problem solving cycle in business studies

Effective Problem-Solving Techniques in Business

Problem solving is an increasingly important soft skill for those in business. The Future of Jobs Survey by the World Economic Forum drives this point home. According to this report, complex problem solving is identified as one of the top 15 skills that will be sought by employers in 2025, along with other soft skills such as analytical thinking, creativity and leadership.

Dr. Amy David , clinical associate professor of management for supply chain and operations management, spoke about business problem-solving methods and how the Purdue University Online MBA program prepares students to be business decision-makers.

Why Are Problem-Solving Skills Essential in Leadership Roles?

Every business will face challenges at some point. Those that are successful will have people in place who can identify and solve problems before the damage is done.

“The business world is constantly changing, and companies need to be able to adapt well in order to produce good results and meet the needs of their customers,” David says. “They also need to keep in mind the triple bottom line of ‘people, profit and planet.’ And these priorities are constantly evolving.”

To that end, David says people in management or leadership need to be able to handle new situations, something that may be outside the scope of their everyday work.

“The name of the game these days is change—and the speed of change—and that means solving new problems on a daily basis,” she says.

The pace of information and technology has also empowered the customer in a new way that provides challenges—or opportunities—for businesses to respond.

“Our customers have a lot more information and a lot more power,” she says. “If you think about somebody having an unhappy experience and tweeting about it, that’s very different from maybe 15 years ago. Back then, if you had a bad experience with a product, you might grumble about it to one or two people.”

David says that this reality changes how quickly organizations need to react and respond to their customers. And taking prompt and decisive action requires solid problem-solving skills.

What Are Some of the Most Effective Problem-Solving Methods?

David says there are a few things to consider when encountering a challenge in business.

“When faced with a problem, are we talking about something that is broad and affects a lot of people? Or is it something that affects a select few? Depending on the issue and situation, you’ll need to use different types of problem-solving strategies,” she says.

Using Techniques

There are a number of techniques that businesses use to problem solve. These can include:

• Five Whys : This approach is helpful when the problem at hand is clear but the underlying causes are less so. By asking “Why?” five times, the final answer should get at the potential root of the problem and perhaps yield a solution.
• Gap Analysis : Companies use gap analyses to compare current performance with expected or desired performance, which will help a company determine how to use its resources differently or adjust expectations.
• Gemba Walk : The name, which is derived from a Japanese word meaning “the real place,” refers to a commonly used technique that allows managers to see what works (and what doesn’t) from the ground up. This is an opportunity for managers to focus on the fundamental elements of the process, identify where the value stream is and determine areas that could use improvement.
• Porter’s Five Forces : Developed by Harvard Business School professor Michael E. Porter, applying the Five Forces is a way for companies to identify competitors for their business or services, and determine how the organization can adjust to stay ahead of the game.
• Six Thinking Hats : In his book of the same name, Dr. Edward de Bono details this method that encourages parallel thinking and attempting to solve a problem by trying on different “thinking hats.” Each color hat signifies a different approach that can be utilized in the problem-solving process, ranging from logic to feelings to creativity and beyond. This method allows organizations to view problems from different angles and perspectives.
• SWOT Analysis : This common strategic planning and management tool helps businesses identify strengths, weaknesses, opportunities and threats (SWOT).

“We have a lot of these different tools,” David says. “Which one to use when is going to be dependent on the problem itself, the level of the stakeholders, the number of different stakeholder groups and so on.”

Each of the techniques outlined above uses the same core steps of problem solving:

• Identify and define the problem
• Consider possible solutions
• Evaluate options
• Choose the best solution
• Implement the solution
• Evaluate the outcome

Data drives a lot of daily decisions in business and beyond. Analytics have also been deployed to problem solve.

“We have specific classes around storytelling with data and how you convince your audience to understand what the data is,” David says. “Your audience has to trust the data, and only then can you use it for real decision-making.”

Data can be a powerful tool for identifying larger trends and making informed decisions when it’s clearly understood and communicated. It’s also vital for performance monitoring and optimization.

How Is Problem Solving Prioritized in Purdue’s Online MBA?

The courses in the Purdue Online MBA program teach problem-solving methods to students, keeping them up to date with the latest techniques and allowing them to apply their knowledge to business-related scenarios.

“I can give you a model or a tool, but most of the time, a real-world situation is going to be a lot messier and more valuable than what we’ve seen in a textbook,” David says. “Asking students to take what they know and apply it to a case where there’s not one single correct answer is a big part of the learning experience.”

Make Your Own Decision to Further Your Career

An online MBA from Purdue University can help advance your career by teaching you problem-solving skills, decision-making strategies and more. Reach out today to learn more about earning an online MBA with Purdue University .

If you would like to receive more information about pursuing a business master’s at the Mitchell E. Daniels, Jr. School of Business, please fill out the form and a program specialist will be in touch!

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What Is Problem Solving in Business?

Problem-solving in business is defined as implementing processes that reduce or remove obstacles that are preventing you or others from accomplishing operational and strategic business goals.

In business, a problem is a situation that creates a gap between the desired and actual outcomes. In addition, a true problem typically does not have an immediately obvious resolution.

Business problem-solving works best when it is approached through a consistent system in which individuals:

• Identify and define the problem
• Prioritize the problem based on size, potential impact, and urgency
• Complete a root-cause analysis
• Develop a variety of possible solutions
• Evaluate possible solutions and decide which is most effective
• Plan and implement the solution

Why Is Problem-Solving Important in Business?

Understanding the importance of problem-solving skills in the workplace will help you develop as a leader. Problem-solving skills will help you resolve critical issues and conflicts that you come across. Problem-solving is a valued skill in the workplace because it allows you to:

• Apply a standard problem-solving system to all challenges
• Find the root causes of problems
• Quickly deal with short-term business interruptions
• Form plans to deal with long-term problems and improve the organization
• See challenges as opportunities
• Keep your cool during challenges

How Do You Solve Business Problems Effectively?

There are many different problem-solving strategies, but most can be broken into general steps. Here is a six-step method for business problem solving:

1) Identify the Details of the Problem: Gather enough information to accurately define the problem. This can include data on procedures being used, employee actions, relevant workplace rules, and so on. Write down the specific outcome that is needed, but don’t assume what the solution should be.

• Use the Five Whys: When assessing a problem, a common strategy is to ask “why” five times. First, ask why the problem occurred. Then, take the answer and ask “why” again, and so on. The intention is to help you get down to the root cause of the problem so you can directly target that core issue with your solution.

2) Creatively Brainstorm Solutions:   State every solution you can think of. Write them down. Seek input from those who possess in-depth knowledge of or experience with the problem you’re trying to solve. These insights will provide you with valuable perspectives you can transform into tangible and impactful solutions.

3) Evaluate Solutions and Make a Decision:   Assess the feasibility of each solution. Is the deadline realistic? Are there readily available resources you can leverage to successfully implement the solution? What is the return on investment of each solution? If necessary, come up with alternative solutions or adjust the initial ones you brainstormed in step 2.

4) Make a Decision: Finally, make a firm decision on one solution. This final solution should clearly address the root cause of the problem.

• Perform a SWOT Analysis: You can use a SWOT analysis to help you decide on the best solution. A SWOT analysis involves identifying the strengths, weaknesses, opportunities, and threats linked to a specific decision. With this framework, your team can assess a decision from various angles, thereby gaining a holistic view of it.

5) Take Action:   Write up a detailed plan. This involves developing a comprehensive roadmap that outlines the steps required to implement your solution. The steps should specify milestones, deadlines, roles, and how to obtain the necessary approvals. To ensure accountability, your entire team should have access to this action plan. Each team member should be able to track and share their progress with the group.

6) Gather and Share Feedback: Problem-solving is not a “set it and forget it” process. It’s a dynamic journey that necessitates ongoing attention, deliberation, and refinement to achieve optimal results. Thus, periodic feedback is critical in validating whether the chosen solution creates the desired impact. It allows key stakeholders to check in and make any necessary changes.

What Are Problem-Solving Skills?

Problem-solving skills are specific procedures that can be used to complete one or more of the six general steps of problem-solving (discussed above). Here are five important examples:

Using Emotional Intelligence: You’ll solve problems more calmly when you learn to recognize your own emotional patterns and to empathize with and guide the emotions of others. Avoid knee-jerk responses and making assumptions.

Researching Problems: An effective solution requires an accurate description of the problem. Define simple problems using quick research methods such as asking, “What? Where? When? and How much?.” Difficult problems require more in-depth research, such as data exploration, surveys, and interviews.

Creative Brainstorming: When brainstorming with a group, encourage idea creation by listening attentively to everyone, and recognizing everyone’s unique contributions.

Logical Reasoning: Develop standard logical steps for analyzing possible solutions to problems. Study and apply ideas about logical fallacies, deductive reasoning, and other areas of analytical thought.

Decisiveness: Use an agreed-upon system for choosing a solution, which can include assigning pros and cons to solutions, identifying mandatory results, getting feedback about solutions, choosing the decision-maker(s), and finishing or repeating the process.

How Can You Improve Your Problem-Solving Skills?

Learning how to solve business problems takes time and effort. Though some people appear to have been born with superior problem-solving skills, great problem-solvers usually have taken the time to refine their abilities. You can develop high-level skills for solving problems too, through the following methods:

Ask and Listen: Don’t expect to solve every problem alone. Ask for advice, and listen to it carefully.

Practice Curiosity: Any time you’re involved in solving a problem, practice researching and defining the problem just a little longer than you would naturally.

Break Down Problems: Whenever possible, break large problems into their smallest units. Then, search for solutions to one unit at a time.

Don’t Label Yourself Negatively: Don’t allow a problem to mean something negative about you personally. Separate yourself from it. Look at it objectively and be part of the solution.

Enhance Your Problem-Solving Skills with CMOE

Problem-solving skills in business are not developed overnight. Developing then takes ongoing practice and the right guidance to get right. We encourage you to leverage CMOE’s Problem-Solving and Decision Making in the Workplace workshop to further develop your skills. We’ll help you identify new ways to solve problems methodically so you can create greater impact.

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Problem-Solving in Business: CASE STUDIES

• ABOUT THIS LIBGUIDE
• PROBLEM-SOLVING DEFINED AND WHY IT IS IMPORTANT
• SKILLS AND QUALIFICATIONS NEEDED IN PROBLEM-SOLVING
• PROBLEM-SOLVING STEPS
• CASE STUDIES
• MORE HELPFUL RESOURCES

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• Last Updated: Mar 23, 2024 4:47 PM
• URL: https://libguides.nypl.org/problem_solving_in_business

Business Studies: CREATIVE THINKING & PROBLEM SOLVING

Kurt Bailey 

At the end of this lesson you should be able to:

• Explain the meaning of creative thinking.

• Discuss/Describe/Explain the advantages/benefits of creative thinking in the workplace.

• Explain how businesses can use creative thinking to generate entrepreneurial opportunities.

• Discuss how businesses can use creative thinking to solve business problems.

Introduction:

Businesses have to solve many problems as they confront the challenges of dynamic and complex business environments. Businesses need to find ways to break out from routine thinking in order to solve problems and make decisions.

Recently all businesses, locally and abroad, were confronted with the challenges that was brought about by the COVID-19 pandemic This forced them to come up with new/innovative ideas to survive. Just consider how the restaurant industry, which is one of many, was adversely affected. As a result of the declaration of a state of disaster, restaurants could no longer open up their doors for patrons to come and sit down. Consequently, most of them have resorted to taking orders online and/or telephonically and then deliver to the clients.

Solving problems requires businesses to apply creative and critical thinking skills.

The key focus of this lesson will be on:

i) How Creative thinking can contribute towards successful and sustainable business practice. We will also be looking at ii) How Creative thinking can be used to generate entrepreneurial opportunities and solve business problems.

CONCEPTS AND SKILLS

• 1. Make sure that you know the key concept(s):

Creative thinking - The thought process that leads to original/novel/new ideas/new approaches. Use of non-conventional methods to solve problems. Breaking out of routine thinking.

Routine thinking - Sequence of actions or patterns of behaviour that is regularly followed or rehearsed.

Conventional solutions - Solutions based on what is generally done, believed or conformed to.

Non-conventional ideas - Solutions based on what is not generally done, believed or conformed to.

Problem solving - Alternative solutions are generated/ identified and critically evaluated. Analysing a situation to identify strategies to bring about change.

Decision making - Various alternatives are considered before choosing the best one. It is part of the problem solving cycle as decisions need to be made in each step.

Innovative - The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Challenge/Threat - A problem/obstacle that can prevent you from achieving a goal.

Opportunity - A time or set of circumstances that makes it possible to do something

Business Opportunity - Is a business investment that allows the buyer to start a business.

• 2. Core Content: • Make sure that you know / understand and are able to apply the CORE CONTENT. Pay particular attention to the cognitive levels. The cognitive verbs serve as a guide for how to answer the questions.
• 3. Discuss how businesses can use creative thinking to solve business problems.
• 4. Elaborate on the meaning of problem solving.
• 5. Explain the differences between decision making and problem solving
• 6. Outline/Mention /Discuss/Explain/ the problem solving cycle.

1.1.Complete the following statement by using the word(s) in the list below. Write only the word(s) next to the question number.

1.1.1 The …. process requires creative thinking skills to generate and evaluate alternative solutions. (2)

1.1.2 …. refers to the process in which various alternatives are considered before deciding on the (2) best one.

2.1 Read the scenario below and answer the questions that follows:

2.1.1 Define creative thinking. (2)

2.1.2 Explain the advantages/benefits of creative thinking in the workplace for businesses like Google. (10)

2.1.3 Discuss ANY FOUR steps in the problem-solving-cycle that Google can follow to solve their problems. (12)

2.1.4 Explain how Google can use creative thinking to generate entrepreneurial opportunities. (6)

In Conclusion

• Constant changes in the market impact on business operations and so they need to adapt to it quickly and make quick/creative decisions.

• Creative thinking can help to solve business problems successfully.

• In part two of Creative thinking and Problem-solving the emphasis will be on the Problem-solving techniques businesses can use to solve many problems as they confront the challenges of dynamic and complex business environments.

• 2020 Grade 10 Business Studies Core Notes: Business Roles: Creative thinking and Problem-solving, Pages 3-6

• Via Afrika Business Studies Grade 11 Learner's Book

• Platinum Business Studies Grade 11 Learner's Book

• Oxford Successful Business Studies Grade 11 Learner's Book

• Solutions for a Business Studies Grade 11 Learner's Book

• Focus Business Studies Grade 11 Learner's Book

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The Art of Effective Problem Solving: A Step-by-Step Guide

Author: Daniel Croft

Daniel Croft is an experienced continuous improvement manager with a Lean Six Sigma Black Belt and a Bachelor's degree in Business Management. With more than ten years of experience applying his skills across various industries, Daniel specializes in optimizing processes and improving efficiency. His approach combines practical experience with a deep understanding of business fundamentals to drive meaningful change.

Whether we realise it or not, problem solving skills are an important part of our daily lives. From resolving a minor annoyance at home to tackling complex business challenges at work, our ability to solve problems has a significant impact on our success and happiness. However, not everyone is naturally gifted at problem-solving, and even those who are can always improve their skills. In this blog post, we will go over the art of effective problem-solving step by step.

You will learn how to define a problem, gather information, assess alternatives, and implement a solution, all while honing your critical thinking and creative problem-solving skills. Whether you’re a seasoned problem solver or just getting started, this guide will arm you with the knowledge and tools you need to face any challenge with confidence. So let’s get started!

Problem Solving Methodologies

Individuals and organisations can use a variety of problem-solving methodologies to address complex challenges. 8D and A3 problem solving techniques are two popular methodologies in the Lean Six Sigma framework.

Methodology of 8D (Eight Discipline) Problem Solving:

The 8D problem solving methodology is a systematic, team-based approach to problem solving. It is a method that guides a team through eight distinct steps to solve a problem in a systematic and comprehensive manner.

The 8D process consists of the following steps:

• Form a team: Assemble a group of people who have the necessary expertise to work on the problem.
• Define the issue: Clearly identify and define the problem, including the root cause and the customer impact.
• Create a temporary containment plan: Put in place a plan to lessen the impact of the problem until a permanent solution can be found.
• Identify the root cause: To identify the underlying causes of the problem, use root cause analysis techniques such as Fishbone diagrams and Pareto charts.
• Create and test long-term corrective actions: Create and test a long-term solution to eliminate the root cause of the problem.
• Implement and validate the permanent solution: Implement and validate the permanent solution’s effectiveness.
• Prevent recurrence: Put in place measures to keep the problem from recurring.
• Recognize and reward the team: Recognize and reward the team for its efforts.

Download the 8D Problem Solving Template

A3 Problem Solving Method:

The A3 problem solving technique is a visual, team-based problem-solving approach that is frequently used in Lean Six Sigma projects. The A3 report is a one-page document that clearly and concisely outlines the problem, root cause analysis, and proposed solution.

The A3 problem-solving procedure consists of the following steps:

• Determine the issue: Define the issue clearly, including its impact on the customer.
• Perform root cause analysis: Identify the underlying causes of the problem using root cause analysis techniques.
• Create and implement a solution: Create and implement a solution that addresses the problem’s root cause.
• Monitor and improve the solution: Keep an eye on the solution’s effectiveness and make any necessary changes.

Subsequently, in the Lean Six Sigma framework, the 8D and A3 problem solving methodologies are two popular approaches to problem solving. Both methodologies provide a structured, team-based problem-solving approach that guides individuals through a comprehensive and systematic process of identifying, analysing, and resolving problems in an effective and efficient manner.

Step 1 – Define the Problem

The definition of the problem is the first step in effective problem solving. This may appear to be a simple task, but it is actually quite difficult. This is because problems are frequently complex and multi-layered, making it easy to confuse symptoms with the underlying cause. To avoid this pitfall, it is critical to thoroughly understand the problem.

To begin, ask yourself some clarifying questions:

• What exactly is the issue?
• What are the problem’s symptoms or consequences?
• Who or what is impacted by the issue?
• When and where does the issue arise?

Answering these questions will assist you in determining the scope of the problem. However, simply describing the problem is not always sufficient; you must also identify the root cause. The root cause is the underlying cause of the problem and is usually the key to resolving it permanently.

Try asking “why” questions to find the root cause:

• What causes the problem?
• Why does it continue?
• Why does it have the effects that it does?

By repeatedly asking “ why ,” you’ll eventually get to the bottom of the problem. This is an important step in the problem-solving process because it ensures that you’re dealing with the root cause rather than just the symptoms.

Once you have a firm grasp on the issue, it is time to divide it into smaller, more manageable chunks. This makes tackling the problem easier and reduces the risk of becoming overwhelmed. For example, if you’re attempting to solve a complex business problem, you might divide it into smaller components like market research, product development, and sales strategies.

To summarise step 1, defining the problem is an important first step in effective problem-solving. You will be able to identify the root cause and break it down into manageable parts if you take the time to thoroughly understand the problem. This will prepare you for the next step in the problem-solving process, which is gathering information and brainstorming ideas.

Step 2 – Gather Information and Brainstorm Ideas

Gathering information and brainstorming ideas is the next step in effective problem solving. This entails researching the problem and relevant information, collaborating with others, and coming up with a variety of potential solutions. This increases your chances of finding the best solution to the problem.

Begin by researching the problem and relevant information. This could include reading articles, conducting surveys, or consulting with experts. The goal is to collect as much information as possible in order to better understand the problem and possible solutions.

Next, work with others to gather a variety of perspectives. Brainstorming with others can be an excellent way to come up with new and creative ideas. Encourage everyone to share their thoughts and ideas when working in a group, and make an effort to actively listen to what others have to say. Be open to new and unconventional ideas and resist the urge to dismiss them too quickly.

Finally, use brainstorming to generate a wide range of potential solutions. This is the place where you can let your imagination run wild. At this stage, don’t worry about the feasibility or practicality of the solutions; instead, focus on generating as many ideas as possible. Write down everything that comes to mind, no matter how ridiculous or unusual it may appear. This can be done individually or in groups.

Once you’ve compiled a list of potential solutions, it’s time to assess them and select the best one. This is the next step in the problem-solving process, which we’ll go over in greater detail in the following section.

Step 3 – Evaluate Options and Choose the Best Solution

Once you’ve compiled a list of potential solutions, it’s time to assess them and select the best one. This is the third step in effective problem solving, and it entails weighing the advantages and disadvantages of each solution, considering their feasibility and practicability, and selecting the solution that is most likely to solve the problem effectively.

To begin, weigh the advantages and disadvantages of each solution. This will assist you in determining the potential outcomes of each solution and deciding which is the best option. For example, a quick and easy solution may not be the most effective in the long run, whereas a more complex and time-consuming solution may be more effective in solving the problem in the long run.

Consider each solution’s feasibility and practicability. Consider the following:

• Can the solution be implemented within the available resources, time, and budget?
• What are the possible barriers to implementing the solution?
• Is the solution feasible in today’s political, economic, and social environment?

You’ll be able to tell which solutions are likely to succeed and which aren’t by assessing their feasibility and practicability.

Finally, choose the solution that is most likely to effectively solve the problem. This solution should be based on the criteria you’ve established, such as the advantages and disadvantages of each solution, their feasibility and practicability, and your overall goals.

It is critical to remember that there is no one-size-fits-all solution to problems. What is effective for one person or situation may not be effective for another. This is why it is critical to consider a wide range of solutions and evaluate each one based on its ability to effectively solve the problem.

Step 4 – Implement and Monitor the Solution

When you’ve decided on the best solution, it’s time to put it into action. The fourth and final step in effective problem solving is to put the solution into action, monitor its progress, and make any necessary adjustments.

To begin, implement the solution. This may entail delegating tasks, developing a strategy, and allocating resources. Ascertain that everyone involved understands their role and responsibilities in the solution’s implementation.

Next, keep an eye on the solution’s progress. This may entail scheduling regular check-ins, tracking metrics, and soliciting feedback from others. You will be able to identify any potential roadblocks and make any necessary adjustments in a timely manner if you monitor the progress of the solution.

Finally, make any necessary modifications to the solution. This could entail changing the solution, altering the plan of action, or delegating different tasks. Be willing to make changes if they will improve the solution or help it solve the problem more effectively.

It’s important to remember that problem solving is an iterative process, and there may be times when you need to start from scratch. This is especially true if the initial solution does not effectively solve the problem. In these situations, it’s critical to be adaptable and flexible and to keep trying new solutions until you find the one that works best.

To summarise, effective problem solving is a critical skill that can assist individuals and organisations in overcoming challenges and achieving their objectives. Effective problem solving consists of four key steps: defining the problem, generating potential solutions, evaluating alternatives and selecting the best solution, and implementing the solution.

You can increase your chances of success in problem solving by following these steps and considering factors such as the pros and cons of each solution, their feasibility and practicability, and making any necessary adjustments. Furthermore, keep in mind that problem solving is an iterative process, and there may be times when you need to go back to the beginning and restart. Maintain your adaptability and try new solutions until you find the one that works best for you.

• Novick, L.R. and Bassok, M., 2005.  Problem Solving . Cambridge University Press.

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Daniel Croft

Hi im Daniel continuous improvement manager with a Black Belt in Lean Six Sigma and over 10 years of real-world experience across a range sectors, I have a passion for optimizing processes and creating a culture of efficiency. I wanted to create Learn Lean Siigma to be a platform dedicated to Lean Six Sigma and process improvement insights and provide all the guides, tools, techniques and templates I looked for in one place as someone new to the world of Lean Six Sigma and Continuous improvement.

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10 Step Process for Effective Business Problem Solving

Posted august 3, 2021 by harriet genever.

When you start a small business or launch a startup, the one thing you can count on is the unexpected. No matter how thoroughly you plan, forecast , and test, problems are bound to arise. This is why as an entrepreneur, you need to know how to solve business problems effectively.

What is problem solving in business?

Problem solving in business relates to establishing processes that mitigate or remove obstacles currently preventing you from reaching strategic goals . These are typically complex issues that create a gap between actual results and your desired outcome. They may be present in a single team, operational process, or throughout your entire organization, typically without an immediate or obvious solution. 

To approach problem solving successfully, you need to establish consistent processes that help you evaluate, explore solutions, prioritize execution, and measure success. In many ways, it should be similar to how you review business performance through a monthly plan review . You work through the same documentation, look for gaps, dig deeper to identify the root cause, and hash out options. Without this process, you simply cannot expect to solve problems efficiently or effectively. 

Why problem solving is important for your business

While some would say problem-solving comes naturally, it’s actually a skill you can grow and refine over time. Problem solving skills will help you and your team tackle critical issues and conflicts as they arise. It starts from the top. You as the business owner or CEO needing to display the type of level-headed problem solving that you expect to see from your employees.

Doing so will help you and your staff quickly deal with issues, establish and refine a problem solving process, turn challenges into opportunities, and generally keep a level head. Now, the best business leaders didn’t just find a magic solution to solve their problems, they built processes and leveraged tools to find success. And you can do the same.

By following this 10-step process, you can develop your problem-solving skills and approach any issue that arises with confidence. 

1. Define the problem

When a problem arises, it can be very easy to jump right into creating a solution. However, if you don’t thoroughly examine what led to the problem in the first place, you may create a strategy that doesn’t actually solve it. You may just be treating the symptoms.

For instance, if you realize that your sales from new customers are dropping, your first inclination might be to rush into putting together a marketing plan to increase exposure. But what if decreasing sales are just a symptom of the real problem? 

When you define the problem, you want to be sure you’re not missing the forest for the trees. If you have a large issue on your hands, you’ll want to look at it from several different angles:

Competition 

Is a competitor’s promotion or pricing affecting your sales? Are there new entrants in your market? How are they marketing their product or business?

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Business model 

Is your business model sustainable? Is it realistic for how fast you want to grow? Should you explore different pricing or cost strategies?

Market factors

How are world events and the nation’s economy affecting your customers and your sales?

Are there any issues affecting your team? Do they have the tools and resources they need to succeed? 

Goal alignment 

Is everyone on your team working toward the same goal ? Have you communicated your short-term and long-term business goals clearly and often?

There are a lot of ways to approach the issue when you’re facing a serious business problem. The key is to make sure you’re getting a full snapshot of what’s going on so you don’t waste money and resources on band-aid solutions. 

Going back to our example, by looking at every facet of your business, you may discover that you’re spending more on advertising than your competitors already. And instead, there’s a communication gap within your team that’s leading to the mishandling of new customers and therefore lost sales. 

If you jumped into fixing the exposure of your brand, you would have been dumping more money into an area you’re already winning. Potentially leading to greater losses as more and more new customers are dropped due to poor internal communication.

This is why it’s so vital that you explore your blind spots and track the problem to its source.

2. Conduct a SWOT analysis

All good businesses solve some sort of problem for customers. What if your particular business problem is actually an opportunity, or even a strength if considered from a different angle? This is when you’d want to conduct a SWOT analysis to determine if that is in fact the case.

SWOT is a great tool for strategic planning and bringing multiple viewpoints to the table when you’re looking at investing resources to solve a problem. This may even be incorporated in your attempts to identify the source of your problem, as it can quickly outline specific strengths and weaknesses of your business. And then by identifying any potential opportunities or threats, you can utilize your findings to kickstart a solution. 

3. Identify multiple solutions with design thinking

As you approach solving your problem, you may want to consider using the design thinking approach . It’s often used by organizations looking to solve big, community-based problems. One of its strengths is that it requires involving a wide range of people in the problem-solving process. Which leads to multiple perspectives and solutions arising.

This approach—applying your company’s skills and expertise to a problem in the market—is the basis for design thinking.

It’s not about finding the most complex problems to solve, but about finding common needs within the organization and in the real world and coming up with solutions that fit those needs. When you’re solving business problems, this applies in the sense that you’re looking for solutions that address underlying issues—you’re looking at the big picture.

4. Conduct market research and customer outreach

Market research and customer outreach aren’t the sorts of things small business owners and startups can do once and then cross off the list. When you’re facing a roadblock, think back to the last time you did some solid market research or took a deep dive into understanding the competitive landscape .

Market research and the insights you get from customer outreach aren’t a silver bullet. Many companies struggle with what they should do with conflicting data points. But it’s worth struggling through and gathering information that can help you better understand your target market . Plus, your customers can be one of the best sources of criticism. It’s actually a gift if you can avoid taking the negatives personally .

The worst thing you can do when you’re facing challenges is isolating yourself from your customers and ignore your competition. So survey your customers. Put together a competitive matrix . 

5. Seek input from your team and your mentors

Don’t do your SWOT analysis or design thinking work by yourself. The freedom to express concerns, opinions, and ideas will allow people in an organization to speak up. Their feedback is going to help you move faster and more efficiently. If you have a team in place, bring them into the discussion. You hired them to be experts in their area; use their expertise to navigate and dig deeper into underlying causes of problems and potential solutions.

If you’re running your business solo, at least bring in a trusted mentor. SCORE offers a free business mentorship program if you don’t already have one. It can also be helpful to connect with a strategic business advisor , especially if business financials aren’t your strongest suit.

Quoting Stephen Covey, who said that “strength lies in differences, not in similarities,” speaking to the importance of diversity when it comes to problem-solving in business. The more diverse a team is , the more often innovative solutions to the problems faced by the organization appear.

In fact, it has been found that groups that show greater diversity were better at solving problems than groups made up specifically of highly skilled problem solvers. So whoever you bring in to help you problem-solve, resist the urge to surround yourself with people who already agree with you about everything.

6. Apply lean planning for nimble execution

So you do your SWOT analysis and your design thinking exercise. You come up with a set of strong, data-driven ideas. But implementing them requires you to adjust your budget, or your strategic plan, or even your understanding of your target market.

Are you willing to change course? Can you quickly make adjustments? Well in order to grow, you can’t be afraid to be nimble . 

By adopting the lean business planning method —the process of revising your business strategy regularly—you’ll be able to shift your strategies more fluidly. You don’t want to change course every week, and you don’t want to fall victim to shiny object thinking. But you can strike a balance that allows you to reduce your business’s risk while keeping your team heading in the right direction.

Along the way, you’ll make strategic decisions that don’t pan out the way you hoped. The best thing you can do is test your ideas and iterate often so you’re not wasting money and resources on things that don’t work. That’s Lean Planning .

7. Model different financial scenarios

When you’re trying to solve a serious business problem, one of the best things you can do is build a few different financial forecasts so you can model different scenarios. You might find that the idea that seemed the strongest will take longer than you thought to reverse a negative financial trend. At the very least you’ll have better insight into the financial impact of moving in a different direction.

The real benefit here is looking at different tactical approaches to the same problem. Maybe instead of increasing sales right now, you’re better off in the long run if you adopt a strategy to reduce churn and retain your best customers. You won’t know unless you model a few different scenarios. You can do this by using spreadsheets, and a tool like LivePlan can make it easier and quicker.

8. Watch your cash flow

While you’re working to solve a challenging business problem, pay particular attention to your cash flow and your cash flow forecast . Understanding when your company is at risk of running out of cash in the bank can help you be proactive. It’s a lot easier to get a line of credit while your financials still look good and healthy, than when you’re one pay period away from ruin.

If you’re dealing with a serious issue, it’s easy to start to get tunnel vision. You’ll benefit from maintaining a little breathing room for your business as you figure out what to do next.

9. Use a decision-making framework

Once you’ve gathered all the information you need, generated a number of ideas, and done some financial modeling, you might still feel uncertain. It’s natural—you’re not a fortune-teller. You’re trying to make the best decision you can with the information you have.

This article offers a really useful approach to making decisions. It starts with putting your options into a matrix like this one:

Use this sort of framework to put everything you’ve learned out on the table. If you’re working with a bigger team, this sort of exercise can also bring the rest of your team to the table so they feel some ownership over the outcome.

10. Identify key metrics to track

How will you know your problem is solved? And not just the symptom—how will you know when you’ve addressed the underlying issues? Before you dive into enacting the solution, make sure you know what success looks like.

Decide on a few key performance indicators . Take a baseline measurement, and set a goal and a timeframe. You’re essentially translating your solution into a plan, complete with milestones and goals. Without these, you’ve simply made a blind decision with no way to track success. You need those goals and milestones to make your plan real .

Problem solving skills to improve

As you and your team work through this process, it’s worth keeping in mind specific problem solving skills you should continue to develop. Bolstering your ability, as well as your team, to solve problems effectively will only make this process more useful and efficient. Here are a few key skills to work on.

Emotional intelligence

It can be very easy to make quick, emotional responses in a time of crisis or when discussing something you’re passionate about. To avoid making assumptions and letting your emotions get the best of you, you need to focus on empathizing with others. This involves understanding your own emotional state, reactions and listening carefully to the responses of your team. The more you’re able to listen carefully, the better you’ll be at asking for and taking advice that actually leads to effective problem solving.

Jumping right into a solution can immediately kill the possibility of solving your problem. Just like when you start a business , you need to do the research into what the problem you’re solving actually is. Luckily, you can embed research into your problem solving by holding active reviews of financial performance and team processes. Simply asking “What? Where? When? How?” can lead to more in-depth explorations of potential issues.

The best thing you can do to grow your research abilities is to encourage and practice curiosity. Look at every problem as an opportunity. Something that may be trouble now, but is worth exploring and finding the right solution. You’ll pick up best practices, useful tools and fine-tune your own research process the more you’re willing to explore.

Brainstorming

Creatively brainstorming with your team is somewhat of an art form. There needs to be a willingness to throw everything at the wall and act as if nothing is a bad idea at the start. This style of collaboration encourages participation without fear of rejection. It also helps outline potential solutions outside of your current scope, that you can refine and turn into realistic action.

Work on breaking down problems and try to give everyone in the room a voice. The more input you allow, the greater potential you have for finding the best solution.

Decisiveness

One thing that can drag out acting upon a potential solution, is being indecisive. If you aren’t willing to state when the final cutoff for deliberation is, you simply won’t take steps quickly enough. This is when having a process for problem solving comes in handy, as it purposefully outlines when you should start taking action.

Work on choosing decision-makers, identify necessary results and be prepared to analyze and adjust if necessary. You don’t have to get it right every time, but taking action at the right time, even if it fails, is almost more vital than never taking a step.  

Stemming off failure, you need to learn to be resilient. Again, no one gets it perfect every single time. There are so many factors in play to consider and sometimes even the most well-thought-out solution doesn’t stick. Instead of being down on yourself or your team, look to separate yourself from the problem and continue to think of it as a puzzle worth solving. Every failure is a learning opportunity and it only helps you further refine and eliminate issues in your strategy.

Problem solving is a process

The key to effective problem-solving in business is the ability to adapt. You can waste a lot of resources on staying the wrong course for too long. So make a plan to reduce your risk now. Think about what you’d do if you were faced with a problem large enough to sink your business. Be as proactive as you can.

Editor’s note: This article was originally published in 2016. It was updated in 2021.

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Six problem-solving mindsets for very uncertain times

Great problem solvers are made, not born. That’s what we’ve found after decades of problem solving with leaders across business, nonprofit, and policy sectors. These leaders learn to adopt a particularly open and curious mindset, and adhere to a systematic process for cracking even the most inscrutable problems. They’re terrific problem solvers under any conditions. And when conditions of uncertainty are at their peak, they’re at their brilliant best.

Six mutually reinforcing approaches underly their success: (1) being ever-curious about every element of a problem; (2) being imperfectionists , with a high tolerance for ambiguity; (3) having a “dragonfly eye” view of the world, to see through multiple lenses; (4) pursuing occurrent behavior and experimenting relentlessly; (5) tapping into the collective intelligence , acknowledging that the smartest people are not in the room; and (6) practicing “show and tell” because storytelling begets action (exhibit).

Here’s how they do it.

1. Be ever-curious

As any parent knows, four-year-olds are unceasing askers. Think of the never-ending “whys” that make little children so delightful—and relentless. For the very young, everything is new and wildly uncertain. But they’re on a mission of discovery, and they’re determined to figure things out. And they’re good at it! That high-energy inquisitiveness is why we have high shelves and childproof bottles.

When you face radical uncertainty, remember your four-year-old or channel the four-year-old within you. Relentlessly ask, “Why is this so?” Unfortunately, somewhere between preschool and the boardroom, we tend to stop asking. Our brains make sense of massive numbers of data points by imposing patterns that have worked for us and other humans in the past. That’s why a simple technique, worth employing at the beginning of problem solving, is simply to pause and ask why conditions or assumptions are so until you arrive at the root of the problem. 1 This approach was originally developed by Sakichi Toyoda, the founder of Toyota.

Natural human biases in decision making, including confirmation, availability, and anchoring biases, often cause us to shut down the range of solutions too early. 2 Daniel Kahneman, Thinking, Fast and Slow , New York, NY: Farrar, Straus and Giroux, 2011. Better—and more creative—solutions come from being curious about the broader range of potential answers.

One simple suggestion from author and economist Caroline Webb to generate more curiosity in team problem solving is to put a question mark behind your initial hypotheses or first-cut answers. This small artifice is surprisingly powerful: it tends to encourage multiple solution paths and puts the focus, correctly, on assembling evidence. We also like thesis/antithesis, or red team/blue team, sessions, in which you divide a group into opposing teams that argue against the early answers—typically, more traditional conclusions that are more likely to come from a conventional pattern. Why is this solution better? Why not that one? We’ve found that better results come from embracing uncertainty. Curiosity is the engine of creativity.

We have to be comfortable with estimating probabilities to make good decisions, even when these guesses are imperfect. Unfortunately, we have truckloads of evidence showing that human beings aren’t good intuitive statisticians.

2. Tolerate ambiguity—and stay humble!

When we think of problem solvers, many of us tend to picture a poised and brilliant engineer. We may imagine a mastermind who knows what she’s doing and approaches a problem with purpose. The reality, though, is that most good problem solving has a lot of trial and error; it’s more like the apparent randomness of rugby than the precision of linear programming. We form hypotheses, porpoise into the data, and then surface and refine (or throw out) our initial guess at the answer. This above all requires an embrace of imperfection and a tolerance for ambiguity—and a gambler’s sense of probabilities.

The real world is highly uncertain. Reality unfolds as the complex product of stochastic events and human reactions. The impact of COVID-19 is but one example: we address the health and economic effects of the disease, and their complex interactions, with almost no prior knowledge. We have to be comfortable with estimating probabilities to make good decisions, even when these guesses are imperfect. Unfortunately, we have truckloads of evidence showing that human beings aren’t good intuitive statisticians. Guesses based on gut instinct can be wildly wrong. That’s why one of the keys to operating in uncertain environments is epistemic humility, which Erik Angner defines as “the realization that our knowledge is always provisional and incomplete—and that it might require revision in light of new evidence.” 3 Erik Angner, “Epistemic humility—knowing your limits in a pandemic,” Behavioral Scientist , April 13, 2020, behavioralscientist.org.

Recent research shows that we are better at solving problems when we think in terms of odds rather than certainties. 4 Annie Duke, Thinking in Terms of Bets: Making Smarter Decisions When You Don’t Have All the Facts , New York, NY: Portfolio/Penguin, 2018. For example, when the Australian research body Commonwealth Scientific and Industrial Research Organisation (CSIRO), which owned a core patent on the wireless internet protocol, sought royalties from major companies, it was initially rebuffed. The CSIRO bet that it could go to court to protect its intellectual property because it estimated that it needed only 10 percent odds of success for this to be a good wager, given the legal costs and likely payoff. It improved its odds by picking the weakest of the IP violators and selecting a legal jurisdiction that favored plaintiffs. This probabilistic thinking paid off and eventually led to settlements to CSIRO exceeding $500 million. 5 CSIRO briefing to US Government, December 5, 2006. A tolerance for ambiguity and a willingness to play the odds helped the organization feel its way to a good solution path.

To embrace imperfectionism with epistemic humility, start by challenging solutions that imply certainty. You can do that in the nicest way by asking questions such as “What would we have to believe for this to be true?” This brings to the surface implicit assumptions about probabilities and makes it easier to assess alternatives. When uncertainty is high, see if you can make small moves or acquire information at a reasonable cost to edge out into a solution set. Perfect knowledge is in short supply, particularly for complex business and societal problems. Embracing imperfection can lead to more effective problem solving. It’s practically a must in situations of high uncertainty, such as the beginning of a problem-solving process or during an emergency.

Good problem solving typically involves designing experiments to reduce key uncertainties. Each move provides additional information and builds capabilities.

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3. take a dragonfly-eye view.

Dragonfly-eye perception is common to great problem solvers. Dragonflies have large, compound eyes, with thousands of lenses and photoreceptors sensitive to different wavelengths of light. Although we don’t know exactly how their insect brains process all this visual information, by analogy they see multiple perspectives not available to humans. The idea of a dragonfly eye taking in 360 degrees of perception 6 Philip Tetlock and Dan Gardner, Superforecasting: The Art and Science of Prediction , New York, NY: Crown, 2015. is an attribute of “superforecasters”—people, often without domain expertise, who are the best at forecasting events.

Think of this as widening the aperture on a problem or viewing it through multiple lenses. The object is to see beyond the familiar tropes into which our pattern-recognizing brains want to assemble perceptions. By widening the aperture, we can identify threats or opportunities beyond the periphery of vision.

Consider the outbreak of HIV in India in the early 1990s—a major public-health threat. Ashok Alexander, director of the Bill & Melinda Gates Foundation’s India Aids Initiative, provided a brilliant example of not just vision but also dragonfly vision. Facing a complex social map with a rapidly increasing infection rate, he widened the problem’s definition, from a traditional epidemiological HIV transmission model at known “hot spots,” to one in which sex workers facing violence were made the centerpiece.

This approach led to the “Avahan solution,” which addressed a broader set of leverage points by including the sociocultural context of sex work. The solution was rolled out to more than 600 communities and eventually credited with preventing 600,000 infections. The narrow medical perspective was sensible and expected, but it didn’t tap into the related issue of violence against sex workers, which yielded a richer solution set. Often, a secret unlocks itself only when one looks at a problem from multiple perspectives, including some that initially seem orthogonal.

The secret to developing a dragonfly-eye view is to “anchor outside” rather than inside when faced with problems of uncertainty and opportunity. Take the broader ecosystem as a starting point. That will encourage you to talk with customers, suppliers, or, better yet, players in a different but related industry or space. Going through the customer journey with design-thinking in mind is another powerful way to get a 360-degree view of a problem. But take note: when decision makers face highly constrained time frames or resources, they may have to narrow the aperture and deliver a tight, conventional answer.

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4. pursue occurrent behavior.

Occurrent behavior is what actually happens in a time and place, not what was potential or predicted behavior. Complex problems don’t give up their secrets easily. But that shouldn’t deter problem solvers from exploring whether evidence on the facets of a solution can be observed, or running experiments to test hypotheses. You can think of this approach as creating data rather than just looking for what has been collected already. It’s critical for new market entry—or new market creation. It also comes in handy should you find that crunching old data is leading to stale solutions.

Most of the problem-solving teams we are involved with have twin dilemmas of uncertainty and complexity, at times combined as truly “wicked problems.” 7 A term coined in a now famous 1973 article: Horst W. J. Rittel and Melvin Webber, “Dilemmas in a general theory of planning,” Policy Sciences , 1973, Number 4, pp. 155–69. For companies ambitious to win in the great unknown in an emerging segment—such as electric cars or autonomous vehicles, where the market isn’t fully established—good problem solving typically involves designing experiments to reduce key uncertainties, not just relying on existing data. Each move (such as buying IP or acquiring a component supplier) and each experiment (including on-road closed tests) not only provides additional information to make decisions but also builds capabilities and assets that support further steps. Over time, their experiments, including alliances and acquisitions, come to resemble staircases that lead to either the goal or to abandonment of the goal. Problem-solving organizations can “bootstrap” themselves into highly uncertain new spaces, building information, foundational assets, and confidence as they take steps forward.

Risk-embracing problem solvers find a solution path by constantly experimenting. Statisticians use the abbreviation EVPI—the expected value of perfect information—to show the value of gaining additional information that typically comes from samples and experiments, such as responses to price changes in particular markets. A/B testing is a powerful tool for experimenting with prices, promotions, and other features and is particularly useful for digital marketplaces and consumer goods. Online marketplaces make A/B testing easy. Yet most conventional markets also offer opportunities to mimic the market’s segmentation and use it to test different approaches.

The mindset required to be a restless experimenter is consistent with the notion in start-ups of “failing fast.” It means that you get product and customer affirmation or rejection quickly through beta tests and trial offerings. Don’t take a lack of external data as an impediment—it may actually be a gift, since purchasable data is almost always from a conventional way of meeting needs, and is available to your competitors too. Your own experiments allow you to generate your own data; this gives you insights that others don’t have. If it is difficult (or unethical) to experiment, look for the “natural experiments” provided by different policies in similar locations. An example would be to compare outcomes in twin cities, such as Minneapolis–St. Paul.

It’s a mistake to think that your team has the smartest people in the room. They aren’t there. They’re invariably somewhere else. Nor do they need to be there if you can access their intelligence via other means.

5. Tap into collective intelligence and the wisdom of the crowd

Chris Bradley, a coauthor of Strategy Beyond the Hockey Stick , 8 Chris Bradley, Marin Hirt, and Sven Smit, Strategy Beyond the Hockey Stick: People, Probabilities, and Big Moves to Beat the Odds , Hoboken, NJ: Wiley, 2018. observed that “it’s a mistake to think that on your team you have the smartest people in the room. They aren’t there. They’re invariably somewhere else.” 9 For more from Chris Bradley, in a conversation with Rob McLean, see “ Want better strategies? Become a bulletproof problem solver ,” August 2019. Nor do they need to be there if you can access their intelligence via other means. In an ever-changing world where conditions can evolve unpredictably, crowdsourcing invites the smartest people in the world to work with you. For example, in seeking a machine-learning algorithm to identify fish catch species and quantities on fishing boats, the Nature Conservancy (TNC) turned to Kaggle and offered a $150,000 prize for the best algorithm. This offer attracted 2,293 teams from all over the world. TNC now uses the winning algorithm to identify fish types and sizes caught on fishing boats in Asia to protect endangered Pacific tuna and other species.

Crowdsourced problem solving is familiar in another guise: benchmarking. When Sir Rod Carnegie was CEO of Conzinc Riotinto Australia (CRA), he was concerned about the costs of unscheduled downtime with heavy trucks, particularly those requiring tire changes. He asked his management team who was best in the world at changing tires; their answer was Formula One, the auto racing competition. A team traveled to the United Kingdom to learn best practice for tire changes in racetrack pits and then implemented what it learned thousands of miles away, in the Pilbara region of Western Australia. The smartest team for this problem wasn’t in the mining industry at all.

Of course, while crowdsourcing can be useful when conventional thinking yields solutions that are too expensive or incomplete for the challenge at hand, it has its limitations. Good crowdsourcing takes time to set up, can be expensive, and may signal to your competitors what you are up to. Beware of hidden costs, such as inadvertently divulging information and having to sieve through huge volumes of irrelevant, inferior suggestions to find the rare gem of a solution.

Accept that it’s OK to draw on diverse experiences and expertise other than your own. Start with brainstorming sessions that engage people from outside your team. Try broader crowdsourcing competitions to generate ideas. Or bring in deep-learning talent to see what insights exist in your data that conventional approaches haven’t brought to light. The broader the circles of information you access, the more likely it is that your solutions will be novel and creative.

Rookie problem solvers show you their analytic process and math to convince you they are clever. Seasoned problem solvers show you differently.

6. Show and tell to drive action

We started our list of mindsets with a reference to children, and we return to children now, with “show and tell.” As you no doubt remember—back when you were more curious!—show and tell is an elementary-school activity. It’s not usually associated with problem solving, but it probably piqued your interest. In fact, this approach is critical to problem solving. Show and tell is how you connect your audience with the problem and then use combinations of logic and persuasion to get action.

The show-and-tell mindset aims to bring decision makers into a problem-solving domain you have created. A team from the Nature Conservancy, for instance, was presenting a proposal asking a philanthropic foundation to support the restoration of oyster reefs. Before the presentation, the team brought 17 plastic buckets of water into the boardroom and placed them around the perimeter. When the foundation’s staff members entered the room, they immediately wanted to know what the buckets were for. The team explained that oyster-reef restoration massively improves water quality because each oyster filters 17 buckets of water per day. Fish stocks improve, and oysters can also be harvested to help make the economics work. The decision makers were brought into the problem-solving domain through show and tell. They approved the funding requested and loved the physical dimension of the problem they were part of solving.

Rookie problem solvers show you their analytic process and mathematics to convince you that they are clever. That’s sometimes called APK, the anxious parade of knowledge. But seasoned problem solvers show you differently. The most elegant problem solving is that which makes the solution obvious. The late economist Herb Simon put it this way: “Solving a problem simply means representing it so as to make the solution transparent.” 10 Herbert Simon, The Sciences of the Artificial , Cambridge, MA: MIT Press, 1969.

To get better at show and tell, start by being clear about the action that should flow from your problem solving and findings: the governing idea for change. Then find a way to present your logic visually so that the path to answers can be debated and embraced. Present the argument emotionally as well as logically, and show why the preferred action offers an attractive balance between risks and rewards. But don’t stop there. Spell out the risks of inaction, which often have a higher cost than imperfect actions have.

The mindsets of great problem solvers are just as important as the methods they employ. A mindset that encourages curiosity, embraces imperfection, rewards a dragonfly-eye view of the problem, creates new data from experiments and collective intelligence, and drives action through compelling show-and-tell storytelling creates radical new possibilities under high levels of unpredictability. Of course, these approaches can be helpful in a broad range of circumstances, but in times of massive uncertainty, they are essential.

Charles Conn is an alumnus of McKinsey’s Sydney office and is a board member of Patagonia and former CEO of the Rhodes Trust. Robert McLean is an alumnus of the Sydney office and is the advisory-board chair of the Nature Conservancy Australia. They are the authors of Bulletproof Problem Solving: The One Skill That Changes Everything (Wiley, 2018).

This article was edited by David Schwartz, an executive editor in the Tel Aviv office.

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What Is Creative Problem-Solving & Why Is It Important?

• 01 Feb 2022

One of the biggest hindrances to innovation is complacency—it can be more comfortable to do what you know than venture into the unknown. Business leaders can overcome this barrier by mobilizing creative team members and providing space to innovate.

There are several tools you can use to encourage creativity in the workplace. Creative problem-solving is one of them, which facilitates the development of innovative solutions to difficult problems.

Here’s an overview of creative problem-solving and why it’s important in business.

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What Is Creative Problem-Solving?

Research is necessary when solving a problem. But there are situations where a problem’s specific cause is difficult to pinpoint. This can occur when there’s not enough time to narrow down the problem’s source or there are differing opinions about its root cause.

In such cases, you can use creative problem-solving , which allows you to explore potential solutions regardless of whether a problem has been defined.

Creative problem-solving is less structured than other innovation processes and encourages exploring open-ended solutions. It also focuses on developing new perspectives and fostering creativity in the workplace . Its benefits include:

• Finding creative solutions to complex problems : User research can insufficiently illustrate a situation’s complexity. While other innovation processes rely on this information, creative problem-solving can yield solutions without it.
• Adapting to change : Business is constantly changing, and business leaders need to adapt. Creative problem-solving helps overcome unforeseen challenges and find solutions to unconventional problems.
• Fueling innovation and growth : In addition to solutions, creative problem-solving can spark innovative ideas that drive company growth. These ideas can lead to new product lines, services, or a modified operations structure that improves efficiency.

Creative problem-solving is traditionally based on the following key principles :

1. Balance Divergent and Convergent Thinking

Creative problem-solving uses two primary tools to find solutions: divergence and convergence. Divergence generates ideas in response to a problem, while convergence narrows them down to a shortlist. It balances these two practices and turns ideas into concrete solutions.

2. Reframe Problems as Questions

By framing problems as questions, you shift from focusing on obstacles to solutions. This provides the freedom to brainstorm potential ideas.

3. Defer Judgment of Ideas

When brainstorming, it can be natural to reject or accept ideas right away. Yet, immediate judgments interfere with the idea generation process. Even ideas that seem implausible can turn into outstanding innovations upon further exploration and development.

4. Focus on "Yes, And" Instead of "No, But"

Using negative words like "no" discourages creative thinking. Instead, use positive language to build and maintain an environment that fosters the development of creative and innovative ideas.

Creative Problem-Solving and Design Thinking

Whereas creative problem-solving facilitates developing innovative ideas through a less structured workflow, design thinking takes a far more organized approach.

Design thinking is a human-centered, solutions-based process that fosters the ideation and development of solutions. In the online course Design Thinking and Innovation , Harvard Business School Dean Srikant Datar leverages a four-phase framework to explain design thinking.

The four stages are:

• Clarify: The clarification stage allows you to empathize with the user and identify problems. Observations and insights are informed by thorough research. Findings are then reframed as problem statements or questions.
• Ideate: Ideation is the process of coming up with innovative ideas. The divergence of ideas involved with creative problem-solving is a major focus.
• Develop: In the development stage, ideas evolve into experiments and tests. Ideas converge and are explored through prototyping and open critique.
• Implement: Implementation involves continuing to test and experiment to refine the solution and encourage its adoption.

Creative problem-solving primarily operates in the ideate phase of design thinking but can be applied to others. This is because design thinking is an iterative process that moves between the stages as ideas are generated and pursued. This is normal and encouraged, as innovation requires exploring multiple ideas.

Creative Problem-Solving Tools

While there are many useful tools in the creative problem-solving process, here are three you should know:

Creating a Problem Story

One way to innovate is by creating a story about a problem to understand how it affects users and what solutions best fit their needs. Here are the steps you need to take to use this tool properly.

1. Identify a UDP

Create a problem story to identify the undesired phenomena (UDP). For example, consider a company that produces printers that overheat. In this case, the UDP is "our printers overheat."

2. Move Forward in Time

To move forward in time, ask: “Why is this a problem?” For example, minor damage could be one result of the machines overheating. In more extreme cases, printers may catch fire. Don't be afraid to create multiple problem stories if you think of more than one UDP.

3. Move Backward in Time

To move backward in time, ask: “What caused this UDP?” If you can't identify the root problem, think about what typically causes the UDP to occur. For the overheating printers, overuse could be a cause.

Following the three-step framework above helps illustrate a clear problem story:

• The printer is overused.
• The printer overheats.
• The printer breaks down.

You can extend the problem story in either direction if you think of additional cause-and-effect relationships.

4. Break the Chains

By this point, you’ll have multiple UDP storylines. Take two that are similar and focus on breaking the chains connecting them. This can be accomplished through inversion or neutralization.

• Inversion: Inversion changes the relationship between two UDPs so the cause is the same but the effect is the opposite. For example, if the UDP is "the more X happens, the more likely Y is to happen," inversion changes the equation to "the more X happens, the less likely Y is to happen." Using the printer example, inversion would consider: "What if the more a printer is used, the less likely it’s going to overheat?" Innovation requires an open mind. Just because a solution initially seems unlikely doesn't mean it can't be pursued further or spark additional ideas.
• Neutralization: Neutralization completely eliminates the cause-and-effect relationship between X and Y. This changes the above equation to "the more or less X happens has no effect on Y." In the case of the printers, neutralization would rephrase the relationship to "the more or less a printer is used has no effect on whether it overheats."

Even if creating a problem story doesn't provide a solution, it can offer useful context to users’ problems and additional ideas to be explored. Given that divergence is one of the fundamental practices of creative problem-solving, it’s a good idea to incorporate it into each tool you use.

Brainstorming

Brainstorming is a tool that can be highly effective when guided by the iterative qualities of the design thinking process. It involves openly discussing and debating ideas and topics in a group setting. This facilitates idea generation and exploration as different team members consider the same concept from multiple perspectives.

Hosting brainstorming sessions can result in problems, such as groupthink or social loafing. To combat this, leverage a three-step brainstorming method involving divergence and convergence :

• Have each group member come up with as many ideas as possible and write them down to ensure the brainstorming session is productive.
• Continue the divergence of ideas by collectively sharing and exploring each idea as a group. The goal is to create a setting where new ideas are inspired by open discussion.
• Begin the convergence of ideas by narrowing them down to a few explorable options. There’s no "right number of ideas." Don't be afraid to consider exploring all of them, as long as you have the resources to do so.

Alternate Worlds

The alternate worlds tool is an empathetic approach to creative problem-solving. It encourages you to consider how someone in another world would approach your situation.

For example, if you’re concerned that the printers you produce overheat and catch fire, consider how a different industry would approach the problem. How would an automotive expert solve it? How would a firefighter?

Be creative as you consider and research alternate worlds. The purpose is not to nail down a solution right away but to continue the ideation process through diverging and exploring ideas.

Continue Developing Your Skills

Whether you’re an entrepreneur, marketer, or business leader, learning the ropes of design thinking can be an effective way to build your skills and foster creativity and innovation in any setting.

If you're ready to develop your design thinking and creative problem-solving skills, explore Design Thinking and Innovation , one of our online entrepreneurship and innovation courses. If you aren't sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

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