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Business Problem Solving Techniques

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Problem solving is required in many aspects of management and leadership. The Cambridge Dictionary definition of a problem is ‘a situation, person or thing that needs attention and needs to be dealt with or solved’. There are many different approaches and techniques that can be used to help solve problems and when dealing with a problem it is important to gain an understanding before deciding what to do. There are a number of different things that can cause problems, examples of those are; equipment failure, software failure, problems with physical resources or materials, problems with human resources, customer complaints, difficulties with working relationships, problems with processes and procedures, poor quality levels of products/services, and ineffective communication.

Problem solving and decision making are linked and by considering the processes of solving problems we can see how they relate. The order of the activities required to identify and understand a problem are best broken down using a step by step approach to solve those issues. Those steps are by clearly defining the problem by gathering data about the problem. Once this data has been collected it needs to be interpreted to inform a solution or develop alternate solutions. All solutions need to be evaluated and the best selected before a plan can be put in place for the solution to be implemented. The final step is to monitor and review the solution to see if it was successful. There are many techniques that can enhance the primary investigation into the problem and provide a clear framework for working towards a solution and decision making.

One of those techniques is SWOT analysis; this can be used for problem solving as it looks at the strengths, weaknesses, opportunities and threats. It uses those specifics to focus attention towards all aspects of a problem, not just one area. It can be useful for gathering, interpreting and analysing the information but it does not produce an answer to the problem. As a manager it is still their role to identify the pros and cons of each option; this is done by each realistic possible solution being analysed to identify the key areas of SWOT.

PESTLE analysis is another technique used to solve problems as collecting information is a key part of the problem-solving process. PESTLE stands for political, economic, socio-cultural, technological, legal and environmental. It is a simple tool that helps to analysis all of those areas and changes in the business environment to have an understanding of the impact of those outside factors on a business. It gives a bigger picture of the business environment and by using this form of analysis it ensures that you stay aligned positively with changes that are affecting our world. For pestle analysis to work each factor that is relevant or applies to you, needs to be brainstormed to identify the information that applies to these factors and draw conclusions from this information. Using this technique helps to avoid taking actions that are doomed to failure for reasons beyond our control.

Alongside those types of analysis is PDCA, which stands for Plan, Do, Check, Act, and was devised by J. Edwards Derning in the 1950s. It runs in a cycle so is never ending once you have acted you then start again at the planning stage. The planning stage is where you identify the problem and root causes so that you are then able to do by implementing the plan and taking action. Once the plan has been implemented it is important to check by reviewing and measuring the progress against the objectives. Finally acting or adjusting is recognising the success and identifying further improvements, before repeating the process again if any problems are identified. This is a simple model with easy to remember steps, but it can have lots of detail added to it where necessary.

The Fishbone diagram is also known as the cause and effect diagram, it is used to fault find and solve problems. It is a visual based technique as it uses brainstorming to consider all the possible causes of a problem to be able to address all those parts and completely solve the problem rather than just an element. There are 4 steps to this process starting with identifying the problem; this includes what the problem is, who is involved, where and when it occurs. The next step is to work out the major factors involved, this can be anything from the system, equipment and materials to external forces or individuals involved with the problem. It is important to think about as many of those as possible in order to solve the whole problem and not just one element of it. Once this has been done you can move onto the third step which is to identify possible causes. This step needs to be done for each major factor that was identified in step 2. The final stage is to analyse the diagram that should show all the possible causes of the problem. It is now important to investigate the most likely causes but it gives a clearly root of the cause so that the problem can then be solved. This technique is best used in a team setting; this will enable a broader input from a wide range of experiences.

A simpler problem-solving technique is the 5 whys. This asks questions to determine the root cause of the problem by asking 5 questions. It may not necessarily solve the problem, but it acts as a guide to an alternative path. It asks a ‘why’ question about the problem to be able to get to the root of it. The next ‘why’ question should then follow on depending on how the first question is answered. This technique does not fix the problem but instead gives you an answer as to what caused it, you can then use this information to solve the problem. When solving a problem, it might be necessary to use several different techniques to find the cause of the problem and then go forward to solve the issue. Therefore, it is important to have an understanding of a range of different tools and techniques because this will also vary depending on the dynamics of the team.

Explain techniques used for decision making

There are many aspects that are involved during decision making and this is usually the second part of a process after problem solving. The Oxford Dictionary defines decision making ‘as the action or process of making decisions, especially important ones’. Problems will arise and as a manager we need to make decisions about how to solve them. There are a few different tools and techniques that can be used to make decisions; those techniques include Pareto analysis, weighted decision-making grids (decision matrix), pros and cons analysis, and decision trees.

Pareto analysis was developed by Vilfredo Pareto. He discovered that in Italy 80% of its wealth was owned by 20% of its people. This relates to problem solving and decision making by applying an 80-20 principle to solving a problem. If 20% of the causes are contributing to 80% of the problem, then we know that if we deal with the 20%, we can solve 80% of the problem. This type of analysis can be applied not only to problem solving but also decision-making by working through 4 steps. To start with it is important to find the root cause of the problem, in order to find a solution; this should then be followed with gathering data in order to establish which cause is the biggest problem. Once the data have been collected calculations need to be done to see which cause, once fixed, can solve most of the problem. Finally, this data is then displayed graphically to enable a decision to be made around what action needs to be taken to what cause.

Decision matrix are a good tool to weight up different factors that cause problems. They are a comparison tool to look at different solutions to a problem and weighting up what option would be best to solve the problem. When making a decision there are a number of different factors that need to be considered such as cost, quality, location, reliability and payment just to name a few. Some of those factors may be more important than others so may play a larger factor in the final decision. To start with you need a list of options as rows on a table and the factors to consider as columns. Once this is done, as a manager you need to decide which factors have more relevance and importance to the outcome. Each option and factor combination need to be given a score on how effect it is, and weight is added to this score by the relative importance of the factor. These scores should be added up for each option to give an overall score. This overall score will then provide a clear decision of which option would be the best based on the highest score. This is a good tool to use if there are a number of different alternatives to a problem that could all work, but you need to find that one that will be most effect for your work team.

Moving on to pros and cons; this is a simple tool for making decisions to assessing the different options available. Pros are the positive outcomes and the cons are the negative consequences. This means that when looking at an option all the pros and cons need to be listed in a table. To make the results qualitative and give simple data a weight needs to be added to each pro and con. For example, each pro would have a score of 1 to 5 with 5 being the best outcome, and each con would have a score of 1 to 5 with 5 being the worst consequence. Once each pro and con have a score they need to be totalled at the bottom of each column. The total cons score is then subtracted from the total pro score, leaving you with one number for each option. The option with the higher score can be deemed the better option. It is good with this technique to do it as a team exercise meaning there is more ideas in the pot of what could be pros or cons.

Finally, a Decision tree is a support tool the has a flowchart like structure. It helps to look at the possible consequences or outcomes based on related choices. It helps to weigh possible actions against one another based on factors such as cost, probabilities, and benefits. They can either be used to help make an informal discussion or to help predict the best possible choice. Decision trees start with a single question, known as a node; this then branches out into possible outcomes. Each of those outcomes leads to additional nodes and they continue to branch off into other possibilities. There are 3 types of nodes; those are chance, decision and end nodes. A decision node is normally the start of the decision tree as it shows a decision that must be made. Followed by a chance node as those show the probabilities of certain results, and finally an end node which shows the outcome of a decision path. Each node can have more than one branch as each branch indicates a possible outcome. Decision trees when done right are easy to understand and help to pick out the best of several different options, however they can become extremely complex and in this case, it might be better to use a different decision making technique. When making decisions it might be necessary to use a number of different techniques to find the best possible decision and go forward with this decision as a team. This is why it is important to understand a range of different tools and techniques because this will also vary depending on the dynamics of the team and the decision that need to be made.

Explain how data analysis supports decision making

This links back to most of the decision making techniques already talked about as most of them use numbers that produce a result. Being able to get to this result is part of analysing the data that has come from using those techniques. When looking at a problem it is important to assess direct or primary sources of evidence; this is what is linked directly to the problem and how it started. However, there are also secondary sources of data which come from looking at similar problems elsewhere. Once data has been collected it needs to be interpreted and turned into something that can be used, making it relevant to the problem. When using decision making techniques the data that it produces is what justifies the recommendations and is normally what helps to win the support to use that decision as a solution.

Data analysis can be done to support all decision making processes weather the data is quantitative or qualitative. The decision making techniques that we have looked at use both of those types of data. Quantitative data tends to be more objective, involving quantities or amounts; this data can be measured. Qualitative data is more subjective as it is collecting statements and descriptions; this type of data is useful to gain a better understanding. However due to the nature of the data it can be difficult to analyse and form conclusions. Depending on the problem will change how it is dealt with and this helps guide us towards which type of data is best to collect. It is also important to check the validity of the data collected; this means checking the accuracy and quality of the source of data before using it to come to a conclusion. This also means doing some data cleaning to get rid of stuff that is not relevant or not needed to make a decision.

Once all the data has been collected to make a decision it needs to be interpreted. This means turning that data into useful information so looking at trends and patterns, which will lead to a potential solution. There are several ways to interpret this data such as tables, bar charts, scatter graphs, line graphs, and pie charts. Using a table is a simple way in the initial stages to interpret the evidence produced from using the decision making techniques as they demonstrate a simple option for presenting data. This makes it easier for trends and patterns to be visual. This is just one of the ways to interpret the data collected and depending on what data is collected will change the way you present it.


  1. https://dictionary.cambridge.org/dictionary/english/problem
  2. https://whatis.techtarget.com/definition/PDCA-plan-do-check-act
  3. https://www.swotanalysis.com/problem-analysis-how-to-guide
  4. http://problemsolvingnyman.blogspot.com/2009/06/pest-analysis-part-8.html
  5. http://mindtools.com
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