When we reflect on our daily activities, we often find ourselves impressed by all that we accomplish. Yet, by the end of the day, we're left with the feeling that there's never enough time, or that we should be doing more. This sentiment isn't confined to our personal lives; it resonates deeply in the business world. Small and mid-sized businesses (SMEs), leaders and organisations are constantly striving to overcome challenges, improve processes, and execute plans. This is a perpetual problem-solving cycle. But during all this activity, one crucial step may be overlooked: Identifying the Problem. So, I ask you, “What’s your Problem?” How do you go about identifying it?
As an experienced business consultant, I have witnessed numerous instances where leaders, both in large organisations and SMEs, dive headfirst into addressing issues without taking the time to clearly define the problem they aim to solve. In this article, we will dig into the importance of problem identification and why it is important.
What's Your Problem?
Many organisations operate on limited budgets and challenging timelines. This can lead to a rush to find solutions, often without a thorough understanding of the underlying problem. The "why" of the problem is often overshadowed by the urgency of "what to do." However, the failure to identify and formulate the problem correctly can have negative consequences, including misallocation of resources (ie.: money, time, people), and failed execution of initiatives that could have a negative impact on the organisation's growth.
Additionally, the constant drive for solutions has become deeply ingrained in our work culture. Leaders and business owners often feel an obligation to offer immediate solutions instead of fostering a culture where teams are empowered to collaborate and devise solutions themselves.
Aligning with Strategy
In any organisation, decisions and actions should be aligned with their strategy. The problem identification process plays a key role in ensuring this alignment. Clear problem definition empowers leaders to assess whether it aligns with their strategic goals. This alignment ensures that the resources invested in solving the problem contribute to the broader mission and vision of the organisation.
Steps to Problem Identification
Identifying and defining a problem correctly is the first step. To ensure that your organisation is on the right track, follow these steps:
1. Start with the Why: It might be a rhetorical question, but it is important to rationally understand why we need a solution. What are we achieving? What is “from – to”? By starting with the "why," you can gain a deeper understanding of the problem's significance.
2. Justify the Need: examine if this problem is aligned with your organisation’s strategy. Does solving this problem contribute to your long-term vision? If this is not, it might be necessary to reconsider whether it's the right problem to address. Assess the level of feasibility of solving the problem.
3. Define the Problem: Once the "why" and the impact are established, proceed to define the problem. Employ data, insights, learnings from previous attempts to solve it, and stakeholder input to create a clear problem statement that leaves no room for ambiguity.
4. Prioritise: In cases where multiple problems surface, assess the urgency and potential impact of each and decide which one requires immediate attention.
5. Engage Stakeholders: Involve key stakeholders in the problem identification process, as their perspectives and insights provide a more holistic view.
6. Set Measurable Objectives: Clearly define what success looks like. What are the metrics will be impacted?
7. Develop Actions: Formulate a strategy that outlines the steps, resources, and timeline, ensuring alignment with your overall business strategy.
8. Implement and Monitor: Execute your plan and closely monitor its progress, consistently review progress.
9. Learn: Learn from your experiences, adapt, and continuously refine your approach.
Case Study: The Power of Problem Identification
To illustrate the impact of effective problem identification, let's consider an example I am quite confident many of you have experienced.
Company ABC, an SME in the manufacturing sector, was experiencing declining profit. The initial approach was to address the Sales team to brainstorm tactics such as promotions, volume discounts, extended credit terms, sales team incentives, price freezes, free delivery, and other options. All these potential solutions would come at a cost, as they would impact profits but compromise the profit margin. However, upon closer examination and problem identification, they realised this issue was driven by rising production costs, specifically raw materials.
By aligning this problem with their procurement strategy, they focused on optimising their negotiating better supply contracts. This shift in perspective led to substantial cost savings and, ultimately, a significant increase in net profit and profit margins.
Another common scenario is when marketing promotions are proposed as the solution, without a thorough understanding of the actual problem that needs addressing, such as issues related to visibility at the outlet level, limited product range, or quality complaints.
In summary, large and SME organisations face an infinite number of challenges and opportunities. However, to succeed in this market, and become more efficient with the limited resources available (time, people, money) leaders need to focus on problem identification. By starting with the "why," aligning with the organisation's strategy, and following a structured approach, organisations can elevate their efficiency in addressing what truly matters.
Commencing with the correct problem can make all the difference in achieving sustained growth and realising the full potential of your business. So, I ask you again, what is the real challenge you are facing? "What's Your Problem?".
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