Give me a problem, I solve it. That's how entrepreneurs work, right? We're problem solvers by nature.
That's great in theory, but here's the thing: How do you know that you're working on the right problem? That you haven't overlooked the root cause? That your chosen solutions are the ones with the highest potential impact?
Answering these questions is actually pretty easy. All you have to do is follow five simple steps. If you're rigorous about the problem-solving method you use, I promise you'll improve your chances of solving the right problem, generating solutions that address the true root cause, and selecting the ideas with the greatest impact.
How can I guarantee it will work? I've personally used these five steps for almost 15 years, and I’ve been teaching structured problem solving for a long time.
Step 1: Pin the Problem
Clearly define the issue at hand. Look at the problem from multiple perspectives. What would your CEO identify as the problem? Your customers? Your front-line associates? You get the picture. Problems look different to different people.
Also, look at causality. All of us have solved a symptom without curing the real disease. When you fix a symptom, the root problem doesn't go away--it simply manifests as a new symptom. Be sure to understand causality. Once you've looked through different lenses and found root causes, you should have a clearly defined problem.
Step 2: Identify the Issues
Start breaking down the problem into subcomponents. For example, your profit problem breaks down into revenue issues and cost issues. The revenue side breaks down further into price and volume issues. On the other side, you've got fixed-cost, variable-cost, and semi-variable-cost issues. As you break the problem down and identify all the possible issues, your odds of finding the true root cause skyrocket. This process also lends structure to your problem solving so you can be deliberate in your investigation and analysis.
Step 3: Generate Hypotheses and Prioritize Proving Them
Once you've laid out all the issues, start thinking about ways to solve each one. Don't actually begin putting solutions into action--just identify possible solutions for each issue. Those possible solutions become the hypotheses you're going to prioritize, analyze, and evaluate. For example, if you have a volume issue on the revenue side of things, you might suggest entering new markets, launching a new product, or expanding distribution channels. All those ideas focus primarily on driving volume. Those are your four initial hypotheses for that particular issue.
Once you've constructed a full list of hypotheses that could solve all the issues, you need to prioritize your efforts. There’s so much waste in our current problem-solving methods because we go out and try to prove or disprove every hypothesis instead of focusing on the ones that could have the biggest ROI.
Use the 80/20 method. Do some rough calculations to see which idea might be the biggest. Don't set out to prove or disprove every hypothesis. Focus your efforts on the ones that could be the most meaningful.
Step 4: Conduct Your Analysis
You can stop twitching now--we finally get to open Excel. But again, the analysis is a focused effort designed to prove or disprove your primary hypothesis. If you prove it's a valuable solution, you'll have some impact and then move on to the next most likely idea. Ring the cash register, folks. You may not find the biggest idea on the first shot but at least you're making a contribution (unlike those folks who analyze everything but implement nothing).
Remember--you don't need all the analysis. You need the right analysis. If you can focus your efforts on proving or disproving your primary hypothesis, you'll be more efficient and get to answers quickly versus getting stuck in the muck of analysis paralysis.
Step 5: Advance Your Answer
Now you need to start selling that recommendation so it gets implemented. Begin by transforming that hypothesis into a clearly worded recommendation. Have the core analyses required to prove your case and not one bit more. People aren't impressed by your million spreadsheets. They're impressed when you can pull out two or three core analyses that prove your case.
Once you've defined that recommendation, put it into a logical, clear storyline. Help your audience understand what the problem is, why we need to solve it, and how your recommendation saves the day.
There you go!
Five easy steps for solving even the most complex problems. Note that the method is about clarity, focus, simplicity, and elegance. It's not an Excel competition. It's about who can crack the biggest problems the fastest and also who can crack the most problems in the shortest period of time. I know it seems simple, but the discipline takes a long time to acquire.
So what are the biggest challenges you face in your problem solving?