problem solving strategies in entrepreneurship

6.1 Problem Solving to Find Entrepreneurial Solutions

Portions of the material in this section are based on original work by Geoffrey Graybeal and produced with support from the Rebus Community. The original is freely available under the terms of the CC BY 4.0 license at https://press.rebus.community/media-innovation-and-entrepreneurship/.

Learning Objectives

By the end of this section, you will be able to:

• Define problem solving in the context of entrepreneurship
• Describe and compare the adaptive model and the innovative model of problem solving
• Identify the skills entrepreneurs need for effective problem solving
• Identify types of problem solvers

As you’ve learned, entrepreneurs often visualize an opportunity gap, a gap between what exists and what could exist, as Hirabayashi and Lidey did with Shine. Entrepreneurial problem solving is the process of using innovation and creative solutions to close that gap by resolving societal, business, or technological problems. Sometimes, personal problems can lead to entrepreneurial opportunities if validated in the market. The entrepreneur visualizes the prospect of filling the gap with an innovative solution that might entail the revision of a product or the creation of an entirely new product. In any case, the entrepreneur approaches the problem-solving process in various ways. This chapter is more about problem solving as it pertains to the entrepreneur’s thought process and approach rather than on problem solving in the sense of opportunity recognition and filling those gaps with new products.

For example, as we read in Identifying Entrepreneurial Opportunity , Sara Blakely (as shown in Figure 6.2 ) saw a need for body contouring and smoothing undergarments one day in the late 1990s when she was getting dressed for a party and couldn’t find what she needed to give her a silhouette she’d be pleased with in a pair of slacks. She saw a problem: a market need. But her problem-solving efforts are what drove her to turn her solution (Spanx undergarments) into a viable product. Those efforts came from her self-admitted can-do attitude: “It’s really important to be resourceful and scrappy—a glass half-full mindset.” 1 Her efforts at creating a new undergarment met resistance with hosiery executives, most of whom were male and out of touch with their female consumers. The hosiery owner who decided to help Blakely initially passed on the idea until running it by his daughters and realizing she was on to something. That something became Spanx , and today, Blakely is a successful entrepreneur. 2

Before getting into the heart of this chapter, we need to make a distinction: Decision making is different from problem solving . A decision is needed to continue or smooth a process affecting the operation of a firm. It can be intuitive or might require research and a long period of consideration. Problem solving , however, is more direct. It entails the solution of some problem where a gap exists between a current state and a desired state. Entrepreneurs are problem solvers who offer solutions using creativity or innovative ventures that exploit opportunities. This chapter focuses on different approaches to problem solving and need recognition that help potential entrepreneurs come up with ideas and refine those ideas.

Two Problem Solving Models: Adaptive and Innovative

There are two prominent established problem-solving models: adaptive and innovative . A renowned British psychologist, Michael Kirton , developed the Kirton Adaption-Innovation (KAI) Inventory to measure an individual’s style of problem solving. 3 Problem-solving preferences are dependent on the personality characteristics of originality, conformity, and efficiency, according to Kirton. The KAI inventory identifies an individual’s problem-solving approach by measuring agreement with statements that align with characteristics, such as the ability to produce many novel ideas, to follow rules and get along in groups, and to systematically orient daily behavior. The results categorize an individual as an innovator or an adaptor. Innovators are highly original, do not like to conform, and value efficiency less than adaptors.

The first and more conservative approach an entrepreneur may use to solve problems is the adaptive model. The adaptive model seeks solutions for problems in ways that are tested and known to be effective. An adaptive model accepts the problem definition and is concerned with resolving problems rather than finding them. This approach seeks greater efficiency while aiming at continuity and stability. The second and more creative approach is the innovative model of entrepreneurial problem solving, which uses techniques that are unknown to the market and that bring advantage to an organization. An innovative problem-solving style challenges the problem definition, discovers problems and avenues for their solutions, and questions existing assumptions—in a nutshell, it does things differently. It uses outside-the-box thinking and searches for novel solutions. Novelty is a shared trait of creative entrepreneurship, and it’s why entrepreneurs gravitate toward this method of problem solving. According to Dr. Shaun M. Powell , a senior lecturer at the University of Wollongong, Australia: “Creative entrepreneurs are notable for a distinctive management style that is based on intuition, informality and rapid decision making, whereas the more conventional thinking styles are not in accord with the unique attributes of creative entrepreneurs.” 4 This way of problem solving doesn’t alter an existing product. It is the creation of something entirely new.

For example, healthcare facilities have long been known as a source of methicillin-resistant Staphylococcus aureus (MRSA), a deadly infection that can have long-term effects on patients. Vital Vio , led by Colleen Costello , has developed white light technology that effectively disinfects healthcare facilities by targeting a molecule specific to bacteria. The light, safe to humans, can burn constantly to kill regenerative bacteria. An adaptive problem-solving model would seek to minimize harm of MRSA within a hospital—to respond to it—whereas the Vital Vio is an entirely new technique that seeks to eliminate it. Adaptive solutions to MRSA include established processes and protocols for prevention, such as having doctors, nurses, and other healthcare providers clean their hands with soap and water, or an alcohol-based hand rub before and after patient care, testing patients to see if they have MRSA on their skin, cleaning hospital rooms and medical equipment, and washing and drying clothes and bed linens in the warmest recommended temperatures. 5

Link to Learning

Visit Inc. Magazine for support and advice for up-and-coming startups to learn more. Examples of how “Dorm Room” entrepreneurs spot and pursue opportunities are shared along with tips and advice for making your startup a success.

Problem-Solving Skills

While identifying problems is a necessary part of the origin of the entrepreneurial process, managing problems is an entirely different aspect once a venture is off the ground and running. An entrepreneur does not have the luxury of avoiding problems and is often responsible for all problem solving in a startup or other form of business. There are certain skills that entrepreneurs possess that make them particularly good problem solvers. Let’s examine each skill (shown in Figure 6.3 ) .

Critical Thinking

Critical thinking is the complex analysis of a problem or issue with the goal of solving the problem or making a decision. The entrepreneur analyzes and peels away the layers of a problem to find the core of an issue facing a business. The entrepreneur focuses on the heart of the problem and responds reasonably and openly to suggestions for solving it. Critical thinking is not only important for developing entrepreneurial ideas: it is a sought-after asset in education and employment. Entrepreneur Rebecca Kantar dropped out of Harvard in 2015 to found the tech startup Imbellus , which aims to replace standardized college admissions tests like the SAT with interactive scenarios that test critical-thinking skills. Many standardized tests may include multiple choice questions asking for the answer to a straightforward knowledge question or math problem. Kantar seeks to create tests that are more concerned with the analytic ability and reasoning that goes into the process of solving the problem. Imbellus says it aims to test “how people think,” not just what they know. The platform, which has not yet launched, will use simulations for its user assessments. 6

Read more about problem solving and EnterpriseWorks/Vita’s story at Harvard Business Review .

Communication

Communication skills , the ability to communicate messages effectively to an intended recipient, are the skills entrepreneurs use to pool resources for the purposes of investigating solutions leading to innovative problem solving and competitive advantage. Good communication allows for the free association of ideas between entrepreneurs and businesses. It can illustrate a problem area or a shared vision, and seeks stakeholder buy-in from various constituencies. Networking and communication within an industry allow the entrepreneur to recognize the position of an enterprise in the market and work toward verbalizing solutions that move an organization beyond its current state. By “verbalizing,” we mean communication from and with the company/entity. Internal communications include company emails, newsletters, presentations, and reports that can set strategic goals and objectives, and report on what has been accomplished and what goals and objectives remain, so that employees within an organization are knowledgeable and can work on solving problems that remain within the organization. External communications could include press releases, blogs and websites, social media, public speeches, and presentations that explain the company’s solutions to problems. They could also be investor pitches complete with business plans and financial projections.

Ideation exercises, such as brainstorming sessions (discussed in Creativity, Innovation, and Invention , are good communication tools that entrepreneurs can use to generate solutions to problems. Another such tool is a hackathon —an event, usually hosted by a tech company or organization, which brings together programmers and workers with other degrees of specialization within the company, community, or organization to collaborate on a project over a short period of time. These can last from twenty-four hours to a few days over a weekend. A hackathon can be an internal company-wide initiative or an external event that brings community participants together. A business model canvas , which is covered in Business Model and Plan and other activities outlined in other chapters can be used internally or externally to identify problems and work toward creating a viable solution.

Networking is an important manifestation of useful communication. What better method is there of presenting one’s concept, gaining funding and buy-in, and marketing for the startup than through building a network of individuals willing to support your venture? A network may consist of potential employees, customers, board members, outside advisors, investors, or champions (people who just love your product) with no direct vested interest. Social networks consist of weak ties and strong ties. Sociologist Mark Granovetter studied such networks back in the 1970s, and his findings still apply today, even if we include social media networks in the definition too. Weak ties facilitate flow of information and community organization, he said, whereas strong ties represent strong connections among close friends, family members, and supportive coworkers. 7 Strong ties require more work to maintain than weak ties (as illustrated by the strong lines and weak dotted lines in Figure 6.4 ) and in a business context, they don’t lead to many new opportunities. Weak ties, in contrast, do open doors in that they act as bridges to other weak ties within functional areas or departments that you might not have had access to directly or through strong ties. 8

In fact, many young entrepreneurs, including tech entrepreneur Oliver Isaacs , realize college is a great place to begin building teams. Isaacs is the founder of viral opinion network Amirite.com , which is widely credited as the place where Internet memes started and online slang got a foothold. 9 Amirite.com consists of a large network of pages and partnerships on Facebook and Instagram that reach 15 million users each month. Isaacs recommends using your alumni network to build a team and customer base for your own venture because you never know if you’re talking to a future employee or partner.

Sharing of ideas and resources is highly valued in the entrepreneurial process. Communication is a vital skill in problem solving because the ability to identify and articulate the problem (define the problem space) is necessary to adequately address a problem. A problem can be too vague or broad or narrow. Thus, communicating the problem is important, as is conveying the solution.

Decisiveness

Decisiveness is as it sounds: the ability to make a quick, effective decision, not letting too much time go by in the process. Entrepreneurs must be productive, even in the face of risk. They often rely on intuition as well as on hard facts in making a choice. They ask what problem needs to be solved, think about solutions, and then consider the means necessary to implement an idea. And the decisions must be informed with research.

For example, as explained in Adam Grant’s book The Originals , the co-founders of Warby Parker, a venture-backed startup focused on the eyewear industry, started their company while they were graduate students. At the time they knew little about the industry, but after conducting some detailed research, they learned that the industry was dominated by one major player—Luxottica. They used this information and other data to refine their strategy and business model (focusing mainly on value, quality, and convenience via an online channel). By the time they decided to launch the business, they had thought through the key details, and they attained rapid early success. Today Warby Parker has over 100 retail stores in the US, is profitable, and is valued at almost $2 billion.

Decisiveness is the catapult to progress. Amazon founder Jeff Bezos preaches the importance of decisiveness throughout his organization. Bezos believes that decisiveness can even lead to innovation. Bezos advocates for making decisions after obtaining 70 percent of the information you need to do so: “Being wrong may be less costly than you think, whereas being slow is going to be expensive for sure,” Bezos wrote in a 2017 annual letter to stockholders. 10

Read this LinkedIn blog post on decisiveness to learn more.

Ability to Analyze Data

Data analysis is the process of analyzing data and modeling it into a structure that leads to innovative conclusions. Identifying Entrepreneurial Opportunity covered much of the sources of data that entrepreneurs might seek. But it is one thing to amass information and statistics. It is another to make sense of that data, to use it to fill a market need or forecast a trend to come. Successful founders know how to pose questions about and make meaning out of information. And if they can’t do that themselves, they know how to bring in experts who can.

In addition to public sources of broad data, a business can collect data on customers when they interact with the company on social media or when they visit the company website, especially if they complete a credit card transaction. They can collect their own specific data on their own customers, including location, name, activity, and how they got to the website. Analyzing these data will give the entrepreneur a better idea about the interested audience’s demographic.

In entrepreneurship, analyzing data can help with opportunity recognition, creation, and assessment by analyzing data in a variety of ways. Entrepreneurs can explore and leverage different data sources to identify and compare “attractive” opportunities, since such analyses can describe what has happened, why it happened, and how likely it is to happen again in the future. In business in general, analytics is used to help managers/entrepreneurs gain improved insight about their business operations/emerging ventures and make better, fact-based decisions.

Analytics can be descriptive, predictive, or prescriptive. Descriptive analytics involves understanding what has happened and what is happening; predictive analytics uses data from past performance to estimate future performance; and prescriptive analytics uses the results of descriptive and predictive analytics to make decisions. Data analysis can be applied to manage customer relations, inform financial and marketing activities, make pricing decisions, manage the supply chain, and plan for human resource needs, among other functions of a venture. In addition to statistical analysis, quantitative methods, and computer models to aid decision-making, companies are also increasingly using artificial intelligence algorithms to analyze data and make quick decisions.

Understanding of Business and Industry

Entrepreneurs need sound understanding of markets and industries. Often times, they are already working in a large organization when they see growth opportunities or inefficiencies in a market. The employee gains a deep understanding of the industry at hand. If the employee considers a possible solution for a problem, this solution might become the basis for a new business.

For example, consider a marketing agency that used traditional marketing for thirty years. This agency had an established clientele. An executive in the organization began studying social media analytics and social media. The executive approached the owner of the business to change processes and begin serving clients through social media, but the owner refused. Clients within the agency began to clamor for exposure on social media. The marketing executive investigated the possibility of building an agency in her locale servicing clients who wish to utilize social media. The marketing executive left the organization and started her own agency (providing, of course, that this is in compliance with any noncompete clauses in her contract). Her competitive advantage was familiarity with both traditional and social media venues. Later, the original agency started floundering because it did not offer social media advertising. Our intrepid executive purchased the agency to gain the clientele and serve those wishing to move away from traditional marketing.

A similar experience occurred for entrepreneur Katie Witkin . After working in traditional marketing roles, the University of Wisconsin-Madison graduate, pictured in Figure 6.5 , left agency life behind four years out of college to cofound her own company, AGW Group . In 2009, Witkin had been interning at a music marketing agency that didn’t have a social media department. She knew, both from her time at college and from observing industry trends, that social media was changing the way companies connected with customers. For her own venture, she expanded the focus to all supporting brands to manage all things digital. Today, the cultural and marketing communications agency has fifteen employees and big-name clients ranging from HBO to Red Bull. 11

Resourcefulness

Resourcefulness is the ability to discover clever solutions to obstacles. Sherrie Campbell , a psychologist, author, and frequent contributor to Entrepreneur magazine on business topics, put it this way:

“There is not a more useful or important trait to possess than resourcefulness in the pursuit of success. Resourcefulness is a mindset, and is especially relevant when the goals you have set are difficult to achieve or you cannot envision a clear path to get to where you desire to go. With a resourcefulness mindset you are driven to find a way. An attitude of resourcefulness inspires out-of-the-box thinking, the generation of new ideas, and the ability to visualize all the possible ways to achieve what you desire. Resourcefulness turns you into a scrappy, inventive and enterprising entrepreneur. It places you a cut above the rest.” 12

Entrepreneurs start thinking about a business venture or startup by talking to people and procuring experts to help create, fund, and begin a business. Entrepreneurs are risk takers, passionate about new endeavors. If they don’t have a college degree or a great deal of business experience, they understand there are many resources available to support them in the endeavor, such as the Service Corps of Retired Executives (SCORE) and the Small Business Administration (SBA) . There are many sources available to fund the business with little or no debt and options, as you will see in the chapter on Entrepreneurial Finance and Accounting . The entrepreneur follows a vision and researches opportunities to move toward a dream.

For example, in the late 1990s, Bill McBean and his business partner Billy Sterett had an opportunity to buy an underperforming auto dealership that would make their company the dominant one in the market. Neither wanting to take cash from other ventures nor wanting to borrow more money and tie themselves to more debt, the entrepreneurs were resourceful by finding another path forward to obtaining the money necessary for the acquisition they both coveted. They changed banks and renegotiated their banking payback requirements, lowering their interest payments, reducing fees, and lowering their monthly payments, ultimately freeing up a significant amount of cash that allowed them to buy the new company. 13

Types of Problem Solvers

Entrepreneurs have an insatiable appetite for problem solving. This drive motivates them to find a resolution when a gap in a product or service occurs. They recognize opportunities and take advantage of them. There are several types of entrepreneurial problem solvers, including self-regulators, theorists, and petitioners.

Self-Regulating Problem Solvers

Self-regulating problem solvers are autonomous and work on their own without external influence. They have the ability to see a problem, visualize a possible solution to the problem, and seek to devise a solution, as Figure 6.6 illustrates. The solution may be a risk, but a self-regulating problem solver will recognize, evaluate, and mitigate the risk. For example, an entrepreneur has programmed a computerized process for a client, but in testing it, finds the program continually falls into a loop, meaning it gets stuck in a cycle and doesn’t progress. Rather than wait for the client to find the problem, the entrepreneur searches the code for the error causing the loop, immediately edits it, and delivers the corrected program to the customer. There is immediate analysis, immediate correction, and immediate implementation. The self-regulating problem solvers’ biggest competitive advantage is the speed with which they recognize and provide solutions to problems.

Theorist Problem Solvers

Theorist problem solvers see a problem and begin to consider a path toward solving the problem using a theory. Theorist problem solvers are process oriented and systematic. While managers may start with a problem and focus on an outcome with little consideration of a means to an end, entrepreneurs may see a problem and begin to build a path with what is known, a theory, toward an outcome. That is, the entrepreneur proceeds through the steps to solve the problem and then builds on the successes, rejects the failures, and works toward the outcome by experimenting and building on known results. At this point, the problem solver may not know the outcome, but a solution will arise as experiments toward a solution occur. Figure 6.7 shows this process.

For example, if we consider Marie Curie as an entrepreneur, Curie worked toward the isolation of an element. As different approaches to isolating the element failed, Curie recorded the failures and attempted other possible solutions. Curie’s failed theories eventually revealed the outcome for the isolation of radium. Like Curie, theorists use considered analysis, considered corrective action, and a considered implementation process. When time is of the essence, entrepreneurs should understand continual experimentation slows the problem-solving process.

Petitioner Problem Solvers

Petitioner problem solvers ( Figure 6.8 ) see a problem and ask others for solution ideas. This entrepreneur likes to consult a person who has “been there and done that.” The petitioner might also prefer to solve the problem in a team environment. Petitioning the entrepreneurial team for input ensures that the entrepreneur is on a consensus-driven path. This type of problem solving takes the longest to complete because the entrepreneur must engage in a democratic process that allows all members on the team to have input. The process involves exploration of alternatives for the ultimate solution. In organizational decision-making, for example, comprehensiveness is a measure of the extent a firm attempts to be inclusive or exhaustive in its decision-making. Comprehensiveness can be gauged by the number of scheduled meetings, the process by which information is sought, the process by which input is obtained from external sources, the number of employees involved, the use of specialized consultants and the functional expertise of the people involved, the years of historical data review, and the assignment of primary responsibility, among other factors. Comprehensive decision-making would be an example of a petitioner problem-solving style, as it seeks input from a vast number of team members.

A charette —a meeting to resolve conflicts and identify solutions—is another example that employs a petitioner problem-solving approach. Often times, a developer of a new project might hold a community charette to aid in the design of a project, hoping to gain approval from elected officials. In the building example, this could consist of the developer and his team of architects, project designers, and people with expertise in the project working alongside community members, business executives, elected officials, or representatives like staff members or citizen-appointed boards like a planning board. Such an activity is representative of a petitioner problem-solving approach, as opposed to a developer representative designing the project with no input from anyone else.

In summary, there is no right or wrong style of problem solving; each problem solver must rely on the instincts that best drive innovation. Further, they must remember that not all problem-solving methods work in every situation. They must be willing to adapt their own preference to the situation to maximize efficiency and ensure they find an effective solution. Attempting to force a problem-solving style may prevent an organization from finding the best solution. While general entrepreneurial problem-solving skills such as critical thinking, decisiveness, communication, and the ability to analyze data will likely be used on a regular basis in your life and entrepreneurial journey, other problem-solving skills and the approach you take will depend on the problem as it arises.

There are a number of resources online that can help analyze your problem-solving abilities. Mindtools.com is one such resource. These are useful to learn your general problem-solving tendencies before being called upon to apply them in a real-world setting. One of the problem-solving techniques available from mindtools.com offers that problems can be addressed from six different perspectives. Called CATWOE , the approach is an acronym for Customers, Actors (people within the organization), Transformative, Worldwide, Owner, and Environment (organizational).

Learn more about the CATWOE technique for problem solving.

• 1 Helen Lock. “‘I Put My Butt on the Line’: How Spanx Took Over the World.” The Guardian. July 11, 2016. https://www.theguardian.com/small-business-network/2016/jul/11/put-butt-on-the-line-how-spanx-world
• 2 Gary Keller. “Business Success Series, Part 1: Sara Blakely-Spanx.” The One Thing. n.d. https://www.the1thing.com/blog/the-one-thing/business-success-series-part-1-sara-blakely-spanx/
• 3 “Characteristics of Adaptors and Innovators.” Kirton KAI Inventory Tool . n.d. http://pubs.acs.org/subscribe/archive/ci/31/i11/html/11hipple_box3.ci.html
• 4 Shaun Powell. “The Management and Consumption of Organisational Creativity.” Journal of Consumer Marketing 25, no. 3 (2008): 158–166.
• 5 N.C Healthcare-Associated Infections Prevention Program. Healthcare-Associated Infections in North Carolina: 2014 Annual Report, Healthcare Consumer Version. April 2015. https://epi.dph.ncdhhs.gov/cd/hai/figures/hai_apr2015_consumers_annual.pdf
• 6 Romesh Ratnesar. “What If Instead of Taking the SAT You Got to Play a Video Game?” Bloomberg BusinessWeek. March 19, 2019. https://www.bloomberg.com/news/features/2019-03-19/a-harvard-dropout-s-plan-to-fix-college-admissions-with-video-games
• 7 Mark Granovetter. “The Strength of Weak Ties.” American Journal of Sociology 5 (1973): 1360–1380.
• 8 Jacob Morgan. “Why Every Employee Should Be Building Weak Ties at Work.” Forbes. March 11, 2014. https://www.forbes.com/sites/jacobmorgan/2014/03/11/every-employee-weak-ties-work/#277851063168
• 9 John White. “Top UK Influencer Oliver Isaacs Reveals What It Takes to Go Viral.” Inc . August 6, 2017. https://www.inc.com/john-white/top-uk-influencer-oliver-isaacs-reveals-what-it-ta.html
• 10 Erik Larson. “How Jeff Bezos Uses Faster Better Decisions to Keep Amazon Innovating.” Forbes . September 24, 2018. https://www.forbes.com/sites/eriklarson/2018/09/24/how-jeff-bezos-uses-faster-better-decisions-to-keep-amazon-innovating/#492c351b7a65
• 11 Stephanie Schomer. “How Getting Laid Off Empowered This Entrepreneur to Start Her Own Award-Winning Marketing Agency.” Entrepreneur. January 15, 2019. https://www.entrepreneur.com/article/326212
• 12 Sherrie Campbell. “6 Characteristics of Resourceful People That Bring Them Success.” Entrepreneur. March 10, 2016. https://www.entrepreneur.com/article/272171
• 13 “Resourcefulness Is More Important Than Resources.” The Ecommerce Mindset: How Successful Store Owners Think. n.d. https://www.oberlo.com/ebooks/mindset/resourceful-entrepreneur

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Effective Problem-Solving Strategies for Entrepreneurs

• May 7, 2024
• Problem-Solving Skills

Entrepreneurship inherently involves navigating complex challenges, making effective problem-solving skills essential for sustained success. This article examines problem-solving for entrepreneurs, offering insights into techniques and strategies that can significantly enhance decision-making processes.

Understanding the core components of problem-solving is crucial in addressing common challenges faced by entrepreneurs, including market competition and financial constraints. By cultivating a problem-solving mindset, individuals can adapt and thrive in an ever-evolving business landscape.

Table of Contents

Understanding Problem-Solving for Entrepreneurs

Problem-solving for entrepreneurs involves the process of identifying, analyzing, and addressing challenges within a business context. This skill is essential for navigating the complexities of the marketplace, where unpredictable obstacles can arise. Mastering problem-solving enables entrepreneurs to make informed decisions and implement effective strategies.

Entrepreneurs face various challenges, including market competition, resource constraints, and financial limitations. Each of these hurdles requires a tailored approach to problem-solving, integrating critical thinking and creativity. Successful entrepreneurs often capitalize on their ability to assess situations comprehensively and devise pragmatic solutions.

A robust problem-solving framework incorporates analytical skills, creativity, and emotional intelligence. By combining these components, entrepreneurs can craft innovative strategies to counteract challenges and leverage opportunities. This adaptability fosters resilience in fast-paced business environments.

Understanding problem-solving for entrepreneurs not only enhances personal growth but also contributes to overall business success. Developing these skills promotes a culture of continuous improvement, empowering entrepreneurs to thrive amid adversity.

Common Challenges Faced by Entrepreneurs

Entrepreneurs often encounter a range of challenges that can impede their efforts to establish and grow their businesses. Market competition is a significant hurdle; as industries evolve, staying ahead of rivals demands innovative solutions and strategic differentiation. Entrepreneurs must continuously analyze competitors and adapt their offerings to maintain relevance.

Resource management represents another common struggle. Efficiently allocating human, financial, and physical resources is critical for operational success. Entrepreneurs frequently grapple with limited resources, making it essential to prioritize tasks and streamline processes to achieve maximum productivity.

Financial constraints can severely impact business operations. Entrepreneurs may face difficulties in securing funding or managing cash flow, which can hinder growth opportunities. Developing robust financial strategies is vital for mitigating these challenges and ensuring the sustainability of the business.

Recognizing these challenges is the first step in mastering problem-solving for entrepreneurs. By understanding the complexities of competition, resource allocation, and financial management, entrepreneurs can cultivate the necessary skills to navigate their challenges effectively.

Market Competition

Market competition refers to the rivalry among businesses to attract customers and achieve a greater market share. Entrepreneurs face a variety of challenges due to competitive dynamics, necessitating effective problem-solving skills to navigate these obstacles successfully.

The nature of market competition can be characterized by several factors:

• Number of Competitors: More rivals can dilute market share and reduce profitability.
• Product Differentiation: Unique offerings can help businesses stand out in a crowded market.
• Pricing Strategies: Competitive pricing may be necessary, affecting profit margins.

To thrive in such an environment, entrepreneurs must continuously analyze their competitors and adapt their strategies accordingly. This involves conducting market research, identifying emerging trends, and leveraging innovative solutions to meet consumer needs, thereby enhancing their competitive advantage.

Resource Management

Effective resource management is a cornerstone of successful entrepreneurship. It encompasses the strategic allocation and utilization of various resources including human, financial, and physical assets to achieve business objectives. Entrepreneurs face the challenge of maximizing limited resources while meeting the demands of a competitive market.

In terms of human resources, entrepreneurs must foster a capable team. Key aspects include identifying skill sets, encouraging professional development, and ensuring a positive work environment. Additionally, financial resources must be monitored meticulously. Techniques such as budgeting, forecasting, and cost management can prevent overspending and promote sustainability.

Physical resources, such as equipment and inventory, also require close attention. Entrepreneurs should invest in technology that enhances efficiency and reduce waste through inventory management systems. Balancing these elements effectively leads to better problem-solving outcomes.

To enhance resource management, entrepreneurs can adopt the following strategies:

• Prioritize resource allocation based on strategic goals
• Cultivate relationships with suppliers for better terms
• Implement regular assessments to adapt resources as necessary.

Financial Constraints

Entrepreneurs frequently encounter financial constraints that can impede their business growth and sustainability. Such constraints often arise from limited access to capital, fluctuating cash flows, and unforeseen expenses, making it challenging to effectively manage day-to-day operations.

Addressing financial constraints involves strategic budgeting and prioritization of expenditures, ensuring that resources are allocated to areas that yield the highest return. Entrepreneurs may also consider alternative funding sources, such as crowdfunding or angel investments, to overcome capital shortages.

Effective problem-solving for entrepreneurs must incorporate financial literacy, allowing them to analyze financial statements and make informed decisions. Utilizing tools like cash flow forecasts and budgeting software can aid in navigating these challenges, enabling businesses to remain agile and responsive.

Collaboration with financial advisors or accountants can offer valuable insights, helping entrepreneurs to identify potential savings and investment opportunities. This collaborative approach not only enhances problem-solving skills but also strengthens the overall financial health of the business.

Problem-Solving Skills: Core Components

Problem-solving for entrepreneurs involves several core components that form the foundation of effective decision-making. These components include critical thinking, creativity, analytical skills, and emotional intelligence, each contributing uniquely to the problem-solving process.

Critical thinking allows entrepreneurs to assess situations objectively, identify root causes, and weigh potential solutions. This skill is essential for developing sound strategies that address challenges and foster growth. Creativity, on the other hand, fuels innovation, enabling entrepreneurs to generate novel ideas and approaches to complex problems.

Analytical skills facilitate the interpretation of data to inform decisions. Entrepreneurs adept in this area can dissect information, recognize patterns, and devise evidence-based solutions. Emotional intelligence also plays a significant role in problem-solving, as it aids entrepreneurs in understanding team dynamics and managing interpersonal relationships during challenging situations.

By honing these problem-solving skills, entrepreneurs can navigate obstacles more effectively and drive their ventures toward success.

Techniques for Effective Problem-Solving

Effective problem-solving techniques for entrepreneurs encompass a structured approach that facilitates informed decision-making. One prominent technique is the root cause analysis, which aids in identifying the underlying issues contributing to problems. By addressing these root causes rather than symptoms, entrepreneurs can create sustainable solutions.

Brainstorming serves as another valuable technique, encouraging creativity and diverse input. Involving team members in brainstorming sessions can lead to innovative ideas and collaborative solutions. The emphasis on open dialogue fosters a culture where every contribution is valued, enhancing problem-solving for entrepreneurs.

Moreover, the use of decision matrices aids in evaluating multiple solutions against established criteria. This method enables entrepreneurs to systematically assess options, ensuring that decisions are data-driven. By quantifying factors such as cost, feasibility, and impact, entrepreneurs can select the most effective solution confidently.

Lastly, prototyping and iterative testing play critical roles in refining solutions. By experimenting with small-scale implementations, entrepreneurs can gather valuable feedback and make necessary adjustments. This agile approach enhances the overall effectiveness of problem-solving efforts, ultimately leading to greater entrepreneurial success.

The Role of Data in Problem-Solving for Entrepreneurs

Data-driven decision-making is a pivotal aspect of effective problem-solving for entrepreneurs. It involves leveraging quantitative and qualitative information to identify issues, evaluate alternatives, and implement solutions. By engaging with data, entrepreneurs can discern patterns and understand market dynamics.

Utilizing analytics tools helps streamline this process. Entrepreneurs can analyze customer behavior, track market trends, and measure performance indicators. Such tools convert raw data into actionable insights, enhancing strategic planning and operations management.

Measuring outcomes is equally important. By assessing the impact of decisions through data analysis, entrepreneurs can refine their approaches. They can identify successful strategies and recognize areas needing improvement, ensuring continuous growth.

In summary, data equips entrepreneurs with the necessary insights to confront challenges head-on and navigate complex landscapes. Adopting data-driven methodologies reinforces their problem-solving skills and solidifies their position in competitive markets.

Data-Driven Decision Making

Data-driven decision making involves the process of collecting and analyzing relevant data to guide entrepreneurial choices. Entrepreneurs harness data from various sources, such as customer feedback, market trends, and financial metrics, to inform their strategies and operations.

Utilizing advanced analytics tools enables entrepreneurs to identify patterns and trends that might not be visible through intuition alone. By relying on quantitative evidence, startups and established businesses alike can reduce uncertainty and improve their decision-making accuracy.

Incorporating data-driven methodologies allows entrepreneurs to adapt quickly to changing market conditions. This agility is crucial for navigating challenges such as market competition and financial constraints while optimizing resource management.

By fostering a culture that values data collection and analysis, entrepreneurs can enhance their problem-solving capabilities. This foundation not only empowers informed decision-making but also positions businesses for sustainable growth and success in a competitive landscape.

Utilizing Analytics Tools

Utilizing analytics tools is integral to effective problem-solving for entrepreneurs. These tools provide valuable insights into business operations, market trends, and consumer behavior. By analyzing data collected from various sources, entrepreneurs can identify patterns and make informed decisions that enhance their strategic approach.

For instance, platforms like Google Analytics allow entrepreneurs to track website traffic and user behavior, helping them understand customer preferences. This knowledge can inform marketing strategies and improve customer engagement, ultimately leading to better business performance. Similarly, CRM software can analyze customer interactions, enabling entrepreneurs to tailor their services to meet specific needs.

Furthermore, utilizing financial analytics tools like QuickBooks or Xero offers a clear view of a company’s financial health by simplifying budgeting and cash flow analysis. With these insights, entrepreneurs can address financial constraints effectively and allocate resources more efficiently, significantly enhancing their problem-solving skills.

Incorporating these analytics tools into regular business practices equips entrepreneurs with the data necessary to navigate challenges confidently and stay ahead in a competitive market environment.

Measuring Outcomes

Measuring outcomes involves assessing the effectiveness of problem-solving strategies employed by entrepreneurs. This process allows for an evaluation of whether implemented solutions are yielding the desired results and meeting business objectives.

Entrepreneurs can use Key Performance Indicators (KPIs) to track important metrics, such as revenue growth, customer satisfaction, and operational efficiency. By analyzing these indicators, business owners can discern what works and what requires adjustment.

Integrating feedback mechanisms, such as surveys and performance reviews, further enhances the understanding of outcomes. This feedback provides valuable insights into areas needing improvement and highlights successful strategies, fostering a culture of continuous learning.

Ultimately, measuring outcomes is vital for refining problem-solving techniques for entrepreneurs. It equips them with the information necessary to make data-driven decisions, ensuring that their business remains adaptable and competitive in an ever-changing landscape.

Collaborative Problem-Solving Strategies

Collaborative problem-solving strategies entail engaging multiple stakeholders in the decision-making process to overcome challenges effectively. By fostering teamwork and diverse perspectives, entrepreneurs can unlock innovative solutions that may not emerge in isolation.

Building a diverse team is fundamental for enhancing creativity and resourcefulness. A mix of backgrounds, experiences, and skill sets provides varied viewpoints, enabling a richer discussion around potential solutions. This diversity helps entrepreneurs tackle complex problems from multiple angles.

The importance of communication cannot be overstated. Open dialogue encourages team members to share insights and concerns, fostering an environment where all contributions are valued. This inclusive atmosphere promotes the sharing of ideas that lead to more effective problem-solving for entrepreneurs.

Leveraging collective intelligence is another key aspect. By utilizing collaborative tools and platforms, teams can gather and analyze information efficiently. Sharing knowledge and resources enhances the decision-making process, enabling entrepreneurs to implement agile and well-informed strategies to navigate their challenges.

Building a Diverse Team

A diverse team comprises individuals from various backgrounds, experiences, and perspectives. This diversity fosters creativity and innovation, essential components of effective problem-solving for entrepreneurs. By embracing differences, teams can explore a wider array of solutions, enhancing their problem-solving capabilities.

In a diverse team, individuals contribute unique insights influenced by their cultural, educational, and professional experiences. This variety enables comprehensive analysis of challenges and encourages more effective collaboration. Entrepreneurs can tap into the collective strengths of their team, leading to improved outcomes in addressing complex issues.

Building a diverse team is not merely about assembling people from different demographics; it involves creating an inclusive environment. An inclusive atmosphere encourages open communication and facilitates the sharing of ideas. Such engagement is key to leveraging the problem-solving skills necessary for entrepreneurial success.

Ultimately, fostering diversity within a team enhances the problem-solving process. It empowers entrepreneurs to approach challenges with a broader perspective, leading to innovative solutions and sustained growth in competitive markets.

Importance of Communication

Effective communication is a pivotal element in problem-solving for entrepreneurs. It encompasses the exchange of ideas, feedback, and information, allowing for the identification and analysis of issues faced within a business context. Strong communication skills foster clarity and understanding among team members, which is vital during challenging situations.

Clear communication facilitates the articulation of problems and potential solutions. When entrepreneurs can convey their thoughts succinctly, it allows team members to contribute meaningfully, resulting in more comprehensive solutions. Consider the following aspects that underscore this importance:

• Encourages open dialogue, allowing for diverse perspectives.
• Improves collaborative efforts, enhancing the overall dynamics of the team.
• Reduces misunderstandings that may arise during problem analysis.

Furthermore, effective communication ensures that everyone is aligned with the company’s objectives, especially when navigating obstacles. Entrepreneurs who prioritize communication can harness the collective intelligence of their teams, driving innovative solutions and fostering a positive work environment.

Leveraging Collective Intelligence

Collective intelligence refers to the shared or group intelligence that emerges from the collaboration and competition of many individuals. For entrepreneurs, leveraging collective intelligence can significantly enhance problem-solving capabilities, leading to innovative solutions that might not surface in isolation.

Harnessing the insights of a diverse team fosters varied perspectives essential for effective problem-solving. Key advantages include:

• Enhanced creativity through diverse viewpoints.
• Increased information access, leading to richer data analysis.
• Greater adaptability and resilience when addressing complex challenges.

Encouraging open communication among team members is vital. A culture that values every contribution can elevate problem-solving initiatives, allowing the collective intelligence of the group to flourish. By effectively harnessing these resources, entrepreneurs can not only address current challenges but also proactively anticipate future opportunities.

Case Studies in Entrepreneurial Problem-Solving

Case studies offer practical insights into how successful entrepreneurs have navigated complex challenges through effective problem-solving skills. These real-world examples illustrate both the strategies employed and the outcomes achieved, providing invaluable lessons for others in the entrepreneurial landscape.

For instance, Airbnb faced significant regulatory hurdles in various cities. The founders adopted a collaborative problem-solving approach, engaging with local authorities to develop mutually beneficial frameworks. This direct communication enabled them to address concerns, fostering a more sustainable business model.

Another notable case is that of Starbucks, which encountered a downturn in customer satisfaction. The company implemented data-driven decision-making strategies by analyzing customer feedback and trends. This led to a successful revamp of their menu and store experiences, ultimately boosting loyalty and revenue.

These case studies in entrepreneurial problem-solving not only underscore the importance of adaptability but also highlight the role of data and collaboration in overcoming obstacles, reinforcing the significance of developing these competencies within the entrepreneurial community.

The Impact of Technology on Problem-Solving

Technology fundamentally transforms problem-solving for entrepreneurs by enhancing their capacity to analyze data, streamline processes, and foster innovation. Advanced tools, including artificial intelligence and machine learning, empower business leaders to identify trends and predict potential challenges more effectively.

Cloud-based solutions facilitate real-time collaboration among teams, allowing for more dynamic brainstorming and idea-sharing. This interconnectedness enhances collective problem-solving, as diverse perspectives contribute to well-rounded solutions. Moreover, project management software improves task organization, ensuring that problems are addressed in a timely manner.

Data analytics is pivotal in shaping a data-driven approach to problem-solving for entrepreneurs. By leveraging analytics tools, entrepreneurs can make informed decisions based on evidence rather than intuition alone, thus minimizing risks associated with ambiguity.

The rapid evolution of technology also introduces a wealth of resources, ranging from online courses to webinars, aimed at enhancing problem-solving skills. Such continuous learning opportunities empower entrepreneurs to adapt to changing market dynamics and cultivate a proactive problem-solving mindset.

Managing Stress During Problem-Solving

Entrepreneurs often encounter stress during the problem-solving process, which can impede their decision-making capabilities. Managing this stress is vital for maintaining clarity and facilitating more effective solutions. Recognizing stress triggers, such as tight deadlines or high stakes, allows entrepreneurs to adopt proactive strategies to address these challenges.

Techniques such as mindfulness and structured breaks can significantly mitigate stress levels. Implementing regular mindfulness practices, such as meditation or deep-breathing exercises, promotes a calm state of mind. Additionally, taking structured breaks during intense problem-solving sessions can refresh concentration and enhance productivity.

Establishing a supportive network is also instrumental in stress management. Engaging with mentors or peers provides emotional support and alternative perspectives on problems. This collaboration can reduce the isolation that often accompanies stressful situations, fostering a more resilient approach to problem-solving.

By prioritizing stress management, entrepreneurs can enhance their problem-solving skills. This not only leads to better outcomes but also promotes a healthier work environment, essential for sustaining long-term entrepreneurial success.

Cultivating a Problem-Solving Mindset

A problem-solving mindset is defined as an approach that embraces challenges as opportunities for growth and innovation. Entrepreneurs equipped with this mindset view obstacles not as setbacks but as chances to devise creative solutions and improve their businesses.

To cultivate this mindset, entrepreneurs should practice resilience, adaptability, and open-mindedness. Engaging with diverse perspectives can enhance problem-solving capabilities and foster a culture that encourages experimentation. This is vital in navigating complex business landscapes.

Setting specific goals promotes a proactive attitude towards problem-solving. Entrepreneurs can break challenges into manageable tasks, allowing them to focus on solutions rather than potential failures.

Continuous learning through courses, workshops, and networking can provide valuable insights into effective strategies. By embracing a mindset centered on growth and exploration, entrepreneurs can enhance their problem-solving skills, leading to greater success in their ventures.

The ability to navigate challenges through effective problem-solving is crucial for entrepreneurs. Mastering these skills not only enhances decision-making but also fosters resilience and adaptability in an ever-evolving business landscape.

By cultivating a comprehensive understanding of problem-solving techniques, entrepreneurs can strategically address obstacles and seize opportunities. Emphasizing data-driven insights and collaborative approaches further amplifies their potential for sustainable growth.

Ultimately, investing in problem-solving skills equips entrepreneurs to thrive in competitive markets, ensuring long-term success in their ventures. Embrace the journey of problem-solving for entrepreneurs, as it paves the way for innovation and transformative results.

• July 19, 2023

Entrepreneur Skills – Problem Solving Skills

Boost your entrepreneurial journey with top-tier problem solving skills. explore key insights and strategies for effective problem-solving in business..

If there is one universal truth that all entrepreneurs share, it’s the reality that problem-solving is a critical part of their daily routine. From handling unforeseen obstacles, improving inefficient processes, to developing innovative solutions that meet the market’s evolving demands—problem-solving is the lifeblood of any successful venture. This blog post will delve into the depths of problem-solving, exploring the science behind it, and shedding light on how entrepreneurs can hone this skill to conquer the business world.

The entrepreneurial journey is rarely a smooth ride. It’s filled with ups and downs, turns and twists that often lead to unchartered territory. These challenges demand an entrepreneur’s ability to effectively solve problems. Recent research suggests that problem-solving skills are directly linked to business success, as these skills foster resilience, strategic thinking, and the ability to adapt in an ever-changing business landscape.

What is interesting to note is that problem-solving is more than just fixing what’s broken. It involves creativity, critical thinking, empathy, and at times, even an appetite for risk. It’s about understanding a problem in its entirety—its root causes, potential impacts, and effective, long-lasting solutions. In essence, problem-solving is a holistic approach to turning hurdles into opportunities for growth.

Furthermore, the ability to solve problems efficiently provides entrepreneurs with a competitive edge. In today’s dynamic business environment where industries can be disrupted overnight, having the skill to identify and solve problems rapidly can make the difference between survival and extinction. The importance of these skills is reflected in a report by the World Economic Forum, which forecasts that problem-solving capabilities will be among the most sought-after skills in the next decade.

In this post, we’ll explore 18 key themes surrounding the art of problem-solving for entrepreneurs. We will delve into various facets of this essential skill, offering actionable insights backed by extensive research, real-world examples, and proven strategies. Whether you’re a budding entrepreneur or a seasoned business leader looking to up your game, this comprehensive guide promises a wealth of knowledge that will help shape your entrepreneurial journey.

Key Insights on Problem Solving

1. Understanding the Problem:

The foundation of any problem-solving process is a deep understanding of the problem. This requires you to go beyond the superficial symptoms and uncover the root causes. Often, problems are complex and multi-faceted, making them challenging to understand fully. Techniques such as the “5 Whys” or Cause and Effect Diagrams can be beneficial in digging deeper and identifying the true source of the problem.

2. Identifying Opportunities:

Problems often come masked as opportunities. Entrepreneurs who have mastered the art of problem-solving can flip the script and turn a challenge into an avenue for innovation or business growth. It’s all about perspective. Look at problems as questions that need answers and obstacles as potential paths towards new business opportunities.

3. Creativity:

Problem-solving and creativity go hand in hand. Sometimes, traditional solutions may not be adequate or effective, necessitating a creative approach. Techniques such as brainstorming, mind mapping, or lateral thinking can inspire unconventional solutions that break the mold and deliver results.

4. Analytical Thinking:

Analytical thinking plays a crucial role in problem-solving. It allows entrepreneurs to examine a problem objectively, breaking it down into smaller, manageable parts. This approach is essential when dealing with complex issues, as it helps to simplify them, making the solution-finding process more efficient.

5. Decision Making:

Making decisions is an integral part of solving problems. Entrepreneurs often have to make quick decisions under pressure. Having a systematic decision-making process helps increase the likelihood of choosing the most effective solution.

6. Resourcefulness:

Entrepreneurs often operate with limited resources, making resourcefulness a valuable skill. It’s about making the most out of what’s available and finding clever ways to overcome limitations. The ability to be resourceful not only aids in problem-solving but also sparks innovation.

7. Flexibility:

The business landscape is continually changing. As such, a solution that worked yesterday may not be applicable today. Flexibility allows entrepreneurs to adapt their approach to problem-solving, accounting for changes in circumstances, market conditions, or technology.

8. Risk Analysis:

Risk is inherent in every business decision. Entrepreneurs who are skilled at risk analysis can anticipate potential problems and mitigate them before they become significant issues. It’s about striking a balance between risk and reward, ensuring that the solutions implemented do not endanger the business.

9. Collaboration:

Problem-solving is not a solo endeavor. Collaboration enables entrepreneurs to leverage diverse perspectives and skills, fostering creative and effective solutions. Building a culture of collaboration in a team also promotes ownership and morale, enhancing the problem-solving process.

10. Communication:

Effective communication is pivotal to successful problem-solving. Clear and concise communication ensures that everyone involved understands the problem and their role in solving it. It also prevents misunderstandings that could derail the solution implementation process.

11. Embracing Failure:

Embracing failure is a crucial part of problem-solving. Mistakes and failures offer valuable lessons that can provide insights into more effective solutions. The ability to learn from failure fosters resilience and encourages a growth mindset, essential for entrepreneurial success.

12. Continuous Learning:

The more knowledge an entrepreneur has, the better equipped they are to solve problems. Cultivating a culture of continuous learning promotes curiosity and openness to new ideas, enriching the problem-solving process.

13. Customer-Centricity:

Problem-solving should always be customer-centric. Understanding your customer’s needs and concerns can guide your problem-solving efforts, ensuring that the solutions you implement enhance customer value and satisfaction.

14. Emotional Intelligence:

Emotional intelligence aids in problem-solving by promoting empathy and understanding. It allows entrepreneurs to consider the emotional and human aspects of a problem, leading to more comprehensive and effective solutions.

15. Time Management:

Efficient problem-solving requires effective time management. Knowing how to prioritize problems based on their urgency and impact can streamline the problem-solving process and ensure that critical issues are addressed promptly.

16. Strategic Thinking:

Strategic thinking involves looking at problems from a broader perspective. It allows entrepreneurs to consider the long-term implications of their solutions, ensuring that they align with their business goals and vision.

17. Technology Literacy:

In today’s digital age, technology literacy is crucial for problem-solving. Whether it’s leveraging data analytics for informed decision-making or utilizing digital tools to enhance collaboration, technology plays a significant role in modern problem-solving.

18. Self-Motivation:

Last but not least, self-motivation is essential. Problem-solving can be challenging and draining. The ability to stay motivated and maintain a positive attitude can make the process more manageable and productive, driving entrepreneurial success.

Problem-solving is a critical entrepreneurial skill that serves as the backbone of any successful venture. The ability to accurately identify and creatively overcome challenges is a testament to an entrepreneur’s resilience and adaptability. In this rapidly evolving business environment, a problem-solving mindset empowers entrepreneurs to navigate through uncertainty, fostering innovation and growth.

This comprehensive guide has provided an in-depth look at 18 crucial themes surrounding problem-solving for entrepreneurs. By understanding and implementing these insights, entrepreneurs can enhance their problem-solving skills, contributing to their personal growth and their business’s success.

Ultimately, the true value of problem-solving lies in its capacity to transform obstacles into opportunities. It’s not just about ‘fixing’ what’s broken, but about continuously evolving, adapting, and driving forward in the face of adversity. In the world of entrepreneurship, problems are merely stepping stones on the path to success.

So, embrace the challenges that come your way, arm yourself with these problem-solving strategies, and continue on your entrepreneurial journey. Remember, every problem you solve takes you one step closer to your ultimate business goal.

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4.1 Problem Solving to Find Entrepreneurial Solutions

Learning Objectives

By the end of this section, you will be able to:

• Define problem solving in the context of entrepreneurship
• Describe and compare the adaptive model and the innovative model of problem solving
• Identify the skills entrepreneurs need for effective problem solving
• Identify types of problem solvers

As you’ve learned, entrepreneurs often visualize an opportunity gap, a gap between what exists and what could exist, as Hirabayashi and Lidey did with Shine. Entrepreneurial problem solving is the process of using innovation and creative solutions to close that gap by resolving societal, business, or technological problems. Sometimes, personal problems can lead to entrepreneurial opportunities if validated in the market. The entrepreneur visualizes the prospect of filling the gap with an innovative solution that might entail the revision of a product or the creation of an entirely new product. In any case, the entrepreneur approaches the problem-solving process in various ways. This chapter is more about problem solving as it pertains to the entrepreneur’s thought process and approach rather than on problem solving in the sense of opportunity recognition and filling those gaps with new products.

For example, as we read in Identifying Entrepreneurial Opportunity, Sara Blakely (as shown in Figure 4.2) saw a need for body contouring and smoothing undergarments one day in the late 1990s when she was getting dressed for a party and couldn’t find what she needed to give her a silhouette she’d be pleased with in a pair of slacks. She saw a problem: a market need. But her problem-solving efforts are what drove her to turn her solution (Spanx undergarments) into a viable product. Those efforts came from her self-admitted can-do attitude: “It’s really important to be resourceful and scrappy—a glass half-full mindset.” [1] Her efforts at creating a new undergarment met resistance with hosiery executives, most of whom were male and out of touch with their female consumers. The hosiery owner who decided to help Blakely initially passed on the idea until running it by his daughters and realizing she was on to something. That something became Spanx, and today, Blakely is a successful entrepreneur. [2]

Before getting into the heart of this chapter, we need to make a distinction: Decision making is different from problem solving. A decision is needed to continue or smooth a process affecting the operation of a firm. It can be intuitive or might require research and a long period of consideration. Problem solving, however, is more direct. It entails the solution of some problem where a gap exists between a current state and a desired state. Entrepreneurs are problem solvers who offer solutions using creativity or innovative ventures that exploit opportunities. This chapter focuses on different approaches to problem solving and need recognition that help potential entrepreneurs come up with ideas and refine those ideas.

Two Problem Solving Models: Adaptive and Innovative

There are two prominent established problem-solving models: adaptive and innovative. A renowned British psychologist, Michael Kirton, developed the Kirton Adaption-Innovation (KAI) Inventory to measure an individual’s style of problem solving. [3] Problem-solving preferences are dependent on the personality characteristics of originality, conformity, and efficiency, according to Kirton. The KAI inventory identifies an individual’s problem-solving approach by measuring agreement with statements that align with characteristics, such as the ability to produce many novel ideas, to follow rules and get along in groups, and to systematically orient daily behavior. The results categorize an individual as an innovator or an adaptor. Innovators are highly original, do not like to conform, and value efficiency less than adaptors.

The first and more conservative approach an entrepreneur may use to solve problems is the adaptive model. The adaptive model seeks solutions for problems in ways that are tested and known to be effective. An adaptive model accepts the problem definition and is concerned with resolving problems rather than finding them. This approach seeks greater efficiency while aiming at continuity and stability. The second and more creative approach is the innovative model of entrepreneurial problem solving, which uses techniques that are unknown to the market and that bring advantage to an organization. An innovative problem-solving style challenges the problem definition, discovers problems and avenues for their solutions, and questions existing assumptions—in a nutshell, it does things differently. It uses outside-the-box thinking and searches for novel solutions. Novelty is a shared trait of creative entrepreneurship, and it’s why entrepreneurs gravitate toward this method of problem solving. According to Dr. Shaun M. Powell, a senior lecturer at the University of Wollongong, Australia: “Creative entrepreneurs are notable for a distinctive management style that is based on intuition, informality and rapid decision making, whereas the more conventional thinking styles are not in accord with the unique attributes of creative entrepreneurs.” [4] This way of problem solving doesn’t alter an existing product. It is the creation of something entirely new.

For example, healthcare facilities have long been known as a source of methicillin-resistant Staphylococcus aureus (MRSA), a deadly infection that can have long-term effects on patients. Vital Vio, led by Colleen Costello, has developed white light technology that effectively disinfects healthcare facilities by targeting a molecule specific to bacteria. The light, safe to humans, can burn constantly to kill regenerative bacteria. An adaptive problem-solving model would seek to minimize harm of MRSA within a hospital—to respond to it—whereas the Vital Vio is an entirely new technique that seeks to eliminate it. Adaptive solutions to MRSA include established processes and protocols for prevention, such as having doctors, nurses, and other healthcare providers clean their hands with soap and water, or an alcohol-based hand rub before and after patient care, testing patients to see if they have MRSA on their skin, cleaning hospital rooms and medical equipment, and washing and drying clothes and bed linens in the warmest recommended temperatures. [5]

Link to Learning

Visit Inc. Magazine for support and advice for up-and-coming startups to learn more. Examples of how “Dorm Room” entrepreneurs spot and pursue opportunities are shared along with tips and advice for making your startup a success.

Problem-Solving Skills

While identifying problems is a necessary part of the origin of the entrepreneurial process, managing problems is an entirely different aspect once a venture is off the ground and running. An entrepreneur does not have the luxury of avoiding problems and is often responsible for all problem solving in a startup or other form of business. There are certain skills that entrepreneurs possess that make them particularly good problem solvers. Let’s examine each skill (shown in Figure 4.3) .

Critical Thinking

Critical thinking is the complex analysis of a problem or issue with the goal of solving the problem or making a decision. The entrepreneur analyzes and peels away the layers of a problem to find the core of an issue facing a business. The entrepreneur focuses on the heart of the problem and responds reasonably and openly to suggestions for solving it. Critical thinking is not only important for developing entrepreneurial ideas: it is a sought-after asset in education and employment. Entrepreneur Rebecca Kantar dropped out of Harvard in 2015 to found the tech startup Imbellus, which aims to replace standardized college admissions tests like the SAT with interactive scenarios that test critical-thinking skills. Many standardized tests may include multiple choice questions asking for the answer to a straightforward knowledge question or math problem. Kantar seeks to create tests that are more concerned with the analytic ability and reasoning that goes into the process of solving the problem. Imbellus says it aims to test “how people think,” not just what they know. The platform, which has not yet launched, will use simulations for its user assessments. [6]

Read more about problem solving and EnterpriseWorks/Vita’s story at Harvard Business Review.

Communication

Communication skills, the ability to communicate messages effectively to an intended recipient, are the skills entrepreneurs use to pool resources for the purposes of investigating solutions leading to innovative problem solving and competitive advantage. Good communication allows for the free association of ideas between entrepreneurs and businesses. It can illustrate a problem area or a shared vision, and seeks stakeholder buy-in from various constituencies. Networking and communication within an industry allow the entrepreneur to recognize the position of an enterprise in the market and work toward verbalizing solutions that move an organization beyond its current state. By “verbalizing,” we mean communication from and with the company/entity. Internal communications include company emails, newsletters, presentations, and reports that can set strategic goals and objectives, and report on what has been accomplished and what goals and objectives remain, so that employees within an organization are knowledgeable and can work on solving problems that remain within the organization. External communications could include press releases, blogs and websites, social media, public speeches, and presentations that explain the company’s solutions to problems. They could also be investor pitches complete with business plans and financial projections.

Ideation exercises, such as brainstorming sessions, are good communication tools that entrepreneurs can use to generate solutions to problems. Another such tool is a hackathon—an event, usually hosted by a tech company or organization, which brings together programmers and workers with other degrees of specialization within the company, community, or organization to collaborate on a project over a short period of time. These can last from twenty-four hours to a few days over a weekend. A hackathon can be an internal company-wide initiative or an external event that brings community participants together. A business model canvas can be used internally or externally to identify problems and work toward creating a viable solution.

Networking is an important manifestation of useful communication. What better method is there of presenting one’s concept, gaining funding and buy-in, and marketing for the startup than through building a network of individuals willing to support your venture? A network may consist of potential employees, customers, board members, outside advisors, investors, or champions (people who just love your product) with no direct vested interest. Social networks consist of weak ties and strong ties. Sociologist Mark Granovetter studied such networks back in the 1970s, and his findings still apply today, even if we include social media networks in the definition too. Weak ties facilitate flow of information and community organization, he said, whereas strong ties represent strong connections among close friends, family members, and supportive coworkers.7 [7] Strong ties require more work to maintain than weak ties (as illustrated by the strong lines and weak dotted lines in Figure 4.4) and in a business context, they don’t lead to many new opportunities. Weak ties, in contrast, do open doors in that they act as bridges to other weak ties within functional areas or departments that you might not have had access to directly or through strong ties. [8]

In fact, many young entrepreneurs, including tech entrepreneur Oliver Isaacs, realize college is a great place to begin building teams. Isaacs is the founder of viral opinion network Amirite.com, which is widely credited as the place where Internet memes started and online slang got a foothold. [9] Amirite.com consists of a large network of pages and partnerships on Facebook and Instagram that reach 15 million users each month. Isaacs recommends using your alumni network to build a team and customer base for your own venture because you never know if you’re talking to a future employee or partner.

Sharing of ideas and resources is highly valued in the entrepreneurial process. Communication is a vital skill in problem solving because the ability to identify and articulate the problem (define the problem space) is necessary to adequately address a problem. A problem can be too vague or broad or narrow. Thus, communicating the problem is important, as is conveying the solution.

Decisiveness

Decisiveness is as it sounds: the ability to make a quick, effective decision, not letting too much time go by in the process. Entrepreneurs must be productive, even in the face of risk. They often rely on intuition as well as on hard facts in making a choice. They ask what problem needs to be solved, think about solutions, and then consider the means necessary to implement an idea. And the decisions must be informed with research.

For example, as explained in Adam Grant’s book The Originals, the co-founders of Warby Parker, a venture-backed startup focused on the eyewear industry, started their company while they were graduate students. At the time they knew little about the industry, but after conducting some detailed research, they learned that the industry was dominated by one major player—Luxottica. They used this information and other data to refine their strategy and business model (focusing mainly on value, quality, and convenience via an online channel). By the time they decided to launch the business, they had thought through the key details, and they attained rapid early success. Today Warby Parker has over 100 retail stores in the US, is profitable, and is valued at almost $2 billion.

Decisiveness is the catapult to progress. Amazon founder Jeff Bezos preaches the importance of decisiveness throughout his organization. Bezos believes that decisiveness can even lead to innovation. Bezos advocates for making decisions after obtaining 70 percent of the information you need to do so: “Being wrong may be less costly than you think, whereas being slow is going to be expensive for sure,” Bezos wrote in a 2017 annual letter to stockholders. [10]

Read this LinkedIn blog post on decisiveness to learn more. The 3 Big Reasons People Aren’t Decisive – And How to Overcome Them by Paul Petrone

Ability to Analyze Data

Data analysis is the process of analyzing data and modeling it into a structure that leads to innovative conclusions. Identifying Entrepreneurial Opportunity covered much of the sources of data that entrepreneurs might seek. But it is one thing to amass information and statistics. It is another to make sense of that data, to use it to fill a market need or forecast a trend to come. Successful founders know how to pose questions about and make meaning out of information. And if they can’t do that themselves, they know how to bring in experts who can.

In addition to public sources of broad data, a business can collect data on customers when they interact with the company on social media or when they visit the company website, especially if they complete a credit card transaction. They can collect their own specific data on their own customers, including location, name, activity, and how they got to the website. Analyzing these data will give the entrepreneur a better idea about the interested audience’s demographic.

In entrepreneurship, analyzing data can help with opportunity recognition, creation, and assessment by analyzing data in a variety of ways. Entrepreneurs can explore and leverage different data sources to identify and compare “attractive” opportunities, since such analyses can describe what has happened, why it happened, and how likely it is to happen again in the future. In business in general, analytics is used to help managers/entrepreneurs gain improved insight about their business operations/emerging ventures and make better, fact-based decisions.

Analytics can be descriptive, predictive, or prescriptive. Descriptive analytics involves understanding what has happened and what is happening; predictive analytics uses data from past performance to estimate future performance; and prescriptive analytics uses the results of descriptive and predictive analytics to make decisions. Data analysis can be applied to manage customer relations, inform financial and marketing activities, make pricing decisions, manage the supply chain, and plan for human resource needs, among other functions of a venture. In addition to statistical analysis, quantitative methods, and computer models to aid decision-making, companies are also increasingly using artificial intelligence algorithms to analyze data and make quick decisions.

Understanding of Business and Industry

Entrepreneurs need sound understanding of markets and industries. Often times, they are already working in a large organization when they see growth opportunities or inefficiencies in a market. The employee gains a deep understanding of the industry at hand. If the employee considers a possible solution for a problem, this solution might become the basis for a new business.

For example, consider a marketing agency that used traditional marketing for thirty years. This agency had an established clientele. An executive in the organization began studying social media analytics and social media. The executive approached the owner of the business to change processes and begin serving clients through social media, but the owner refused. Clients within the agency began to clamor for exposure on social media. The marketing executive investigated the possibility of building an agency in her locale servicing clients who wish to utilize social media. The marketing executive left the organization and started her own agency (providing, of course, that this is in compliance with any noncompete clauses in her contract). Her competitive advantage was familiarity with both traditional and social media venues. Later, the original agency started floundering because it did not offer social media advertising. Our intrepid executive purchased the agency to gain the clientele and serve those wishing to move away from traditional marketing.

A similar experience occurred for entrepreneur Katie Witkin. After working in traditional marketing roles, the University of Wisconsin-Madison graduate, pictured in Figure 4.5, left agency life behind four years out of college to cofound her own company, AGW Group. In 2009, Witkin had been interning at a music marketing agency that didn’t have a social media department. She knew, both from her time at college and from observing industry trends, that social media was changing the way companies connected with customers. For her own venture, she expanded the focus to all supporting brands to manage all things digital. Today, the cultural and marketing communications agency has fifteen employees and big-name clients ranging from HBO to Red Bull. [11]

Resourcefulness

Resourcefulness is the ability to discover clever solutions to obstacles. Sherrie Campbell, a psychologist, author, and frequent contributor to Entrepreneur magazine on business topics, put it this way:

“There is not a more useful or important trait to possess than resourcefulness in the pursuit of success. Resourcefulness is a mindset, and is especially relevant when the goals you have set are difficult to achieve or you cannot envision a clear path to get to where you desire to go. With a resourcefulness mindset you are driven to find a way. An attitude of resourcefulness inspires out-of-the-box thinking, the generation of new ideas, and the ability to visualize all the possible ways to achieve what you desire. Resourcefulness turns you into a scrappy, inventive and enterprising entrepreneur. It places you a cut above the rest.” [12]

Entrepreneurs start thinking about a business venture or startup by talking to people and procuring experts to help create, fund, and begin a business. Entrepreneurs are risk takers, passionate about new endeavors. If they don’t have a college degree or a great deal of business experience, they understand there are many resources available to support them in the endeavor, such as the Service Corps of Retired Executives (SCORE) and the Small Business Administration (SBA). There are many sources available to fund the business with little or no debt and options. The entrepreneur follows a vision and researches opportunities to move toward a dream.

For example, in the late 1990s, Bill McBean and his business partner Billy Sterett had an opportunity to buy an underperforming auto dealership that would make their company the dominant one in the market. Neither wanting to take cash from other ventures nor wanting to borrow more money and tie themselves to more debt, the entrepreneurs were resourceful by finding another path forward to obtaining the money necessary for the acquisition they both coveted. They changed banks and renegotiated their banking payback requirements, lowering their interest payments, reducing fees, and lowering their monthly payments, ultimately freeing up a significant amount of cash that allowed them to buy the new company. [13]

Types of Problem Solvers

Entrepreneurs have an insatiable appetite for problem solving. This drive motivates them to find a resolution when a gap in a product or service occurs. They recognize opportunities and take advantage of them. There are several types of entrepreneurial problem solvers, including self-regulators, theorists, and petitioners.

Self-Regulating Problem Solvers

Self-regulating problem solvers are autonomous and work on their own without external influence. They have the ability to see a problem, visualize a possible solution to the problem, and seek to devise a solution, as Figure 4.6 illustrates. The solution may be a risk, but a self-regulating problem solver will recognize, evaluate, and mitigate the risk. For example, an entrepreneur has programmed a computerized process for a client, but in testing it, finds the program continually falls into a loop, meaning it gets stuck in a cycle and doesn’t progress. Rather than wait for the client to find the problem, the entrepreneur searches the code for the error causing the loop, immediately edits it, and delivers the corrected program to the customer. There is immediate analysis, immediate correction, and immediate implementation. The self-regulating problem solvers’ biggest competitive advantage is the speed with which they recognize and provide solutions to problems.

Theorist Problem Solvers

Theorist problem solvers see a problem and begin to consider a path toward solving the problem using a theory. Theorist problem solvers are process oriented and systematic. While managers may start with a problem and focus on an outcome with little consideration of a means to an end, entrepreneurs may see a problem and begin to build a path with what is known, a theory, toward an outcome. That is, the entrepreneur proceeds through the steps to solve the problem and then builds on the successes, rejects the failures, and works toward the outcome by experimenting and building on known results. At this point, the problem solver may not know the outcome, but a solution will arise as experiments toward a solution occur. Figure 4.7 shows this process.

For example, if we consider Marie Curie as an entrepreneur, Curie worked toward the isolation of an element. As different approaches to isolating the element failed, Curie recorded the failures and attempted other possible solutions. Curie’s failed theories eventually revealed the outcome for the isolation of radium. Like Curie, theorists use considered analysis, considered corrective action, and a considered implementation process. When time is of the essence, entrepreneurs should understand continual experimentation slows the problem-solving process.

Petitioner Problem Solvers

Petitioner problem solvers (Figure 4.8) see a problem and ask others for solution ideas. This entrepreneur likes to consult a person who has “been there and done that.” The petitioner might also prefer to solve the problem in a team environment. Petitioning the entrepreneurial team for input ensures that the entrepreneur is on a consensus-driven path. This type of problem solving takes the longest to complete because the entrepreneur must engage in a democratic process that allows all members on the team to have input. The process involves exploration of alternatives for the ultimate solution. In organizational decision-making, for example, comprehensiveness is a measure of the extent a firm attempts to be inclusive or exhaustive in its decision-making. Comprehensiveness can be gauged by the number of scheduled meetings, the process by which information is sought, the process by which input is obtained from external sources, the number of employees involved, the use of specialized consultants and the functional expertise of the people involved, the years of historical data review, and the assignment of primary responsibility, among other factors. Comprehensive decision-making would be an example of a petitioner problem-solving style, as it seeks input from a vast number of team members.

A charette—a meeting to resolve conflicts and identify solutions—is another example that employs a petitioner problem-solving approach. Often times, a developer of a new project might hold a community charette to aid in the design of a project, hoping to gain approval from elected officials. In the building example, this could consist of the developer and his team of architects, project designers, and people with expertise in the project working alongside community members, business executives, elected officials, or representatives like staff members or citizen-appointed boards like a planning board. Such an activity is representative of a petitioner problem-solving approach, as opposed to a developer representative designing the project with no input from anyone else.

In summary, there is no right or wrong style of problem solving; each problem solver must rely on the instincts that best drive innovation. Further, they must remember that not all problem-solving methods work in every situation. They must be willing to adapt their own preference to the situation to maximize efficiency and ensure they find an effective solution. Attempting to force a problem-solving style may prevent an organization from finding the best solution. While general entrepreneurial problem-solving skills such as critical thinking, decisiveness, communication, and the ability to analyze data will likely be used on a regular basis in your life and entrepreneurial journey, other problem-solving skills and the approach you take will depend on the problem as it arises.

There are a number of resources online that can help analyze your problem-solving abilities. Mindtools.com is one such resource. These are useful to learn your general problem-solving tendencies before being called upon to apply them in a real-world setting. One of the problem-solving techniques available from mindtools.com offers that problems can be addressed from six different perspectives. Called CATWOE, the approach is an acronym for Customers, Actors (people within the organization), Transformative, Worldwide, Owner, and Environment (organizational).

Learn more about the CATWOE technique for problem solving.

Chapter Credit

Portions of the material in this section are based on original work by Geoffrey Graybeal and produced with support from the Rebus Community. The original is freely available under the terms of the CC BY 4.0 license at https://press.rebus.community/media-innovation-and-entrepreneurship/.

• Helen Lock. “‘I Put My Butt on the Line’: How Spanx Took Over the World.” The Guardian. July 11, 2016. https://www.theguardian.com/small-business-network/2016/jul/11/put-butt-on-the-line-how-spanx-world ↵
• Gary Keller. “Business Success Series, Part 1: Sara Blakely-Spanx.” The One Thing. n.d. https://www.the1thing.com/blog/the-one-thing/business-success-series-part-1-sara-blakely-spanx/ ↵
• “Characteristics of Adaptors and Innovators.” Kirton KAI Inventory Tool. n.d. http://pubs.acs.org/subscribe/archive/ci/31/i11/html/11hipple_box3.ci.html ↵
• Shaun Powell. “The Management and Consumption of Organisational Creativity.” Journal of Consumer Marketing 25, no. 3 (2008): 158–166. ↵
• N.C Healthcare-Associated Infections Prevention Program. Healthcare-Associated Infections in North Carolina: 2014 Annual Report, Healthcare Consumer Version. April 2015. https://epi.dph.ncdhhs.gov/cd/hai/figures/hai_apr2015_consumers_annual.pdf ↵
• Romesh Ratnesar. “What If Instead of Taking the SAT You Got to Play a Video Game?” Bloomberg BusinessWeek. March 19, 2019. https://www.bloomberg.com/news/features/2019-03-19/a-harvard-dropout-s-plan-to-fix-college-admissions-with-video-games ↵
• Mark Granovetter. “The Strength of Weak Ties.” American Journal of Sociology 5 (1973): 1360–1380. ↵
• Jacob Morgan. “Why Every Employee Should Be Building Weak Ties at Work.” Forbes. March 11, 2014. https://www.forbes.com/sites/jacobmorgan/2014/03/11/every-employee-weak-ties-work/#277851063168 ↵
• John White. “Top UK Influencer Oliver Isaacs Reveals What It Takes to Go Viral.” Inc. August 6, 2017. https://www.inc.com/john-white/top-uk-influencer-oliver-isaacs-reveals-what-it-ta.html ↵
• Erik Larson. “How Jeff Bezos Uses Faster Better Decisions to Keep Amazon Innovating.” Forbes. September 24, 2018. https://www.forbes.com/sites/eriklarson/2018/09/24/how-jeff-bezos-uses-faster-better-decisions-to-keep-amazon-innovating/#492c351b7a65 ↵
• Stephanie Schomer. “How Getting Laid Off Empowered This Entrepreneur to Start Her Own Award-Winning Marketing Agency.” Entrepreneur. January 15, 2019. https://www.entrepreneur.com/article/326212 ↵
• Sherrie Campbell. “6 Characteristics of Resourceful People That Bring Them Success.” Entrepreneur. March 10, 2016. https://www.entrepreneur.com/article/272171 ↵
• “Resourcefulness Is More Important Than Resources.” The Ecommerce Mindset: How Successful Store Owners Think. n.d. https://www.oberlo.com/ebooks/mindset/resourceful-entrepreneur ↵

NSCC Foundations of Entrepreneurship Copyright © 2022 by OpenStax is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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Chapter 5 – Creative Problem Solving

Learning Objectives

• Recognize the difference between adaptive and innovative problem solving models
• Describe the three types of problem solvers
• Identify the five stages in the empathic design cycle

Creative Problem Solving

Innovative entrepreneurs are essentially problem solvers, but this level of innovation—identifying a pain point and working to overcome it—is only one in a series of innovative steps. In the influential business publication  Forbes , the entrepreneur Larry  Myler notes that problem solving is inherently reactive. That is, you have to wait for a problem to happen in order to recognize the need to solve the problem. Solving problems is an important part of the practice of innovation, but to elevate the practice and the field, innovators should anticipate problems and strive to prevent them. In many cases, they create systems for continuous improvement, which Myler notes may involve “breaking” previous systems that seem to function perfectly well. Striving for continuous improvement helps innovators stay ahead of market changes. Thus, they have products ready for emerging markets, rather than developing projects that chase change, which can occur constantly in some tech-driven fields. One issue with building a system for constant improvement is that you are in essence creating problems in order to solve them, which goes against established culture in many firms. Innovators look for organizations that can handle purposeful innovation, or they attempt to start them. Some innovators even have the goal of innovating far ahead into the future, beyond current capacities. In order to do this, Myler suggests bringing people of disparate experiential backgrounds with different expertise together. These relationships are not guarantees of successful innovation, but such groups can generate ideas independent of institutional inertia. Thus, innovators are problem solvers but also can work with forms of problem creation and problem imagination. They tackle problems that have yet to exist in order to solve them ahead of time.

Two Problem Solving Models: Adaptive and Innovative

There are two prominent established problem-solving models:  adaptive  and  innovative . A renowned British psychologist, Michael  Kirton , developed the  Kirton Adaption-Innovation (KAI) Inventory to measure an individual’s style of problem solving. Problem-solving preferences are dependent on the personality characteristics of originality, conformity, and efficiency, according to Kirton. The KAI inventory identifies an individual’s problem-solving approach by measuring agreement with statements that align with characteristics, such as the ability to produce many novel ideas, to follow rules and get along in groups, and to systematically orient daily behavior. The results categorize an individual as an innovator or an adaptor. Innovators are highly original, do not like to conform, and value efficiency less than adaptors.

The first and more conservative approach an entrepreneur may use to solve problems is the adaptive model. The  adaptive model  seeks solutions for problems in ways that are tested and known to be effective. An adaptive model accepts the problem definition and is concerned with resolving problems rather than finding them. This approach seeks greater efficiency while aiming at continuity and stability. The second and more creative approach is the  innovative model  of entrepreneurial problem solving, which uses techniques that are unknown to the market and that bring advantage to an organization. An innovative problem-solving style challenges the problem definition, discovers problems and avenues for their solutions, and questions existing assumptions—in a nutshell, it does things differently. It uses outside-the-box thinking and searches for novel solutions. Novelty is a shared trait of creative entrepreneurship, and it’s why entrepreneurs gravitate toward this method of problem solving. According to Dr. Shaun M.  Powell , a senior lecturer at the University of Wollongong, Australia: “Creative entrepreneurs are notable for a distinctive management style that is based on intuition, informality and rapid decision making, whereas the more conventional thinking styles are not in accord with the unique attributes of creative entrepreneurs.” This way of problem solving doesn’t alter an existing product. It is the creation of something entirely new.

Vyv: Innovative Problem Solving in Healthcare

Healthcare facilities have long been known as a source of methicillin-resistant Staphylococcus aureus  (MRSA), a deadly infection that can have long-term effects on patients. Adaptive solutions to MRSA include established processes and protocols for prevention, such as having doctors, nurses, and other healthcare providers clean their hands with soap and water, or an alcohol-based hand rub before and after patient care, testing patients to see if they have MRSA on their skin, cleaning hospital rooms and medical equipment, and washing and drying clothes and bed linens in the warmest recommended temperatures.

Vyv , led by Colleen  Costello , has developed white light technology that effectively disinfects healthcare facilities by targeting a molecule specific to bacteria. The light, safe to humans, can burn constantly to kill regenerative bacteria. An adaptive problem-solving model would seek to minimize harm of MRSA within a hospital—to respond to it—whereas Vyv is an entirely new technique that seeks to eliminate it.

Types of Problem Solvers

Entrepreneurs have an insatiable appetite for problem solving. This drive motivates them to find a resolution when a gap in a product or service occurs. They recognize opportunities and take advantage of them. There are several types of entrepreneurial problem solvers, including self-regulators, theorists, and petitioners.

Self-Regulating Problem Solvers

Self-regulating problem solvers are autonomous and work on their own without external influence. They have the ability to see a problem, visualize a possible solution to the problem, and seek to devise a solution, as the figure below illustrates. The solution may be a risk, but a self-regulating problem solver will recognize, evaluate, and mitigate the risk. For example, an entrepreneur has programmed a computerized process for a client, but in testing it, finds the program continually falls into a loop, meaning it gets stuck in a cycle and doesn’t progress. Rather than wait for the client to find the problem, the entrepreneur searches the code for the error causing the loop, immediately edits it, and delivers the corrected program to the customer. There is immediate analysis, immediate correction, and immediate implementation. The self-regulating problem solvers’ biggest competitive advantage is the speed with which they recognize and provide solutions to problems.

Theorist Problem Solvers

Theorist problem solvers see a problem and begin to consider a path toward solving the problem using a theory. Theorist problem solvers are process oriented and systematic. While managers may start with a problem and focus on an outcome with little consideration of a means to an end, entrepreneurs may see a problem and begin to build a path with what is known, a theory, toward an outcome. That is, the entrepreneur proceeds through the steps to solve the problem and then builds on the successes, rejects the failures, and works toward the outcome by experimenting and building on known results. At this point, the problem solver may not know the outcome, but a solution will arise as experiments toward a solution occur. The figure below shows this process.

For example, if we consider Marie  Curie  as an entrepreneur, Curie worked toward the isolation of an element. As different approaches to isolating the element failed, Curie recorded the failures and attempted other possible solutions. Curie’s failed theories eventually revealed the outcome for the isolation of radium. Like Curie, theorists use considered analysis, considered corrective action, and a considered implementation process. When time is of the essence, entrepreneurs should understand continual experimentation slows the problem-solving process.

Petitioner Problem Solvers

Petitioner problem solvers (see figure below) see a problem and ask others for solution ideas. This entrepreneur likes to consult a person who has “been there and done that.” The petitioner might also prefer to solve the problem in a team environment. Petitioning the entrepreneurial team for input ensures that the entrepreneur is on a consensus-driven path. This type of problem solving takes the longest to complete because the entrepreneur must engage in a democratic process that allows all members on the team to have input. The process involves exploration of alternatives for the ultimate solution. In organizational decision-making, for example, comprehensiveness is a measure of the extent a firm attempts to be inclusive or exhaustive in its decision-making. Comprehensiveness can be gauged by the number of scheduled meetings, the process by which information is sought, the process by which input is obtained from external sources, the number of employees involved, the use of specialized consultants and the functional expertise of the people involved, the years of historical data review, and the assignment of primary responsibility, among other factors. Comprehensive decision-making would be an example of a petitioner problem-solving style, as it seeks input from a vast number of team members.

Empathic design cycle

One approach to creative problem solving is through empathy. Empathy is the human ability to feel what other humans are feeling. Practicing empathy enables us to relate to people and see the problem through the eyes and feelings of those who experience it. By expressing empathy, you can begin to understand many facets of a problem and start to think about all of the forces you will need to bring to bear on it. From empathy comes the ability to proceed to the second step, defining the problem. Defining the problem must be based on honest, rational, and emotional observation. Third in the process is brainstorming solutions, or coming up with as many solutions as possible without judging the feasibility. The next step is building a prototype and last you need to test it. Once you apply this process to developing a product or service, you need to return to the empathetic mindset to examine whether you have reached a viable solution and, thus, an opportunity.

Many entrepreneurs start companies because they are also the consumer of that particular product or service. When you are able to empathize with your customers (because you are one), it makes it easier to understand how they use your product, what goals it helps them to accomplish, and what challenges they have. However, there are a multitude of businesses where the entrepreneur is not the customer. The ability to examine a potential idea from the customer’s perspective is why spending time during the first stage in the Empathic Design Cycle is so important.

Project Focus

What type of problem solver are you? How has that impacted the way you interact with your group?

Have you shown empathy when considering the potential customers you plan to target with your product/service? Has that been an easy or difficult process?

Attribution

This work builds upon materials originally developed by OpenStax in their publication “ Entrepreneurship ,” which is licensed under CC BY 4.0 .

Introduction to Entrepreneurship Copyright © 2024 by Jenn Woodhull-Smith is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Identifying Problems Worth Solving: A Guide for Entrepreneurs

In the world of entrepreneurship, success often hinges on the ability to identify and solve the right problems worth solving. However, tackling an issue without fully understanding its worth can lead to wasted time and resources. This blog post will guide you through the process of determining which problems are worth solving and how to address them effectively, ensuring a greater likelihood of success in your entrepreneurial journey of building better software or SaaS solutions.

Key Takeaways

• Identify and reframe problems worth solving through research, observation, customer conversations and collaborative problem-solving techniques.
• Evaluate market demand to ensure successful solutions by leveraging technology and resources.
• Build trust with customers by providing consistent problem-solving strategies that create value.

Understanding the Essence of a Problem Worth Solving

As an entrepreneur, it’s vital to focus on problems that meet certain criteria, such as establishing an emotional connection with customers, demonstrating market potential, and being realistically solvable. A profound understanding of these aspects can help you create solutions that address the genuine problems your target customers face, ultimately leading to a more successful and impactful business.

Determining if a problem is worth solving involves considering diverse approaches and perspectives, analyzing potential impacts, and understanding the reasons the market has failed to address the problem. This process, known as idea extraction, involves interviewing individuals in a market about the difficulties they face to identify a problem they are willing to pay to have solved, thus improving the customer’s circumstances.

Emotional Connection

Emotionally connecting to a problem involves understanding and empathizing with the feelings and experiences associated with the issue. By recognizing the emotional motivations behind customer issues, more effective solutions can be developed, resulting in greater customer value. For instance, Slack identified the need for a sense of community, meaning, and shared purpose in workplace communication and developed a tool that encourages inclusive communication and discussion around common objectives.

Forming an emotional bond with the problem can spark motivation and ignite creative solutions. This approach ensures that entrepreneurs not only address the superficial aspects of a problem but also tackle its underlying emotional drivers, leading to a more profound and lasting impact on customers.

Pro Tip: People primarily take action for emotional reasons NOT logical ones. Logic prevails in the end, but emotional reactions are the primary driver for action. As such, it’s important that you know what emotional drivers are motivating users and customers to take action.

Market Potential

Assessing the market size and its potential to expand becomes important when determining if a problem requires a solution. One way to gauge market potential is by examining the amount of money customers are currently spending to address the issue. This helps us better understand important context around how motivated customers are to solve the problem and the impact that it’s causing to their business operations.

Focus your research in these areas:

• Thoroughly research their target market
• Identify gaps in the existing solutions offered by competitors
• Ensure that their proposed solution addresses a genuine customer need
• Ensure that their proposed solution has the potential to capture a significant market share.

Solvability

A problem worth solving must be feasible to resolve, have an emotional connection, and demonstrate commercial viability. Solvability comprises a critical component of this equation. I followed this exact strategy to bring my B2B SaaS product Podcast Show Notes to market. This software leverages AI to automate the creation of show notes for podcast episodes using AI. Before building this product, I validated it as both a problem worth solving and a commercially viable solution by selling it and developing an MVP before investing more significantly and building out the entire application.

Breaking down complex issues into individual elements by drilling down to root causes can render them more accessible and solvable. By considering the feasibility of a solution and the resources needed to implement it, entrepreneurs can ensure that their efforts are directed towards problems that can be realistically solved and have a meaningful impact on customers’ circumstances. This approach allows problem solvers to focus on the big idea that can truly make a difference.

Research and Observation: Key Steps in Identifying Problems Worth Solving

Uncovering potential problems worth solving requires a combination of research and observation, which can be achieved through customer conversations, industry analysis, and competitor study. The most promising approach to identify a customer’s problem worth solving is to engage in dialogue with a particular group of customers at the outset of the innovation process, allowing you to better understand their problems and challenges.

Thorough research and observation can help software and SaaS entrepreneurs confirm the existence and importance of a problem, directing their efforts towards resolving significant issues that can impact their target market positively.

Customer Conversations

Engaging with customers is vital for understanding their challenges and verifying insights with further research. While there is no definitive answer to how many customer interviews are needed to identify a deep problem with a sizable market, beginning with three to five customers and modifying questions every new set of three to five customer interviews is the ideal approach.

However, it’s crucial to be aware of a challenge in uncovering issues through customer conversations: individuals don’t always reflect problems and challenges of the same severity. This means customer A may report a problem with a minor impact as a BIG problem, but customer B may report a problem with a big impact as a small problem. As such, it’s critically important to develop a systematic approach to being able to compare problems and impact in a relatively consistent manner across a set of interviews.

Industry Analysis

Scrutinizing industry trends and advancements aids in identifying potential problems and opportunities. For example, the European Union’s implementation of the General Data Protection Regulation (GDPR) created a reason for businesses to need new software and SaaS solutions. By analyzing:

• Customer needs
• Market size
• The competitive landscape
• Technological advancements

Entrepreneurs can uncover potential problems worth solving and opportunities for growth by leveraging various strategies such as:

• Customer surveys
• Focus groups
• Market research

Each of these strategies has respective pros and cons when helping you identify problems worth solving. A balanced approach is recommended to ensure you capture adequate context in the problem space.

Note: Be aware of a problem related to running focus groups I call ‘group think’. This is where you don’t get adequate representation from the group and the ‘loudest voice’ seems to carry because everyone doesn’t feel comfortable expressing their feelings in a group setting. This is where one on one conversations shine.

Competitor Study

Studying competitor offerings is vital to identify problems that warrant resolution, enabling entrepreneurs to understand the current market solutions and their potential limitations. By examining competitors, entrepreneurs can recognize areas where they can offer a superior or more innovative solution to meet customer demands and resolve pain points, ultimately ensuring that their solution has a competitive edge.

Competitor study not only helps in identifying potential problems worth solving, but also assists entrepreneurs in understanding the market conditions, customer inclinations, and potential barriers to entry for given markets, which are essential components in determining the practicality and success of a business.

Pro Tip: There’s always competition. Even if it isn’t the same format as what you plan to build. If you want to build a software solution then you may be competing against another product or a service. Either way, that’s your competition. Study it because you stand to learn a whole lot from that investment.

Collaborative Problem-Solving Techniques

Entrepreneurs can encourage innovative problem-solving by employing collaborative techniques, including brainstorming sessions, design thinking, and stakeholder mapping. These approaches encourage creativity, cooperation, and reiteration, ultimately leading to innovation projects that are tailored to the needs and desires of the users.

By engaging with a diverse group of stakeholders, entrepreneurs can gain valuable insights and perspectives, helping them to identify, validate, and address problems in a more comprehensive and effective manner.

Brainstorming Sessions

Inviting various stakeholders to participate in brainstorming sessions can create a broad assortment of ideas and perspectives, ultimately leading to improved solutions. Brainstorming sessions can be conducted in-person or using online platforms to facilitate wider participation, and they can involve both individual and group brainstorming to prevent groupthink and encourage faster innovation in a psychologically safe setting.

Through brainstorming sessions, entrepreneurs can:

• Evaluate all aspects of an issue
• Encourage creative thinking
• Provide further pathways to success
• Ensure that the focus remains on the broader perspective and the problems to be solved, rather than jumping to solutions prematurely.

Design Thinking

Design thinking is a systematic and human-centric approach to problem-solving that can greatly assist entrepreneurs in recognizing issues worth addressing. The design thinking process consists of five steps:

• Empathize: Comprehend the needs and perspectives of the target users or customers.
• Define: Clearly define the problem or challenge that needs to be addressed.
• Ideate: Generate a wide range of possible solutions or ideas.
• Prototype: Create a physical or digital representation of the solution.
• Test: Gather feedback and evaluate the effectiveness of the solution.

By following these steps, entrepreneurs can uncover issues and develop innovative solutions.

The advantages of design thinking include:

• Promoting creativity
• Cooperation and collaboration
• Iteration and continuous improvement
• Tailoring solutions to user requirements
• Minimizing risk
• Increasing the likelihood of success

Stakeholder Mapping

Stakeholder mapping is an essential component of the problem-solving process, as it assists entrepreneurs in comprehending the people, groups, and organizations that can influence or be influenced by their project or business. By mapping out stakeholders, entrepreneurs can ascertain their requirements, expectations, and issues, which are essential in understanding the problems that are worth solving.

In order to prioritize stakeholders and ensure that their perspectives and interests are taken into account when identifying and addressing problems, entrepreneurs can engage in the following activities:

• Customer conversations
• Competitor analysis
• Brainstorming sessions
• Design thinking
• Stakeholder mapping

Reframing and Validating Identified Problems

After identifying a problem, it becomes important to reconsider its framing and confirm its significance. Reframing a problem facilitates the consideration of it from varied perspectives and ultimately leads to improved solutions. For instance, my Podcast Show Notes tool can help podcast production agencies with more than just producing great show notes in less time and budget. My software helps them scale their agencies so it goes way beyond solving each of those problems.

Validation is another crucial step in the decision making process. By challenging assumptions, evaluating market demand, and conducting product discovery, entrepreneurs can refine and validate identified problems, ensuring that their efforts are directed towards addressing pressing issues with the potential to make a real difference in their target market.

Challenging Assumptions

It’s important to identify and question risky assumptions to prevent the development of bad software. Challenging the status quo, considering unconventional approaches, and visualizing alternative solutions can help entrepreneurs challenge assumptions and discover real problems, examine novel perspectives, and devise inventive solutions to address the underlying issues.

Disregarding assumptions could result in the production of an inappropriate product or solution, expending time and resources ineffectively, and neglecting potential opportunities. By actively challenging assumptions, entrepreneurs can ensure that their efforts are focused on addressing genuine customer needs, ultimately leading to more successful and impactful solutions.

Evaluating Market Demand

Measuring potential demand for a solution is critical to guarantee it meets a legitimate target customer need.

Entrepreneurs should consider factors such as:

• The size of the target market
• The number of potential customers
• The customer’s willingness to pay

These factors are important in order to properly evaluate market demand.

Product Discovery

Product discovery involves a series of activities, such as user testing, customer interviews, and feedback collection, in order to gain insights into the needs and pain points of the target users. This process enables entrepreneurs to validate the existence and significance of a problem and prioritize and concentrate on resolving issues that have a true effect on their target market, augmenting the possibilities of creating a successful and valuable product.

For instance, in the case of Podcast Show Notes, user feedback led to modifications in the initial version of the solution, such as:

• Creating multiple title options for a podcast
• Turning episodes into social posts and marketing emails
• Creating new tiers for power users of the software
• Enabling multi-language support to broaden the target market

This example demonstrates the importance of product discovery in refining and validating identified problems to ensure the development of successful solutions, ultimately leading to a problem solved for those facing the issue.

Turning Identified Problems into Successful Solutions

After identifying, reframing, and validating a problem, the subsequent step is to convert it into a viable solution. To achieve this, entrepreneurs should focus on creating a roadmap, leveraging technology and resources, and building trust and value.

By developing a clear plan, utilizing available technology, and delivering value to customers from day one, entrepreneurs can ensure that their efforts are directed towards addressing the right problems and achieving the desired outcome, ultimately leading to a more successful and impactful business.

Creating a Roadmap

Crafting a detailed plan that outlines the steps to address the identified problem and achieve the intended outcomes is key to transforming identified problems into successful solutions. A roadmap helps to set objectives, collect inputs, and prioritize the problems that need to be solved, ensuring that the emphasis remains on the broader perspective and the predicaments to solve, instead of immediately jumping to solutions.

Formulating a plan of action, constructing a timeline, and establishing goals and objectives are essential components of a successful roadmap. By creating a roadmap, entrepreneurs can effectively communicate their strategic plan and coordinate resources proficiently, resulting in a greater chance of success in resolving the identified problems.

Leveraging Technology and Resources

Leveraging technology and resources plays a crucial role in boosting efficiency and productivity. Entrepreneurs have access to a plethora of online tools, software, databases, and other resources that can aid in identifying and resolving issues.

By employing technology and resources to create prototypes, evaluate solutions, and refine solutions, entrepreneurs can ensure that their efforts are directed towards addressing the right problems in the most efficient and effective manner possible. Moreover, entrepreneurs can assess their success when utilizing technology and resources by monitoring metrics such as cost savings, time savings, and customer satisfaction.

Building Trust and Value

Delivering value to customers from the outset and progressively building trust through consistent problem-solving and customer-centric strategies is vital for sustained success. Entrepreneurs may deliver value to customers from the outset by comprehending their requirements, furnishing solutions that fulfill those requirements, and delivering an excellent customer experience.

By attentively listening to customer feedback, promptly responding to customer inquiries, and providing solutions that adequately meet customer needs, entrepreneurs can establish trust through consistent problem-solving and customer-centric approaches.

Ultimately, cultivating trust and value contributes to fulfilling customer requirements, developing a competitive advantage, stimulating innovation, and producing business opportunities that can improve a customer’s circumstances.

Identifying and addressing problems worth solving is a critical aspect of successful innovation in the software space. By understanding the essence of a problem worth solving, conducting research and observation, employing collaborative problem-solving techniques, reframing and validating identified problems, and turning them into successful solutions, entrepreneurs can ensure that their efforts are directed towards the right problems and ultimately achieve success in their endeavors. By focusing on delivering value to customers and fostering trust, entrepreneurs can create lasting impact and build prosperous businesses that address genuine customer needs. If you could use help with strategy related to uncovering problems worth solving, schedule a free product strategy session with me so I can learn more about how to help.

Frequently Asked Questions

What are some problems that need to be solved.

The world faces numerous pressing issues, such as climate change, wars and military conflicts, water contamination, human rights violations, global health issues, poverty, and children’s lack of access to healthcare, education, safety, and food. Each of these need to be addressed urgently and ideally with innovative solutions.

What makes a problem worth solving?

A problem is worth solving if it has a significant negative impact on the customer’s circumstances and a better solution can provide meaningful benefits compared to existing solutions, whether for many customers or a smaller niche group.

How do I find a problem worth solving?

To find a problem worth solving, interview customers to gain insight into their pain points and day-to-day activities. Ask them questions about how often they experience the problem and how they’re trying to solve it. Then, use further customer and market research to validate your assumptions. Finally, capture early demand when you have 70% confidence in the solution.

What does it mean to identify a problem?

Problem Identification is the process of clearly identifying the root cause of a problem and developing a detailed problem statement that includes the impact. It requires analyzing the context, background, and symptoms of the issue to form a hypothesis about what is causing or maintaining the conditions around the problem. This process involves gathering data, conducting interviews, and analyzing the data to identify the root cause of the problem. Once the root cause is identified, a problem statement can be developed that outlines the scope of the problem.

What are the criteria for a problem worth solving?

For a problem to be worth solving, it must be relevant to the target customer, have potential for commercial success and be realistically solvable.

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Problem solving: How to Identify and Solve Problems as an Entrepreneur

1. understanding the importance of problem-solving, 2. identifying common challenges faced by entrepreneurs, 3. analyzing and assessing the root causes of problems, 4. developing effective problem-solving strategies, 5. implementing solutions and measuring success, 6. overcoming obstacles and adapting to change, 7. leveraging technology for efficient problem-solving, 8. collaborating and seeking support from others, 9. continuous learning and improvement in problem-solving skills.

Problem-solving plays a crucial role in the journey of an entrepreneur. It is a skill that allows individuals to identify and overcome challenges , leading to growth and success. In this section, we will explore the significance of problem-solving and provide insights from different perspectives.

1. Enhancing Adaptability: Problem-solving equips entrepreneurs with the ability to adapt to changing circumstances. By analyzing problems and finding effective solutions, entrepreneurs can navigate through uncertainties and make informed decisions. This adaptability is essential in today's dynamic business environment .

2. Driving Innovation: Problems often serve as catalysts for innovation. When entrepreneurs encounter obstacles, they are prompted to think creatively and develop unique solutions. This process of problem-solving fosters innovation, leading to the development of new products, services, or processes that can differentiate a business from its competitors .

3. Building Resilience: Problem-solving builds resilience in entrepreneurs. By facing and overcoming challenges, entrepreneurs develop a mindset that embraces setbacks as opportunities for growth. This resilience enables them to persevere in the face of adversity and bounce back stronger.

4. enhancing Decision-making : effective problem-solving enhances decision-making skills. Entrepreneurs who can analyze problems, evaluate potential solutions, and make informed choices are more likely to achieve favorable outcomes. Problem-solving enables entrepreneurs to consider multiple perspectives, weigh pros and cons , and select the most suitable course of action.

5. strengthening Customer relationships : Problem-solving is closely tied to customer satisfaction. When entrepreneurs proactively address customer issues and provide timely solutions , they build trust and loyalty . By understanding and solving customer problems , entrepreneurs can create a positive customer experience and foster long-term relationships .

6. Overcoming Obstacles: Problems are inevitable in the entrepreneurial journey. However, effective problem-solving allows entrepreneurs to overcome obstacles and continue moving forward. By breaking down complex problems into manageable tasks and implementing systematic approaches, entrepreneurs can tackle challenges head-on.

7. Learning and Growth: Problem-solving provides valuable learning opportunities. Each problem encountered presents a chance for entrepreneurs to acquire new knowledge, skills, and insights. By reflecting on past problem-solving experiences, entrepreneurs can continuously improve their problem-solving abilities and grow both personally and professionally.

Problem-solving is a fundamental skill for entrepreneurs. It enhances adaptability, drives innovation, builds resilience, enhances decision-making, strengthens customer relationships , overcomes obstacles, and promotes learning and growth. By embracing problem-solving as an integral part of their entrepreneurial journey, individuals can navigate challenges effectively and achieve success.

Understanding the Importance of Problem Solving - Problem solving: How to Identify and Solve Problems as an Entrepreneur

Entrepreneurs face a multitude of challenges on their journey to success. These challenges can arise from various aspects of running a business, including market dynamics, financial constraints, and operational hurdles. By understanding and addressing these common challenges, entrepreneurs can enhance their problem-solving skills and increase their chances of achieving their goals.

1. Market Uncertainty: One of the key challenges faced by entrepreneurs is navigating through market uncertainty. This includes understanding customer needs, predicting market trends , and staying ahead of competitors . Entrepreneurs must conduct thorough market research and analysis to identify potential opportunities and mitigate risks.

2. Financial Management: Managing finances is another significant challenge for entrepreneurs. They need to secure funding, allocate resources effectively , and maintain a healthy cash flow . This requires careful budgeting, financial planning, and seeking investment opportunities.

3. team building : Building a competent and cohesive team is crucial for the success of any entrepreneurial venture. Entrepreneurs must recruit, train, and retain talented individuals who share their vision and can contribute to the growth of the business. effective communication and leadership skills are essential in fostering a positive work environment .

4. scaling and growth : As businesses expand, entrepreneurs often face challenges related to scaling and managing growth. This includes adapting to increased demand, expanding operations, and maintaining quality standards . Entrepreneurs must develop scalable business models and implement efficient processes to ensure smooth growth .

5. Innovation and Adaptability: In today's rapidly evolving business landscape , entrepreneurs must continuously innovate and adapt to stay relevant. They need to embrace new technologies, anticipate market changes, and pivot their strategies when necessary. Being open to change and fostering a culture of innovation is vital for long-term success .

6. marketing and Customer acquisition : Entrepreneurs need to effectively market their products or services and attract customers. This involves developing a strong brand identity , implementing targeted marketing strategies , and building customer relationships . Entrepreneurs should leverage digital marketing tools and platforms to reach their target audience effectively.

7. time management : Time management is a common challenge faced by entrepreneurs, as they often juggle multiple responsibilities and tasks. Prioritizing activities, setting realistic goals , and delegating tasks can help entrepreneurs optimize their time and increase productivity.

8. legal and Regulatory compliance : entrepreneurs must navigate through complex legal and regulatory frameworks to ensure compliance. This includes understanding intellectual property rights , tax obligations, and industry-specific regulations . seeking legal counsel and staying updated on relevant laws is crucial to avoid legal pitfalls .

By addressing these common challenges, entrepreneurs can enhance their problem-solving skills and increase their chances of success . It is important for entrepreneurs to seek support from mentors, industry experts, and fellow entrepreneurs to overcome these challenges and thrive in their entrepreneurial journey.

Identifying Common Challenges Faced by Entrepreneurs - Problem solving: How to Identify and Solve Problems as an Entrepreneur

Analyzing and assessing the root causes of problems is a crucial aspect of problem-solving for entrepreneurs. By understanding the underlying factors that contribute to a problem, entrepreneurs can develop effective strategies to address and resolve them. In this section, we will delve into the various perspectives on problem analysis and provide valuable insights .

1. Multiple Perspectives: When analyzing the root causes of a problem, it is essential to consider different viewpoints. This allows entrepreneurs to gain a comprehensive understanding of the issue and identify potential contributing factors. By examining the problem from various angles, entrepreneurs can uncover hidden connections and develop more effective solutions.

2. Identifying Patterns: One effective approach to analyzing root causes is to identify patterns. By examining past instances of similar problems, entrepreneurs can identify commonalities and recurring themes. This helps in understanding the underlying causes and developing strategies to prevent future occurrences.

3. Cause-and-Effect Analysis: Another useful technique is cause-and-effect analysis. This involves identifying the primary cause of a problem and tracing its effects throughout the system. By understanding the causal relationships , entrepreneurs can address the root cause directly and mitigate the associated effects.

4. Data Analysis: Utilizing data analysis techniques can provide valuable insights into the root causes of problems. By collecting and analyzing relevant data, entrepreneurs can identify trends, correlations, and potential causes. This data-driven approach enhances problem-solving by providing objective evidence to support decision-making .

5. Examples: Let's consider an example to illustrate the importance of analyzing root causes. Suppose an entrepreneur is facing a decline in customer satisfaction. By analyzing customer feedback , conducting surveys, and examining sales data, the entrepreneur may discover that the root cause is a lack of product quality. Armed with this insight, the entrepreneur can focus on improving product quality to address the underlying issue and enhance customer satisfaction .

Analyzing and assessing the root causes of problems is a critical step in effective problem-solving for entrepreneurs. By considering multiple perspectives, identifying patterns, conducting cause-and-effect analysis, utilizing data analysis techniques, and using examples, entrepreneurs can gain a deeper understanding of the issues they face and develop targeted strategies for resolution.

Analyzing and Assessing the Root Causes of Problems - Problem solving: How to Identify and Solve Problems as an Entrepreneur

If you need some assistance with your blog, I can offer you some general tips on developing effective problem-solving strategies as an entrepreneur. These are based on my own knowledge and experience, and not on any web search. Here are some tips:

- Define the problem clearly. Before you can solve a problem, you need to understand what it is, why it matters, and what are the desired outcomes. A clear problem statement can help you focus on the root cause and the main objectives of your problem-solving process .

- gather relevant information . Once you have defined the problem, you need to collect and analyze data and information that can help you understand the problem better and identify possible solutions. You can use various sources of information, such as customer feedback, market research , industry reports, expert opinions, etc. You should also evaluate the reliability and validity of the information you gather.

- Generate and evaluate alternatives. After you have gathered enough information, you can start brainstorming and generating different ideas and options for solving the problem. You can use various techniques, such as mind mapping, swot analysis , pros and cons lists, etc. To stimulate your creativity and organize your thoughts. You should also evaluate the feasibility, effectiveness, and impact of each alternative, and compare them with your criteria and goals.

- Choose and implement the best solution. Based on your evaluation, you can select the most suitable solution for your problem and plan how to implement it. You should consider the resources, time, budget, and risks involved in the implementation, and communicate your plan clearly to your team and stakeholders . You should also monitor and measure the results and outcomes of your solution, and make adjustments if needed.

- Learn from the experience. Finally, you should reflect on the problem-solving process and the solution you implemented, and learn from the feedback and outcomes. You should identify what worked well and what didn't, and what you can improve for the future. You should also document and share your learnings and best practices with others, and celebrate your achievements.

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Implementing solutions and Measuring success is a crucial aspect of problem-solving for entrepreneurs. In this section, we will explore various insights and strategies to effectively implement solutions and evaluate their success.

1. Clearly Define the Problem: Before implementing any solution, it is essential to have a clear understanding of the problem at hand. This involves identifying the root cause, analyzing its impact, and setting specific goals for resolving it.

2. brainstorming and Idea generation : Once the problem is defined, entrepreneurs can engage in brainstorming sessions to generate potential solutions. Encouraging diverse perspectives and ideas can lead to innovative approaches.

3. Prioritize and Evaluate Solutions: Not all solutions are equally effective or feasible. It is crucial to prioritize and evaluate each solution based on factors such as cost , resources required, and potential impact. This helps in selecting the most viable options.

4. Develop an Action Plan: After selecting the most suitable solution, entrepreneurs should create a detailed action plan. This plan should outline the steps, timelines, and responsibilities involved in implementing the solution.

5. Test and Iterate: It is often beneficial to test the solution on a smaller scale before implementing it fully. This allows for identifying any potential issues or areas of improvement. Iteration based on feedback and data analysis can lead to more refined solutions.

6. monitor Key metrics : To measure the success of the implemented solution, entrepreneurs should establish key performance indicators (KPIs) and regularly monitor them. These metrics can include factors like customer satisfaction , revenue growth, or process efficiency.

7. Analyze Results and Adjust: Analyzing the data collected from monitoring KPIs provides valuable insights into the effectiveness of the solution. If the desired outcomes are not achieved, adjustments can be made to the implementation strategy or alternative solutions can be explored.

8. Continuous Improvement: Problem-solving is an ongoing process, and entrepreneurs should strive for continuous improvement. This involves learning from past experiences, seeking feedback, and adapting strategies to changing circumstances.

By following these steps and utilizing a systematic approach, entrepreneurs can effectively implement solutions and measure their success in problem-solving endeavors. Remember, problem-solving is a dynamic process, and flexibility is key to finding optimal solutions .

Implementing Solutions and Measuring Success - Problem solving: How to Identify and Solve Problems as an Entrepreneur

One of the most important skills for an entrepreneur is problem-solving . However, problems are not always easy to solve, especially when they involve obstacles and changes that are beyond your control. How can you overcome these challenges and adapt to the changing circumstances ? In this section, we will explore some strategies and tips that can help you deal with problems effectively and creatively.

Some of the common obstacles and changes that entrepreneurs may face are:

- Market changes : The demand for your product or service may fluctuate due to changes in customer preferences, trends, competition, regulations, or other factors. You need to keep an eye on the market and adjust your offering accordingly.

- Resource constraints : You may have limited resources such as time , money, staff, equipment, or materials to execute your plans. You need to prioritize your tasks and allocate your resources wisely .

- Team conflicts : You may have disagreements or misunderstandings with your co-founders, employees, partners, or investors. You need to communicate clearly and respectfully, and resolve the conflicts constructively.

- Personal issues : You may have personal problems such as health, family, or emotional issues that affect your motivation, productivity, or well-being. You need to take care of yourself and seek support when needed.

To overcome these obstacles and adapt to these changes, you can follow these steps:

1. Identify the problem : The first step is to define the problem clearly and accurately. What is the root cause of the problem? What are the symptoms and effects of the problem? How does the problem affect your goals and objectives?

2. Analyze the problem : The next step is to gather relevant information and data about the problem. What are the facts and assumptions about the problem? What are the possible causes and consequences of the problem? What are the strengths and weaknesses of your current situation?

3. Generate solutions : The third step is to brainstorm and evaluate different solutions to the problem. What are the possible options and alternatives to solve the problem? What are the pros and cons of each solution? How feasible and effective are each solution?

4. Implement solutions : The fourth step is to select and execute the best solution to the problem. How will you implement the solution? What are the resources and actions required to implement the solution? How will you monitor and measure the results of the solution?

5. Review and improve : The final step is to review and improve the solution based on the feedback and outcomes. What are the outcomes and impacts of the solution? What are the successes and failures of the solution? How can you improve the solution or prevent the problem from recurring?

Here are some examples of how entrepreneurs can overcome obstacles and adapt to changes using these steps:

- Example 1 : A fashion entrepreneur notices that the sales of her clothing line are declining due to a change in customer preferences. She identifies the problem as a mismatch between her products and the market demand . She analyzes the problem by conducting market research and customer surveys. She generates solutions such as redesigning her products, launching a new collection, or targeting a different segment. She implements the solution of launching a new collection that reflects the latest trends and customer feedback. She reviews and improves the solution by tracking the sales and customer satisfaction of the new collection and making adjustments as needed.

- Example 2 : A software entrepreneur faces a resource constraint due to a tight deadline and a small budget. He identifies the problem as a lack of time and money to complete his project. He analyzes the problem by estimating the scope, cost, and duration of the project. He generates solutions such as outsourcing some tasks, reducing some features, or seeking additional funding . He implements the solution of outsourcing some tasks to a reliable and affordable freelancer. He reviews and improves the solution by communicating regularly with the freelancer and ensuring the quality and timeliness of the work.

- Example 3 : A social entrepreneur has a team conflict due to a disagreement with his co-founder over the vision and direction of the venture. He identifies the problem as a lack of alignment and trust between the co-founders. He analyzes the problem by listening to and understanding the perspectives and concerns of his co-founder. He generates solutions such as compromising, collaborating, or parting ways. He implements the solution of collaborating with his co-founder to create a shared vision and mission statement that reflects their common values and goals. He reviews and improves the solution by maintaining open and honest communication and feedback with his co-founder and respecting their differences and strengths.

Overcoming Obstacles and Adapting to Change - Problem solving: How to Identify and Solve Problems as an Entrepreneur

Technology is a powerful tool that can help entrepreneurs solve problems in various domains and contexts. Whether it is finding new ways to reach customers, optimize operations, enhance products, or improve services, technology can offer innovative solutions that can save time , money, and resources. However, leveraging technology for problem-solving is not a simple task. It requires a clear understanding of the problem, the available technology, and the desired outcome. It also involves creativity, critical thinking, collaboration, and experimentation. In this section, we will explore some of the best practices and strategies for using technology to solve problems as an entrepreneur. We will also look at some examples of how technology has been used to solve real-world problems in different industries.

Some of the steps for leveraging technology for efficient problem-solving are:

1. Define the problem. The first step is to identify and understand the problem that needs to be solved. This involves asking questions such as: What is the root cause of the problem? Who are the stakeholders involved? What are the goals and objectives of solving the problem? What are the constraints and challenges? How will the problem and the solution be measured and evaluated?

2. Research the technology. The next step is to explore and evaluate the technology that can be used to solve the problem. This involves asking questions such as: What are the existing or emerging technologies that can address the problem? What are the advantages and disadvantages of each technology? How compatible and adaptable is the technology to the problem and the context? How reliable and secure is the technology? How easy and affordable is it to access and use the technology?

3. Design the solution. The third step is to design and plan the solution that will use the technology to solve the problem. This involves asking questions such as: What are the features and functions of the solution? How will the solution use the technology to achieve the desired outcome ? How will the solution integrate with the existing systems and processes ? What are the resources and skills needed to implement the solution? What are the risks and assumptions involved in the solution?

4. test and refine the solution . The fourth step is to test and refine the solution that uses the technology to solve the problem. This involves asking questions such as: How will the solution be tested and validated? What are the criteria and metrics for success? How will the feedback and data be collected and analyzed? How will the solution be improved and optimized based on the results? How will the solution be scaled and sustained over time?

5. Communicate and share the solution. The final step is to communicate and share the solution that uses the technology to solve the problem. This involves asking questions such as: How will the solution be communicated and presented to the stakeholders and the audience? How will the solution be marketed and promoted to the potential users and customers? How will the solution be documented and reported to the relevant authorities and parties? How will the solution be transferred and replicated to other problems and contexts?

Some examples of how technology has been used to solve problems as an entrepreneur are:

- Airbnb: Airbnb is a platform that connects people who have spare rooms or properties with travelers who need a place to stay. Airbnb solved the problem of finding affordable and authentic accommodation by using technology to create a peer-to-peer marketplace that enables hosts and guests to interact and transact online.

- Uber: Uber is a platform that connects people who need a ride with drivers who have a car. Uber solved the problem of finding reliable and convenient transportation by using technology to create a network of on-demand drivers who can be requested and paid via a mobile app.

- Netflix: Netflix is a platform that provides streaming video on demand (SVOD) services to subscribers. Netflix solved the problem of finding and watching quality entertainment by using technology to create a personalized and customized library of movies and shows that can be accessed and viewed anytime and anywhere.

Leveraging Technology for Efficient Problem Solving - Problem solving: How to Identify and Solve Problems as an Entrepreneur

Collaborating and seeking support from others is a crucial aspect of problem-solving as an entrepreneur . By leveraging the knowledge, skills, and perspectives of others, entrepreneurs can gain valuable insights and find innovative solutions to the challenges they face.

One perspective on collaboration is the idea that two heads are better than one. When entrepreneurs collaborate with others, they can tap into a diverse range of expertise and experiences. This can lead to a more comprehensive understanding of the problem at hand and generate a wider range of potential solutions.

Another viewpoint is the power of collective intelligence . When individuals come together to collaborate, they can collectively contribute their unique ideas and perspectives. This can result in a synergistic effect, where the whole is greater than the sum of its parts. By harnessing the collective intelligence of a group, entrepreneurs can uncover novel approaches and breakthrough solutions.

1. Building a network: Entrepreneurs can actively build a network of like-minded individuals, industry experts, mentors, and potential collaborators. This network can serve as a valuable resource for seeking support, advice, and feedback. By nurturing relationships within their network, entrepreneurs can tap into a wealth of knowledge and expertise.

2. Seeking mentorship: mentors can provide guidance , wisdom, and support to entrepreneurs. They can offer valuable insights based on their own experiences and help entrepreneurs navigate challenges more effectively. By seeking out mentors who have expertise in relevant areas, entrepreneurs can benefit from their guidance and learn from their successes and failures .

3. Joining communities and forums: Online communities and forums provide platforms for entrepreneurs to connect with others who share similar interests and challenges. These communities can be a source of support, inspiration, and collaboration. Entrepreneurs can engage in discussions, ask questions, and share their own insights, fostering a sense of community and collective problem-solving .

4. Collaborative projects: Entrepreneurs can initiate collaborative projects with other individuals or organizations. By pooling resources, skills, and knowledge, entrepreneurs can tackle complex problems that may be beyond their individual capabilities. Collaborative projects can foster creativity , innovation, and the exchange of ideas, leading to more robust and effective solutions.

5. Leveraging partnerships: Entrepreneurs can form strategic partnerships with other businesses or organizations. These partnerships can provide access to additional resources, expertise, and market opportunities. By leveraging the strengths of each partner, entrepreneurs can tackle challenges more effectively and achieve mutual growth and success .

Remember, collaboration and seeking support from others is not a sign of weakness, but rather a strategic approach to problem-solving. By embracing collaboration, entrepreneurs can tap into a wealth of knowledge, expertise, and perspectives, leading to more innovative and effective solutions.

Collaborating and Seeking Support from Others - Problem solving: How to Identify and Solve Problems as an Entrepreneur

One of the most important skills for an entrepreneur is problem-solving. Problems are inevitable in any business, and how you deal with them can make or break your success. However, problem-solving is not a static skill that you can learn once and forget. It is a dynamic and evolving process that requires continuous learning and improvement . In this section, we will explore some of the ways that you can enhance your problem-solving skills as an entrepreneur and become more effective and efficient in finding solutions.

Some of the strategies that you can use to improve your problem-solving skills are:

1. Identify the root cause of the problem. Many times, we tend to focus on the symptoms or the effects of a problem, rather than the underlying cause. This can lead to superficial or temporary solutions that do not address the core issue. To avoid this, you need to dig deeper and ask yourself why the problem exists, what are the factors that contribute to it, and how it affects your business goals. A useful tool for this is the 5 Whys technique , which involves asking "why" repeatedly until you reach the root cause. For example, if your problem is that your sales are declining, you can ask:

- Why are your sales declining? Because your customers are not satisfied with your product.

- Why are your customers not satisfied with your product? Because your product does not meet their needs or expectations.

- Why does your product not meet their needs or expectations? Because you did not conduct enough market research or user feedback before launching it.

- Why did you not conduct enough market research or user feedback ? Because you did not have enough time or resources to do so.

- Why did you not have enough time or resources to do so? Because you did not plan or prioritize your product development process properly.

By asking these questions, you can identify the root cause of your problem, which is your lack of planning and prioritization, and then work on solving it.

2. Seek multiple perspectives and opinions. Sometimes, we can get stuck in our own way of thinking and overlook other possible solutions or approaches. To overcome this, you need to seek input and feedback from different sources, such as your team members, mentors, customers, competitors, experts, or even friends and family. By doing this, you can gain new insights, ideas, perspectives, and opinions that can help you solve your problem more effectively. You can also avoid biases, assumptions, or blind spots that may hinder your problem-solving process. A useful tool for this is the Six Thinking Hats technique , which involves wearing different hats or roles to view the problem from different angles. For example, you can wear:

- The white hat to focus on the facts and data related to the problem.

- The red hat to express your emotions and feelings about the problem.

- The black hat to identify the risks and drawbacks of the problem or the solution.

- The yellow hat to highlight the benefits and opportunities of the problem or the solution .

- The green hat to generate creative and alternative solutions to the problem.

- The blue hat to manage and organize the problem-solving process.

By wearing these hats, you can expand your thinking and explore the problem from different perspectives.

3. Test and evaluate your solutions. Once you have generated some possible solutions to your problem, you need to test and evaluate them to see if they work or not. You can do this by conducting experiments, simulations, prototypes, or pilots to test your solutions in real or simulated scenarios . You can also use metrics, indicators, or criteria to measure the effectiveness, efficiency, feasibility, and desirability of your solutions. By doing this, you can validate your assumptions, gather feedback, learn from your mistakes, and improve your solutions. A useful tool for this is the plan-Do-Check-act (PDCA) cycle , which involves four steps:

- Plan your solution and how you will test it.

- Do implement your solution and collect data and feedback .

- Check analyze your data and feedback and compare it with your expected results.

- Act adjust your solution based on your analysis and feedback and repeat the cycle until you reach your desired outcome.

By following this cycle, you can test and evaluate your solutions in a systematic and iterative way.

These are some of the ways that you can improve your problem-solving skills as an entrepreneur. By applying these strategies, you can become more confident and competent in finding and implementing solutions to your business problems . Remember, problem-solving is not a one-time event, but a continuous learning and improvement process. Therefore, you should always seek new challenges, opportunities, and feedback to enhance your problem-solving skills and grow as an entrepreneur.

Continuous Learning and Improvement in Problem Solving Skills - Problem solving: How to Identify and Solve Problems as an Entrepreneur

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10-Step Problem Solving Process for Business Owners and Entrepreneurs

13 min. read

Updated November 22, 2024

When you start a small business or launch a startup, the one thing you can count on is the unexpected. No matter how thoroughly you plan, forecast, and test—problems are bound to arise. 

This is why, a key skill you must develop as an entrepreneur, is business problem solving.

What is problem solving?

Problem solving in business relates to establishing processes that mitigate or remove obstacles preventing you from reaching strategic goals. 

These are typically complex issues that create a gap between actual results and your desired outcome. They may be present in a single team, operational process, or throughout your organization, typically without an immediate or obvious solution. 

To find effective solutions, you need to establish consistent problem solving methods that help you: 

• • Explore solutions
• • Prioritize execution
• • Measure success

This should be similar to how you review business performance during a monthly plan review . 

You work through the same documentation, look for gaps, dig deeper to identify the root cause of the problem, and hash out options. 

Without this process, you can’t expect to solve problems efficiently or effectively. 

Why problem solving is important for your business

While some would say problem-solving comes naturally, it’s actually a skill you can grow and refine over time. 

The best business leaders didn’t just find a magic solution to solve their problems, they built processes and leveraged tools to find success. And you can do the same.

I’ll take you through the process, step-by-step, so you can confidently tackle any type of problem. 

1. Define the problem

When a problem arises, it’s all too easy to jump into finding a solution. 

While taking action is admirable, if you don’t correctly identify the source of the problem, you may not solve it. You just treat the symptoms, get short-term relief, and the likely possibility of the issue resurfacing.

For instance, if you realize that your sales from new customers are dropping, your first inclination might be to rush into upping your marketing spend to increase exposure. 

But what if decreasing sales are just a symptom of the real problem ?

You want to be sure you’re not missing the forest for the trees. 

So, whenever you have a large issue, take the time to look at it from multiple angles. While not exhaustive, here are a few places to start with:

Competition 

• • Is a competitor’s promotion or pricing affecting your sales?
• • Are there new entrants in your market ?
• • How are they marketing their product or business?

Business model 

• • Is your business model sustainable?
• • Is it realistic for how fast you want to grow?
• • Should you explore different pricing or cost strategies?

Market factors

• • Are world events, social trends, or your nation’s economy impacting customer spending?
• • Are there supply chain changes impacting your expenses or distribution processes?
• • Are there any issues affecting your team?
• • Do they have the tools and resources they need to succeed?

Goal alignment 

• • Is everyone on your team working toward the same goal ?
• • Have you communicated short-term and long-term business goals clearly and often?

Back to our example: By looking at every facet of your business, you may discover you’re already spending more on advertising than your competitors. Instead, a communication gap within your team is leading to the mishandling of new customers and therefore lost sales. 

If you jumped into fixing your brand exposure with more ads, you would have been dumping more money into an area you’re already winning. Potentially leading to greater losses as more and more new customers are dropped due to poor internal communication.

This is why it’s so vital that you explore your blind spots and track the problem to its source.

2. Conduct a SWOT analysis

All good businesses solve some sort of problem for customers. 

What if your particular business problem is an opportunity? What if it’s a strength if considered from a different angle? 

You’ll want to conduct a SWOT analysis to determine if that is the case. 

SWOT is a great tool to use whenever you’re looking at investing resources to solve a problem. It can help you avoid implementing a solution where the chances of success are low due to your current internal or external positioning.

You may even want to use this analysis when defining your problem—as it immediately frames problems and solutions through the lens of specific strengths and weaknesses of your business. Then use any opportunities or threats you identify to kickstart a solution.

If you’re not a fan of using SWOT as a problem-solving technique, there are plenty of other alternative frameworks to use. All that matters is that it helps you further identify the problem and what potential solutions may require.

3. Identify multiple solutions with design thinking

The worst thing you can do is limit your solutions. If you do, you may miss out on solutions that lead to better, cheaper, or faster results.

That’s why you may want to use the design thinking approach . It’s often used by organizations looking to solve big, community-based problems and emphasizes rapid iteration by opening up the floor to any and all ideas. 

One of the strengths of design thinking is that it brings a wide range of people into the problem-solving process. Allowing multiple perspectives and solutions to arise.

This approach—applying your company’s skills and expertise to a problem in the market—is the basis for design thinking.

It’s not about finding and solving the most complex problems, but common needs within the organization and in the real world. 

When you’re solving business problems, this applies in the sense that you’re looking for solutions that address underlying issues—you’re looking at the big picture.

4. Conduct market research and customer outreach

Market research and customer interviews aren’t meant to be done once and forgotten about. No, customer feedback should be something that you seek out frequently to ensure you’re meeting customer needs. 

Now, market research and the insights you get from customer outreach aren’t a silver bullet. Many companies struggle with what they should do with conflicting data points. But it’s worth gathering information that can help you better understand your target market. 

Plus, your customers can be one of the best sources of criticism. It’s a gift if you can avoid taking the negatives personally.

The worst thing you can do when facing challenges is to isolate yourself from your customers. 

So, if you haven’t been already, survey your customers. Talk to them. Take their feedback to heart and use it to further define the problem and potential solutions. 

5. Seek input from your team and your mentors

Hopefully, you haven’t waited to involve team members until five steps into solving a problem. If you have, it’s still not too late to reap the benefits of collaborating with others.

Ideally, you bring in different contributors throughout to express concerns, opinions, and ideas . Their feedback is going to help you move faster and more efficiently. 

If you have a team in place, bring them into the discussion. You hired them to be experts in their area; use their expertise to navigate and dig deeper into underlying causes of problems and potential solutions.

Quoting Stephen Covey, “strength lies in differences, not in similarities.” The more diverse a team is, the more often innovative solutions to the problems faced by the organization appear.

It has been found that groups that show greater diversity were better at solving problems than groups made up specifically of highly skilled problem solvers. So whoever you bring in to help you problem-solve, resist the urge to surround yourself with people who already agree with you about everything

If you’re running your business solo, bring in a trusted mentor instead. 

SCORE offers a free business mentorship program if you don’t already have one. It can also be helpful to connect with a business advisor , especially if business financials aren’t your strongest suit.

6. Apply growth planning for nimble execution

So you do your SWOT analysis and your design thinking exercise. You come up with a set of strong, data-driven ideas. However, implementing them requires you to adjust your budget, your strategic plan, or even your understanding of your target market.

Are you willing to change course? Can you quickly make adjustments? Well to grow, you can’t be afraid to be nimble. 

By adopting the growth planning method —plan, project, review, and revise—you can shift your strategies more fluidly. 

You don’t want to change course every week, and you don’t want to fall victim to shiny object thinking. But you can strike a balance to reduce your business’s risk while keeping your team heading in the right direction.

Along the way, you’ll make strategic decisions that don’t pan out how you hoped. The best thing you can do is test your ideas and iterate often to avoid wasting money and resources on things that don’t work. 

That’s growth planning in action.

7. Model different financial scenarios

Now, you have a detailed understanding of your problem and one or two solutions in mind. However, even with all of this planning and analysis, things are bound to change. 

Luckily, you can minimze your risk and plan how you’ll react if things go better or worse than expected, by developing a few different financial forecast scenarios. 

You might find that the idea that seemed the strongest will take longer than you thought to reverse a negative financial trend. Or another requires so much up front investment that it risks draining your cash reserves before any gains are realized.

Even if the answers aren’t as obvious as those examples, at the very least you’ll understand the financial impact of moving in a different direction.

The real benefit here is looking at different tactical approaches to the same problem. Maybe instead of increasing sales right now, you’re better off in the long run if you adopt a strategy to reduce churn and retain your best customers. 

You won’t know unless you model a few different scenarios. You can do this work with a customized spreadsheet or a dedicated forecasting tool like LivePlan.

8. Watch your cash flow

While you’re working to solve a challenging business problem, pay particular attention to your cash flow and your cash flow forecast . 

Understanding when your company is at risk of running out of cash in the bank can help you be proactive. It’s a lot easier to get a line of credit while your financials still look good and healthy, than when you’re one pay period away from ruin.

Remember, it’s easy to get tunnel vision. You’ll benefit from maintaining a little breathing room for your business as you figure out what to do next.

9. Use a decision-making framework

Once you’ve gathered all the information you need, generated a number of ideas, and done some financial modeling, you might still feel uncertain. 

It’s natural—you’re not a fortune-teller. You’re trying to make the best decision you can with the information you have. This is why it may be helpful to use a simple decision matrix to put everything you’ve learned on the table.

Whatever format you use to make a final decision—just stick with it. Like all the SWOT analysis alternatives, these decision frameworks all do the same thing. 

The important thing is that it makes it easy to bring everything together, review what each solution requires, and quickly move forward.  

10. Identify key metrics to track

How will you know your problem is solved? And not just the symptom—how will you know when you’ve addressed the underlying issues? 

Well, that requires you to define what success looks like. And it doesn’t have to be as complicated or daunting as that may sound.

Just decide on a few key performance indicators . 

Take a baseline measurement, and set a goal and a timeframe. You’re essentially translating your solution into a plan, complete with milestones and goals. Without these, you’ve simply made a blind decision with no way to track success. 

You need those goals and milestones to make your plan real .

Problem solving skills to improve

As you and your team work through this process, there are specific problem solving skills you should continue to develop.

Emotional intelligence

It can be very easy to make quick, emotional responses during a crisis or when discussing something you’re passionate about. 

You need to avoid making assumptions and letting your emotions get the best of you, by focusing on empathizing with others. This involves understanding your own emotional state and reactions—while also listening carefully to your team. 

The better you listen and keep your emotions in check, the better you’ll be at asking for and taking advice that leads to effective problem solving.

Jumping right into a solution can immediately kill the possibility of solving your problem. 

Just like when you start a business , you need to research what the problem you’re solving is. Luckily, you can embed research into your problem solving by holding active reviews of financial performance and team processes.

Simply asking “What? Where? When? How?” can lead to more in-depth explorations of potential issues.

The best thing you can do to grow your research abilities is to encourage and practice curiosity. Look at every problem as an opportunity. Something that may be trouble now, but is worth exploring and finding the right solution. 

You’ll pick up best practices, useful tools and fine-tune your own research process the more you’re willing to explore.

Brainstorming

Creatively brainstorming with your team is somewhat of an art form.

There needs to be a willingness to throw everything at the wall and act as if nothing is a bad idea at the start. This style of collaboration encourages participation without fear of rejection. It also helps outline potential solutions outside of your current scope, that you can refine and turn into realistic action.

Work on breaking down problems and try to give everyone in the room a voice. The more input you allow, the greater potential for finding the best solution.

Decisiveness

One thing that can drag out acting upon a potential solution, is being indecisive.

If you aren’t willing to state when the final cutoff for deliberation is, you won’t take steps quickly enough. This is when having a process for problem solving comes in handy, as it purposefully outlines when you should start taking action.

Work on choosing decision-makers, identify necessary results, and be prepared to analyze and adjust if necessary. You don’t have to get it right every time, but taking action at the right time, even if it fails, is almost more vital than never taking a step.  

Stemming off failure, you need to learn to be resilient. Again, no one gets it perfect every single time.

There are so many factors to consider and sometimes even the most well-thought-out solution doesn’t stick. Instead of being down on yourself or your team, separate yourself from the problem and continue to think of it as a puzzle worth solving. 

Every failure is a learning opportunity that only helps you further refine and eliminate issues in your strategy.

Problem solving is a process

The key to effective problem-solving in business is the ability to adapt. You can waste a lot of resources by staying on the wrong course for too long. 

So make a plan to reduce your risk now. 

Consider what you’ll do when faced with a problem large enough to sink your business. Be as proactive as you can, develop the necessary skills, and test multiple approaches to problem solving (even outside of the process listed here).

Lastly, explore tools that will help you create plans and track your progress. At a minimum, use performance dashboard software to make critical business information readily available. 

This will make it much easier to identify problems, dig into what’s causing them, and immediately measure the impact of your decisions. 

Just remember, a tool cannot replace your ability to problem solve. Focus on adopting a consistent process first—then look for ways to improve it. 

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Harriet Genever

Harriet Genever is a freelance writer and copyeditor, specializing in blog posts, research articles and customer case studies. As the founder of her Australian-based business, Write Beyond, she works with B2B companies and small business, developing compelling content to attract customers and keep them engaged. With a background in Human Resource Management, Harriet enjoys the personal interaction with clients and their customers when working on writing projects. She is also a true believer that the key to success in any business is its people.

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