Business Problem Solving
The bulletproof problem-solving approach: A seven-step process
Dr. Stephen Hills
Learning objectives
To understand the importance of problem solving for a MBA student.
To consider a variety of problem solving approaches.
To be able to avoid pitfalls and common mistakes in problem solving.
To gain a high level understanding of the seven-steps of bullet proof problem solving.
To apply the process to a problem that you have recently solved yourself.
Why a module on business problem solving?
Background: Managerial skills evolution
The focus of organizational capability has shifted from strategy to execution to complex problem solving.
70s – 80s: Strategy – Where and how to compete
90s -2015: Execution – Business process redesign, getting things done, assuming correct strategic direction
2015 onward: Complex problem solving – Critical thinking, agile and creative problem solving
World Economic Forum Future of Jobs Report (2020): Top 10 Skills
Complex problem solving
Critical thinking
Creativity
People management
Coordinating with others
Emotional intelligence
Judgment and decision-making
Service orientation
Negotiation
Cognitive flexibility
The importance of problem solving
“Problem solving is decision making when there is complexity and uncertainty that rules out obvious answers, and where there are consequences that make the work to get good answers worth it.”
Conn & McLean (2018)
Problems are larger, more complex, and faster moving than ever before.
In this module you will learn how to define a problem, creatively break it into manageable parts, and systematically work toward a solution.
In business decisions are often made under strong time pressure so there is a need for effective problem solving and the recognition you are likely to be operating with imperfect information.
A problem can be solved in a day, but it may not be the best solution. Equally, taking 6 months to decide may be far too slow.
The importance of problem solving
“It doesn’t matter if you are working in the cafeteria or the inspection line of a plant, companies will only hire people who can see problems and organize responses.”
Brooks (2018)
“The world no longer rewards people just for what they know – Google knows everything – but for what they can do with what they know.”
Csapo & Funke (2017)
The importance of critical thinking
“Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action.”
(Ennis, 2015)
Critical thinking is very important because everyday as managers, we have an ocean of decisions to make.
We are bombarded with so many decisions that it’s impossible to make a perfect decision every time.
But by analyzing and evaluating information, critical thinking helps us to make better decisions.
Components of critical thinking
To think critically is to be sceptical, to be analytical, to evaluate the information and evidence we see, and to not take things at face value.
To think independently is to be thought leaders with our own original ideas, and to make up our own mind about what to believe or do.
To think with an open-mind is to look at the various sides of an issue, and to recognize our biases and how they influence what we believe or do.
To be fair and reasonable is to come to a conclusion on the basis of objective and logical thinking.
Problem solving approaches
Gemini Consulting Problem Solving Process
Problem Statement
Background
Idea Generation
Selection
Benefits/Concerns
Critical Concerns Identification
Action Plans
Learning
Leading and managing the people issues
Recognition and
starting the process
Diagnosis
Planning
Implementation and reviewing progress
Sustaining the change
Hayes (2018) Model of Change
Managing change involves seven core activities:
Recognising the need for change and starting the change process
Diagnosing what needs to be changed and formulating a vision of a preferred future state
Planning how to intervene in order to achieve the desired change
Implementing plans and reviewing progress
Sustaining the change
Leading and managing the people issues
Learning
Current
state
Future
state
C
B
A
The Change Process
Coaching – The GROW Model – from Coaching for Performance by John Whitmore
Goal – what are you seeking to achieve?
Reality – what is the current situation? An objective evaluation; confronting the facts
Options – maximise the choices, beware of negative assumptions
What – will you do?
“Coaching is unlocking people’s potential to maximise their own performance”.
In other words, to solve the problems that face them such as growing a business or gaining promotion.
Bullet Proof Problem Solving
The bulletproof problem-solving process is both a complete process and an iterative cycle.
This cycle can be completed over any timeframe with the information at hand.
Once you reach a preliminary end point, you can repeat the process to draw out more insight for deeper understanding.
Pitfalls and common mistakes in problem solving
Pitfalls and common mistakes
Weak problem statements: Vague problem statements that are not specific in terms of:
Establishing what is required to make a decision on solving the problem
The action that will follow the problem being solved
Constraints of the problem-solving
Time frame and level of accuracy required for the problem to be solved
Asserting the answer: Proposing a solution without going through the objective process of problem-solving, based upon anecdotal evidence and existing biases:
Availability bias: Drawing only on the facts that you have to hand
Anchoring bias: Relying too heavily on the first information we learn
Confirmation bias: A tendency to search for, interpret, favor, or recall information in a way that confirms or supports our prior beliefs or values.
Actionable questions
What type of new car should I buy?
Where should I live?
How do we reduce the litter in the park?
How do we grow the business?
Does London need a 3rd runway?
Should we invest in HS2?
What organisational structure do we need?
Should we outsource?
Pitfalls and common mistakes
Failure to disaggregate the problem: Not breaking the problem up into its component parts.
For example, the problem of asthma in Sydney was only solved when broken up in terms of frequency and severity.
When looking at the problem in terms of frequency, asthma was consistent across all of Sydney, thus not revealing any insights to solve the problem.
However, when looking at the problem in terms of severity (i.e., deaths and hospitalizations), there were significant differences between areas.
It was already understood that asthma was linked to tree cover and the areas in Sydney where deaths and hospitalizations were greatest had least tree cover.
Therefore, what was the solution?
Pitfalls and common mistakes
Incomplete analytical tool set: Although some issues can be resolved with ‘back of the envelope’ simple calculations, others require sophisticated tools of analysis.
Failing to link conclusions with a storyline for action: Finishing the project after the analysis is complete, without synthesizing your findings and communicating to diverse audiences.
For example, the problem of the decline of the bee population can get lost in the technical language used in describing the important role that bees play in pollination, but becomes more compelling when linked back to humans, so to stimulate action.
Failing to link conclusions with a storyline for action:
The seven-steps of bullet proof problem solving
The seven-steps process
How do you define a problem in a precise way to meet the decision maker’s needs?
How do you disaggregate the issues and develop hypotheses to be explored?
How do you prioritize what to do and what not to do?
How do you develop a workplan and assign analytical tasks?
How do you decide on the fact gathering and analysis to resolve the issues, while avoiding cognitive biases?
How do you go about synthesizing the findings to highlight insights?
How do you communicate them in a compelling way?
Step 1: Define the problem
Good problem definition is essential.
Specific
Measure success
Time bounded
Meets values of the decision maker
Step 2: Disaggregate the issues
Use a logic tree to disassemble the problems into parts
Use theoretical frameworks to understand drivers of the problem solution
Step 3: Prioritise the issues, prune the tree
Identify which branches of the logic tree have the biggest impact on the problem and which you can most affect
Aim to make the best use of team time and resource
Step 4: Build a workplan and timetable
Make a plan for fact gathering and analysis
Assign team members to tasks with specific outputs and completion times
Step 5: Conduct critical analyses
Start with heuristics – short cuts or rules of thumb – to get an order of magnitude understanding of each component and assess priorities
Understand where there is a need for more work and for more complex techniques
Make frequent use of one-day answers
Step 6: Synthesise findings from the analysis
Assemble findings into a logical structure
Synthesise in a way that convinces others
Step 7: Prepare a powerful communication
Develop a storyline from the conclusions
Governing thought or argument derived from the situation –observation – conclusion
Support with synthesised findings and assembled into component arguments
Lead with action steps or pose a series of questions that motivate action.
Case: Does Sydney airport have adequate capacity?
Step 1: Problem definition
Will Sydney airport capacity be adequate in the future?
The problem statement was bounded around passenger airport capacity, so excludes policy factors that might warrant a second airport, such as:
Greater accessibility
Safety
Environmental factors like noise
Alternatives like a very fast train link between major cities
Step 2: Problem disaggregation
Break down the problem of airport capacity in terms of supply minus demand.
If supply exceeds demand, then Sydney airport does have adequate capacity.
If demand exceeds supply, then Sydney airport does not have adequate capacity.
But how do we define and measure supply and demand?
The number of passengers the airport can process
The number of passengers wanting to use the airport
How to model demand?
GDP growth?
Reasons for travelling to Sydney?
Flight Costs (aviation fuel costs)
Runway utilisation
Operating hours
Planes per hour
People per plane
Runway Capacity
Plane Type
Dimensions
Number of Runways
Not a short term solution
Which Areas Can Be Most Easily
Influenced to increase capacity?
Step 3: Prioritize the issues, prune the tree
We can reframe the question of ‘will airport capacity be adequate?’ to ‘how can capacity be increased to ensure it is adequate?’ because this provides an actionable solution.
This helps us to prioritize the issues and prune the tree by focusing on the factors that can be actively managed to increase capacity.
First, it is easier to actively manage supply (airport capacity) than demand (airport use).
Then, of the the three ways that supply has been defined, in the short-term, the number of runways is fixed and so is runway capacity, defined in terms of size of aircraft that can fit on to a runway at a given time.
Therefore, in prioritizing the issues and pruning the tree, we should conclude that the variable that we can actively manage and, therefore, the key to solving this problem is runway utilization.
How can we define runway utilization?
Steps 4 and 5: Workplanning and analysis
Having concluded that runway utilization is the key, we can define this in terms of:
Hours of operation
Spacing between aircraft movements
Number of people per airplane
Our analysis should then focus upon which of these are the variables that we can actively manage to increase runway utilization and, therefore, airport capacity.
Hours of operation are limited by curfew periods, weather and maintenance, none of which can be actively managed.
Spacing between aircraft movements would require reducing the time between take-offs and landings, reducing safety, so not a good option for increasing capacity.
Therefore, our most viable solution is to increase people per plane.
Slot pricing favouring larger planes
Light aircraft policy
Reduce further the times between take-offs and landings
Difficult to change because of noise
Steps 6 and 7: Synthesis and storytelling
Supply is more actively manageable than demand.
Runway utilization is the most actively manageable component of supply – more so than number of runways and capacity per runway.
People per plane is the most actively manageable component of runway utilization – more so than hours of operation and spacing between aircraft.
Policies that can increase people per plane are:
Higher slot prices (the price airlines pay for permitted take-off and landing times) that require airlines to use larger planes to be more profitable.
Banning light aircraft from using the airport at peak hours.
Conclusions
Conclusions
Complex problem solving is a critical skill for MBA students.
Problem solving should follow a rigorous process, such as the seven-step process of bulletproof problem solving (although there are others).
Disaggregating problems into component parts using logic trees allows you to isolate the most important analyses.
Prioritizing analyses avoids working on parts of the problem that don’t contribute much to the solution – keeping you on the critical path, e.g. focusing on actively manageable variables.
We can use simple or sophisticated tools for analysis.
We need to synthesize our findings and tell a compelling story to convince someone to act.
Workshop: Which three MBA programmes should I apply to and in what order?
Step 1: Define the problem
Which three MBA programmes should I apply to and in what order?
Constraints:
Assumes you have already concluded that you are going to undertake postgraduate study and that an MBA is the course you want to study.
You can only apply to three MBA programmes and you should rank them in terms of first, second and third choice.
There is no point applying to MBA programmes for whom you do not meet the entry requirements.
Step 2: Disaggregate the issues
List the factors that mattered to you in terms of a good MBA programme to apply for, such as:
University reputation
Mode of learning
Location of university
Curriculum
Teaching staff
Cost
Funding
Define the factors in terms of what they mean and how you could measure them.
For example, university reputation means a university respected by the kind of employers I would want to work for after my MBA and could be measured using data from university league tables – using ranking to assign points to the universities being considered.
Step 3: Prioritise the issues, prune the tree
Starting with 100%, weight the factors in terms of importance to you.
For example, university location may be of utmost importance to you, so you give it a 40% weighting.
Prune the factors that are not on your critical path by:
Removing factors that are not sufficiently important to you (i.e., have an insignificant weighting)
Removing factors that conflict with others (e.g., if a student wanted to study their MBA remotely, this would remove the need to consider location of the university).
Collapse factors that can be encompassed in a single factor (e.g., cost and availability of funding could be collapsed into a single factor of affordability).
Remove factors that are not differentiating between your choices (e.g., if you have won a large scholarship, affordability would not differentiate between your choices).
Steps 4 and 5: Workplanning and analyses
Undertake ‘back of an envelope’ simple analysis to establish a list of viable MBA programmes to go forward to more detailed and sophisticated analysis.
Collect data (i.e., fact gathering) against your final list of weighted factors for the MBA programmes selected in the previous step.
Calculate a total weighted score for each MBA programme and rank the programmes.
How does this compare to the MBA programmes you applied to?
Steps 6 and 7: Synthesis and storytelling
Prepare a compelling pitch to your parents or significant others to explain your choice of MBA programmes to apply for.
Present this to the class.