Identifying Business Problems

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Importance of Identifying Business Problems  

Identifying business problems is an essential part of the operations process. Problems in any area can have a significant impact on your entire organization. The goal of identifying and solving problems should be to improve efficiency, reduce waste, and increase profitability.  

How To Go About Identifying Business Problems

You know there are areas that need fixing in your business, but it can be difficult to identify the exact problem. Various methods can be utilized which include looking at the Key Performance Indicators (KPIs), getting feedback, and taking time to observe. Key Performance Indicators (KPIs) are a way to direct the focus of your attention. Key Performance Indicators (KPIs) can shed light on financials such as sales and margins. In terms of operations, KPIs include completion time, shipment time, and yield. Getting feedback from customers and employees regarding areas they see for improvement can also be a great benefit. Observing the day-to-day work over the course of a few days may also highlight areas that need improvement.

What Tools Are Necessary?

Once you have an idea of what the problem is, you should begin implementing the principles of Lean, Six Sigma, or Theory of Constraints. Start by creating a Value Stream Map so you can see what the problems are from an Enterprise level in the current state. From there, map out what an ideal future state will look like. A complementary tool to the Value Stream Map is the Process Map. The Process Map helps you analyze, in detail, the problems identified in the Value Stream Map.  The detail will help you solve those problems and simplify your business.  

Another interesting tool you can use is a Gemba Walk. Taken from the Japanese language, Gemba is a Lean term and translates to “Actual place.” A Gemba Walk is a process in which the business leaders and support personnel gather information by observing and interacting with employees where they work (Actual place). This is important because it will help you see the difference between what you think is going on and what is actually going on.  

Finally, keeping an eye on financial results will help identify potential problems. Watching weekly, monthly, and quarterly sales numbers will allow you to address problems early on before they become much more difficult issues later on.  

Common Mistakes Business Owners and Managers Make

Over time, we have been able to notice some mistakes that business owners and managers often make.  

  1. They don’t measure their processes – We come across companies that don’t have a well-defined process that they can use as a baseline for what needs to be improved upon.
  1. They don’t make observations – It may seem trivial, but people are busy and we often see that business leaders simply don’t have the time to do the proper observations
  1. They ignore the problem – Another example of not having time, we often come across leaders who know there is a problem, but they ignore it because it is just another thing on their plate to think about and it may not be as important as the current problem they are trying to solve.  
  2. They come up with a solution without fully understanding the problem – Many business leaders are natural-born drivers and just want to get things done. The problem we see involves companies implementing solutions without fully understanding what the problem is. When this occurs, more time is wasted and new or potentially worse problems develop.

Okay, you have the problems identified…now what?

Once you have identified the problems, it is time to start brainstorming solutions. The best leaders will get all the key players together to discuss potential solutions. A good rule of thumb when sorting through these ideas is to analyze effort vs. impact. The goal is to initially work on the solutions that have the highest impact with the lowest effort (aka investment). Once you have a few solutions in mind, you should begin to test some of them out. It is important that you test multiple things and collect the data to measure the impact. Once the testing phase is complete, you will then need to develop a plan to fully implement it.  

Now that the problem is solved, it is time for a vacation! Said no CEO ever…it is critical that you continually measure the results of the new process, monitor its impact, and make adjustments as needed. Additionally, you will need to create the new standard work around that new process.