4 Classes of Problem-Solving to Grow Value Faster

Types of Problems

There are many types of problems. Conduct a Web search and you’ll find articles ranging from 4 types of problems to 14 types of problem and everything in between. In fact, there are over 100 types and an equal number of methods that one can employ to solve them, seemingly a complete toolbox! But what if there was a meta problem solver for solving all types of problems, and solving them faster?

Do you have a robust problem-solving development program for everyone in your company? How about problem-solving methods and tools? Or a business value growth system to guide the transformation progress and results? While the benefits of such a management approach are immense, you can’t measure it piecemeal.

Classes of Problem-Solving

Class 1 Problems: Known – Known

For Class 1 problems, knowledge is broadly available and the problem-solver has the subject-matter expertise associated with executing the required transformation initiative. Examples may include upgrading a supply chain, accounting system, or other standard process. These classes of problems may be solved through standard initiative or project management methods combined with a change in management techniques.

A bear trap for executives in this quadrant is that they wrongly assume people operating in their environments have the willingness, capability, or capacity to focus energy on executing transformational work that improves their operational environments.

Class 2 Problems: Known – Unknown 

For Class 2 problems, knowledge is broadly available but the problem-solver does not have the subject matter expertise associated with completing transformation initiatives. Examples are similar to Class 1 problems except that the person responsible doesn’t know where to begin to solve the problem. The only difference in Class 2 from Class 1 is that learning steps need to be injected into an initiative design plan, or subject matter expertise needs to be recruited to achieve the initiative. This is one of those situations where new knowledge must be acquired, making the benefit not measurable because of the long-term positive effect of the investment.

Class 2 problems are slightly more difficult. However, they benefit the organization more because they provide the impetus to warrant learning and development as a normative ingredient of the culture. Assuming the culture of the organization is more operationally driven, with little importance placed on continual execution of transformational initiatives, the organization is robbed of this growth opportunity. This is also a cultural issue that’s usually the result of executives focusing on current results at the expense of knowledge and value growth.

Class 3 Problems: Unknown – Known

For Class 3 problems, knowledge is not broadly available, but the problem-solver has unique subject-matter expertise and experience with methods and tools to potentially execute transformation initiatives. An example would be GE’s capability in jet engine design. An organization needs to stitch a unique assembly of value stream excellence together to produce a sustainable competitive advantage and customer lock-in.

Many times, Class 3 problems lie in intellectual property territory. What’s interesting, though, is that being in Class 3 is usually a result of past sustained strategic transformation and innovation. A particular organization may have focused on an operational excellence, product leadership, or a best total solution strategy to achieve sustainable competitive advantage.  

A real question may be, what will the team do from here forward? If a business unit leader who has focused on product leadership remains, sustainable transformation will continue because he or she has created a sustainable transformation culture. If the business unit leader is replaced by an operationally focused manager, the business will lose any competitive advantage it has. This happens way too often due to a lack of business value growth policy.

Class 4 Problems: Unknown – Unknown

Class 4 problems are harder because knowledge is not broadly available. Add on a problem-solver who is not experienced in methods or tools in the unknown-unknown domain and transformation or innovation will cease. Working in this quadrant is experimental and also exciting. The great news is there is an abundance of tools available to work in this space. For example, let’s assume you must improve a product or process to increase worth of your business. Irrespective of interest, you are operating a system that’s producing value for a customer, internal or external.

The first step is understanding the system capability and variability. A popular method to understand the stability of a system is to use a control chart designed to steer you in the direction of system instability, otherwise known as common cause problems, or operator deficiencies, otherwise known as special cause problems. One must approach solutions  to each cause type differently.

If the system is unstable, which the control chart will tell you, the first goal will be to bring the system into stable operation. Assuming the system is stable, you may then assess the gap between what the system is producing and what you’d like it to produce. You then must focus on the constraint to be alleviated in order to produce the value you desire.

What’s interesting is that leadership usually turns to the people as the cause for lack of value, even though we know that greater than 90% of the reasons desired value is not produced is due to system or common cause problems (94% - 96% according to Bell Labs statistician, Dr. Walter Shewhart), and less than 10% due to individual deficiencies or special cause. System design and performance lie squarely on the shoulders of executive leadership.

Once you pinpoint the cause of your system gap, for existing or new processes, products, or knowledge, you can employ the scientific method to experimentally improve or design a new process, product, or knowledge. There are many versions of the scientific method. Most popular is the plan, do, study, act (PDSA) cycle created by Dr. Shewhart. There are many other versions, such as PDCA, DMAIC, or OODA.

Pivotal Innovation has developed the D6™ model, which separates the transformation control from the underlying system needing to be transformed for higher value production capacity. D6 is a meta problem solver that can enable your teams to transform faster, resulting in significant accelerated business value growth.

Perspective

A few years ago, I was at a social event chatting with a bank executive. He asked me what we did and I told him that we help companies grow business value faster. He was intrigued and asked me how we did that. I answered, we help them align their initiatives with their strategy and then automate the process of execution. He then said, “like as in innovation or transformation?” I said yes.

He then said that they were great at developing their strategy plan each year but got distracted by the day-to-day operations. I asked him, “how often do you review and control your financials?” He responded, “every month.” I then asked him, “how often do you review and control the initiatives driving your strategic growth?” He said, “we don’t.” I’m sure I had a puzzled look. He smiled! He did not connect the dots to the fact that he was responsible and accountable for the strategic growth, and therefore for guaranteeing that the execution of high value initiatives was being reviewed and controlled to ensure that growth.

Conclusion

Regardless of the type or class of problem to be solved, most organizations do not have a problem-solving system even though it is the foundation to executing strategically aligned growth initiatives, essential to business value growth acceleration. It starts within a growth learning and development culture that transforms each individual from a “doing” person to a “thinking and doing” person relative to strategic transformation. Dr. W. Edwards Deming, considered the father of quality, referred to this, not as continuous improvement or transformation but as “discontinuous transformation.”

Weakness in problem-solving is one of the primary reasons companies don’t grow business value faster. Improving your problem-solving capability, coupled with strategic alignment, will transform your business to a 2x growth rate, measured over any 5-year period. Problem-solving knowledge is usually embedded as a component within a Business Growth System. 

A fundamental part of Pivotal Innovation's Business Value Growth System is delivered through our Pivotal Innovator™ Platform.

The Pivotal Innovator™ Platform