How To Describe Your Business Problem

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By GOAL/QPC

Once you understand that work consists of a set of processes, the next step is to identify the most important problems within your organization to improve. This article describes a method for describing the first or next business problem to tackle. Doing so helps teams to focus on the most important problem rather than a trivial one when resources and time are limited. Teams can then begin to understand and describe the problem and improvement opportunity.

It's based on a seven-step process described in The Problem Solving Memory Jogger, published by GOAL/QPC. Describing your business problem is step one.

The Importance of Understanding the Business Problem

Focus on the right problem. With limited time and resources, it is essential to focus on a problem that is most important to the customer, team and organization.

Break the problem into manageable pieces. This prevents a team from feeling overwhelmed by the larger problem and helps the team identify the pieces that it can control and change.

Gain more knowledge to better define the problem. This ensures the team keeps all its efforts focused on solving the right problem with the right people.

Describe the problem as the gap between what "is" and what should or could be.

The Importance of Gathering Data and Information

Data can help teams:

• Reveal a problem. Teams can't fix a problem they don't know about.
• Describe a problem. When teams understand what the problem is, they can fix the problem rather than just addressing the symptom.
• Monitor and control a problem. Teams can make sure that what they fix or improve stays that way.
• Prevent a problem. When there is a consistent trend or cycle in the data, a team can take action to reduce or eliminate the undesired trend or cycle in the process before it becomes critical and/or apparent to the customer. It's always easier to prevent a problem than to have to correct it.

Types of Data

There are two types of data to measure process performance: variable data and attribute data. It's important to know which type of data you have, since it helps determine which tool to use.

• Variable data. Data is measured and plotted on a continuous scale over time, e.g., temperature, cost figures, times, strength, pH levels. Use Run Charts, Histograms, Scatter Diagrams, and Variable Control Charts to illustrate this data.
• Attribute data. Data is counted and plotted as discrete events for a specified period of time, based on some characteristic, e.g., types of shipping errors, types of customer complaints, reasons for downtime. Use Check Sheets, Pareto Charts, and Attribute Control Charts for this type of data.

What Actions Must Be Taken in This Step?

• Identify important business and process measures that focus on the customer.
• Identify what type of data is needed to define the problem.
• Arrange data into a form that can be analyzed for meaning. Two good choices are the Run Chart and Pareto Chart.
• Write a problem statement that describes the problem as a gap between the present condition (what is) and the required or desired condition (what should be).

How Do You Do It?
1. Look for changes in important business and process performance measures.

a) Monitor important processes and their key business performance measures. Measures must:

– Be objectively measured with data that reflect the process.
– Support major business objectives.
– Be directly related to a customer need or financial need of the organization.

See Table 1 for examples of measures.

Depending on the organizational improvement structure, this step may be done by a steering team, management team or problem-solving work team. If the business performance measures already exist, monitor them using graphics and charts.

b) Chart the current business and process performance measures.

Use a Run Chart or a Control Chart to plot variable data. These charts show you how the measure performs over time. Data graphed over time helps teams to see if the process they are studying is steady, improving or getting worse. If the process is performing differently than expected, then a team has cause to question this. The team should determine why it has changed and the extent it has changed. Use a Control Chart to distinguish between common cause variation (naturally occurring within the process) and special cause variation (a unique cause not naturally occurring within the process).

In addition to the Run Chart or a Control Chart, a Pareto Chart can be used to chart the performance of the business and/or process measure and to prioritize business issues that need to be addressed. Use a Pareto Chart to visually display attribute data. A Pareto Chart helps a team identify the biggest problem or need for improvement by taking a complex issue and breaking it down into categories of different problems that are occurring. It's used to further prioritize problem areas, categorize customer complaints, defect types, etc. The Pareto Chart is based on the Pareto principle: 20% of the sources cause 80% of the problems. Identify the category that has the highest frequency of occurrence, e.g., the highest cost or highest negative impact, and consider focusing there.

c) Examine the measures and use significant changes in them as signs of potential problems for a team to resolve.

d) Create a draft statement of the problem.

Table 1: Examples of Key Business Performance Measures
Problem	Measured objectively with data		Supports major business objectives	Directly related to customer need or company finances
	Measure	Chart
HOSPITAL: Patients wait too long to see emergency room physician	Wait time from patient logs	Run, Control or Histogram	Relates to quality of patient care	Impacts finances if patients go to another hospital
	Reasons for long wait time	Pareto	Relates to quality of patient care	Impacts finances if patients go to another hospital
PLANT: Manufacturing not meeting production targets	Yields (% of quality)	Run or Control	Efficiency and quality of products	Customers' orders not filled Company loses customers to competitors Lower sales
	Machine downtime (# of times machine breaks and duration)	Run or Histogram	Efficiency and quality of products	Customers' orders not filled Company loses customers to competitors Lower sales
	Reasons for downtime	Pareto	Efficiency and quality of products	Customers' orders not filled Company loses customers to competitors Lower sales

Scenario: "The Case of the Missing Deadline" The Atlantic Book Company (ABC) is a 145-person publishing firm. ABC's success in the last 20 years has been in writing and publishing "how-to" books. More recently, ABC's merger with another publisher has enabled the company to expand into new markets. Growth has come at a cost, however. As the company has grown, it is increasingly difficult to finish new products on schedule. Jeremy, ABC's New Product Development Manager, was well aware that deadlines were missed more often than met. Not only was it difficult for Jeremy's new product development staff to meet the deadlines, but morale was suffering too. The latest employee survey showed a 15% drop in job satisfaction. The decline was directly related to work pressure and having to work longer hours. Jeremy also knew that on-time delivery of new products was an important measure of the health of the business. He decided it was time to solve this problem. Using the data from the Run Chart, Jeremy composed the following problem statement: "For the past two years, and the last eight projects, book production has been late on average by 7.9 weeks."

2. Assemble and support the right team.

If a steering team identified the problem area to address, another team should be chartered to further study and solve the problem. If a team has already been formed and identified the problem, verify that the team has the right members. Consider including suppliers and customers of the process as team members. Also include people who will satisfy the team's needs. Ask team members if anyone is missing or needed, but remember to keep the team small and manageable, no more than five to eight people.

Putting Together an Effective Team

Skills: Does someone do something unique that is a required part of the process? Examples: precision welder, secretary, lab technician, or facilitator.

Knowledge: Is there someone who has essential pieces of information about the problem or process? Examples: research chemist, nurse, customer and/or supplier, service manager.

Approval: Is there someone whose "OK" is required before a likely solution can be implemented? Examples: purchasing manager, finance manager, general manager, CEO.

Acceptance: Are there individuals who can effectively block implementation of a likely solution if it isn't acceptable to them? Examples: process owner, supervisor, worker, or sales representative.

For example, the ABC problem-solving team in our scenario includes:

• – Jeremy, Manager of New Product Development (needed for Approval, Knowledge)
• – Felicia, Lead Editor (needed for Skills, Knowledge)
• – Rich, Customer Representative (needed for Acceptance)
• – Lani, Primary Writer (needed for Skills, Knowledge)
• – Stephano, Copy Layout (needed for Skills)
• At each team meeting, Rich took notes and documented the key ideas that were presented so the team could develop an ongoing storyboard to be posted outside the lunchroom. (Storyboards are self-explanatory, graphic summaries of the key analyses, decisions and actions of the problem-solving process. It keeps the organization informed of the team's progress.)

3. Narrow down the project focus.

a) Look for any other data opportunities to further understand and clarify the problem.

– Is there a different process measure that should be studied?
– Is there additional data that would help you understand the largest bar on the Pareto Chart?
– Do you need to create a new Run Chart on a critical measure?
– Would it be helpful to talk to customers?

Tip: Customers' input is invaluable! Their insights to the problem may change what you choose to measure and how you measure it in the process. Understanding your customers' needs can influence the type of solution you later put into place.

Tip: Sometimes you can narrow the scope of the original problem, depending on the knowledge of your team members and the data that you've collected. Keep the scope of the problem within your team's:

– Area of control or influence
– Budget
– Schedule for implementing a solution
– Suppliers

b) As a team, look at the data gathered so far. Begin to ask, "What's wrong?" "What's not working?" List all potential issues, problems, and opportunities.

c) Identify the issue to focus on. Consider these questions when selecting the issue:

• What issue appears to be the most important one in need of changing or improving? Look at the Run Chart or Pareto Chart.
• Is that issue the most important one to the customer? The team? The organization?
• Does the team have control over the part of the process that needs to be changed?
• Will the necessary resources be available to address this problem?

Scenario Continued: ABC Team Narrows Down the Project Focus The team members decided they had to narrow the focus of the problem before they could find a possible solution. They collected data on the past eight projects by talking with other employees, looking at past records, and studying time logs. After reviewing this data, the team listed possible reasons for the delays. Then the team collected data from project history files on how often each type of delay had occurred. With this data, the team constructed a Pareto Chart to show the frequency of delays. The Pareto Chart showed that more than two thirds of the delays were caused by rework. The team dug a little deeper by reviewing work assignment sheets and time logs for the last eight projects completed. Using data from that search, the team named the reasons why projects were delayed and created a second Pareto Chart that showed where the greatest number of delays was occurring. Based on the data, the team concluded that the leading contributor to project delays was related to graphics production (the tallest bar).

4. Write a final problem statement.

Write a clear and concise statement of the problem to be addressed by the team. A good problem statement will include four components:

Direction: What do you want to do to the performance level of the process, e.g., increase, decrease, cut back, improve, expand, develop, remove, reduce, lower, eliminate, shorten, extend.

Business Measure: The key measure for the process under study, e.g., errors, mistakes, breakdowns, yields, availability, turnaround time, timeliness, wait time, accuracy, cycle time.

Performance Measure: The current numeric performance value of the business measure.

Process Name: The process under study.

For example, the ABC Team's final problem statement was: "Reduce the large number of graphics needing rework in the new product development process so that book production schedules can be met on time."

How Can You Turbo-charge This Step?

The key to a successful problem-solving effort is to get a team off to a good start with the right people working on the right problem. Consider these other approaches to identifying and defining the right problem.

Affinity Diagram and Interrelationship Digraph

1. Start by talking to the customers, suppliers, or staff and workers. Identify their issues and organize them using the Affinity Diagram. This method truly focuses on a customer-identified concern!

2. Identify the driver of these themed groupings using the Interrelationship Digraph.

3. Identify a key business performance measure related to the driver.

4. Construct a Run Chart or Control Chart on the measure. Construct a Pareto Chart on the identified types of concerns/issues.

Problem Reformulation Tool

If a team has trouble identifying the problem, this tool can help a team visualize the problem in a new way.

1. Using pictures, questions, and criteria, identify the components of the system (process) in order to identify new approaches to focusing on the right problem and then solving it.

2. Look at how the components affect the system and at the interrelationships between the components.

3. After writing new statements of how the components or relationships relate back to the original problem, prioritize and select one.

4. Identify a measure on this new problem statement and evaluate it for further study.

Purpose Hierarchy Tool

This tool identifies the full range of possible purposes of an improvement effort and then focuses in on the one that fits the needs of the customer and available resources.

1. Brainstorm a list of purpose statements that begin with the word "to" and have an action (verb) and an object of that action.

2. Code each statement as to its level of difficulty:

S = simple
SM = simple to medium
M = medium
MC = medium to complex
C = complex

3. Order the statements from simple to complex and then select the focus purpose by mapping the statements against applicable criteria.

Useful Links

GOAL/QPC
http://www.goalqpc.com/

Buy the The Problem Solving Memory Jogger:
http://www.bpmenterprise.com/BGT

For more information about run charts and control charts, read:
http://www.isixsigma.com/library/forum/c031015_run_chart.asp

For more about pareto charts, read:
http://www.isixsigma.com/library/content/c010527a.asp

For more about affinity diagrams, read:
http://software.isixsigma.com/library/content/c040901b.asp

For more about interrelationship digraphs, read:
http://www.skymark.com/resources/tools/relations_diagram.htm

For more about histograms, read:
http://www.isixsigma.com/library/content/c010527c.asp

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