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Definition of Business Problem

Business Problems are current or long-term challenges and issues faced by a business. These may prevent a business from executing strategy and achieving goals. In some cases, business problems also threaten the long-term survival of an Organization.

A Problem may be defined as a deviation from a desired set of specific conditions or a range of acceptable conditions; these conditions may be objectives or standards or situations which are considered optimal.

Examples of Business Problems are wide Range and may Include :

Slippage of Business Growth, Fall in Profits, Loss of Markets / Customers, South ward Trend of Market Demand, Product Diversification, Increased Competition, Lower Levels of Efficiency, Higher Levels of Customer Rejections, Supply Disruptions, Cost of Capital, Delivery or Warehousing Problems, Difficulty of Building Brand Image etc.

Lack of Problems – Means Built up of Inefficiencies & Ineffectiveness in the Business

Often an apparent lack of problems can mean that the “fat” in your business in the form of Inefficiencies & Ineffectiveness are built up in the business un-noticed.

For Example inventory, long lead times and excess labour and overhead can cover up everyday problems and deny you the opportunity to find and fix these issues.  Big inventory buffers might mean that the poor reliability of a key process does not get noticed because the business never runs out of stock, or worse, excess inventory will be held as “insurance” against poor machine reliability.  Excess labour can also hide quality and product design problems as operators spend their “spare” non-value added time reworking product.

It is important that problem-solving is a routine process in your business and not just a one-off event.

Organizational Problems Root Causes

Growing businesses face a range of challenges. As a business grows, different problems and opportunities demand different solutions.

Every Organization invariably Encounters one or the other Problem which may find its Roots from

> Absence of Clear Direction from Top Management or Lack of Leadership ability

> Lack of Organizational Alignment

> Failure to Develop Key Competencies

> Poor Communication Processes

> Lack of Awareness

> Development & Strategic Issues

> Interpersonal & Cultural

> Operational

> Safety & Environmental

> People & Performance Related

Some of these problems are obviously more severe or complex than others.

Root causes

Problems are Goodas they give us opportunities to improve

Businesses either Fail or Prosper depends on how well they Identify the Problem Early and Address or Resolve the Problem.

Problems are Goodas they give us opportunities to improve. Most of us react negatively to problems when they take us by surprise. Our first impressions often define our reactions to problem in a negative light on how to Avoid or Mitigate the Problem. Inside of every Problem Lies an opportunity. So Explore Insight into a Problem to Open up  Window of Opportunities

Problems are Unavoidable – Majority of them are caused by External Factors beyond your Control – the Impact and Intensity of the problems are however Variable and depends on Situations.

If you can Learn to Accept Problems as a Normal, Regular, and Completely Unavoidable part of Business, you’ll take your first step toward handling them with more grace and objective understanding.

It is Your Mindset, How You See Problems

It is Your Mindset to See Problems, as Opportunities or Threats.

For Example Customer Rejection & Return of a Product on Quality Grounds,  may be taken as a positive Opportunity to Probe the Root Cause and Improve upon Quality on Sustainable basis or taken as financial loss and some how to manage to sell at discount.

There may be some Devastating Incidents like COVID – 19, that made markets around the world crashed, Economies Collapsed, significantly Impacting Businesses, Supply Chains greatly Disrupted, Business Operations Halted and the Damages are Continuing and still Uncertain. However, some businesses turned this adverse impact into Positive Opportunity to adopt to this New Normal.

Problems of Problem Solving

Businesses either Fail or Prosper depends on how well they Identify the Problem, Define the Problem and Address or Resolve the Problem. Not every problem has an easy solution. Tackling the complexity of most significant business issues can take Different Approaches and a pool of talented people with diverse points of view take conclusive Decisions.

However, here we shall Discuss the Problem of Problem Solving.

Often due to either problems not being recognized or being recognized but not being dealt with appropriately, Businesses may signal themselves for Trouble and certain times even threaten for Survival or result in Collapse of Businesses.

real problem

Problems Not being Recognized Early

Problems not being Recognized is a Biggest Problem. The First Step in Solving any Problem is Recognizing & Admitting that there is a Problem. Every organization has some types of problems in its business. But not every organization works to Recognize the Problems early of it’s happening and correct those problems. When things in business start going bad and the problem probably keeps getting worse, then Businesses start to Recognize Problems very Lately, by which time major damages must have occurred.

Identifying a problem can be a difficult task in itself.

It’s useful to consider the following questions when faced with a problem.

> Is there a problem at all? Is the problem Real or Perceived?

> Is this problem really an Opportunity for Improvement?

> Does the problem Need Solving?

> If not Resolved, what could be Consequences?

Do not Perceive the Problem – Real Problems should be Recognized Early Businesses are sometimes Blind to Problems & it’s Sources. Information may not Received to signal that a Problem Exists or even No such Mechanism in the organization exists to Smell & Capture the Problems. “Feel Good – Everything is Fine” – such attitude factors also not Good always, as we should be Critical in Positive Manner to gauze the Surroundings of Business & Circumstances.

“The problem contains the solution.” A Problem well Understood Reaches us Near to Solution

Problems Recognized but not being Dealt with Appropriately

While addressing the Problems, most companies aren’t sufficiently rigorous in defining the problems they’re attempting to solve and articulating why those issues are important. Without that rigor, organizations miss opportunities, waste resources, and end up pursuing short term initiatives or case to case approach as and when problems happen, which aren’t aligned with appropriately dealing the problem completely.

Organization generally assigned to Fix a very Specific, near-term problem. But because the firm doesn’t employ a rigorous process for understanding the dimensions of the problem, do not address underlying problem from it’s root cause.

Often, once identified, some problems defy resolution and are managed as conditions to be endured rather than situations to be solved in entirety.

Trying to Suppress or Hide the Real Problems

Generally, People because of various reasons like Fear of loss of their Position, Damage of Reputation etc adopt the approach of Denial, Non-Disclosure and Pretending there isn’t any Problem, though there exist some problems.

Many times, employees or / and management have a vested interest in identifying business management mistakes in a company or department. These mistakes can encompass many things like Poor Communication, Lack of Clear Vision, No Mechanism to Recognize & Reward, Fear of Expression or Openness, “Why Should I Highlight Negative things” attitude etc.

Also, Many Times Business are trying to Suppress or Hide the Real Problems. For Example, Drop in Sales, Market Department may immediately justify saying Market Slow Down, Entry of More Competitors, Preferences for Import etc… etc…, without much factual details, but mostly generalizing, but not analyzing the Root Causes and try to Hide the Facts. The prime Reasons for Fall in Sales may be Customer Dissatisfaction because of Frequent Product Rejections, Non- Attending the Complaints, Wrong Documentation, Poor Communication / Relationships etc.

Problems are Attributed to People & Blamed

Problem solving skills are highly sought after by employers as many companies rely on their employees to identify and solve problems.

Unfortunately when a problem occurs, it is common to look for someone to blame, even though it’s likely to be the system and not the person at fault.

Some people tend to personalize problems. Whether or not they are to blame, people often look upon problems as personal failings which are embarrassing. Management also try to Fix the Person for the Problem and may not Look into Real Cause and Investigate.

For example, if performance in your department is substandard, you might think the problem is with the individuals submitting work. However, if you look a bit deeper, the real issue might be Problems with Systems & Procedures or a lack of training, or an unreasonable workload.

Businesses Fail when Interpersonal relationships fail because of poor problem solving.

Approaching a problem analytically focused on facts and not to blame, can improve problem solving greatly. Instead of starting with Who did it? ask,

What happened?

Why it Happened?

When did it happen?

Under what circumstances? 

Jumping to Fix the Problem without Factual Analysis

A lot of the work in problem solving involves understanding what the underlying issues of the problem really are – not the symptoms. Dealing with a customer complaint for example, may be seen as a problem that needs to be solved, and it’s almost certainly a good idea to do so. But Customer Complaint is only a Symptom and not a Problem which need to be Analyzed for it’s Root Causes to eliminate the problem & Permanently Resolved.

Following on from problem identification, structuring the problem is all about gaining more information about the problem and increasing understanding. This phase is all about a period of observation, careful inspection, fact finding and analysis, fact-finding and developing a clear picture of the problem,  building a more comprehensive picture of both the goal(s) and the barrier(s), careful analysis of the different possible courses of action and then selecting the best solution for implementation. This stage may not be necessary for very simple problems but is essential for problems of a more complex nature. Jumping to Fix the Problem without Factual Analysis may prove to be costly to the Business

“If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.”

― Albert Einstein

Poor Diagnosis of Problems: Wrong Assumptions; Data Error or Bias

Every Problem has in it the Seeds of its own solution.

Any trend or deviation from the truth in data collection, analysis, interpretation and publication is called bias or data errors. Bias in data collection, can occur either intentionally or unintentionally. Bias causes false conclusions and is potentially misleading. Therefore, it is essential that proper care should to taken to analyze the Problem with Factual Data.

Don’t guess about underlying causes or simply assume.  Incorrect diagnosis or decisions without diagnosis may proved to be costly consequences. The odds of hitting the right answer without diagnosis is really low, so it’s as important to guard against self-induced ‘framing’ as that imposed by others.

Offering Solutions without Understanding Consequential Impact

Even though well prepared we are for problem solving, there is always an element of the unknown. Although planning and structuring will help make the problem solving process more likely to be successful, good judgement and an element of good luck will ultimately determine whether problem solving was a success.

You need to ensure that the steps you take today don’t themselves create additional problems for the future. For Example opting for Substitute Raw Materials with objective of Cost Reduction, without Analyzing Long Term Functional Impact of the Finished Product.

Effective risk management is essential for Proper Actionable Outcomes or Decisions.

1. identifying and analyzing potential (future) events that may negatively impact individuals, assets, and / or the environment (i.e. risk analysis); and

2. making judgments “on the tolerability of the risk on the basis of a risk analysis” while considering influencing factors (i.e. risk evaluation).

Put in simpler terms, a risk assessment determines possible mishaps, their likelihood and consequences, and the tolerances for such events. The results of this process may be expressed in a quantitative or qualitative fashion. Risk assessment is an inherent part of a broader Problem-Solving Approach to help eliminate any potential risk-related consequences.

Not Changing with Circumstances

Market conditions continually change, so you need to revisit and update your business plan regularly. As your business grows, your strategy needs to evolve to suit your changed circumstances.

For example, your focus is likely to change from winning new customers to building profitable relationships and maximizing growth with existing customers. Existing business relationships often have greater potential for profit and can also provide reliable cash flow. Newer relationships may increase turnover, but the profit margins may be lower, which may not be sustainable.


Author Bio

 International Business Consultant - Corporate Trainer, Mentor & Author  BSc.Engg.+MBA+PGD TQM & ISO 9000 : 30+ Yrs of Corporate Experience + 6+ Yrs Consulting & Training Exp.  Fellow Institution of Engineers (FIE) & Chartered Engineer;  Worked in Aditya Birla Group, View Full Profile

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July 2024