problem solving cycle in business studies

The Importance of the Problem Solving Cycle in Business Studies – Strategies for Success

• Post author By bicycle-u
• Post date 08.12.2023

In the field of business studies, problem solving plays a crucial role in ensuring the success and growth of an organization. Whether it’s finding solutions to operational challenges, addressing customer concerns, or creating new strategies, the ability to effectively solve problems is an essential skill for business professionals.

The problem solving cycle is a systematic approach that guides individuals and organizations in identifying, analyzing, and resolving problems. It consists of several steps, including problem definition, gathering information, generating alternatives, evaluating options, making a decision, implementing the solution, and evaluating the results.

One of the key advantages of the problem solving cycle is its emphasis on a structured and logical approach. By following the steps in a sequential manner, business professionals can ensure that all aspects of the problem are thoroughly assessed and that potential solutions are carefully evaluated. This helps to minimize the risk of making hasty or ill-informed decisions.

Moreover, the problem solving cycle encourages critical thinking and creativity. As individuals engage in the process of problem solving, they are encouraged to think outside the box and consider alternative perspectives. This can lead to innovative solutions that may not have been initially obvious. By fostering an open-minded and innovative mindset, the problem solving cycle enables businesses to adapt to changing circumstances and stay ahead in a competitive marketplace.

The Importance of Problem Solving in Business

Problem solving is an essential skill in the business world. In order to succeed in the dynamic and fast-paced business environment, individuals and organizations must be able to identify and solve problems effectively.

The problem solving cycle is a systematic approach to tackling complicated issues that arise in business operations. It involves several steps, including identifying the problem, gathering relevant information, analyzing the data, generating potential solutions, evaluating the alternatives, and implementing the best course of action. This cycle is crucial in ensuring that businesses address problems in a structured and efficient manner.

Enhancing Innovation and Creativity

Problem solving in business encourages innovation and creativity. When faced with a problem, individuals and teams are forced to think outside the box and come up with unique solutions. This process not only helps solve the immediate problem, but also fosters a culture of innovation within the organization. Through problem solving, businesses can discover new opportunities, improve their products or services, and gain a competitive edge in the market.

Building Resilience and Adaptability

Problem solving also helps businesses build resilience and adaptability. In today’s rapidly changing business landscape, organizations must be able to adapt to new challenges and find solutions quickly. By developing problem solving skills, individuals and teams become more adept at navigating through uncertainty and finding viable solutions. This resilience and adaptability are essential in maintaining business continuity and remaining competitive in the face of evolving market conditions.

In conclusion, problem solving is of utmost importance in the business world. It enables businesses to overcome challenges, enhance innovation, and build resilience. By embracing the problem solving cycle, individuals and organizations can effectively address problems and drive success in today’s dynamic business environment.

The Steps of Problem Solving in Business Studies

In business studies, problem solving is an essential skill that allows individuals to identify and resolve issues within a company or organization. By following a structured problem solving cycle, businesses can effectively address challenges and improve their operations. The steps of problem solving in business studies typically include:

Identifying the Problem in Business

The problem solving cycle in business studies is a crucial process that helps organizations address and overcome various challenges they encounter. One of the key steps in this cycle is identifying the problem.

Identifying the problem is essential as it sets the foundation for the entire problem-solving process. It involves thoroughly understanding the situation and recognizing the issue that needs to be addressed.

During this stage, businesses need to gather relevant data, analyze information, and conduct research to gain a comprehensive understanding of the problem. This may involve conducting surveys, interviews, or analyzing financial records to gather useful insights.

Once the problem is identified, organizations can define its scope and boundaries. This involves determining the factors and variables that contribute to the problem, as well as considering the potential impact it may have on the business.

Effective problem identification allows businesses to prioritize and allocate resources appropriately. It helps them focus their efforts on addressing the most pressing issues and avoiding wasted time and resources on less significant problems.

Furthermore, identifying the problem early on enables businesses to develop effective strategies and action plans to solve it. It allows for a proactive approach, as organizations can anticipate and mitigate potential risks before they escalate.

In conclusion, identifying the problem is a critical step in the problem solving cycle in business studies. It lays the groundwork for the entire process and enables organizations to effectively address challenges and achieve desired outcomes.

Gathering Information for Problem Solving in Business

One crucial aspect of the problem solving cycle in business studies is gathering information. When faced with a problem, it is essential to gather as much relevant information as possible to make informed decisions and find suitable solutions.

There are various methods and sources for gathering information in a business context. One commonly used method is research, which involves collecting data from primary and secondary sources. Primary sources include surveys, interviews, and observations, while secondary sources include books, articles, and online databases. By collecting information from both primary and secondary sources, businesses can gain a comprehensive understanding of the problem at hand.

Moreover, businesses can gather information by analyzing existing data and records. This may involve reviewing financial statements, sales reports, and customer feedback to identify patterns and trends. By examining this data, businesses can uncover underlying issues and potential solutions.

Additionally, businesses can gather information by seeking input from stakeholders. This includes managers, employees, customers, and suppliers who may have valuable insights and perspectives on the problem. Engaging in discussions and brainstorming sessions with these stakeholders can provide diverse viewpoints and ideas that can contribute to effective problem solving.

Furthermore, technology plays a significant role in information gathering. With the advancement of digital platforms and tools, businesses can collect data through online surveys, social media analytics, and website traffic analysis. These technological solutions provide real-time feedback and enable businesses to respond quickly to emerging issues.

In conclusion, gathering information is a critical step in the problem solving cycle in business studies. By utilizing various methods such as research, data analysis, stakeholder input, and technology, businesses can collect valuable information that can lead to effective problem solving and decision making.

Developing Potential Solutions in Business Studies

Once the problem has been identified and thoroughly understood in the problem-solving cycle, the next step is to develop potential solutions. This stage of the cycle is crucial as it involves brainstorming and evaluating various options to address the problem at hand.

Business studies provide students with a toolkit of analytical frameworks and problem-solving techniques to help in this process. Students are encouraged to think creatively and critically to come up with innovative and effective solutions.

One commonly used technique in business studies is the SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats. This analysis helps to identify the internal strengths and weaknesses of a business, as well as the external opportunities and threats it faces. By understanding these factors, students can develop solutions that leverage the strengths, mitigate the weaknesses, capitalize on the opportunities, and minimize the threats.

Another approach used in business studies is the decision matrix, which involves evaluating potential solutions based on criteria such as cost, feasibility, and impact. By assigning weights and scores to each criterion, students can objectively assess the pros and cons of each solution and make an informed decision.

In addition to these techniques, business studies also emphasize the importance of considering ethical and social implications when developing potential solutions. It is crucial for students to assess the impact their proposed solutions may have on stakeholders, such as employees, customers, and the community at large.

Overall, developing potential solutions in business studies requires a combination of analytical thinking, creativity, critical evaluation, and ethical consideration. It is a complex process that involves exploring various options and considering multiple factors. By mastering this stage of the problem-solving cycle, students are better equipped to tackle real-world business challenges in their future careers.

Evaluating Potential Solutions in Business

As part of the problem solving cycle in business, evaluating potential solutions is a crucial step. Once a problem has been identified and potential solutions have been generated, it is important to assess each solution’s feasibility and effectiveness.

Feasibility: One of the key factors to consider when evaluating potential solutions is their feasibility. This involves determining if the solution is practical, feasible, and can be implemented within the resources and constraints of the business. It is essential to consider factors such as cost, time, and available resources before making a decision.

Effectiveness: Another crucial aspect to consider is the effectiveness of each potential solution. This involves assessing how well a solution addresses the problem at hand and whether it can achieve the desired outcomes. The solution should align with the goals and objectives of the business and provide the best possible results.

Cost-Benefit Analysis: Conducting a cost-benefit analysis is a common technique used to evaluate potential solutions. This involves comparing the costs associated with implementing a solution against the expected benefits or returns. It helps decision-makers determine whether the potential solution is economically viable and if the benefits outweigh the costs.

Risks and Contingencies: It is also important to evaluate the potential risks and develop contingency plans for each solution. This involves assessing the potential negative consequences or risks associated with each solution and developing strategies to mitigate them. By considering potential risks, businesses can minimize the likelihood of failure and ensure the implementation of a successful solution.

Iterative Evaluation: It is important to note that evaluating potential solutions is an iterative process. It may require revisiting and reevaluating the solutions multiple times before making a final decision. This allows for a thorough assessment and increases the chances of selecting the most suitable solution.

In conclusion, evaluating potential solutions plays a vital role in the problem solving cycle in business. By assessing the feasibility, effectiveness, cost-benefit analysis, risks, and contingencies of each solution, businesses can make informed decisions and choose the most suitable solution to address the problem at hand.

Selecting the Best Solution for Business Problems

When studying business, it is important to understand the problem-solving cycle and how it can be applied to real-life situations. One key step in this cycle is selecting the best solution for business problems.

Evaluating the Potential Solutions

Before selecting the best solution, it is essential to evaluate the potential options available. This can be done by analyzing each solution’s feasibility, costs, benefits, and potential risks. It is important to consider both short-term and long-term implications.

Considering Stakeholders’ Perspectives

Business problems often affect various stakeholders, including employees, customers, suppliers, and investors. When selecting the best solution, it is crucial to consider the perspectives and interests of all stakeholders involved. This ensures that the solution not only resolves the problem but also maintains positive relationships and promotes overall business success.

In some cases, it may be necessary to prioritize certain stakeholders’ perspectives based on their significance to the business and the problem at hand.

Weighing the Trade-Offs

Every solution comes with trade-offs. It is essential to weigh these trade-offs and understand the potential consequences of each solution. This includes considering the financial implications, impact on resources, and potential risks involved.

By carefully weighing the trade-offs, a business can make an informed decision and select the solution that provides the greatest overall benefit.

Overall, selecting the best solution for business problems requires a comprehensive evaluation of potential solutions, consideration of stakeholders’ perspectives, and weighing the trade-offs. By following these steps in the problem-solving cycle, businesses can effectively address and resolve various challenges, ensuring continued success and growth.

Implementing the Chosen Solution in Business

Once a suitable solution has been identified in the problem solving cycle in business studies, it is crucial to effectively implement it in order to achieve desired outcomes. The implementation phase involves putting the chosen solution into action and making it a part of the organization’s operations.

Before implementing the solution, it is important to create a detailed plan outlining the steps that need to be taken and the resources required. This plan should address potential challenges and risks that could arise during the implementation process.

A key aspect of implementing the chosen solution is ensuring effective communication and coordination among the different stakeholders involved. This includes informing employees about the solution, providing them with necessary training or resources, and obtaining their feedback and support.

In some cases, it may be necessary to modify existing processes, procedures, or systems to accommodate the implementation of the chosen solution. This could involve making changes to the organization’s structure, technology, or workflow.

Monitoring and evaluating the implementation process is also essential to ensure that the chosen solution is being effectively implemented. This can be done through regular performance reviews, feedback from customers or clients, and data analysis.

Furthermore, it is important to address any issues or challenges that arise during the implementation process promptly. This may require revisiting and adapting the chosen solution or seeking additional resources or expertise if necessary.

Overall, implementing the chosen solution in business is a critical step in the problem solving cycle. It requires careful planning, effective communication, and continuous monitoring and evaluation to ensure successful implementation and achieve desired outcomes.

Monitoring the Solution’s Effectiveness in Business

Once a problem has been identified and a solution has been implemented in business studies, it is important to monitor the effectiveness of the solution. This allows businesses to ensure that the problem has been fully solved and that the solution is working as intended. Monitoring the solution’s effectiveness also provides valuable insights and data that can be used for future problem solving.

1. Collection of Data

In order to monitor the solution’s effectiveness, businesses must collect relevant data. This could include customer feedback, sales data, or any other relevant information. By collecting data, businesses can gain a better understanding of how the solution is impacting various areas of the business.

2. Analysis of Data

Once the data has been collected, it is important to analyze it to determine the effectiveness of the solution. This analysis may involve comparing the data to previous benchmarks or industry standards to determine if the solution is meeting its intended goals. This analysis can also help identify any potential areas for improvement or further problem solving.

3. Periodic Evaluation

Monitoring the solution’s effectiveness should be an ongoing process. Businesses should regularly evaluate the data and make any necessary adjustments to ensure that the solution continues to be effective. Periodic evaluation allows businesses to stay proactive in addressing any issues that may arise and make necessary changes to maintain the desired results.

By monitoring the solution’s effectiveness in business studies, businesses can ensure that their problem-solving efforts are successful and sustainable. Through the collection and analysis of relevant data, periodic evaluation, and ongoing adjustments, businesses can continuously improve and optimize their problem-solving processes.

Revising the Solution if Necessary in Business Studies

The problem solving cycle in business studies involves several steps, starting with identifying the problem, gathering information, generating potential solutions, and ultimately selecting and implementing the best solution. However, even after carefully going through these steps, it is still possible for the solution to not produce the desired results.

Recognizing the Need for Revision

During the implementation phase, it is important to closely monitor and evaluate the progress of the chosen solution. This evaluation process will help determine if the solution is effectively addressing the problem or if adjustments need to be made. By analyzing the outcomes and comparing them to the desired results, it becomes apparent whether revising the solution is necessary.

Identifying Necessary Changes

Once it is determined that the solution needs revision, the next step is to identify the specific areas that require adjustments. This may involve conducting further research, analyzing data, or seeking feedback from stakeholders. By pinpointing the weaknesses or shortcomings of the solution, it becomes possible to develop a strategy for improving it.

It is crucial to approach the revision process with an open mind and a willingness to explore alternative solutions. By being flexible and open to change, it becomes possible to find new approaches that may produce better results.

Additionally, it is important to communicate and collaborate with team members or other stakeholders during the revision process. Their insights and perspectives can provide valuable input in identifying the necessary changes and refining the solution.

Furthermore, it is essential to establish a timeline for implementing these revisions and to allocate the necessary resources to ensure their successful execution.

In conclusion, the problem solving cycle in business studies does not end with the implementation of a solution. Revising the solution if necessary is a critical step in achieving the desired outcomes. By carefully evaluating the effectiveness of the solution and making necessary adjustments, businesses can improve their problem-solving processes and ultimately achieve success.

The Role of Creativity in Problem Solving in Business

Problem solving is an essential skill in the business cycle, and it is crucial for success in any organization. However, to stand out and find innovative solutions, it is important to also foster creativity in the problem-solving process.

What is Creativity?

Creativity is the ability to think outside of the box, to come up with new and original ideas. It is a valuable skill, as it allows individuals to approach problems from different angles and find unique solutions.

In the context of problem-solving in business studies, creativity plays a vital role. It helps to break away from conventional thinking and encourages individuals to explore unconventional solutions that may have the potential to bring about positive changes in the organization.

The Impact of Creativity on Problem Solving in Business Studies

Creativity enhances problem-solving by generating a wide range of ideas and possibilities. It encourages individuals to explore different perspectives and challenge existing assumptions. This can lead to more innovative and effective solutions.

Additionally, creativity in problem-solving promotes adaptability and flexibility. It allows individuals to adapt their approaches to changing circumstances and find new ways to overcome obstacles. This can be especially valuable in today’s fast-paced business environment.

Creative problem solving also fosters collaboration and teamwork. By encouraging individuals to share their ideas and perspectives, it can enhance communication and generate a sense of ownership and commitment among team members.

In conclusion, creativity is a crucial element in problem-solving in business studies. It helps individuals approach problems with fresh perspectives, fosters innovation, and promotes collaboration. By incorporating creativity into the problem-solving cycle, businesses can find unique and effective solutions to the challenges they face.

The Importance of Communication in Problem Solving in Business

Effective communication plays a critical role in the problem-solving cycle within business studies. In order to successfully navigate the complexities of problem solving, businesses must employ clear and concise communication strategies.

Firstly, communication is crucial during the identification and definition stage of the problem-solving cycle. This involves gathering information, analyzing data, and understanding the root causes of the problem. Without effective communication, team members may misunderstand the problem or fail to communicate important information, leading to inaccurate problem definition and potentially ineffective solutions.

Clear communication promotes collaboration

In addition, communication fosters collaboration and teamwork during the brainstorming and solution generation phase. By openly discussing the problem and sharing ideas, different perspectives and expertise can be brought to the table. Effective communication ensures that all team members have a voice and are able to contribute their insights and suggestions, resulting in a more comprehensive and innovative problem-solving process.

Communication facilitates implementation and evaluation

Furthermore, communication is essential during the implementation and evaluation stages of problem solving. Clear communication ensures that everyone involved in the process understands their roles and responsibilities, timelines, and expected outcomes. This facilitates the smooth execution of the plan and enables timely adjustments if necessary. Regular communication and feedback also allow for the evaluation of the implemented solution, identifying any areas for improvement and enabling continuous learning and growth.

In conclusion, effective communication is paramount in the problem-solving cycle within business studies. It enables accurate problem definition, promotes collaboration, facilitates implementation, and allows for evaluation. Businesses that prioritize communication as a part of their problem-solving process are better equipped to address challenges and achieve successful outcomes.

The Benefits of Collaboration in Problem Solving in Business

Problem solving is an essential skill in business studies, and it plays a crucial role in the success of any organization. However, solving complex problems can be challenging, and often requires a collaborative approach.

Enhanced Problem-solving Skills

Collaboration encourages individuals to share their unique perspectives and ideas. By working together, different viewpoints can be considered, leading to more effective problem-solving strategies. Collaborative problem solving allows for a diversity of thought, which can spur innovation and creativity.

Increased Efficiency and Effectiveness

Collaboration enables teams to pool their knowledge and skills, resulting in more efficient problem solving. By dividing tasks and responsibilities, individuals can focus on their areas of expertise, leading to faster and more effective solutions. When teams work together, they can also leverage each other’s strengths and overcome individual weaknesses.

Additionally, collaboration enables teams to brainstorm and generate a wide range of possible solutions. This diversity of ideas can lead to better decision-making and more comprehensive problem-solving outcomes.

Improved Communication and Cooperation

Collaboration fosters open communication and cooperation among team members. Through collaborative problem solving, individuals learn to actively listen to others, empathize with different perspectives, and work together towards a common goal. This not only strengthens relationships, but also enhances the overall communication and teamwork skills of individuals.

Increased Employee Engagement and Satisfaction

Collaborative problem solving can increase employee engagement and satisfaction. When employees feel valued and included in the problem-solving process, they are more likely to be motivated and committed to finding solutions. Teamwork and collaboration also promote a sense of belonging and camaraderie, which can contribute to a positive work environment.

In conclusion, collaboration is a powerful tool for problem solving in business. By fostering enhanced problem-solving skills, increasing efficiency and effectiveness, improving communication and cooperation, and promoting employee engagement and satisfaction, collaboration can lead to more successful outcomes in the problem-solving cycle in business studies.

The Challenges of Problem Solving in Business

Problem-solving is an integral part of the business cycle. It requires critical thinking and analysis to identify and address issues that arise in various aspects of a business. However, there are several challenges that business professionals often face when engaging in problem-solving processes.

Limited resources

One of the major challenges in problem-solving is the availability of limited resources. Businesses often have finite budgets and restricted access to manpower, technology, and other necessary tools. This limitation can make it difficult to address complex problems that require extensive resources.

Time constraints

Time is a crucial factor in problem-solving, and business professionals often face tight deadlines. They need to find solutions quickly and implement them efficiently to minimize the impact of the problem on the overall business operations. Time constraints can create additional pressure and stress, making it challenging to think critically and come up with effective solutions.

Despite these challenges, problem-solving is an essential skill in the business world. It helps businesses identify and overcome obstacles, improve efficiency, and achieve their goals. By recognizing the challenges associated with problem-solving, business professionals can develop strategies to overcome them and optimize their problem-solving process.

The Skills Required for Effective Problem Solving in Business

In the business world, problem-solving skills are crucial for success. Whether it’s dealing with a minor issue or a major crisis, the ability to effectively identify problems and come up with solutions is essential. Here are some key skills required for effective problem-solving in a business context:

1. Analytical Thinking

Effective problem solvers have strong analytical thinking skills. This involves the ability to break down complex problems into smaller, more manageable parts and analyze the underlying causes. Analytical thinking helps business professionals see patterns, connections, and relationships between various factors, which can lead to more accurate problem diagnosis and effective solutions.

2. Creativity

Problem-solving often requires thinking outside the box and coming up with creative solutions. In a business context, this could mean finding new ways to increase efficiency, improve customer satisfaction, or adapt to changing market conditions. Creative problem solvers are not afraid to take risks and explore innovative ideas that may not have been tried before.

3. Collaboration

In many business problems, collaboration is key. Effective problem solvers know how to work well with others, communicate their ideas clearly, and listen actively. Collaboration can involve brainstorming sessions, team meetings, and seeking input from colleagues or industry experts. By involving different perspectives and expertise, business professionals can come up with more comprehensive and effective solutions.

4. Decision Making

Another critical skill for effective problem-solving in business is decision making. Business professionals need to be able to evaluate different options, weigh the pros and cons, and make informed decisions based on the available information. This requires critical thinking, the ability to consider multiple factors, and a good understanding of the potential impact of each decision.

5. Adaptability

The business environment is constantly changing, which means effective problem solvers need to be adaptable. They should be able to quickly adjust their strategies and approaches as new information or circumstances arise. Being open to change and having a flexible mindset can help business professionals navigate unexpected challenges and find innovative solutions.

By developing and honing these skills, individuals can become effective problem solvers in a business setting. The problem-solving cycle in business studies provides a framework for applying these skills systematically, allowing organizations to identify, analyze, and solve problems effectively.

Problem Solving Techniques Used in Business Studies

In the field of business studies, problem solving is a vital skill that professionals need to develop. Whether it’s identifying and resolving issues within an organization or coming up with innovative solutions, problem solving is at the core of a successful business strategy.

There are several problem-solving techniques that are commonly used in business studies. One such technique is brainstorming, which involves generating as many ideas as possible in a group setting. By encouraging creativity and free thinking, brainstorming helps to uncover different perspectives and potential solutions to a given problem.

Another technique used in business studies is root cause analysis. This method involves identifying the underlying causes of a problem rather than just addressing the symptoms. By digging deeper and understanding the root cause, businesses can implement long-lasting solutions that prevent similar problems from occurring in the future.

Furthermore, the SWOT analysis technique is widely used in business studies to assess and solve problems. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. By analyzing these four factors, businesses can identify their strengths and weaknesses, as well as potential opportunities and threats in the external environment. This analysis provides a comprehensive understanding of the current situation and helps businesses develop effective strategies to overcome challenges.

Additionally, decision-making models are frequently used in business studies to solve problems. These models involve a systematic approach to making decisions, considering various factors such as the cost-benefit analysis, risk assessment, and stakeholder analysis. By following a structured decision-making process, businesses can make informed choices that lead to the best possible outcomes.

Overall, problem solving techniques play a crucial role in business studies. By employing these techniques, professionals can effectively identify, analyze, and resolve issues that arise in the business environment. Whether it’s through brainstorming, root cause analysis, SWOT analysis, or decision-making models, businesses can develop innovative solutions and overcome challenges to achieve success.

The Future of Problem Solving in Business

In today’s rapidly changing business landscape, problem solving has become an essential skill for success. As new technologies and industries emerge, businesses are faced with increasingly complex challenges that require innovative solutions.

Adapting to the Digital Age

Advancements in technology such as artificial intelligence, machine learning, and data analytics are transforming the way businesses operate. These tools can facilitate problem solving by providing organizations with valuable insights and predictive capabilities.

For example, by analyzing large amounts of data, businesses can identify patterns and trends that may not be immediately apparent. This allows them to make data-driven decisions and proactively address potential issues before they become major problems.

Collaborative Problem Solving

The future of problem solving in business also involves a shift towards more collaborative approaches. While individual problem solving skills will always be important, businesses are realizing the power of teamwork in finding creative solutions.

Collaborative problem solving brings together individuals with diverse backgrounds, skills, and perspectives to tackle complex challenges. This allows for a more holistic understanding of the problem and encourages innovative thinking.

Additionally, collaborative problem solving fosters a culture of continuous learning and improvement. By working together, team members can learn from each other’s experiences and develop new skills that can be applied to future problem-solving endeavors.

In conclusion, the future of problem solving in business lies in embracing technological advancements and cultivating a collaborative mindset. By leveraging these approaches, businesses can navigate the complexities of the modern world and find innovative solutions to drive success.

Questions and answers:

How can the problem-solving cycle be applied in business studies.

The problem-solving cycle in business studies can be applied by identifying the problem, gathering relevant information, generating potential solutions, analyzing the solutions, selecting the best one, implementing the solution, and evaluating the outcome.

What are the essential steps in the problem-solving cycle?

The essential steps in the problem-solving cycle are problem identification, information gathering, solution generation, solution analysis, solution selection, solution implementation, and outcome evaluation.

Why is the problem-solving cycle important in business studies?

The problem-solving cycle is important in business studies because it helps to develop critical thinking skills, find effective solutions to business problems, improve decision-making, and enhance overall business performance.

What are some strategies for problem-solving in business studies?

Some strategies for problem-solving in business studies include brainstorming, conducting market research, analyzing data, seeking input from stakeholders, using decision-making models, and evaluating outcomes.

Can the problem-solving cycle be used in other disciplines besides business studies?

Yes, the problem-solving cycle can be used in other disciplines besides business studies. It is a general framework that can be applied to various fields such as engineering, healthcare, education, and technology.

What is the problem solving cycle in business studies?

The problem solving cycle in business studies is a systematic approach that helps businesses identify and solve problems. It involves several steps, including problem identification, data collection and analysis, solution generation, and implementation and evaluation of the solution.

Why is the problem solving cycle important in business studies?

The problem solving cycle is important in business studies because it helps businesses address challenges and improve their operations. By following a structured problem solving process, businesses can make data-driven decisions and implement effective solutions, leading to better outcomes and increased success.

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Problem-Solving Cycle- Discover Amazing 7 Steps to Solve Problems Insightfully

Posted on September 20, 2024 Author Dr. Balaji Niwlikar Leave a comment

Introduction to Problem-Solving Cycle

Problem-solving is a critical cognitive process that individuals engage in regularly, whether in personal, academic, or professional situations. The ability to effectively identify, analyze, and solve problems is a key skill valued in various disciplines, from education to business.

One way to approach problem-solving systematically is through the problem-solving cycle , a structured method consisting of several essential steps: problem identification, problem definition and representation, strategy formulation, organization of information, resource allocation, monitoring, and evaluation. These stages help guide individuals from recognizing the existence of a problem to finding and implementing a solution.

Problem-Solving Cycle (Sternberg & Sternberg)

Problem Identification

The first stage in the problem-solving cycle is problem identification— recognizing that a problem exists. This step is critical because if a problem is not correctly identified, it cannot be resolved. Problems often stem from discrepancies between the current state and a desired state. Sometimes problems are obvious, such as a broken computer or an underperforming employee, but at other times, they may be more subtle, such as a gradual decline in customer satisfaction or personal motivation.

For example- Consider a marketing team in a small business. Over time, the company’s sales have been declining, but no one in the organization has identified this as a significant problem. Instead, they attribute it to seasonal changes, assuming that sales will pick up in a few months. Only when a member of the team decides to dig into the data and compares current sales figures to historical trends does the issue become apparent—there is a larger, more persistent drop in sales that warrants attention. In this case, the first stage of the problem-solving cycle, problem identification, only occurs when someone recognizes the existence of a deeper issue.

Research in cognitive psychology suggests that perceptual errors can prevent individuals from identifying problems, particularly when they rely on biased assumptions or fail to actively monitor for discrepancies (Heider, 1958). In organizational settings, a lack of feedback mechanisms can also hinder problem identification. Studies show that companies with strong feedback cultures are more likely to identify issues early and address them before they become significant problems (London & Smither, 2002).

2. Problem Definition and Representation

After identifying the problem, the next step is problem definition and representation . This involves clarifying what the problem is and how it is understood. Clear definition of the problem ensures that all stakeholders are aligned in their understanding of what needs to be resolved. This stage often requires breaking the problem down into smaller components and ensuring that the scope of the problem is neither too broad nor too narrow.

For example- Returning to the example of the marketing team, once the declining sales trend is identified, the next step is to define the problem more precisely. Is the decline related to product quality, marketing strategy, or changing consumer preferences? The team decides to analyze sales data by region, product, and customer demographic, discovering that the issue primarily lies with one underperforming product line that has not been updated in several years. By defining the problem more specifically, the team can focus their efforts on addressing the product line’s shortcomings, rather than wasting resources on unrelated issues.

Effective problem definition is supported by the Framing effect (Tversky & Kahneman, 1981). How a problem is framed can significantly impact how individuals perceive and approach it. Studies show that problems framed in terms of potential losses are often approached more cautiously than those framed in terms of potential gains, which influences the chosen problem-solving strategies. In educational settings, students who clearly define a problem before attempting to solve it tend to perform better in problem-solving tasks (Pretz, Naples, & Sternberg, 2003). This finding emphasizes the importance of spending adequate time understanding the problem before moving forward.

Framing Effect

3. Strategy Formulation

Once the problem is clearly defined, the next step is strategy formulation —deciding how to approach solving the problem. This involves selecting a plan based on the nature of the problem, available resources, and the desired outcome. Strategy formulation may involve analysis—breaking down the problem into smaller, more manageable parts—or synthesis, in which elements of the problem are combined in creative ways to generate new solutions.

Two key thinking processes are involved in strategy formulation- divergent thinking and convergent thinking . Divergent thinking involves brainstorming multiple possible solutions to a problem, while convergent thinking focuses on narrowing down those solutions to find the best one.

4. Organization of Information

The fourth step in the problem-solving cycle is the organization of information . During this stage, individuals must determine how the various pieces of information related to the problem fit together. Organizing information involves structuring data in a way that highlights relationships between different elements of the problem, making it easier to discern patterns, connections, and potential solutions.

For example- The marketing team collects extensive information about consumer behavior, competitors, and past marketing campaigns. They organize this data by creating charts and visual representations to identify trends. For example, they use a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to examine internal and external factors affecting their product line. This method allows them to see how different aspects of the problem are related and helps them identify key areas for improvement.

Research shows that organizing information is critical to problem-solving success. In one study, students who used graphic organizers to arrange information performed better on problem-solving tasks than those who did not (Hawk, McLeod, & Jonassen, 1993). Cognitive psychology also suggests that visualizing the structure of a problem can lead to insight, a sudden realization of a solution that emerges when the problem is viewed from a new perspective (Ohlsson, 1992). This “aha” moment often occurs when individuals reorganize information in a way that makes the solution more apparent.

5. Resource Allocation

Resource allocation refers to the distribution of time, effort, and other resources necessary for solving the problem . This step requires individuals to evaluate the costs and benefits of various approaches and decide how best to allocate their mental and physical resources.

For example- In the case of the marketing team, they must decide how much time and money to invest in addressing the decline in sales. They evaluate the cost of running an ad campaign, redesigning the product, and conducting further market research. Based on this analysis, they allocate a larger portion of their budget to the ad campaign, which they believe will have the most significant impact on sales. However, they also set aside time to monitor the campaign’s effectiveness and make adjustments if necessary.

Planning fallacy (The Decision Lab)

6. Monitoring

As individuals work through the problem-solving process, they must continuously engage in monitoring to ensure that they are on track . Monitoring involves evaluating progress, identifying potential obstacles, and making adjustments as needed. This step is crucial because it helps individuals stay focused and avoid wasted effort.

7. Evaluation

The final stage of the problem-solving cycle is evaluation—assessing whether the solution has been successful in solving the problem. This step involves reviewing the outcomes of the problem-solving process and determining whether any additional actions are necessary.

For example- After several months, the marketing team evaluates the overall impact of their efforts. They find that the updated product design and targeted ad campaign have successfully increased sales, but not to the level they had originally hoped. Based on this evaluation, they decide to implement additional changes to the product and continue refining their marketing strategy. By critically assessing the effectiveness of their solution, they ensure that they are constantly improving.

Research shows that individuals who engage in reflective practice —regularly evaluating their problem-solving processes—are more likely to achieve long-term success (Schön, 1983). In professional settings, organizations that conduct post-mortem analyses after completing projects tend to improve their problem-solving processes over time (Fong, 2006). Evaluation is essential for learning from past experiences and applying those lessons to future problems.

Conclusion to Problem-Solving Cycle

The efficacy of the problem-solving cycle is well-supported by research across multiple disciplines, including cognitive psychology, education, and business. Studies have shown that systematic problem-solving approaches enhance cognitive abilities and lead to better outcomes. For example, research in cognitive psychology emphasizes the importance of clear thinking and strategic planning (Sternberg, 1986), while educational studies highlight how structured problem-solving improves learning and achievement (Schön, 1983).

In the business world, effective problem-solving processes are linked to improved organizational performance and innovation (Fong, 2006). By adhering to the steps of the problem-solving cycle, individuals and organizations can enhance their problem-solving skills, overcome challenges, and achieve lasting success.

Reference for Problem-Solving Cycle

Bloom, B. S., & Broder, L. J. (1950). Problem-solving processes of college students: An exploratory investigation. University of Chicago Press.

Carlson, M. P., & Bloom, I. (2005). The cyclic nature of problem solving: An emergent multidimensional problem-solving framework. Educational Studies in Mathematics, 58(1), 45-75.

Flavell, J. H. (1979). Metacognition and cognitive monitoring: A new area of cognitive–developmental inquiry. American Psychologist, 34(10), 906-911.

Fong, G. (2006). Postmortem analysis and the improvement of project management. International Journal of Project Management, 24(1), 29-37.

Galotti, K. M. (2018). Cognitive psychology in and out of the laboratory. Thomson Brooks/Cole Publishing Co.

Guilford, J. P. (1967). The nature of human intelligence. McGraw-Hill.

Hawk, P. P., McLeod, R. W., & Jonassen, D. H. (1993). Teaching and learning problem solving: Matching strategies with objectives. Educational Technology Research and Development, 41(1), 17-30.

Heider, F. (1958). The psychology of interpersonal relations. John Wiley & Sons, Inc.

Jordan, P. J., & Troth, A. C. (2004). Managing emotions during team problem solving: Emotional intelligence and conflict resolution. Human Performance, 17(2), 195-218.

Larkin, J. H., McDermott, J., Simon, D. P., & Simon, H. A. (1980). Expert and novice performance in solving physics problems. Science, 208(4450), 1335-1342.

London, M., & Smither, J. W. (2002). Feedback orientation, feedback culture, and the longitudinal performance management process. Human Resource Management Review, 12(1), 81-100.

Matlin, M. W., & Farmer, A. (2019). Cognition (10th ed.). Wiley.

Mumford, M. D., Marks, M. A., Connelly, M. S., Zaccaro, S. J., & Reiter-Palmon, R. (1991). Cognitive and temperament predictors of creative problem-solving. Journal of Creative Behavior, 25(3), 256-278.

Ohlsson, S. (1992). Information-processing explanations of insight and related phenomena. Advances in Psychology, 93, 1-44.

Pretz, J. E., Naples, A. J., & Sternberg, R. J. (2003). Recognizing, defining, and representing problems. In J. E. Davidson & R. J. Sternberg (Eds.), The psychology of problem solving (pp. 3-30). Cambridge University Press.

Schön, D. A. (1983). The reflective practitioner: How professionals think in action. Basic Books.

Schraw, G., & Dennison, R. S. (1994). Assessing metacognitive awareness. Contemporary Educational Psychology, 19(4), 460-475.

Schwarz, N., & Skurnik, I. (2003). Feeling and thinking: Implications for problem solving. In J. E. Davidson & R. J. Sternberg (Eds.), The psychology of problem solving (pp. 263-291). Cambridge University Press.

Sternberg, R. J. (1981). Intelligence and problem-solving. Cognition, 9(1), 45-59.

Sternberg, R. J. (1986). Intelligence applied: Understanding and increasing your intellectual skills. Harcourt Brace Jovanovich.

Sternberg, R. J., & Sternberg, K. (2006). Cognitive psychology (p. 178). Belmont, CA: Thomson/Wadsworth.

Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211(4481), 453-458.

Zhou, J. (2013). Emotional intelligence and innovation performance. European Journal of Innovation Management, 16(1), 21-45.

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How to master the seven-step problem-solving process

In this episode of the McKinsey Podcast , Simon London speaks with Charles Conn, CEO of venture-capital firm Oxford Sciences Innovation, and McKinsey senior partner Hugo Sarrazin about the complexities of different problem-solving strategies.

Podcast transcript

Simon London: Hello, and welcome to this episode of the McKinsey Podcast , with me, Simon London. What’s the number-one skill you need to succeed professionally? Salesmanship, perhaps? Or a facility with statistics? Or maybe the ability to communicate crisply and clearly? Many would argue that at the very top of the list comes problem solving: that is, the ability to think through and come up with an optimal course of action to address any complex challenge—in business, in public policy, or indeed in life.

Looked at this way, it’s no surprise that McKinsey takes problem solving very seriously, testing for it during the recruiting process and then honing it, in McKinsey consultants, through immersion in a structured seven-step method. To discuss the art of problem solving, I sat down in California with McKinsey senior partner Hugo Sarrazin and also with Charles Conn. Charles is a former McKinsey partner, entrepreneur, executive, and coauthor of the book Bulletproof Problem Solving: The One Skill That Changes Everything [John Wiley & Sons, 2018].

Charles and Hugo, welcome to the podcast. Thank you for being here.

Hugo Sarrazin: Our pleasure.

Charles Conn: It’s terrific to be here.

Simon London: Problem solving is a really interesting piece of terminology. It could mean so many different things. I have a son who’s a teenage climber. They talk about solving problems. Climbing is problem solving. Charles, when you talk about problem solving, what are you talking about?

Charles Conn: For me, problem solving is the answer to the question “What should I do?” It’s interesting when there’s uncertainty and complexity, and when it’s meaningful because there are consequences. Your son’s climbing is a perfect example. There are consequences, and it’s complicated, and there’s uncertainty—can he make that grab? I think we can apply that same frame almost at any level. You can think about questions like “What town would I like to live in?” or “Should I put solar panels on my roof?”

You might think that’s a funny thing to apply problem solving to, but in my mind it’s not fundamentally different from business problem solving, which answers the question “What should my strategy be?” Or problem solving at the policy level: “How do we combat climate change?” “Should I support the local school bond?” I think these are all part and parcel of the same type of question, “What should I do?”

I’m a big fan of structured problem solving. By following steps, we can more clearly understand what problem it is we’re solving, what are the components of the problem that we’re solving, which components are the most important ones for us to pay attention to, which analytic techniques we should apply to those, and how we can synthesize what we’ve learned back into a compelling story. That’s all it is, at its heart.

I think sometimes when people think about seven steps, they assume that there’s a rigidity to this. That’s not it at all. It’s actually to give you the scope for creativity, which often doesn’t exist when your problem solving is muddled.

Simon London: You were just talking about the seven-step process. That’s what’s written down in the book, but it’s a very McKinsey process as well. Without getting too deep into the weeds, let’s go through the steps, one by one. You were just talking about problem definition as being a particularly important thing to get right first. That’s the first step. Hugo, tell us about that.

Hugo Sarrazin: It is surprising how often people jump past this step and make a bunch of assumptions. The most powerful thing is to step back and ask the basic questions—“What are we trying to solve? What are the constraints that exist? What are the dependencies?” Let’s make those explicit and really push the thinking and defining. At McKinsey, we spend an enormous amount of time in writing that little statement, and the statement, if you’re a logic purist, is great. You debate. “Is it an ‘or’? Is it an ‘and’? What’s the action verb?” Because all these specific words help you get to the heart of what matters.

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Simon London: So this is a concise problem statement.

Hugo Sarrazin: Yeah. It’s not like “Can we grow in Japan?” That’s interesting, but it is “What, specifically, are we trying to uncover in the growth of a product in Japan? Or a segment in Japan? Or a channel in Japan?” When you spend an enormous amount of time, in the first meeting of the different stakeholders, debating this and having different people put forward what they think the problem definition is, you realize that people have completely different views of why they’re here. That, to me, is the most important step.

Charles Conn: I would agree with that. For me, the problem context is critical. When we understand “What are the forces acting upon your decision maker? How quickly is the answer needed? With what precision is the answer needed? Are there areas that are off limits or areas where we would particularly like to find our solution? Is the decision maker open to exploring other areas?” then you not only become more efficient, and move toward what we call the critical path in problem solving, but you also make it so much more likely that you’re not going to waste your time or your decision maker’s time.

How often do especially bright young people run off with half of the idea about what the problem is and start collecting data and start building models—only to discover that they’ve really gone off half-cocked.

Hugo Sarrazin: Yeah.

Charles Conn: And in the wrong direction.

Simon London: OK. So step one—and there is a real art and a structure to it—is define the problem. Step two, Charles?

Charles Conn: My favorite step is step two, which is to use logic trees to disaggregate the problem. Every problem we’re solving has some complexity and some uncertainty in it. The only way that we can really get our team working on the problem is to take the problem apart into logical pieces.

What we find, of course, is that the way to disaggregate the problem often gives you an insight into the answer to the problem quite quickly. I love to do two or three different cuts at it, each one giving a bit of a different insight into what might be going wrong. By doing sensible disaggregations, using logic trees, we can figure out which parts of the problem we should be looking at, and we can assign those different parts to team members.

Simon London: What’s a good example of a logic tree on a sort of ratable problem?

Charles Conn: Maybe the easiest one is the classic profit tree. Almost in every business that I would take a look at, I would start with a profit or return-on-assets tree. In its simplest form, you have the components of revenue, which are price and quantity, and the components of cost, which are cost and quantity. Each of those can be broken out. Cost can be broken into variable cost and fixed cost. The components of price can be broken into what your pricing scheme is. That simple tree often provides insight into what’s going on in a business or what the difference is between that business and the competitors.

If we add the leg, which is “What’s the asset base or investment element?”—so profit divided by assets—then we can ask the question “Is the business using its investments sensibly?” whether that’s in stores or in manufacturing or in transportation assets. I hope we can see just how simple this is, even though we’re describing it in words.

When I went to work with Gordon Moore at the Moore Foundation, the problem that he asked us to look at was “How can we save Pacific salmon?” Now, that sounds like an impossible question, but it was amenable to precisely the same type of disaggregation and allowed us to organize what became a 15-year effort to improve the likelihood of good outcomes for Pacific salmon.

Simon London: Now, is there a danger that your logic tree can be impossibly large? This, I think, brings us onto the third step in the process, which is that you have to prioritize.

Charles Conn: Absolutely. The third step, which we also emphasize, along with good problem definition, is rigorous prioritization—we ask the questions “How important is this lever or this branch of the tree in the overall outcome that we seek to achieve? How much can I move that lever?” Obviously, we try and focus our efforts on ones that have a big impact on the problem and the ones that we have the ability to change. With salmon, ocean conditions turned out to be a big lever, but not one that we could adjust. We focused our attention on fish habitats and fish-harvesting practices, which were big levers that we could affect.

People spend a lot of time arguing about branches that are either not important or that none of us can change. We see it in the public square. When we deal with questions at the policy level—“Should you support the death penalty?” “How do we affect climate change?” “How can we uncover the causes and address homelessness?”—it’s even more important that we’re focusing on levers that are big and movable.

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Simon London: Let’s move swiftly on to step four. You’ve defined your problem, you disaggregate it, you prioritize where you want to analyze—what you want to really look at hard. Then you got to the work plan. Now, what does that mean in practice?

Hugo Sarrazin: Depending on what you’ve prioritized, there are many things you could do. It could be breaking the work among the team members so that people have a clear piece of the work to do. It could be defining the specific analyses that need to get done and executed, and being clear on time lines. There’s always a level-one answer, there’s a level-two answer, there’s a level-three answer. Without being too flippant, I can solve any problem during a good dinner with wine. It won’t have a whole lot of backing.

Simon London: Not going to have a lot of depth to it.

Hugo Sarrazin: No, but it may be useful as a starting point. If the stakes are not that high, that could be OK. If it’s really high stakes, you may need level three and have the whole model validated in three different ways. You need to find a work plan that reflects the level of precision, the time frame you have, and the stakeholders you need to bring along in the exercise.

Charles Conn: I love the way you’ve described that, because, again, some people think of problem solving as a linear thing, but of course what’s critical is that it’s iterative. As you say, you can solve the problem in one day or even one hour.

Charles Conn: We encourage our teams everywhere to do that. We call it the one-day answer or the one-hour answer. In work planning, we’re always iterating. Every time you see a 50-page work plan that stretches out to three months, you know it’s wrong. It will be outmoded very quickly by that learning process that you described. Iterative problem solving is a critical part of this. Sometimes, people think work planning sounds dull, but it isn’t. It’s how we know what’s expected of us and when we need to deliver it and how we’re progressing toward the answer. It’s also the place where we can deal with biases. Bias is a feature of every human decision-making process. If we design our team interactions intelligently, we can avoid the worst sort of biases.

Simon London: Here we’re talking about cognitive biases primarily, right? It’s not that I’m biased against you because of your accent or something. These are the cognitive biases that behavioral sciences have shown we all carry around, things like anchoring, overoptimism—these kinds of things.

Both: Yeah.

Charles Conn: Availability bias is the one that I’m always alert to. You think you’ve seen the problem before, and therefore what’s available is your previous conception of it—and we have to be most careful about that. In any human setting, we also have to be careful about biases that are based on hierarchies, sometimes called sunflower bias. I’m sure, Hugo, with your teams, you make sure that the youngest team members speak first. Not the oldest team members, because it’s easy for people to look at who’s senior and alter their own creative approaches.

Hugo Sarrazin: It’s helpful, at that moment—if someone is asserting a point of view—to ask the question “This was true in what context?” You’re trying to apply something that worked in one context to a different one. That can be deadly if the context has changed, and that’s why organizations struggle to change. You promote all these people because they did something that worked well in the past, and then there’s a disruption in the industry, and they keep doing what got them promoted even though the context has changed.

Simon London: Right. Right.

Hugo Sarrazin: So it’s the same thing in problem solving.

Charles Conn: And it’s why diversity in our teams is so important. It’s one of the best things about the world that we’re in now. We’re likely to have people from different socioeconomic, ethnic, and national backgrounds, each of whom sees problems from a slightly different perspective. It is therefore much more likely that the team will uncover a truly creative and clever approach to problem solving.

Simon London: Let’s move on to step five. You’ve done your work plan. Now you’ve actually got to do the analysis. The thing that strikes me here is that the range of tools that we have at our disposal now, of course, is just huge, particularly with advances in computation, advanced analytics. There’s so many things that you can apply here. Just talk about the analysis stage. How do you pick the right tools?

Charles Conn: For me, the most important thing is that we start with simple heuristics and explanatory statistics before we go off and use the big-gun tools. We need to understand the shape and scope of our problem before we start applying these massive and complex analytical approaches.

Simon London: Would you agree with that?

Hugo Sarrazin: I agree. I think there are so many wonderful heuristics. You need to start there before you go deep into the modeling exercise. There’s an interesting dynamic that’s happening, though. In some cases, for some types of problems, it is even better to set yourself up to maximize your learning. Your problem-solving methodology is test and learn, test and learn, test and learn, and iterate. That is a heuristic in itself, the A/B testing that is used in many parts of the world. So that’s a problem-solving methodology. It’s nothing different. It just uses technology and feedback loops in a fast way. The other one is exploratory data analysis. When you’re dealing with a large-scale problem, and there’s so much data, I can get to the heuristics that Charles was talking about through very clever visualization of data.

You test with your data. You need to set up an environment to do so, but don’t get caught up in neural-network modeling immediately. You’re testing, you’re checking—“Is the data right? Is it sound? Does it make sense?”—before you launch too far.

Simon London: You do hear these ideas—that if you have a big enough data set and enough algorithms, they’re going to find things that you just wouldn’t have spotted, find solutions that maybe you wouldn’t have thought of. Does machine learning sort of revolutionize the problem-solving process? Or are these actually just other tools in the toolbox for structured problem solving?

Charles Conn: It can be revolutionary. There are some areas in which the pattern recognition of large data sets and good algorithms can help us see things that we otherwise couldn’t see. But I do think it’s terribly important we don’t think that this particular technique is a substitute for superb problem solving, starting with good problem definition. Many people use machine learning without understanding algorithms that themselves can have biases built into them. Just as 20 years ago, when we were doing statistical analysis, we knew that we needed good model definition, we still need a good understanding of our algorithms and really good problem definition before we launch off into big data sets and unknown algorithms.

Simon London: Step six. You’ve done your analysis.

Charles Conn: I take six and seven together, and this is the place where young problem solvers often make a mistake. They’ve got their analysis, and they assume that’s the answer, and of course it isn’t the answer. The ability to synthesize the pieces that came out of the analysis and begin to weave those into a story that helps people answer the question “What should I do?” This is back to where we started. If we can’t synthesize, and we can’t tell a story, then our decision maker can’t find the answer to “What should I do?”

Simon London: But, again, these final steps are about motivating people to action, right?

Charles Conn: Yeah.

Simon London: I am slightly torn about the nomenclature of problem solving because it’s on paper, right? Until you motivate people to action, you actually haven’t solved anything.

Charles Conn: I love this question because I think decision-making theory, without a bias to action, is a waste of time. Everything in how I approach this is to help people take action that makes the world better.

Simon London: Hence, these are absolutely critical steps. If you don’t do this well, you’ve just got a bunch of analysis.

Charles Conn: We end up in exactly the same place where we started, which is people speaking across each other, past each other in the public square, rather than actually working together, shoulder to shoulder, to crack these important problems.

Simon London: In the real world, we have a lot of uncertainty—arguably, increasing uncertainty. How do good problem solvers deal with that?

Hugo Sarrazin: At every step of the process. In the problem definition, when you’re defining the context, you need to understand those sources of uncertainty and whether they’re important or not important. It becomes important in the definition of the tree.

You need to think carefully about the branches of the tree that are more certain and less certain as you define them. They don’t have equal weight just because they’ve got equal space on the page. Then, when you’re prioritizing, your prioritization approach may put more emphasis on things that have low probability but huge impact—or, vice versa, may put a lot of priority on things that are very likely and, hopefully, have a reasonable impact. You can introduce that along the way. When you come back to the synthesis, you just need to be nuanced about what you’re understanding, the likelihood.

Often, people lack humility in the way they make their recommendations: “This is the answer.” They’re very precise, and I think we would all be well-served to say, “This is a likely answer under the following sets of conditions” and then make the level of uncertainty clearer, if that is appropriate. It doesn’t mean you’re always in the gray zone; it doesn’t mean you don’t have a point of view. It just means that you can be explicit about the certainty of your answer when you make that recommendation.

Simon London: So it sounds like there is an underlying principle: “Acknowledge and embrace the uncertainty. Don’t pretend that it isn’t there. Be very clear about what the uncertainties are up front, and then build that into every step of the process.”

Hugo Sarrazin: Every step of the process.

Simon London: Yeah. We have just walked through a particular structured methodology for problem solving. But, of course, this is not the only structured methodology for problem solving. One that is also very well-known is design thinking, which comes at things very differently. So, Hugo, I know you have worked with a lot of designers. Just give us a very quick summary. Design thinking—what is it, and how does it relate?

Hugo Sarrazin: It starts with an incredible amount of empathy for the user and uses that to define the problem. It does pause and go out in the wild and spend an enormous amount of time seeing how people interact with objects, seeing the experience they’re getting, seeing the pain points or joy—and uses that to infer and define the problem.

Simon London: Problem definition, but out in the world.

Hugo Sarrazin: With an enormous amount of empathy. There’s a huge emphasis on empathy. Traditional, more classic problem solving is you define the problem based on an understanding of the situation. This one almost presupposes that we don’t know the problem until we go see it. The second thing is you need to come up with multiple scenarios or answers or ideas or concepts, and there’s a lot of divergent thinking initially. That’s slightly different, versus the prioritization, but not for long. Eventually, you need to kind of say, “OK, I’m going to converge again.” Then you go and you bring things back to the customer and get feedback and iterate. Then you rinse and repeat, rinse and repeat. There’s a lot of tactile building, along the way, of prototypes and things like that. It’s very iterative.

Simon London: So, Charles, are these complements or are these alternatives?

Charles Conn: I think they’re entirely complementary, and I think Hugo’s description is perfect. When we do problem definition well in classic problem solving, we are demonstrating the kind of empathy, at the very beginning of our problem, that design thinking asks us to approach. When we ideate—and that’s very similar to the disaggregation, prioritization, and work-planning steps—we do precisely the same thing, and often we use contrasting teams, so that we do have divergent thinking. The best teams allow divergent thinking to bump them off whatever their initial biases in problem solving are. For me, design thinking gives us a constant reminder of creativity, empathy, and the tactile nature of problem solving, but it’s absolutely complementary, not alternative.

Simon London: I think, in a world of cross-functional teams, an interesting question is do people with design-thinking backgrounds really work well together with classical problem solvers? How do you make that chemistry happen?

Hugo Sarrazin: Yeah, it is not easy when people have spent an enormous amount of time seeped in design thinking or user-centric design, whichever word you want to use. If the person who’s applying classic problem-solving methodology is very rigid and mechanical in the way they’re doing it, there could be an enormous amount of tension. If there’s not clarity in the role and not clarity in the process, I think having the two together can be, sometimes, problematic.

The second thing that happens often is that the artifacts the two methodologies try to gravitate toward can be different. Classic problem solving often gravitates toward a model; design thinking migrates toward a prototype. Rather than writing a big deck with all my supporting evidence, they’ll bring an example, a thing, and that feels different. Then you spend your time differently to achieve those two end products, so that’s another source of friction.

Now, I still think it can be an incredibly powerful thing to have the two—if there are the right people with the right mind-set, if there is a team that is explicit about the roles, if we’re clear about the kind of outcomes we are attempting to bring forward. There’s an enormous amount of collaborativeness and respect.

Simon London: But they have to respect each other’s methodology and be prepared to flex, maybe, a little bit, in how this process is going to work.

Hugo Sarrazin: Absolutely.

Simon London: The other area where, it strikes me, there could be a little bit of a different sort of friction is this whole concept of the day-one answer, which is what we were just talking about in classical problem solving. Now, you know that this is probably not going to be your final answer, but that’s how you begin to structure the problem. Whereas I would imagine your design thinkers—no, they’re going off to do their ethnographic research and get out into the field, potentially for a long time, before they come back with at least an initial hypothesis.

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Hugo Sarrazin: That is a great callout, and that’s another difference. Designers typically will like to soak into the situation and avoid converging too quickly. There’s optionality and exploring different options. There’s a strong belief that keeps the solution space wide enough that you can come up with more radical ideas. If there’s a large design team or many designers on the team, and you come on Friday and say, “What’s our week-one answer?” they’re going to struggle. They’re not going to be comfortable, naturally, to give that answer. It doesn’t mean they don’t have an answer; it’s just not where they are in their thinking process.

Simon London: I think we are, sadly, out of time for today. But Charles and Hugo, thank you so much.

Charles Conn: It was a pleasure to be here, Simon.

Hugo Sarrazin: It was a pleasure. Thank you.

Simon London: And thanks, as always, to you, our listeners, for tuning into this episode of the McKinsey Podcast . If you want to learn more about problem solving, you can find the book, Bulletproof Problem Solving: The One Skill That Changes Everything , online or order it through your local bookstore. To learn more about McKinsey, you can of course find us at McKinsey.com.

Charles Conn is CEO of Oxford Sciences Innovation and an alumnus of McKinsey’s Sydney office. Hugo Sarrazin is a senior partner in the Silicon Valley office, where Simon London, a member of McKinsey Publishing, is also based.

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Business Studies: CREATIVE THINKING & PROBLEM SOLVING

Kurt Bailey 

At the end of this lesson you should be able to:

• Explain the meaning of creative thinking.

• Discuss/Describe/Explain the advantages/benefits of creative thinking in the workplace.

• Explain how businesses can use creative thinking to generate entrepreneurial opportunities.

• Discuss how businesses can use creative thinking to solve business problems.

Introduction:

Businesses have to solve many problems as they confront the challenges of dynamic and complex business environments. Businesses need to find ways to break out from routine thinking in order to solve problems and make decisions.

Recently all businesses, locally and abroad, were confronted with the challenges that was brought about by the COVID-19 pandemic This forced them to come up with new/innovative ideas to survive. Just consider how the restaurant industry, which is one of many, was adversely affected. As a result of the declaration of a state of disaster, restaurants could no longer open up their doors for patrons to come and sit down. Consequently, most of them have resorted to taking orders online and/or telephonically and then deliver to the clients.

Solving problems requires businesses to apply creative and critical thinking skills.

The key focus of this lesson will be on:

i) How Creative thinking can contribute towards successful and sustainable business practice. We will also be looking at ii) How Creative thinking can be used to generate entrepreneurial opportunities and solve business problems.

CONCEPTS AND SKILLS

• 1. Make sure that you know the key concept(s):

Creative thinking - The thought process that leads to original/novel/new ideas/new approaches. Use of non-conventional methods to solve problems. Breaking out of routine thinking.

Routine thinking - Sequence of actions or patterns of behaviour that is regularly followed or rehearsed.

Conventional solutions - Solutions based on what is generally done, believed or conformed to.

Non-conventional ideas - Solutions based on what is not generally done, believed or conformed to.

Problem solving - Alternative solutions are generated/ identified and critically evaluated. Analysing a situation to identify strategies to bring about change.

Decision making - Various alternatives are considered before choosing the best one. It is part of the problem solving cycle as decisions need to be made in each step.

Innovative - The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Challenge/Threat - A problem/obstacle that can prevent you from achieving a goal.

Opportunity - A time or set of circumstances that makes it possible to do something

Business Opportunity - Is a business investment that allows the buyer to start a business.

• 2. Core Content: • Make sure that you know / understand and are able to apply the CORE CONTENT. Pay particular attention to the cognitive levels. The cognitive verbs serve as a guide for how to answer the questions.
• 3. Discuss how businesses can use creative thinking to solve business problems.
• 4. Elaborate on the meaning of problem solving.
• 5. Explain the differences between decision making and problem solving
• 6. Outline/Mention /Discuss/Explain/ the problem solving cycle.

1.1.Complete the following statement by using the word(s) in the list below. Write only the word(s) next to the question number.

1.1.1 The …. process requires creative thinking skills to generate and evaluate alternative solutions. (2)

1.1.2 …. refers to the process in which various alternatives are considered before deciding on the (2) best one.

2.1 Read the scenario below and answer the questions that follows:

2.1.1 Define creative thinking. (2)

2.1.2 Explain the advantages/benefits of creative thinking in the workplace for businesses like Google. (10)

2.1.3 Discuss ANY FOUR steps in the problem-solving-cycle that Google can follow to solve their problems. (12)

2.1.4 Explain how Google can use creative thinking to generate entrepreneurial opportunities. (6)

In Conclusion

• Constant changes in the market impact on business operations and so they need to adapt to it quickly and make quick/creative decisions.

• Creative thinking can help to solve business problems successfully.

• In part two of Creative thinking and Problem-solving the emphasis will be on the Problem-solving techniques businesses can use to solve many problems as they confront the challenges of dynamic and complex business environments.

• 2020 Grade 10 Business Studies Core Notes: Business Roles: Creative thinking and Problem-solving, Pages 3-6

• Via Afrika Business Studies Grade 11 Learner's Book

• Platinum Business Studies Grade 11 Learner's Book

• Oxford Successful Business Studies Grade 11 Learner's Book

• Solutions for a Business Studies Grade 11 Learner's Book

• Focus Business Studies Grade 11 Learner's Book