You can only solve a problem if you identify the right problem.
The above will make more sense once I describe it and you have studied the accompanying graphic.
There are three CATEGORIES of problems, each of which can be subdivided into a subset of problems. After that you can continue to subdivide a problem to an ever-increasingly granular level. Each of those subsequent layers of ‘problem’ you encounter, can be further classified as TYPES of problems, which then provides the insight to SOLVE the problem.
In order to figure out what types of business problems there are, we first need to have a definition of what a business actually is. At the very highest/moist generic level, a business can be defined as:
A collection of resources that are applied to an opportunity in a particular environment.
That definition reveals the starting point for identifying what can go wrong, and provides the major categories of problems. Once you have identified the major category of problem (sources), you run the problem across the 6 S’s on the Y-axis of the framework. In this way you have 6 potential nodes for every ‘problem’.
Category A: RESOURCE PROBLEMS
Economics 101 tells us that there are four types of resources: Human resources (man) as well as the (raw) materials, the technology (machine) and finally capital. Or: man - machine - materials - money. The 4 Ms.
It makes sense that things can go wrong on any of those fronts and that they would generally be different problems.
Problems at this level is typically easier to identify, except when the problem is the ‘man’ - or the humans in the system. Resources can have many different problems relating to quality, performance, complexity, availability, cost and so forth.
In the case of ‘human resources’, we have additionally have a subjectivity issue. The people are not only a resource for the system, they are the resources that build the system and create and/or solve most other problems in the system. Consequently, ‘people’ is a big part of every problem and every solution.
Category B: OPPORTUNITY PROBLEMS
This category of problem relates to the Business Model. That is, your product/offer is a response to a market opportunity. In startup terms, we talk product-market fit. Without that you cannot have a viable business.
I mentioned that problems can be made even more granular. I have refrained from including that in the graphic, but if you choose to, it will result in an ever-increasing cascade. Allow me to explain how problems with your product can be further refined to be made more specific.
‘Product’ problems could relate to things like Quality, Design or Price. ‘Market’ problems could relate to Access or Communication. And that can refined even further. For instance, ‘access’ could relate to timing, or to channels. Communication can be refined to identify whether it is about awareness or frequency or content.
When looking at these product:market fit problems, we would rely on the elements of excellence to identify whether the problem is primarily related to our strategy or skills or our organisation or whatever other element that may be applicable. (A more detailed example follows below.)
Category C: CONTEXT PROBLEMS
These problems are harder to solve since they are driven by EXTERNAL factors. Examples are when a dictator chooses to nationalise an industry or your exchange rate collapses or (more likely) when a competitor disrupts the industry. The only thing that you could have done proactively about these types of problems was to plan for the risk/likelihood of it happening.
We are all familiar with the P.E.S.T.L.E. variables that we encounter when conducting strategic planning; and when it comes to the perspective of being ‘business problem’, the only real problem is that the business failed to anticipate the problem.
In order to reduce visual clutter, the matrix does not graphically extend to each variable. Each variable is uncontrollable (external is by definition uncontrollable), so the problem is quite simple to identify and is the same basic problem, even if ‘fixing’ it or preventing it a lot easier said than done.
NOTE: This is part 3 in the series. Visit our blog and find the rest of the series which will be published on consecutive days.
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