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Two Stage Approach to Solving Problems

One way to look at a problem: the definition stage and the solution stage

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  • Written by  Banking Exchange Staff Writer
Two Stage Approach to Solving Problems

With the banking industry changing faster than the speed of light, the industry is prone to problems propping up suddenly, particularly but not exclusively with technological changes. One way to look at a problem is in two stages: the definition stage and the solution stage. The two stages of problem solving present an opportunity to go from the present situation to the desired outcome.

During problem definition stage, a number of potential obstacles can get in the way of defining the problem in such a way that can lead to a viable solution during the problem solution stage. Management may not even want to acknowledge the problem as being as severe as it really is, particularly if they may have made a previous decision that led to the present problem. For instance, at a media company focused on the financial industry, the company shifted from offering traditional advertising to content marketing. The revenue generation was minimal, and the company quickly started to lose money. Rather than acknowledge the problem, the company pressed ahead blaming the clients for being slow to buy the product and not being sophisticated enough. This simply delayed identifying the problem until a later date where it became a state of emergency. 

Another trap in the problem definition stage is to not look for disconfirming information. Management has a tendency to miss what the problem truly is because they may have a bias about certain employees or how their particular market works. If they just look for data to back up their view of the problem it will fog up the lenses and prevent them from seeing clearly when getting to the solution stage. This error can also lead to jumping to the solution without first properly defining the problem. A good example is simply when management believes that one employee could not possibly be wrong in his/her assessment of a problem and will only look for confirmation that this particular employee’s vision is correct. Overall, the biggest trap is simply not being objective in looking to define a problem, and can even lead to the wrong goal to focus on. 

Best Practices During The Problem Definition Stage, and how to avoid Errors

Successful leaders will seek to avoid these traps so that they can clearly and objectively define the problem. If the group cannot correctly define the problem, the solution will surely be incorrect. Management may need to double check to make sure that their analysis of the competitive environment is accurate. For instance, in the analogy above regarding the media company that went to a content marketing model from traditional advertising, once they realized that their clients were not buying the product, eventually they went to their top ten clients and asked why.

The reason was two fold. First, clients did not produce enough content to market effectively with this type of new advertising. Secondly, the media budgets had only shifted 10% to this type of marketing. They were able to continue the program at a lower level while shifting their product focus back to traditional advertising until the budgets caught up. This also helped define the cause of the problem, a key component during the identification stage. They needed to uncover the disconnect between budget allocations and the new products before they could work on the solution. Lastly, the team needed to agree on the problems and the objectives that they were looking to reach when coming up with a new solution. 

Potential Errors During the Problem Solution Stage

At the problem solution stage, there are just as many potential traps in coming up with the most effective solution. For instance, in rushing to judgment, companies may come up with only one alternative to the problem without thinking through a number of different alternatives to the problem. Even if the one solution is effective, the company will not know if another solution would be even more effective in the long run.

Additionally, particularly if there is only one decision maker and he/she is high up in the company, other participants in the decision making process will be slow to communicate any skepticism that the decision would not work. In the case where it is fairly obvious that the problem is a self -inflicted wound, in both the problem definition stage and solution stage, it would be good to consider “why did we get into this problem in the first place?” Lastly, and perhaps the most dangerous error in a rush to find a solution, companies may find themselves out of business because they fail to come up with a plan B in case the first solution does not work. 

Even if a rushed solution works well, it may set up the company for failure in the future because the company has not established a healthy process for making decisions. 

Best Practices and How to Avoid Errors in the Decision Making Process

The best way to avoid mistakes during the problem definition stage is to slow down the process, make sure the problem is clearly defined, and to agree on what the end goal should be. It is also important not only to gather data, but to confirm the accuracy and relevance of the data. In the example above, the company made the switch to content marketing in part due to data that showed that the overall media industry was shifting to this type of advertising.

When they dug deeper into the data as well as their direct customer base, they realized that they had overestimated the overall data and underestimated the data in their specific niche of the market. They found the type of advertising their clients buy, financial advertising, was at least two years behind the overall industry in making the transition. 

In both stages, it is important to make sure that the team represents a variety of perspectives that are involved with the problem, as well as outside forces such as an external consultant or perhaps a trusted and unbiased employee that is not directly effected by the problem. In the solution stage, this can help lead to evaluating alternative solutions fairly, and weigh evidence/data fairly without confirmation bias.

During the Cuban Missile Crisis, the President sought to hear from his most extreme opponents in terms of foreign policy because he wanted to consider all solutions to the problem, and this led in part to a successful outcome. Every person has blind spots, and so every solution needs to be evaluated, and once a decision is made leaders need to make sure that employees follow through on the execution of the strategy and be flexible enough to change course if it is not working out as planned. 

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