality rather than quantity. Play with possible solutions, question them, debate them, and reject the ones that do not work or are not viable.
The proposed framework splits the problem solving activity into four distinct phases. The framing phase focuses on identifying all symptoms and empirical regularities correlated with symptoms. A web of symptoms is the outcome. During the formulating phases, potential root causes are derived from the symptoms web, structured and prioritized. A fishbone diagram helps in structuring. Before entering into the solution discovery mode, the context in which the problem should be solved is defined by answering questions like What are implementation constraints?, What requirements must be met?, What comprises a valid solution? or Who should be involved in the solving process?. Finally solutions, addressing the identified root causes, are developed, discussed, questioned, validated, selected, and eventually implemented.
- The proposed framework, executed in a team environment, allows analyzing the problem from different angles. It supports the compilation of heterogeneous information and cognitive structures.
- Through separating the identification of symptoms from the problem solving phase through a root cause analysis, the framework increases the probability that the real problem is solved.
- The contextualizing phase assures that ideas and possible solutions are only as brilliant as can be implemented. Unrealistic optimal solutions are discarded and preference is given to sub-optimal but viable ones.
Baer, Markus, Kurt T. Dirks, & Jackson Nickerson (2013). “Microfoundations of strategic problem formulation”, Strategic Management Journal, Vol. 34, pp. 197-214