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Jeremy Gray – You have a business problem? Grab a model!

21/3/2021

Jeremy Gray – Show 12 Season 4. You have a business problem? Grab a model!

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INTRODUCTION
Why use a model as an aid to solving business problems? As an action orientated entrepreneur there is a temptation to jump to a solution when presented with a problem. Unfortunately, this often leads to a short term solution that soon breaks down or creates other unforeseen problems within the organization. In today’s show we will explore how the use of problem-solving models can lead to robust solutions that fix the issue for the long term without disrupting other parts of your business.

Key Issues - Owner Perspective:
By adopting and encouraging the use of problem-solving methodologies you will provide a framework for your managers to make better decisions. Managers are often limited in their ability to make good decisions as they may not have a full understanding of the business. How often has a manager presented to you a flawed solution to a problem? You have had to ask them, have you thought of this or that? Only to see that they quickly recognize they have missed something important. By using a structured approach, you can avoid some of the consequences of poor decisions.

Show Objectives - The Why
I remember in the early 70’s I saw a sign in a car dealer’s workshop which read: Why is there never enough time to do something right the first time but there is always time to do it over again. Your manager’s probably feel the pressure of time, they cannot spend hours seeking a good decision they need to solve the problem now. If they have some time and seek opinions of others, they may receive conflicting advice creating noise which makes it difficult to rationally assess the situation.

Problems are normal, they occur in all organizations and at all levels within the organization. As a result, employees often develop work arounds which are usually inefficient and hide the real issue. Excellent companies take the time to identify and solve these problems. You should encourage your employees to identify and solve difficulties in their own areas. Your folks are experts in the area they know and often know how to fix problems but often are not encouraged to put forward solutions. Create a problem-solving culture in your company and you will see the impact on your bottom line.

One of the most important factors in developing a problem-solving culture is to be hard on the problems and soft on the people involved. Focus on the problem, not on whose fault it is the problem exists. Avoid personalizing the problem and blaming others.

What You Need to Know - The What
Business problems are messy, unstructured and usually cannot be solved by a single mind. It may be better to describe them as challenges, situations, dilemmas. And they look like this, one I actually faced in early 2020, the emerging Corona virus has shut down my plant in Ezhou, The Taal volcano in the Philippines has forced the evacuation of many of operations employees in the Laguna region and wildfires in Australia are disrupting deliveries out of Sydney and Melbourne. Or a major supplier in Korea has had an explosion that has shut down their plant and there is no estimate of how long before they can be back in production. In other words, they are:

They are ill-defined.
They are ill-structured.
They require collaborative and collective action.

All three elements above are reasons for using model-based decision making but the third is maybe the most important. As you cannot predict what needs to be fixed and therefore which business functions are needed to solve the challenge. By using a model-based process consistently most people in your organization will know what is expected of them which is an excellent starting point.

In any unexpected situation there will be conflicting interests, Sales will want to minimize customer disruption, marketing and R&D may be more focused ensuring the quality and performance of the product/service is maintained, manufacturing will be concerned about disruption to their operations and finance will be worried about the cost of the solution.

So, whether you are facing an acute or chronic situation a well understood methodology will be a great asset.

It may seem that we are discussing a one size fits all, this is far from the case. Each situation will be unique and there will be differences on how you reach your solution but by following a process you will ensure that all bases have been covered and that the solution chosen is not worse than the problem itself.

What You Need to Do - The How
So, you have a situation that needs a solution. How do you go about this?

1) Define the problem: This is key. The definition should be as precise as is possible. Some tools that can help include brainstorming, process flow diagrams, Pareto charts. Defining the problem also helps to avoid scope creep. The tendency to extend the project just a little bit farther.

2) Measure the problem: Anecdotes and opinions are a starting point, but you do need hard data. Sometimes you will find the problem does not actually exist.

3) Set the goal: You need to know where you want to get to. Failure to set a provides a guide to the path they should take. It also helps to measure progress and provides motivation.

4) Determine the root causes. Understand why the process is working way it is. If you have a control chart, then you can determine if the process is in control or out of control. Other tools that can be used are cause and effect analysis (Fishbones), scatter plots, and experimental design formats.

5) Select a solution: From the possible solutions select the one that achieves the desired result and that is practical. Consider the time required to implement the solution as a selection criteria.

6) Implement your chosen solution: The quality of implementation is key. The plan should be clear. A RACI matrix is helpful here. Who is Responsible? Who is Accountable? Who is Concerned? Who needs to be informed?

7) Evaluate the results: Has the solution improved the situation? Have there been unintended consequences? If the solution has not improved, it may be necessary to go back to look at the root causes and start the process again.

8) Look for further improvements. Has the changed process identified more opportunities for improvement?

9) Celebrate!

Another highly regarded methodology comes from Six Sigma DMAIC. Define Measure Analyze, Improve and Control.

Define the problem.

Problem definition is really the heart of problem solving. If you cannot define the problem correctly, it is challenging to solve that problem. There are a number of problem-solving techniques to use:

Ask what, why, when, where, who and how questions?
Or focus on the 5 whys.

Why is there a problem? Do not assume you know the answer. Ask this question five times.

For example:

Why is ABC customer dissatisfied? Because we were late on three of their last five shipments.
Why were we late on three shipments? Because we had a production backlog and the products were not ready to ship.
Why did we have a production backlog? Because the equipment malfunctioned.
Why did the equipment malfunction? Because the scheduled preventative maintenance wasn't done on that unit.
Why wasn't the preventative maintenance done on that unit. Because our maintenance technician was on holiday.

Define the business scope or reach of the problem and then measure the impact of the problem.
Analyze the data you have collected.
Improve the process to eliminate the problem.

To continue on with the above example, you have some options to solve the problem: hire an outside contractor for vacation or overload times or train someone on the plant floor to provide back up relief as necessary.