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2 Presentation Outline 1. Problem Management Process 2. Defining the Problem 3. Formulating the Hypothesis 4. Identifying the Facts 5. Analysing the Facts 6. Developing the Solution

3 Objectives Provide an analytical thinking process Understand problem solving life cycle Manage Project Issues Identification to Resolution Session Outcome Understand the problem solving process Define the issue of your project Focus on the drivers behind your issue Know techniques, such Root Cause & SWOT analysis Know how to present possible solutions

4 Presentation Outline 1. Problem Management Process 2. Defining the Problem 3. Formulating the Hypothesis 4. Identifying the Facts 5. Analysing the Facts 6. Developing the Solution

5 Problem Management Process 1 Define 2 Formulate 3 Collect 4 Conduct 5 Develop Problem Hypothesis Facts Analysis Solutions

6 The Relationship among Problem, Problem Solving, and Decision Making Problem Exists whenever objectives are not being met. What is happening vs. what is wanted to happen Problem Solving The process of taking corrective action to meet objectives. Decision Making The process of selecting an alternative that will solve a problem. First decision is whether to take corrective action.

7 Define the Problem Distinguish Symptoms from the Cause of the Problem List the observable and describable occurrences (symptoms) that indicate a problem exists. Determine the cause of the problem. Removing the cause should cause the symptoms to cease. Symptom: Customer dissatisfaction Cause: Poorly trained employees Solution: Implement customer relations training for employees

8 Presentation Outline 1. Problem Management Process 2. Defining the Problem 3. Formulating the Hypothesis 4. Identifying the Facts 5. Analysing the Facts 6. Developing the Solution

9 Problem Identification Problem when a person observes a discrepancy between the way things are & the way it ought to be Problems can be identified through: Comparative/benchmarking studies Performance reporting of goals and objectives SWOT Analysis Complaints Surveys Etc.

10 Getting to the "Root" of the Problem Sometimes the problem we think is not the real problem Need to get at the real problem by probing Root Cause Analysis is a method of probing Definition of root cause: Specific underlying cause Those that can reasonably be identified Those that management has control to fix

11 Root Cause Analysis Practice of asking, five times, why the problem exists in order to get to the root cause of the problem Employee turnover rate has been increasing Why? Why? Why? Why? Why? Employees are leaving for other jobs Employees are not satisfied Employees feel that they are underpaid Other employers are paying higher salaries Demand for such employees has increased in the market

12 Basic Questions to Define the Problem Who Who is causing the problem? Who says this is a problem? Who are impacted? Who are not impacted?. What What will happen if not solved? What are the symptoms? What are the impacts? Etc. Where Where does this problem occur? Where does it have an impact? Etc. When Why How When does this problem occur? When did it first start occurring? Etc. Why is this problem occurring? Why? Why? Etc. How should this system work? How is it currently handled? Etc.

13 Root Cause Analysis Fishbone Diagram Fishbone Diagram (a.k.a. Cause and Effect Diagram) is an analysis tool that provides a systematic way of looking at effects and the causes that create or contribute to those effects. Detail Cause Detail Cause Result (Problem) Detail Detail Cause Cause The value of the Fishbone Diagram is that it provides a method for categorizing the many potential causes of problems or issues in an orderly way and in identifying root causes

14 FISH BONE ANALYSIS Case Study

15 Other Root Cause Analysis Techniques Force Field Analysis Show forces that impact your problem/issue Scatter Diagrams Show how one variable influences another Process Mapping Maps the as is flow of activities Benchmarking Compares performance to another similar source

16 Problem Management Methodology Problem Hypothesis Facts Analysis Solutions Define Formulate Collect Conduct Develop What need to be corrected Address right problem Identified by clients Specification misleading Defining is discovery based Defining improve focus Drives analytical thinking Start with end in mind Potential explanation Can be tested Proved or disproved Possible root causes Break down root causes Help to build roadmap Meaningful information Qualitative or Quantitative Relevant data for proving Where to look for How to filter Verifying what happened Applying to solve Break down the problem Apply analytical Technique Analyse to prove or disprove Understand issues & drivers Most time spent Confirm or deny hypothesis Many analytical techniques Outcome from hypothesis testing Solution final recommendation What the client wants Addresses the problem Solution is implementable Run an actual example Viability of recommended solution

17 Presentation Outline 1. Problem Management Process 2. Defining the Problem 3. Formulating the Hypothesis 4. Identifying the Facts 5. Analysing the Facts 6. Developing the Solution

18 Issue Diagram is an effective method for breaking down problems and formulating hypotheses Hypothesis #1A Problem Issue #1 Issue #2 Hypothesis #1B Hypothesis #1C Hypothesis #1D Key Questions #1C-a Key Questions #1C-b Key Questions #1C-c Key Questions #1C-d Issue #3

19 Key Components of Issue Diagram Issues Hypotheses Key Questions Questions which need to be answered or topics which need to be explored in order to solve a problem Speculative answers for issues that are phrased as questions and/or areas of exploration for issue phrased as topics Questions that probe hypotheses and drive the primary research required to solve the problem

20 Identifying the Issues Client wants to decide whether they should divest their widget X manufacturing business Issue #1 What key topics should we explore to help the client solve this problem? Is there a market for divesting this business? Problem Issue #2 Is this a cost effective solution for the client? Issue #3 What impacts will there be for the displaced employees?

21 Key to Identifying Issues 1. Develop a comprehensive list of all possible issues related to the problem 2. Reduce the list by eliminating duplicates and combining overlapping issues 3. Using consensus building, get down to a major issues list (usually two to five issues)

22 Formulating the Hypotheses Market Interest? Hypothesis #1A The market is large. Issue #1 Hypothesis #1B Etc. Divest Widget X Business? Problem Cost Effectiveness? Issue #2 Hypothesis #2A Hypothesis #2B What are some possible answers to the issues? Etc. Impacts on Employees? Issue #3 Hypothesis #3A Hypothesis #3B Large percentage of employees will likely retire in two years. Etc.

23 Framing the Key Questions Market Interest? The market is large. Hypothesis #1A Key Question #1A-a Key Question #1A-b How many players are there in the market? Divest Widget X Business? Problem Issue #1 Cost Effectiveness? Issue #2 Hypothesis #1B Hypothesis #2A Hypothesis #2B Key Question #1A-c How many are large enough to take on the client's business? What questions need to be answered to prove/disprove the hypothesis? Impacts on Employees? Issue #3 Large percentage of employees will likely retire in two years. Hypothesis #3A Hypothesis #3B Key Question #3A-a Key Question #3A-b Key Question #3A-c How many employees are 50 years old or older and interested in retiring?

24 Common Pitfalls in Creating Issue Diagram Issues Hypotheses Key Questions Issues which are: Too broad, which expand beyond the objectives Too narrow Too many to be easily remembered Of uneven weight Not sequenced effectively Hypotheses which are: Too few to cover the issue Too many to be easily remembered Not supportable by data Not directly relevant to the issue Key questions which are: Too few to test the hypotheses Too many to be easily remembered Irrelevant to the hypotheses Not answerable with data

25 Key Messages Issue diagrams provide a framework for brainstorming and documenting the issues Hypotheses and the key questions will help shape relevant data collection Formulation of hypotheses and key questions is an evolving process

26 Brainstorming A Method for Identifying Issues and Formulating Hypotheses Brainstorm when wide range of issues and solutions Brainstorming is used to generate ideas There are numerous brainstorming techniques Individual brainstorming is usually not recommended Brainstorming useful for Force Field Analysis

27 Tips for Brainstorming 1. State the purpose and objective of the brainstorming session 2. Set ground rules for participants 3. Give everyone an opportunity to participate 4. Solicit all ideas and opinions nothing is rejected 5. After exhausting all ideas, eliminate irrelevant & duplicate 6. Finalize outcome of the brainstorming through consensus

28 Problem Management Methodology Problem Hypothesis Facts Analysis Solutions Define Formulate Collect Conduct Develop What need to be corrected Address right problem Identified by clients Specification misleading Defining is discovery based Defining improve focus Drives analytical thinking Start with end in mind Potential explanation Can be tested Proved or disproved Possible root causes Break down root causes Help to build roadmap Meaningful information Qualitative or Quantitative Relevant data for proving Where to look for How to filter Verifying what happened Applying to solve Break down the problem Apply analytical Technique Analyse to prove or disprove Understand issues & drivers Most time spent Confirm or deny hypothesis Many analytical techniques Outcome from hypothesis testing Solution final recommendation What the client wants Addresses the problem Solution is implementable Run an actual example Viability of recommended solution

29 Presentation Outline 1. Problem Management Process 2. Defining the Problem 3. Formulating the Hypothesis 4. Identifying the Facts 5. Analysing the Facts 6. Developing the Solution

30 Getting to the Facts Validate the hypotheses require the collection of factual information Identify what information, i.e. data elements, is required Develop a data collection approach/technique Depending on the problem different collection techniques may be used Combine different techniques to allow different perspectives Data collection is a critical stage in problem solving

31 Using the Issue Diagram to identify data needs Problem Issue #1 Issue #2 Issue #3 Hypothesis #1A Hypothesis #1B Hypothesis #2A Hypothesis #2B Hypothesis #3A Hypothesis #3B Key Question #1A-a Key Question #1A-b Key Question #1A-c Key Question #3A-a Key Question #3A-b Key Question #3A-c How many are large enough to take on the client's business? What information or data needs to be collected to answer these questions? How many employees are 50 years old or older and interested in retiring? Number of companies in the industry Revenues for the last 5 years Etc. Ages of the employees Employee interest level Etc.

32 Data Collection Techniques Technique Using Available Information Observing Interviewing Administering Written Questionnaires Conducting Focus Groups Description Using data that has already been collected by others Systematically selecting, watching and recording behavior and characteristics of people, objects or events Oral questioning of respondents, either individually or as a group Collecting data based on answers provided by respondents in written form Facilitating free discussions on specific topics with selected group of participants Tools Checklist Data compilation forms Eyes and ears Data compilation forms Interview guide Data compilation forms Survey Questionnaire Flip charts

33 Importance of Combining Collection Techniques Qualitative Techniques (Flexible) VS. Quantitative Techniques (Less Flexible) Produce qualitative data recorded in narrative form Useful in answering the "why", "what", and "how" questions Typically includes: Loosely structured interviews Focus group discussions Observations Structured question to quantify answers Useful in answering the "how many", "how often", "how significant" Answers expressed numerically A combination of qualitative and quantitative techniques will give a comprehensive understanding of the problem

34 Presentation Outline 1. Problem Management Process 2. Defining the Problem 3. Formulating the Hypothesis 4. Identifying the Facts 5. Analysing the Facts 6. Developing the Solution

35 Conducting the Analysis To "make sense" of the information collected Use analytical techniques to help understanding as follows: What are the most important issues? Pareto Analysis 20:80 Rule What performance areas are weak? What are the core competencies of the client? What forces can influence the problem? Benchmarking SWOT Force Field Analysis

36 Sequential Steps to the Analysis Make sure you know what you are trying to solve Clearly defined issues or questions drive the analysis! Match up the clearly defined question or issue with the appropriate analytical tool(s) Once you ve matched up the analytical tools against the question or issue, then do the analysis

37 Apply analytical tools and move back upstream 1. Start with clearly defined issues or questions Issue #1 Hypothesis #1A Hypothesis #1B How many are large enough to take on the client's business? Key Question #1A-a Key Question #1A-b Key Question #1A-c # of companies in industry Revenues for last 5 years 2. Select the Analytical Tool Benchmarking Problem Issue #2 Hypothesis #2A Hypothesis #2B What analysis needs to be done to answer this question? Issue #3 Hypothesis #3A Hypothesis #3B Key Question #3A-a Key Question #3A-b Key Question #3A-c How many employees are 50 years old or older and interested in retiring? Age of employees Employee interest level in retiring 3. Collect required information per the Analytical Tool selected 4. Once you complete your analysis, move back upstream to answer the key question you started with

38 Analytical Techniques Benchmarking Compare against an internal or external source SWOT Strengths, Weaknesses, Opportunities & Threats Force Field Analysis Overall how it impacts the subject Cost Benefit Analysis Compare costs vs. Benefits Impact Analysis What is the impact of change

39 Benchmarking Compares your performance against competition Differences indicate possible performance issues May be difficult to collect comparable measurement data Comparing best in class performance

40 SWOT Strengths Weaknesses Opportunities Threats Identifies what we are good, not good, might do, and not do? A common analytical tool for strategic planning Subjective Easy to understand and follow Useful to identify the core competencies

41 SWOT Example Internal Assessment of the organization Strengths Client has a global infrastructure to service all types of customers Services are in high demand in most parts of the world Weaknesses Client has limited resources for expanding its global reach Key processes are not very cost competitive when compared to other service providers External Assessment of direct and indirect forces Opportunities Untapped demand exists in half of the World Threats Other are investing in newer technologies New Technologies make it possible to expand service reach Some are entering into strategic partnerships to expand their global footprint

42 Force Field Visually shows significant forces that impact the problem Forces tend to be those factors that promote or hinder a solution Normally from brainstorming session to list all forces

43 Force Field Example Problem: Agency is not strategically focused Positive Forces Negative Forces Agency promoting the Balanced Scorecard Agency has mandates Agencies have BSC in place Strategic planning is growing in importance Agency lack enforcement teeth. Agency not resourced to develop strategic plans Agency has too many change going on Direct More Important Indirect Less Important

44 Impact Analysis Identifies diverse effects associated with a problem/proposed solution How will this impact us? What are the consequences of not acting on the problem? Aim to minimize adverse or negative impacts going forward Helps in assessing risk of different solutionsn Numerous tools can be used to assess impacts

45 Impact Analysis Tools Scenario Playing Do Nothing vs. Solution Cost Benefit Analysis - Used to quantify impacts Decision Tree assign probabilities to alternative for likely solution Simulation Model & Assess impact when variables change Prototype Model Build and test the solution for lessons learned

46 Pareto Analysis Quantifies what is most important on a graph 80 / 20 Rule Puts focus on the significant problems or issues Group issues based on measurable attribute (errors, downtime, etc.) Categorize issues by type (causes, products, etc.) Plot the data and rank according to frequency

47 Downtime, Errors Pareto Chart Categories Causes, Products

48 The Kepner-Tregoe Method 1. Assess each alternative with regard to the must criteria. 2. Rate the importance of each want criterion on a scale (E.g. 1 to 10). 3. Determine how well each alternative meets the want criterion. 4. Compute the weighted score (WS) for each alternative on each criterion. 5. Select the alternative with the highest total weighted score.

49 The Kepner-Tregoe Method for Analyzing Alternatives Exhibit 4 9

50 Cost Benefit Analysis Identify all expected costs and benefits to make the decision Costs includes all tangible outlays and intangible factors with value Compare using a set of financial analysis tools Continuum of Analysis Techniques:

51 Problem Management Methodology Problem Hypothesis Facts Analysis Solutions Define Formulate Collect Conduct Develop What need to be corrected Address right problem Identified by clients Specification misleading Defining is discovery based Defining improve focus Drives analytical thinking Start with end in mind Potential explanation Can be tested Proved or disproved Possible root causes Break down root causes Help to build roadmap Meaningful information Qualitative or Quantitative Relevant data for proving Where to look for How to filter Verifying what happened Applying to solve Break down the problem Apply analytical Technique Analyse to prove or disprove Understand issues & drivers Most time spent Confirm or deny hypothesis Many analytical techniques Outcome from hypothesis testing Solution final recommendation What the client wants Addresses the problem Solution is implementable Run an actual example Viability of recommended solution

52 Presentation Outline 1. Problem Management Process 2. Defining the Problem 3. Formulating the Hypothesis 4. Identifying the Facts 5. Analysing the Facts 6. Developing the Solution

53 Decision-Making Conditions Certainty Each alternative s outcome is known in advance. Risk Probabilities can be assigned to each outcome. Uncertainty Lack of knowledge on the outcome makes it unpredictable

54 Basic Concepts Plan the solution that has the greatest impact on solving the problem Use matrix to weigh solutions (success probability, implementation ease) Solutions must be supported by the analysis Test your solutions as much as you can Clearly communicate the outcome

55 Presenting the Solution Situation Appraisal Clarify situation, outline concerns & choose a direction Problem Analysis Problem defined & root cause determined Decision analysis Alternatives identified & risk analysed Potential Problem Analysis Best alternative assessed for potential problems & negative consequences Actions are proposed to minimize the risk

56 Presenting the Solution Situation Appraisal : Client concerned with current profitability of widget X business and like to divest the product line. Problem Analysis : Client s widget X business is small and not cost competitive in the market. Decision analysis : Maintain the current losing business or dispose and retrain non-retiring staff. Potential Problem Analysis: Not able to get good price or too many staff not keen to retire.

57 Problem Management Methodology Problem Hypothesis Facts Analysis Solutions Define Formulate Collect Conduct Develop What need to be corrected Address right problem Identified by clients Specification misleading Defining is discovery based Defining improve focus Drives analytical thinking Start with end in mind Potential explanation Can be tested Proved or disproved Possible root causes Break down root causes Help to build roadmap Meaningful information Qualitative or Quantitative Relevant data for proving Where to look for How to filter Verifying what happened Applying to solve Break down the problem Apply analytical Technique Analyse to prove or disprove Understand issues & drivers Most time spent Confirm or deny hypothesis Many analytical techniques Outcome from hypothesis testing Solution final recommendation What the client wants Addresses the problem Solution is implementable Run an actual example Viability of recommended solution

58 Key Messages Don t rush out and collect information until analytical tools to be used Use a combination of tools to cover all the bases Decisions involve some assumptions you will not have all the facts Analysis is a discover driven process incremental step as you learn Adjust as you iterate until you have insights; on the problem 100% out-of-the box solutions don t exist No solution is a guarantee willing to revisit your requirements Solutions rarely work unless you get buy-in and commitment Back up your solution with a implementation plan & measure outcome

59 Summary Analytical Thinking is a Scientific Approach Five Step Process for Consultants: - Define the Problem - Test in the form of Hypothesis - Focus on Facts - Analysis (Various Analytical Tools) - Recommend a Solution

60 Planning Key to Success Time Form Plan and Win

61 Question???

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