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What Is Problem Solving in Business?

Problem-solving in business is defined as implementing processes that reduce or remove obstacles that are preventing you or others from accomplishing operational and strategic business goals.

In business, a problem is a situation that creates a gap between the desired and actual outcomes. In addition, a true problem typically does not have an immediately obvious resolution.

Business problem-solving works best when it is approached through a consistent system in which individuals:

• Identify and define the problem
• Prioritize the problem based on size, potential impact, and urgency
• Complete a root-cause analysis
• Develop a variety of possible solutions
• Evaluate possible solutions and decide which is most effective
• Plan and implement the solution

Why Is Problem-Solving Important in Business?

Understanding the importance of problem-solving skills in the workplace will help you develop as a leader. Problem-solving skills will help you resolve critical issues and conflicts that you come across. Problem-solving is a valued skill in the workplace because it allows you to:

• Apply a standard problem-solving system to all challenges
• Find the root causes of problems
• Quickly deal with short-term business interruptions
• Form plans to deal with long-term problems and improve the organization
• See challenges as opportunities
• Keep your cool during challenges

How Do You Solve Business Problems Effectively?

There are many different problem-solving strategies, but most can be broken into general steps. Here is a six-step method for business problem solving:

1) Identify the Details of the Problem: Gather enough information to accurately define the problem. This can include data on procedures being used, employee actions, relevant workplace rules, and so on. Write down the specific outcome that is needed, but don’t assume what the solution should be.

• Use the Five Whys: When assessing a problem, a common strategy is to ask “why” five times. First, ask why the problem occurred. Then, take the answer and ask “why” again, and so on. The intention is to help you get down to the root cause of the problem so you can directly target that core issue with your solution.

2) Creatively Brainstorm Solutions:   State every solution you can think of. Write them down. Seek input from those who possess in-depth knowledge of or experience with the problem you’re trying to solve. These insights will provide you with valuable perspectives you can transform into tangible and impactful solutions.

3) Evaluate Solutions and Make a Decision:   Assess the feasibility of each solution. Is the deadline realistic? Are there readily available resources you can leverage to successfully implement the solution? What is the return on investment of each solution? If necessary, come up with alternative solutions or adjust the initial ones you brainstormed in step 2.

4) Make a Decision: Finally, make a firm decision on one solution. This final solution should clearly address the root cause of the problem.

• Perform a SWOT Analysis: You can use a SWOT analysis to help you decide on the best solution. A SWOT analysis involves identifying the strengths, weaknesses, opportunities, and threats linked to a specific decision. With this framework, your team can assess a decision from various angles, thereby gaining a holistic view of it.

5) Take Action:   Write up a detailed plan. This involves developing a comprehensive roadmap that outlines the steps required to implement your solution. The steps should specify milestones, deadlines, roles, and how to obtain the necessary approvals. To ensure accountability, your entire team should have access to this action plan. Each team member should be able to track and share their progress with the group.

6) Gather and Share Feedback: Problem-solving is not a “set it and forget it” process. It’s a dynamic journey that necessitates ongoing attention, deliberation, and refinement to achieve optimal results. Thus, periodic feedback is critical in validating whether the chosen solution creates the desired impact. It allows key stakeholders to check in and make any necessary changes.

What Are Problem-Solving Skills?

Problem-solving skills are specific procedures that can be used to complete one or more of the six general steps of problem-solving (discussed above). Here are five important examples:

Using Emotional Intelligence: You’ll solve problems more calmly when you learn to recognize your own emotional patterns and to empathize with and guide the emotions of others. Avoid knee-jerk responses and making assumptions.

Researching Problems: An effective solution requires an accurate description of the problem. Define simple problems using quick research methods such as asking, “What? Where? When? and How much?.” Difficult problems require more in-depth research, such as data exploration, surveys, and interviews.

Creative Brainstorming: When brainstorming with a group, encourage idea creation by listening attentively to everyone, and recognizing everyone’s unique contributions.

Logical Reasoning: Develop standard logical steps for analyzing possible solutions to problems. Study and apply ideas about logical fallacies, deductive reasoning, and other areas of analytical thought.

Decisiveness: Use an agreed-upon system for choosing a solution, which can include assigning pros and cons to solutions, identifying mandatory results, getting feedback about solutions, choosing the decision-maker(s), and finishing or repeating the process.

How Can You Improve Your Problem-Solving Skills?

Learning how to solve business problems takes time and effort. Though some people appear to have been born with superior problem-solving skills, great problem-solvers usually have taken the time to refine their abilities. You can develop high-level skills for solving problems too, through the following methods:

Ask and Listen: Don’t expect to solve every problem alone. Ask for advice, and listen to it carefully.

Practice Curiosity: Any time you’re involved in solving a problem, practice researching and defining the problem just a little longer than you would naturally.

Break Down Problems: Whenever possible, break large problems into their smallest units. Then, search for solutions to one unit at a time.

Don’t Label Yourself Negatively: Don’t allow a problem to mean something negative about you personally. Separate yourself from it. Look at it objectively and be part of the solution.

Enhance Your Problem-Solving Skills with CMOE

Problem-solving skills in business are not developed overnight. Developing then takes ongoing practice and the right guidance to get right. We encourage you to leverage CMOE’s Problem-Solving and Decision Making in the Workplace workshop to further develop your skills. We’ll help you identify new ways to solve problems methodically so you can create greater impact.

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Why Problem-Solving Skills Are Essential for Leaders in Any Industry

• 17 Jan 2023

Any organization offering a product or service is in the business of solving problems.

Whether providing medical care to address health issues or quick convenience to those hungry for dinner, a business’s purpose is to satisfy customer needs .

In addition to solving customers’ problems, you’ll undoubtedly encounter challenges within your organization as it evolves to meet customer needs. You’re likely to experience growing pains in the form of missed targets, unattained goals, and team disagreements.

Yet, the ubiquity of problems doesn’t have to be discouraging; with the right frameworks and tools, you can build the skills to solve consumers' and your organization’s most challenging issues.

Here’s a primer on problem-solving in business, why it’s important, the skills you need, and how to build them.

Access your free e-book today.

What Is Problem-Solving in Business?

Problem-solving is the process of systematically removing barriers that prevent you or others from reaching goals.

Your business removes obstacles in customers’ lives through its products or services, just as you can remove obstacles that keep your team from achieving business goals.

Design Thinking

Design thinking , as described by Harvard Business School Dean Srikant Datar in the online course Design Thinking and Innovation , is a human-centered , solutions-based approach to problem-solving and innovation. Originally created for product design, design thinking’s use case has evolved . It’s now used to solve internal business problems, too.

The design thinking process has four stages :

• Clarify: Clarify a problem through research and feedback from those impacted.
• Ideate: Armed with new insights, generate as many solutions as possible.
• Develop: Combine and cull your ideas into a short list of viable, feasible, and desirable options before building prototypes (if making physical products) and creating a plan of action (if solving an intangible problem).
• Implement: Execute the strongest idea, ensuring clear communication with all stakeholders about its potential value and deliberate reasoning.

Using this framework, you can generate innovative ideas that wouldn’t have surfaced otherwise.

Creative Problem-Solving

Another, less structured approach to challenges is creative problem-solving , which employs a series of exercises to explore open-ended solutions and develop new perspectives. This is especially useful when a problem’s root cause has yet to be defined.

You can use creative problem-solving tools in design thinking’s “ideate” stage, which include:

• Brainstorming: Instruct everyone to develop as many ideas as possible in an allotted time frame without passing judgment.
• Divergent thinking exercises: Rather than arriving at the same conclusion (convergent thinking), instruct everyone to come up with a unique idea for a given prompt (divergent thinking). This type of exercise helps avoid the tendency to agree with others’ ideas without considering alternatives.
• Alternate worlds: Ask your team to consider how various personas would manage the problem. For instance, how would a pilot approach it? What about a young child? What about a seasoned engineer?

It can be tempting to fall back on how problems have been solved before, especially if they worked well. However, if you’re striving for innovation, relying on existing systems can stunt your company’s growth.

Related: How to Be a More Creative Problem-Solver at Work: 8 Tips

Why Is Problem-Solving Important for Leaders?

While obstacles’ specifics vary between industries, strong problem-solving skills are crucial for leaders in any field.

Whether building a new product or dealing with internal issues, you’re bound to come up against challenges. Having frameworks and tools at your disposal when they arise can turn issues into opportunities.

As a leader, it’s rarely your responsibility to solve a problem single-handedly, so it’s crucial to know how to empower employees to work together to find the best solution.

Your job is to guide them through each step of the framework and set the parameters and prompts within which they can be creative. Then, you can develop a list of ideas together, test the best ones, and implement the chosen solution.

Related: 5 Design Thinking Skills for Business Professionals

4 Problem-Solving Skills All Leaders Need

1. problem framing.

One key skill for any leader is framing problems in a way that makes sense for their organization. Problem framing is defined in Design Thinking and Innovation as determining the scope, context, and perspective of the problem you’re trying to solve.

“Before you begin to generate solutions for your problem, you must always think hard about how you’re going to frame that problem,” Datar says in the course.

For instance, imagine you work for a company that sells children’s sneakers, and sales have plummeted. When framing the problem, consider:

• What is the children’s sneaker market like right now?
• Should we improve the quality of our sneakers?
• Should we assess all children’s footwear?
• Is this a marketing issue for children’s sneakers specifically?
• Is this a bigger issue that impacts how we should market or produce all footwear?

While there’s no one right way to frame a problem, how you do can impact the solutions you generate. It’s imperative to accurately frame problems to align with organizational priorities and ensure your team generates useful ideas for your firm.

To solve a problem, you need to empathize with those impacted by it. Empathy is the ability to understand others’ emotions and experiences. While many believe empathy is a fixed trait, it’s a skill you can strengthen through practice.

When confronted with a problem, consider whom it impacts. Returning to the children’s sneaker example, think of who’s affected:

• Your organization’s employees, because sales are down
• The customers who typically buy your sneakers
• The children who typically wear your sneakers

Empathy is required to get to the problem’s root and consider each group’s perspective. Assuming someone’s perspective often isn’t accurate, so the best way to get that information is by collecting user feedback.

For instance, if you asked customers who typically buy your children’s sneakers why they’ve stopped, they could say, “A new brand of children’s sneakers came onto the market that have soles with more traction. I want my child to be as safe as possible, so I bought those instead.”

When someone shares their feelings and experiences, you have an opportunity to empathize with them. This can yield solutions to their problem that directly address its root and shows you care. In this case, you may design a new line of children’s sneakers with extremely grippy soles for added safety, knowing that’s what your customers care most about.

Related: 3 Effective Methods for Assessing Customer Needs

3. Breaking Cognitive Fixedness

Cognitive fixedness is a state of mind in which you examine situations through the lens of past experiences. This locks you into one mindset rather than allowing you to consider alternative possibilities.

For instance, your cognitive fixedness may make you think rubber is the only material for sneaker treads. What else could you use? Is there a grippier alternative you haven’t considered?

Problem-solving is all about overcoming cognitive fixedness. You not only need to foster this skill in yourself but among your team.

4. Creating a Psychologically Safe Environment

As a leader, it’s your job to create an environment conducive to problem-solving. In a psychologically safe environment, all team members feel comfortable bringing ideas to the table, which are likely influenced by their personal opinions and experiences.

If employees are penalized for “bad” ideas or chastised for questioning long-held procedures and systems, innovation has no place to take root.

By employing the design thinking framework and creative problem-solving exercises, you can foster a setting in which your team feels comfortable sharing ideas and new, innovative solutions can grow.

How to Build Problem-Solving Skills

The most obvious answer to how to build your problem-solving skills is perhaps the most intimidating: You must practice.

Again and again, you’ll encounter challenges, use creative problem-solving tools and design thinking frameworks, and assess results to learn what to do differently next time.

While most of your practice will occur within your organization, you can learn in a lower-stakes setting by taking an online course, such as Design Thinking and Innovation . Datar guides you through each tool and framework, presenting real-world business examples to help you envision how you would approach the same types of problems in your organization.

Are you interested in uncovering innovative solutions for your organization’s business problems? Explore Design Thinking and Innovation —one of our online entrepreneurship and innovation courses —to learn how to leverage proven frameworks and tools to solve challenges. Not sure which course is right for you? Download our free flowchart .

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10 Step Process for Effective Business Problem Solving

Posted august 3, 2021 by harriet genever.

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 as an entrepreneur, you need to know how to solve business problems effectively.

What is problem solving in business?

Problem solving in business relates to establishing processes that mitigate or remove obstacles currently 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 entire organization, typically without an immediate or obvious solution. 

To approach problem solving successfully, you need to establish consistent processes that help you evaluate, explore solutions, prioritize execution, and measure success. In many ways, it should be similar to how you review business performance through a monthly plan review . You work through the same documentation, look for gaps, dig deeper to identify the root cause, and hash out options. Without this process, you simply cannot 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. Problem solving skills will help you and your team tackle critical issues and conflicts as they arise. It starts from the top. You as the business owner or CEO needing to display the type of level-headed problem solving that you expect to see from your employees.

Doing so will help you and your staff quickly deal with issues, establish and refine a problem solving process, turn challenges into opportunities, and generally keep a level head. Now, 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.

By following this 10-step process, you can develop your problem-solving skills and approach any issue that arises with confidence. 

1. Define the problem

When a problem arises, it can be very easy to jump right into creating a solution. However, if you don’t thoroughly examine what led to the problem in the first place, you may create a strategy that doesn’t actually solve it. You may just be treating the symptoms.

For instance, if you realize that your sales from new customers are dropping, your first inclination might be to rush into putting together a marketing plan to increase exposure. But what if decreasing sales are just a symptom of the real problem? 

When you define the problem, you want to be sure you’re not missing the forest for the trees. If you have a large issue on your hands, you’ll want to look at it from several different angles:

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

How are world events and the nation’s economy affecting your customers and your sales?

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 your short-term and long-term business goals clearly and often?

There are a lot of ways to approach the issue when you’re facing a serious business problem. The key is to make sure you’re getting a full snapshot of what’s going on so you don’t waste money and resources on band-aid solutions. 

Going back to our example, by looking at every facet of your business, you may discover that you’re spending more on advertising than your competitors already. And instead, there’s a communication gap within your team that’s leading to the mishandling of new customers and therefore lost sales. 

If you jumped into fixing the exposure of your brand, 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 actually an opportunity, or even a strength if considered from a different angle? This is when you’d want to conduct a SWOT analysis to determine if that is in fact the case.

SWOT is a great tool for strategic planning and bringing multiple viewpoints to the table when you’re looking at investing resources to solve a problem. This may even be incorporated in your attempts to identify the source of your problem, as it can quickly outline specific strengths and weaknesses of your business. And then by identifying any potential opportunities or threats, you can utilize your findings to kickstart a solution. 

3. Identify multiple solutions with design thinking

As you approach solving your problem, you may want to consider using the design thinking approach . It’s often used by organizations looking to solve big, community-based problems. One of its strengths is that it requires involving a wide range of people in the problem-solving process. Which leads to multiple perspectives and solutions arising.

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 the most complex problems to solve, but about finding common needs within the organization and in the real world and coming up with solutions that fit those needs. 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 outreach aren’t the sorts of things small business owners and startups can do once and then cross off the list. When you’re facing a roadblock, think back to the last time you did some solid market research or took a deep dive into understanding the competitive landscape .

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 struggling through and 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 actually a gift if you can avoid taking the negatives personally .

The worst thing you can do when you’re facing challenges is isolating yourself from your customers and ignore your competition. So survey your customers. Put together a competitive matrix . 

5. Seek input from your team and your mentors

Don’t do your SWOT analysis or design thinking work by yourself. The freedom to express concerns, opinions, and ideas will allow people in an organization to speak up. 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.

If you’re running your business solo, at least bring in a trusted mentor. SCORE offers a free business mentorship program if you don’t already have one. It can also be helpful to connect with a strategic business advisor , especially if business financials aren’t your strongest suit.

Quoting Stephen Covey, who said that “strength lies in differences, not in similarities,” speaking to the importance of diversity when it comes to problem-solving in business. The more diverse a team is , the more often innovative solutions to the problems faced by the organization appear.

In fact, 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.

6. Apply lean 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. But implementing them requires you to adjust your budget, or your strategic plan, or even your understanding of your target market.

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

By adopting the lean business planning method —the process of revising your business strategy regularly—you’ll be able to 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 that allows you 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 the way you hoped. The best thing you can do is test your ideas and iterate often so you’re not wasting money and resources on things that don’t work. That’s Lean Planning .

7. Model different financial scenarios

When you’re trying to solve a serious business problem, one of the best things you can do is build a few different financial forecasts so you can model different scenarios. You might find that the idea that seemed the strongest will take longer than you thought to reverse a negative financial trend. At the very least you’ll have better insight into 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 by using spreadsheets, and a tool like LivePlan can make it easier and quicker.

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.

If you’re dealing with a serious issue, it’s easy to start 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 article offers a really useful approach to making decisions. It starts with putting your options into a matrix like this one:

Use this sort of framework to put everything you’ve learned out on the table. If you’re working with a bigger team, this sort of exercise can also bring the rest of your team to the table so they feel some ownership over the outcome.

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? Before you dive into enacting the solution, make sure you know what success looks like.

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, it’s worth keeping in mind specific problem solving skills you should continue to develop. Bolstering your ability, as well as your team, to solve problems effectively will only make this process more useful and efficient. Here are a few key skills to work on.

Emotional intelligence

It can be very easy to make quick, emotional responses in a time of crisis or when discussing something you’re passionate about. To avoid making assumptions and letting your emotions get the best of you, you need to focus on empathizing with others. This involves understanding your own emotional state, reactions and listening carefully to the responses of your team. The more you’re able to listen carefully, the better you’ll be at asking for and taking advice that actually 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 do the research into what the problem you’re solving actually 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 you have 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 simply 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 in play to consider and sometimes even the most well-thought-out solution doesn’t stick. Instead of being down on yourself or your team, look to separate yourself from the problem and continue to think of it as a puzzle worth solving. Every failure is a learning opportunity and it 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 on staying the wrong course for too long. So make a plan to reduce your risk now. Think about what you’d do if you were faced with a problem large enough to sink your business. Be as proactive as you can.

Editor’s note: This article was originally published in 2016. It was updated in 2021.

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Effective Problem-Solving Techniques in Business

Problem solving is an increasingly important soft skill for those in business. The Future of Jobs Survey by the World Economic Forum drives this point home. According to this report, complex problem solving is identified as one of the top 15 skills that will be sought by employers in 2025, along with other soft skills such as analytical thinking, creativity and leadership.

Dr. Amy David , clinical associate professor of management for supply chain and operations management, spoke about business problem-solving methods and how the Purdue University Online MBA program prepares students to be business decision-makers.

Why Are Problem-Solving Skills Essential in Leadership Roles?

Every business will face challenges at some point. Those that are successful will have people in place who can identify and solve problems before the damage is done.

“The business world is constantly changing, and companies need to be able to adapt well in order to produce good results and meet the needs of their customers,” David says. “They also need to keep in mind the triple bottom line of ‘people, profit and planet.’ And these priorities are constantly evolving.”

To that end, David says people in management or leadership need to be able to handle new situations, something that may be outside the scope of their everyday work.

“The name of the game these days is change—and the speed of change—and that means solving new problems on a daily basis,” she says.

The pace of information and technology has also empowered the customer in a new way that provides challenges—or opportunities—for businesses to respond.

“Our customers have a lot more information and a lot more power,” she says. “If you think about somebody having an unhappy experience and tweeting about it, that’s very different from maybe 15 years ago. Back then, if you had a bad experience with a product, you might grumble about it to one or two people.”

David says that this reality changes how quickly organizations need to react and respond to their customers. And taking prompt and decisive action requires solid problem-solving skills.

What Are Some of the Most Effective Problem-Solving Methods?

David says there are a few things to consider when encountering a challenge in business.

“When faced with a problem, are we talking about something that is broad and affects a lot of people? Or is it something that affects a select few? Depending on the issue and situation, you’ll need to use different types of problem-solving strategies,” she says.

Using Techniques

There are a number of techniques that businesses use to problem solve. These can include:

• Five Whys : This approach is helpful when the problem at hand is clear but the underlying causes are less so. By asking “Why?” five times, the final answer should get at the potential root of the problem and perhaps yield a solution.
• Gap Analysis : Companies use gap analyses to compare current performance with expected or desired performance, which will help a company determine how to use its resources differently or adjust expectations.
• Gemba Walk : The name, which is derived from a Japanese word meaning “the real place,” refers to a commonly used technique that allows managers to see what works (and what doesn’t) from the ground up. This is an opportunity for managers to focus on the fundamental elements of the process, identify where the value stream is and determine areas that could use improvement.
• Porter’s Five Forces : Developed by Harvard Business School professor Michael E. Porter, applying the Five Forces is a way for companies to identify competitors for their business or services, and determine how the organization can adjust to stay ahead of the game.
• Six Thinking Hats : In his book of the same name, Dr. Edward de Bono details this method that encourages parallel thinking and attempting to solve a problem by trying on different “thinking hats.” Each color hat signifies a different approach that can be utilized in the problem-solving process, ranging from logic to feelings to creativity and beyond. This method allows organizations to view problems from different angles and perspectives.
• SWOT Analysis : This common strategic planning and management tool helps businesses identify strengths, weaknesses, opportunities and threats (SWOT).

“We have a lot of these different tools,” David says. “Which one to use when is going to be dependent on the problem itself, the level of the stakeholders, the number of different stakeholder groups and so on.”

Each of the techniques outlined above uses the same core steps of problem solving:

• Identify and define the problem
• Consider possible solutions
• Evaluate options
• Choose the best solution
• Implement the solution
• Evaluate the outcome

Data drives a lot of daily decisions in business and beyond. Analytics have also been deployed to problem solve.

“We have specific classes around storytelling with data and how you convince your audience to understand what the data is,” David says. “Your audience has to trust the data, and only then can you use it for real decision-making.”

Data can be a powerful tool for identifying larger trends and making informed decisions when it’s clearly understood and communicated. It’s also vital for performance monitoring and optimization.

How Is Problem Solving Prioritized in Purdue’s Online MBA?

The courses in the Purdue Online MBA program teach problem-solving methods to students, keeping them up to date with the latest techniques and allowing them to apply their knowledge to business-related scenarios.

“I can give you a model or a tool, but most of the time, a real-world situation is going to be a lot messier and more valuable than what we’ve seen in a textbook,” David says. “Asking students to take what they know and apply it to a case where there’s not one single correct answer is a big part of the learning experience.”

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What Is Problem-Solving? How to Use Problem-Solving Skills to Resolve Issues

Great businesses don’t exist to simply grow and make money. Instead, they solve the world’s problems , from tiny issues to giant dilemmas. Problem-solving is essentially the main function of organizations. An effective organization will have systems and processes in place to reach their goals and solve problems. If a company has team members and leaders who have poor problem-solving skills, that means they’re ineffective at one of the core functions of a business.

What Is Problem-Solving?

What is the general process of problem-solving, 1. define the problem, 2. brainstorm possible solutions, 3. research several options.

After you’ve come up with several possible alternative solutions, pick two or three that seem the most promising using your analytical skills. Then you’ll need to buckle down and do some research to see which one to pursue. Conduct your research using primary and secondary resources.

4. Select a Solution

In order to make the most objective decision:

5. Develop an Action Plan

When the right choice is made, and the solution is placed into the overall strategy, start developing an action plan . Lay out the “who,” “what,” “when,” “why,” and “how.” Visualize exactly what success looks like with this new plan. When working through the problem-solving process, write all the details down. This helps leaders construct action items and delegate them accordingly. Never leave this part of the process empty-handed. Your team needs a clear picture of expectations so they can properly implement the solution. And if everything works, you can use this problem-solving model in the future.

The Best Problem-Solving Strategies and Tools

One of the best ways to discover the root cause of a problem is by utilizing the 5 Whys method. This strategy was developed by Sakichi Toyoda, founder of Toyota Industries. It’s as simple as it sounds. When a problem occurs, ask why it happened five times. In theory, the last answer should get to the heart of the issue.

First Principles Thinking

When one engages in first principles thinking , they end up questioning what everyone just assumes to be true. It effectively removes those assumptions , breaking things down into their most basic elements that are probably true. It’s all about getting to that core foundation of truth and building out from there. Problem-solving skills should always include first principles thinking.

Steve Jobs’ Problem-Solving Method

What to do when a problem feels too big to solve.

Tackling a problem that feels too big to solve requires a can-do, positive mindset. In order to improve your problem-solving, you’ll need to take remember these steps. Imagine what is possible instead of focusing on what seems impossible. As you do so, you’ll become skilled in solving all sorts of problems while also improving your decision-making.

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9 Keys to Solving Problems in Business Quickly and Effectively

Problem-solving in business takes self-discipline and focus, but is a skill that must be learned..

Creating a new business , or working in an existing one, is all about problem solving. Some people are good at it and some are not -  independent of their IQ  or their book smarts (there may even be an inverse relationship here). Yet I'm convinced that problem-solving is a  learnable trait , rather than just a birthright.

Business owners who are great problem solvers within any business are the best prepared to solve their customers' needs effectively as well. In fact, every business is about solutions to customer problems - no problems, no business. Problems are an everyday part of every business and personal environment.

Thus it behooves all of us to work on mastering the discipline of problem solving. Here is a formula from Brian Tracy, in his classic book No Excuses! The Power of Self-Discipline  that I believe will help business professionals move up a notch in this category:

1. Take the time to define the problem clearly. 

Many business leaders like to jump into solution mode immediately, even before they understand the issue. In some cases, a small problem can become a big one if you attack it with inappropriate actions. In all cases, real clarity will expedite the path ahead. 

2. Pursue alternate paths on "facts of life" and opportunities. 

Remember, there are some things that you can do nothing about. They're not problems; they are merely facts of life, like natural disasters. Often, what appears to be a problem is actually an opportunity in disguise. 

3. Challenge the definition from all angles. 

Beware of any problem for which there is only one definition. The more ways you can define a problem, the more likely it is that you will find the best solution. For example, "sales are too low" may mean strong competitors, ineffective advertising, or a poor sales process. 

4. Iteratively question the cause of the problem. 

This is all about finding the root cause, rather than treating a symptom. If you don't get to the root, the problem will likely recur, perhaps with different symptoms. Don't waste time re-solving the same problem. 

5. Identify multiple possible solutions. 

The more possible solutions you develop, the more likely you will come up with the right one. The quality of the solution seems to be in direct proportion to the quantity of solutions considered in problem-solving. 

6. Prioritize potential solutions. 

An acceptable solution, doable now, is usually superior to an excellent solution with higher complexity, longer timeframe, and higher cost. There is a rule that says that every large problem was once a small problem that could have been solved easily at that time. 

7. Make a decision. 

Select a solution, any solution, and then decide on a course of action. The longer you put off deciding on what to do, the higher the cost, and the larger the impact. Your objective should be to deal with 80 percent of all problems immediately. At the very least, set a specific deadline for making a decision and stick to it. 

8. Assign responsibility. 

Who exactly is going to carry out the solution or the different elements of the solution? Otherwise, nothing will happen, and you have no recourse but to implement all solutions yourself. 

9. Set a measure for the solution. 

Otherwise, you will have no way of knowing when and whether the problem was solved. Problem solutions in a complex system often have unintended side effects which can be worse than the original problem. 

People who are good at problem-solving are some of the most valuable and respected people in every area. In fact, success is often defined as the ability to solve problems. In many cultures, this is called street smarts , and it's valued even more than book smarts. The best business professionals have both.

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What is Problem Solving? (Steps, Techniques, Examples)

What is problem solving, definition and importance.

Problem solving is the process of finding solutions to obstacles or challenges you encounter in your life or work. It is a crucial skill that allows you to tackle complex situations, adapt to changes, and overcome difficulties with ease. Mastering this ability will contribute to both your personal and professional growth, leading to more successful outcomes and better decision-making.

Problem-Solving Steps

The problem-solving process typically includes the following steps:

• Identify the issue : Recognize the problem that needs to be solved.
• Analyze the situation : Examine the issue in depth, gather all relevant information, and consider any limitations or constraints that may be present.
• Generate potential solutions : Brainstorm a list of possible solutions to the issue, without immediately judging or evaluating them.
• Evaluate options : Weigh the pros and cons of each potential solution, considering factors such as feasibility, effectiveness, and potential risks.
• Select the best solution : Choose the option that best addresses the problem and aligns with your objectives.
• Implement the solution : Put the selected solution into action and monitor the results to ensure it resolves the issue.
• Review and learn : Reflect on the problem-solving process, identify any improvements or adjustments that can be made, and apply these learnings to future situations.

Defining the Problem

To start tackling a problem, first, identify and understand it. Analyzing the issue thoroughly helps to clarify its scope and nature. Ask questions to gather information and consider the problem from various angles. Some strategies to define the problem include:

• Brainstorming with others
• Asking the 5 Ws and 1 H (Who, What, When, Where, Why, and How)
• Analyzing cause and effect
• Creating a problem statement

Generating Solutions

Once the problem is clearly understood, brainstorm possible solutions. Think creatively and keep an open mind, as well as considering lessons from past experiences. Consider:

• Creating a list of potential ideas to solve the problem
• Grouping and categorizing similar solutions
• Prioritizing potential solutions based on feasibility, cost, and resources required
• Involving others to share diverse opinions and inputs

Evaluating and Selecting Solutions

Evaluate each potential solution, weighing its pros and cons. To facilitate decision-making, use techniques such as:

• SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
• Decision-making matrices
• Pros and cons lists
• Risk assessments

After evaluating, choose the most suitable solution based on effectiveness, cost, and time constraints.

Implementing and Monitoring the Solution

Implement the chosen solution and monitor its progress. Key actions include:

• Communicating the solution to relevant parties
• Setting timelines and milestones
• Assigning tasks and responsibilities
• Monitoring the solution and making adjustments as necessary
• Evaluating the effectiveness of the solution after implementation

Utilize feedback from stakeholders and consider potential improvements. Remember that problem-solving is an ongoing process that can always be refined and enhanced.

Problem-Solving Techniques

During each step, you may find it helpful to utilize various problem-solving techniques, such as:

• Brainstorming : A free-flowing, open-minded session where ideas are generated and listed without judgment, to encourage creativity and innovative thinking.
• Root cause analysis : A method that explores the underlying causes of a problem to find the most effective solution rather than addressing superficial symptoms.
• SWOT analysis : A tool used to evaluate the strengths, weaknesses, opportunities, and threats related to a problem or decision, providing a comprehensive view of the situation.
• Mind mapping : A visual technique that uses diagrams to organize and connect ideas, helping to identify patterns, relationships, and possible solutions.

Brainstorming

When facing a problem, start by conducting a brainstorming session. Gather your team and encourage an open discussion where everyone contributes ideas, no matter how outlandish they may seem. This helps you:

• Generate a diverse range of solutions
• Encourage all team members to participate
• Foster creative thinking

When brainstorming, remember to:

• Reserve judgment until the session is over
• Encourage wild ideas
• Combine and improve upon ideas

Root Cause Analysis

For effective problem-solving, identifying the root cause of the issue at hand is crucial. Try these methods:

• 5 Whys : Ask “why” five times to get to the underlying cause.
• Fishbone Diagram : Create a diagram representing the problem and break it down into categories of potential causes.
• Pareto Analysis : Determine the few most significant causes underlying the majority of problems.

SWOT Analysis

SWOT analysis helps you examine the Strengths, Weaknesses, Opportunities, and Threats related to your problem. To perform a SWOT analysis:

• List your problem’s strengths, such as relevant resources or strong partnerships.
• Identify its weaknesses, such as knowledge gaps or limited resources.
• Explore opportunities, like trends or new technologies, that could help solve the problem.
• Recognize potential threats, like competition or regulatory barriers.

SWOT analysis aids in understanding the internal and external factors affecting the problem, which can help guide your solution.

Mind Mapping

A mind map is a visual representation of your problem and potential solutions. It enables you to organize information in a structured and intuitive manner. To create a mind map:

• Write the problem in the center of a blank page.
• Draw branches from the central problem to related sub-problems or contributing factors.
• Add more branches to represent potential solutions or further ideas.

Mind mapping allows you to visually see connections between ideas and promotes creativity in problem-solving.

Examples of Problem Solving in Various Contexts

In the business world, you might encounter problems related to finances, operations, or communication. Applying problem-solving skills in these situations could look like:

• Identifying areas of improvement in your company’s financial performance and implementing cost-saving measures
• Resolving internal conflicts among team members by listening and understanding different perspectives, then proposing and negotiating solutions
• Streamlining a process for better productivity by removing redundancies, automating tasks, or re-allocating resources

In educational contexts, problem-solving can be seen in various aspects, such as:

• Addressing a gap in students’ understanding by employing diverse teaching methods to cater to different learning styles
• Developing a strategy for successful time management to balance academic responsibilities and extracurricular activities
• Seeking resources and support to provide equal opportunities for learners with special needs or disabilities

Everyday life is full of challenges that require problem-solving skills. Some examples include:

• Overcoming a personal obstacle, such as improving your fitness level, by establishing achievable goals, measuring progress, and adjusting your approach accordingly
• Navigating a new environment or city by researching your surroundings, asking for directions, or using technology like GPS to guide you
• Dealing with a sudden change, like a change in your work schedule, by assessing the situation, identifying potential impacts, and adapting your plans to accommodate the change.
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What Are Problem-Solving Skills? Definition and Examples

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Why do employers hire employees? To help them solve problems. Whether you’re a financial analyst deciding where to invest your firm’s money, or a marketer trying to figure out which channel to direct your efforts, companies hire people to help them find solutions. Problem-solving is an essential and marketable soft skill in the workplace. 

So, how can you improve your problem-solving and show employers you have this valuable skill? In this guide, we’ll cover:

Problem-Solving Skills Definition

Why are problem-solving skills important, problem-solving skills examples, how to include problem-solving skills in a job application, how to improve problem-solving skills, problem-solving: the bottom line.

Problem-solving skills are the ability to identify problems, brainstorm and analyze answers, and implement the best solutions. An employee with good problem-solving skills is both a self-starter and a collaborative teammate; they are proactive in understanding the root of a problem and work with others to consider a wide range of solutions before deciding how to move forward. 

Examples of using problem-solving skills in the workplace include:

• Researching patterns to understand why revenue decreased last quarter
• Experimenting with a new marketing channel to increase website sign-ups
• Brainstorming content types to share with potential customers
• Testing calls to action to see which ones drive the most product sales
• Implementing a new workflow to automate a team process and increase productivity

Problem-solving skills are the most sought-after soft skill of 2022. In fact, 86% of employers look for problem-solving skills on student resumes, according to the National Association of Colleges and Employers Job Outlook 2022 survey . 

It’s unsurprising why employers are looking for this skill: companies will always need people to help them find solutions to their problems. Someone proactive and successful at problem-solving is valuable to any team.

“Employers are looking for employees who can make decisions independently, especially with the prevalence of remote/hybrid work and the need to communicate asynchronously,” Eric Mochnacz, senior HR consultant at Red Clover, says. “Employers want to see individuals who can make well-informed decisions that mitigate risk, and they can do so without suffering from analysis paralysis.”

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Problem-solving includes three main parts: identifying the problem, analyzing possible solutions, and deciding on the best course of action.

>>MORE: Discover the right career for you based on your skills with a career aptitude test .

Research is the first step of problem-solving because it helps you understand the context of a problem. Researching a problem enables you to learn why the problem is happening. For example, is revenue down because of a new sales tactic? Or because of seasonality? Is there a problem with who the sales team is reaching out to? 

Research broadens your scope to all possible reasons why the problem could be happening. Then once you figure it out, it helps you narrow your scope to start solving it. 

Analysis is the next step of problem-solving. Now that you’ve identified the problem, analytical skills help you look at what potential solutions there might be.

“The goal of analysis isn’t to solve a problem, actually — it’s to better understand it because that’s where the real solution will be found,” Gretchen Skalka, owner of Career Insights Consulting, says. “Looking at a problem through the lens of impartiality is the only way to get a true understanding of it from all angles.”

Decision-Making

Once you’ve figured out where the problem is coming from and what solutions are, it’s time to decide on the best way to go forth. Decision-making skills help you determine what resources are available, what a feasible action plan entails, and what solution is likely to lead to success.

On a Resume

Employers looking for problem-solving skills might include the word “problem-solving” or other synonyms like “ critical thinking ” or “analytical skills” in the job description.

“I would add ‘buzzwords’ you can find from the job descriptions or LinkedIn endorsements section to filter into your resume to comply with the ATS,” Matthew Warzel, CPRW resume writer, advises. Warzel recommends including these skills on your resume but warns to “leave the soft skills as adjectives in the summary section. That is the only place soft skills should be mentioned.”

On the other hand, you can list hard skills separately in a skills section on your resume .

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In a Cover Letter or an Interview

Explaining your problem-solving skills in an interview can seem daunting. You’re required to expand on your process — how you identified a problem, analyzed potential solutions, and made a choice. As long as you can explain your approach, it’s okay if that solution didn’t come from a professional work experience.

“Young professionals shortchange themselves by thinking only paid-for solutions matter to employers,” Skalka says. “People at the genesis of their careers don’t have a wealth of professional experience to pull from, but they do have relevant experience to share.”

Aaron Case, career counselor and CPRW at Resume Genius, agrees and encourages early professionals to share this skill. “If you don’t have any relevant work experience yet, you can still highlight your problem-solving skills in your cover letter,” he says. “Just showcase examples of problems you solved while completing your degree, working at internships, or volunteering. You can even pull examples from completely unrelated part-time jobs, as long as you make it clear how your problem-solving ability transfers to your new line of work.”

Learn How to Identify Problems

Problem-solving doesn’t just require finding solutions to problems that are already there. It’s also about being proactive when something isn’t working as you hoped it would. Practice questioning and getting curious about processes and activities in your everyday life. What could you improve? What would you do if you had more resources for this process? If you had fewer? Challenge yourself to challenge the world around you.

Think Digitally

“Employers in the modern workplace value digital problem-solving skills, like being able to find a technology solution to a traditional issue,” Case says. “For example, when I first started working as a marketing writer, my department didn’t have the budget to hire a professional voice actor for marketing video voiceovers. But I found a perfect solution to the problem with an AI voiceover service that cost a fraction of the price of an actor.”

Being comfortable with new technology — even ones you haven’t used before — is a valuable skill in an increasingly hybrid and remote world. Don’t be afraid to research new and innovative technologies to help automate processes or find a more efficient technological solution.

Collaborate

Problem-solving isn’t done in a silo, and it shouldn’t be. Use your collaboration skills to gather multiple perspectives, help eliminate bias, and listen to alternative solutions. Ask others where they think the problem is coming from and what solutions would help them with your workflow. From there, try to compromise on a solution that can benefit everyone.

If we’ve learned anything from the past few years, it’s that the world of work is constantly changing — which means it’s crucial to know how to adapt . Be comfortable narrowing down a solution, then changing your direction when a colleague provides a new piece of information. Challenge yourself to get out of your comfort zone, whether with your personal routine or trying a new system at work.

Put Yourself in the Middle of Tough Moments

Just like adapting requires you to challenge your routine and tradition, good problem-solving requires you to put yourself in challenging situations — especially ones where you don’t have relevant experience or expertise to find a solution. Because you won’t know how to tackle the problem, you’ll learn new problem-solving skills and how to navigate new challenges. Ask your manager or a peer if you can help them work on a complicated problem, and be proactive about asking them questions along the way.

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Companies always need people to help them find solutions — especially proactive employees who have practical analytical skills and can collaborate to decide the best way to move forward. Whether or not you have experience solving problems in a professional workplace, illustrate your problem-solving skills by describing your research, analysis, and decision-making process — and make it clear that you’re the solution to the employer’s current problems. 

Image Credit: Christina Morillo / Pexels 

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Problem-Solving in Business: PROBLEM-SOLVING DEFINED AND WHY IT IS IMPORTANT

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• PROBLEM-SOLVING DEFINED AND WHY IT IS IMPORTANT
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To Solve a Tough Problem, Reframe It

• Julia Binder
• Michael D. Watkins

Research shows that companies devote too little effort to examining problems before trying to solve them. By jumping immediately into problem-solving, teams limit their ability to design innovative solutions.

The authors recommend that companies spend more time up front on problem-framing, a process for understanding and defining a problem. Exploring different frames is like looking at a scene through various camera lenses while adjusting your angle, aperture, and focus. A wide-angle lens gives you a very different photo from that taken with a telephoto lens, and shifting your angle and depth of focus yields distinct images. Effective problem-framing is similar: Looking at a problem from a variety of perspectives helps you uncover new insights and generate fresh ideas.

This article introduces a five-phase approach to problem-framing: In the expand phase, the team identifies all aspects of a problem; in examine, it dives into root causes; in empathize, it considers key stakeholders’ perspectives; in elevate, it puts the problem into a broader context; and in envision, it creates a road map toward the desired outcome.

Five steps to ensure that you don’t jump to solutions

Idea in Brief

The problem.

Research shows that most companies devote too little effort to examining problems from all angles before trying to solve them. That limits their ability to come up with innovative ways to address them.

The Solution

Companies need a structured approach for understanding and defining complex problems to uncover new insights and generate fresh ideas.

The Approach

This article introduces a five-phase approach to problem-framing: In the expand phase, the team identifies all aspects of a problem; in examine, it dives into root causes; in empathize, it considers key stakeholders’ perspectives; in elevate, it puts the problem into a broader context; and in envision, it creates a road map toward the desired outcome.

When business leaders confront complex problems, there’s a powerful impulse to dive right into “solving” mode: You gather a team and then identify potential solutions. That’s fine for challenges you’ve faced before or when proven methods yield good results. But what happens when a new type of problem arises or aspects of a familiar one shift substantially? Or if you’re not exactly sure what the problem is?

Research conducted by us and others shows that leaders and their teams devote too little effort to examining and defining problems before trying to solve them. A study by Paul Nutt of Ohio State University, for example, looked at 350 decision-making processes at medium to large companies and found that more than half failed to achieve desired results, often because perceived time pressure caused people to pay insufficient attention to examining problems from all angles and exploring their complexities. By jumping immediately into problem-solving, teams limit their ability to design innovative and durable solutions.

When we work with organizations and teams, we encourage them to spend more time up front on problem-framing, a process for understanding and defining a problem. Exploring frames is like looking at a scene through various camera lenses while adjusting your angle, aperture, and focus. A wide-angle lens will give you a very different photo from that taken with a telephoto lens, and shifting your angle and depth of focus yields distinct images. Effective problem-framing is similar: Looking at a problem from a variety of perspectives lets you uncover new insights and generate fresh ideas.

As with all essential processes, it helps to have a methodology and a road map. This article introduces the E5 approach to problem-framing—expand, examine, empathize, elevate, and envision—and offers tools that enable leaders to fully explore the problem space.

Phase 1: Expand

In the first phase, set aside preconceptions and open your mind. We recommend using a tool called frame-storming, which encourages a comprehensive exploration of an issue and its nuances. It is a neglected precursor to brainstorming, which typically focuses on generating many different answers for an already framed challenge. Frame-storming helps teams identify assumptions and blind spots, mitigating the risk of pursuing inadequate or biased solutions. The goal is to spark innovation and creativity as people dig into—or as Tina Seelig from Stanford puts it, “fall in love with”—the problem.

Begin by assembling a diverse team, encompassing a variety of types of expertise and perspectives. Involving outsiders can be helpful, since they’re often coming to the issue cold. A good way to prompt the team to consider alternative scenarios is by asking “What if…?” and “How might we…?” questions. For example, ask your team, “What if we had access to unlimited resources to tackle this issue?” or “How might better collaboration between departments or teams help us tackle this issue?” The primary objective is to generate many alternative problem frames, allowing for a more holistic understanding of the issue. Within an open, nonjudgmental atmosphere, you deliberately challenge established thinking—what we call “breaking” the frame.

It may be easy to eliminate some possibilities, and that’s exactly what you should do. Rather than make assumptions, generate alternative hypotheses and then test them.

Consider the problem-framing process at a company we’ll call Omega Soundscapes, a midsize producer of high-end headphones. (Omega is a composite of several firms we’ve worked with.) Omega’s sales had declined substantially over the past two quarters, and the leadership team’s initial diagnosis, or reference frame, was that recent price hikes to its flagship product made it too expensive for its target market. Before acting on this assumption, the team convened knowledgeable representatives from sales, marketing, R&D, customer service, and external consultants to do some frame-storming. Team members were asked:

• What if we lowered the price of our flagship product? How would that impact sales and profitability?
• How might we identify customers in new target markets who could afford our headphones at the current price?
• What if we offered financing or a subscription-based model for our headphones? How would that change perceptions of affordability?
• How might we optimize our supply chain and production processes to reduce manufacturing costs without compromising quality?

In playing out each of those scenarios, the Omega team generated several problem frames:

• The target market’s preferences have evolved.
• New competitors have entered the market.
• Product quality has decreased.
• Something has damaged perceptions of the brand.
• Something has changed in the priorities of our key distributors.

Each of the frames presented a unique angle from which to approach the problem of declining sales, setting the stage for the development of diverse potential solutions. At this stage, it may be relatively easy to eliminate some possibilities, and that’s exactly what you should do. Rather than make assumptions, generate alternative hypotheses and then test them.

See more HBR charts in Data & Visuals

Phase 2: Examine

If the expand phase is about identifying all the facets of a problem, this one is about diving deep to identify root causes. The team investigates the issue thoroughly, peeling back the layers to understand underlying drivers and systemic contributors.

A useful tool for doing this is the iceberg model, which guides the team through layers of causation: surface-level events, the behavioral patterns that drive them, underlying systematic structures, and established mental models. As you probe ever deeper and document your findings, you begin to home in on the problem’s root causes. As is the case in the expand phase, open discussions and collaborative research are crucial for achieving a comprehensive analysis.

Let’s return to our Omega Soundscapes example and use the iceberg model to delve into the issues surrounding the two quarters of declining sales. Starting with the first layer beneath the surface, the behavioral pattern, the team diligently analyzed customer feedback. It discovered a significant drop in brand loyalty. This finding validated the problem frame of a “shifting brand perception,” prompting further investigation into what might have been causing it.

Phase 3: Empathize

In this phase, the focus is on the stakeholders—employees, customers, clients, investors, supply chain partners, and other parties—who are most central to and affected by the problem under investigation. The core objective is to understand how they perceive the issue: what they think and feel, how they’re acting, and what they want.

First list all the people who are directly or indirectly relevant to the problem. It may be helpful to create a visual representation of the network of relationships in the ecosystem. Prioritize the stakeholders according to their level of influence on and interest in the problem, and focus on understanding the roles, demographics, behavior patterns, motivations, and goals of the most important ones.

Now create empathy maps for those critical stakeholders. Make a template divided into four sections: Say, Think, Feel, and Do. Conduct interviews or surveys to gather authentic data. How do various users explain the problem? How do they think about the issue, and how do their beliefs inform that thinking? What emotions are they feeling and expressing? How are they behaving? Populate each section of the map with notes based on your observations and interactions. Finally, analyze the completed empathy maps. Look for pain points, inconsistencies, and patterns in stakeholder perspectives.

Returning to the Omega case study, the team identified its ecosystem of stakeholders: customers (both current and potential); retail partners and distributors; the R&D, marketing, and sales teams; suppliers of headphone components; investors and shareholders; and new and existing competitors. They narrowed the list to a few key stakeholders related to the declining-sales problem: customers, retail partners, and investors/shareholders; Omega created empathy maps for representatives from each.

Here’s what the empathy maps showed about what the stakeholders were saying, thinking, feeling, and doing:

Sarah, the customer, complained on social media about the high price of her favorite headphones. Dave, the retailer, expressed concerns about unsold inventory and the challenge of convincing customers to buy the expensive headphones. Alex, the shareholder, brought up Omega’s declining financial performance during its annual investor day.

Sarah thought that Omega was losing touch with its loyal customer base. Dave was considering whether to continue carrying Omega’s products in his store or explore other brands. Alex was contemplating diversifying his portfolio into other consumer-tech companies.

As a longtime supporter of the brand, Sarah felt frustrated and slightly betrayed. Dave was feeling anxious about the drop in sales and the impact on his store’s profitability. Alex was unhappy with the declining stock value.

Sarah was looking for alternatives to the headphones, even though she loves the product’s quality. Dave was scheduling a call with Omega to negotiate pricing and terms. Alex was planning to attend Omega’s next shareholder meeting to find out more information from the leadership team.

When Omega leaders analyzed the data in the maps, they realized that pricing wasn’t the only reason for declining sales. A more profound issue was customers’ dissatisfaction with the perceived price-to-quality ratio, especially when compared with competitors’ offerings. That insight prompted the team to consider enhancing the headphones with additional features, offering more-affordable alternatives, and possibly switching to a service model.

Phase 4: Elevate

This phase involves exploring how the problem connects to broader organizational issues. It’s like zooming out on a map to understand where a city lies in relation to the whole country or continent. This bird’s-eye view reveals interconnected issues and their implications.

For this analysis, we recommend the four-frame model developed by Lee Bolman and Terrence Deal, which offers distinct lenses through which to view the problem at a higher level. The structural frame helps you explore formal structures (such as hierarchy and reporting relationships); processes (such as workflow); and systems, rules, and policies. This frame examines efficiency, coordination, and alignment of activities.

The human resources frame focuses on people, relationships, and social dynamics. This includes teamwork, leadership, employee motivation, engagement, professional development, and personal growth. In this frame, the organization is seen as a community or a family that recognizes that talent is its most valuable asset. The political frame delves into power dynamics, competing interests, conflicts, coalitions, and negotiations. From this perspective, organizations are arenas where various stakeholders vie for resources and engage in political struggles to influence decisions. It helps you see how power is distributed, used, and contested.

The symbolic frame highlights the importance of symbols, rituals, stories, and shared values in shaping group identity and culture. In it, organizations are depicted as theaters through which its members make meaning.

Using this model, the Omega team generated the following insights in the four frames:

Structural.

A deeper look into the company’s structure revealed siloing and a lack of coordination between the R&D and marketing departments, which had led to misaligned messaging to customers. It also highlighted a lack of collaboration between the two functions and pointed to the need to communicate with the target market about the product’s features and benefits in a coherent and compelling way.

Human resources.

This frame revealed that the declining sales and price hikes had ramped up pressure on the sales team, damaging morale. The demotivated team was struggling to effectively promote the product, making it harder to recover from declining sales. Omega realized it was lacking adequate support, training, and incentives for the team.

The key insight from this frame was that the finance team’s reluctance to approve promotions in the sales group to maintain margins was exacerbating the morale problem. Omega understood that investing in sales leadership development while still generating profits was crucial for long-term success and that frank discussions about the issue were needed.

This frame highlighted an important misalignment in perception: The company believed that its headphones were of “top quality,” while customers reported in surveys that they were “overpriced.” This divergence raised alarm that branding, marketing, and pricing strategies, which were all predicated on the central corporate value of superior quality, were no longer resonating with customers. Omega realized that it had been paying too little attention to quality assurance and functionality.

Phase 5: Envision

In this phase, you transition from framing the problem to actively imagining and designing solutions. This involves synthesizing the insights gained from earlier phases and crafting a shared vision of the desired future state.

Here we recommend using a technique known as backcasting. First, clearly define your desired goal. For example, a team struggling with missed deadlines and declining productivity might aim to achieve on-time completion rates of 98% for its projects and increase its volume of projects by 5% over the next year. Next, reverse engineer the path to achieving your goal. Outline key milestones required over both the short term and the long term. For each one, pinpoint specific interventions, strategies, and initiatives that will propel you closer to your goal. These may encompass changes in processes, policies, technologies, and behaviors. Synthesize the activities into a sequenced, chronological, prioritized road map or action plan, and allocate the resources, including time, budget, and personnel, necessary to implement your plan. Finally, monitor progress toward your goal and be prepared to adjust the plan in response to outcomes, feedback, or changing circumstances. This approach ensures that the team’s efforts in implementing the insights from the previous phases are strategically and purposefully directed toward a concrete destination.

Applying the Approach

Albert Einstein once said, “If I had one hour to solve a problem, I would spend 55 minutes thinking about the problem and five minutes thinking about the solution.” That philosophy underpins our E5 framework, which provides a structured approach for conscientiously engaging with complex problems before leaping to solutions.

As teams use the methodology, they must understand that problem-framing in today’s intricate business landscape is rarely a linear process. While we’re attempting to provide a structured path, we also recognize the dynamic nature of problems and the need for adaptability. Invariably, as teams begin to implement solutions, new facets of a problem may come to light, unforeseen challenges may arise, or external circumstances may evolve. Your team should be ready to loop back to previous phases—for instance, revisiting the expand phase to reassess the problem’s frame, delving deeper into an overlooked root cause in another examine phase, or gathering fresh insights from stakeholders in a new empathize phase. Ultimately, the E5 framework is intended to foster a culture of continuous improvement and innovation.

• JB Julia Binder is the director of the Center for Sustainable and Inclusive Business and a professor of sustainable innovation at IMD.
• Michael D. Watkins is a professor of leadership and organizational change at IMD , a cofounder of Genesis Advisers , and the author of The Six Disciplines of Strategic Thinking .

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Defining Problems: The Most Important Business Skill You've Never Been Taught Fundamental critical thinking is essential in business, and life, but is seldom seen on a college curriculum. Happily, it's something you can figure out.

By Michael Cooper Edited by Dan Bova Sep 26, 2014

Opinions expressed by Entrepreneur contributors are their own.

Albert Einstein once said, "If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it." While that may sound extreme, it does highlight the importance of defining problems. It also hints at some interesting facts: A well-defined problem often contains its own solution within it, and that solution is usually quite obvious and straightforward. By defining problems properly, you make them easier to solve, which means saving time, money and resources.

Related: 3 Reasons Why You Are Failing at Problem Solving

Every businessperson needs to master the ability to define problems, or challenges, but very few MBA programs, leadership development programs or management training programs teach this indispensable skill. I spoke to a group of 80 HR managers recently and asked if any of them had been taught how to define problems. Only one person raised a hand. That's common to most business groups I speak with on a weekly basis. Less than 1 percent of the workforce has been taught how to define problems.

During my first five years as a coach, I didn't know how to define problems properly, but in the ten years since, I've learned this critical technique. I use it every single day, with every single client. It has transformed how I work with people and has made the work much more impactful. These days, clients will hire me solely based on the fact that I have the ability to define their problems during our very first conversation together. When I hear them begin to differentiate between issues, asking, "Which problem are we solving?" I know that I've made a major impact on their business.

Related: Problem Solved

Defining problems is simple and any difficulty that arises is because it requires patience, repetition and thorough examination. It is the most important element of critical thinking.

You can define problems correctly in just three steps I call the Problem Definition Filter:

1. Explore the current situation . Paint a picture in words by including the "presenting problem," the impact it is having, the consequences of not solving the problem, and the emotions the problem is creating for those involved.

2. Explain. Once you have examined and clearly explained the situation, draft a simple problem statement by filling in the blank: The problem that we are trying to solve is: ___________. Distill the problem to its simplest form possible.

3. Ask yourself. "Why is that a problem?" If the answer is another problem, then congratulate yourself for moving from the "presenting problem" to a deeper problem. Then ask yourself again, "Why is that a problem?" Do that repeatedly until you either land on what is obviously the source of all of the problems you've identified or you identify unexpected consequences of not solving the problem. If you land on unexpected consequences, the problem you identified right before that is likely your "source problem."

Toyota famously created the "five why's'' technique for their Six Sigma process improvement program. While that number was limited to five why's, the truth is sometimes it takes only one why. Other times, it may take 17. Ask as many times as needed until you get to the source problem.

This high-level overview of the Problem Definition Filter can help you learn how to define the problems in your department or business and determine if you're wasting time and resources on poorly defined problems. When it comes to determining whether you have defined a problem well, ask yourself or your collaborators if the solution to the problem is obvious or straightforward. Also, ask if it is a problem worth solving -- many problems aren't.

Related: Creative Problem-Solving Strategies to Test Your Business Idea

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problem-solving

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a toy made from cloth and filled with a soft material so that it is pleasant to hold, often in the form of an animal

Like a bull in a china shop: talking about people who are clumsy

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Skills 360 – Problem-Solving 2: The Problem-Solving Process

Welcome back to the Business English Skills 360 podcast as we continue our look at problem-solving. In this lesson, we’ll focus on the process of solving problems.

As we talked about in our last lesson, the first step in problem-solving is analysis. This means gathering all the relevant information and understanding the problem’s causes. It’s important to look at the situation from different perspectives and ensure that everyone involved has a shared understanding of the issue. Without this, you risk coming up with solutions that aren’t feasible or acceptable.

Once the problem is understood, the next step is to define your goals. Many people skip this, but it’s essential to clarify what a good solution would look like. Set clear guidelines, including your timeline, budget, and who is responsible for what. This ensures everyone is aligned and focused on the same objectives.

Now, you can move on to brainstorming possible solutions. Encourage creativity and seek input from a variety of people. It’s important to separate the generation of ideas from the evaluation. Don’t judge ideas too quickly, just focus on coming up with as many as possible. This will give you a broad range of options to choose from later.

After generating ideas, it’s time to evaluate and select the best solution. The “best” solution is the one that fits the goals and criteria you set earlier. Remember, there’s no perfect solution, only the most practical and effective given the circumstances. Make sure the chosen solution is something everyone can support.

Finally, the last step is evaluation. After implementing the solution, take time to reflect. Did it work as expected? Could anything have been done differently? This reflection helps improve your problem-solving process and prepares you for future challenges.

Problem-solving requires a clear, structured approach. By following these five steps – analysis, goal-setting, brainstorming, decision-making, and evaluation – you can tackle problems more effectively and find the optimal solution.

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More From Forbes

The Hidden Goldmine: Why Your Niche Is The Key To Profit

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One of the most important decisions you will make when starting your business is choosing your niche. Your niche determines not only what type of customers you will serve but also how successful you will be in building a profitable, sustainable business. Many new entrepreneurs overlook the importance of this step but choosing the right niche can be the difference between struggling to make ends meet and building a thriving company.

Don’t rush this step. Your niche is your business’s identity, and by selecting wisely, you’ll ensure that you’re entering a market where success is not only possible but highly likely.

Here are some tips on finding the right niche for your business:

1. focus on profitability.

While passion is important, profitability should always be at the forefront when deciding on a niche. A hobby might be fun, but if people aren’t willing to pay for the products or services you offer, your business will not survive. You must select a niche with proven demand if you want to make money. This means looking at market trends and understanding which industries are growing and where consumers are spending their money.

2. In-Demand Niches Have Built-in Customers

One of the benefits of choosing an in-demand niche is that you don’t have to convince people they need what you offer. They already want it. Your job becomes connecting the dots between their needs and your solutions. To find an in-demand niche, research what people are already talking about, what problems they’re trying to solve, and where they’re spending their money.

For example, niches like health, personal finance, and digital marketing are consistently in demand because people are always looking for ways to improve their well-being, manage their money, or grow their businesses. An in-demand niche also gives you the opportunity to create tailored products or services that meet specific needs, increasing your chances of success.

NYT ‘Strands’ Hints, Spangram And Answers For Monday, September 9th

Today’s nyt mini crossword clues and answers for monday, september 9, iphone 16 pro: price, design update and battery life leaked in new report, 3. avoid overcrowded niches.

While it’s important to choose an in-demand niche, it’s equally important to avoid one that’s overcrowded. Entering an overcrowded market means you’ll face fierce competition from well-established businesses. This can make it much harder for your business to stand out, especially when bigger players already dominate the space.

To avoid an overcrowded niche, look for opportunities within a larger market where there are gaps. These gaps often exist in sub-niches, where fewer businesses operate. For example, instead of entering the general “fitness” market, you could focus on a sub-niche like fitness coaching for women over 50 or fitness programs for busy professionals. By narrowing your focus, you can carve out a space where your business becomes the go-to expert.

4. Customers Must Be Willing to Pay

You may have a great idea, but if customers aren’t willing to pay for your product or service, you’ll struggle to build a profitable business . To ensure your niche will generate income, it’s important to assess whether potential customers will spend money on the solutions you provide.

Research the buying habits of your target audience to see what they’re willing to invest in. Are they paying for products and services similar to what you offer? If the answer is yes, that’s a strong indicator of a profitable niche. If the answer is no, you might need to rethink how you position your offering or consider another niche altogether.

5. You Can Become the Expert in a Targeted Niche

Choosing a profitable niche doesn’t just allow you to make money; it also gives you the chance to position yourself as an expert. When you select a niche that is in demand but not overcrowded, you can become the go-to authority in your field. This is important because people prefer to work with experts. They are more likely to trust you, recommend you to others, and pay premium prices for your services.

For example, if you enter a niche that is specific, like eco-friendly home organizing, you can build a brand that stands out as the expert in that area. Over time, as your reputation grows, you can charge more for your services and attract a loyal customer base.

6. Profitability Comes from Solving Problems

The most successful businesses are those that solve specific problems for their customers. When choosing a niche, it’s essential to identify the problems that exist in that market and create solutions that customers will pay for. A profitable niche is not just about selling products; it’s about offering value.

Your target audience is experiencing pain from the problem they have. Think about what keeps them up at night. What are they struggling with? Once you understand their problems, position your business as the solution. This approach not only ensures profitability but also builds long-term relationships with your customers, as they’ll see you as someone who genuinely cares about helping them.

The bottom line is that when starting a business, choosing the right niche can make or break your success. A profitable, in-demand niche that’s not overcrowded and one that people are willing to pay for is the foundation for a sustainable business. Take the time to research the market, understand your audience’s needs, and position your business as the expert in your field. By doing so, you’ll set yourself up for long-term profitability and growth.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business and the founder of She Means Profit . As a Business Strategist for small business owners, Melissa helps women making mid-career shifts, to launch their dream businesses, and also guides established business owners to grow their businesses to more profitably.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

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Bill Gates says solving misinformation is now young people's problem

• Bill Gates spoke about misinformation in an interview with CNBC.
• Gates said he has "handed this problem to the younger generation."
• He added that his "naivete" made him believe people would want "correct information."

Misinformation is one problem Bill Gates won't solve.

"Misinformation is the one where I — a little bit — had to punt and say, 'Okay, we've handed this problem to the younger generation,'" Gates, 68, said during an interview with CNBC published on Thursday.

Misinformation has been a concern almost since the advent of the internet. There was a global reckoning around the issue after the 2016 US election . But the problem has only intensified as technology advances. False claims on social media are now harder than ever to spot, thanks in part to artificial intelligence .

A 2023 Pew Research Center survey found that 65% of American adults believe tech companies should do more to restrict false information and violent content online.

But Gates, one of the most influential tech entrepreneurs of all time, said he doesn't have the answer.

"We should have free speech," he told CNBC. "But if you're inciting violence, if you're causing people not to take vaccines, where are those boundaries?"

He added: "Even the US should have rules, and then if you have rules, what is it? Is there some AI that encodes those rules? You have billions in activity, and if you catch it a day later, the harm is done."

Gates' experience with misinformation is personal. He was the subject of several prominent conspiracy theories related to vaccines and other intervention measures during the height of the COVID-19 pandemic.

One conspiracy theory that gained attention during the pandemic claimed Gates put microchips in vaccines to track people.

Gates told CNET that a woman once confronted him about that conspiracy theory on the street.

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"I really don't need to track you in particular," he said he told the woman.

It has also affected his youngest daughter, Phoebe, who spoke out against "misconceptions and conspiracy theories" during an interview with The Information last March.

"Hearing my daughter talk about how she'd been harassed online, and how her friends experienced that quite a bit, brought that into focus in a way that I hadn't thought about before," he told CNBC.

Gates, who cofounded Microsoft in 1975, told CNBC he initially believed people would use computers and the internet responsibly .

"You know, my naivete that when we made information available, people would want correct information," he said.

Gates added that people will seek out "correct information" for things like medical advice but can also fall victim to confirmation bias .

"Even I will wallow. Let's say there's a politician I don't like, and there's some article online criticizing him a little bit," he told CNBC. "I'm like, 'Oh, that's such a good critique [and] I enjoyed reading it, even if it was exaggerated.'"

Representatives for Gates did not immediately respond to Business a request for comment from Business Insider.

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