General Approach to Decision Making and Problem Solving

Whether you are a scientist, an executive of a major corporation, or a small business owner, the general approach to systematically solving problems is the same.

The following 7 step approach to better management decision making can be used to study nearly all problems faced by a business.

State the problem

A problem first must exist and be recognized. What is the problem and why is it a problem. What is ideal and how do current operations vary from that ideal. Identify why the symptoms (what is going wrong) and the causes (why is it going wrong).

Try to define all terms, concepts, variables, and relationships. Quantify the problem to the extent possible. If the problem, not accurately and quickly filling customer orders, try to determine how many orders were incorrectly filled and how long it took to fill them.

Define the Objectives

What are the objectives of the study. Which objectives are the most critical. Objectives usually are stated by an action verb like to reduce, to increase, or to improve.

Returning to the customer order problem, the major objectives would be:

• To increase the percentage of orders filled correctly.
• To reduce the time it takes to process and order.

A sub objective could include to simplify and streamline the order filling process.

Develop a Diagnostic Framework

Next establish a diagnostic framework, that is, decide what methods are going to be used, what kinds of information are needed, and how and where the information is to be found.

Is there going to be a customer survey, a review of company documents, time and motion tests, or something else. What are the assumptions (facts assumed to be correct) of the study. What are the criteria used to judge the study.

What time, budget, or other constraints are there. What kind of quantitative or other specific techniques are going to be used to analyze the data. (Some of which will be covered shortly). In other words, the diagnostic framework establishes the scope and methods of the entire study.

Collect and Analyze the Data

The next step is to collect the data (by following the methods established in Step 3. Raw data is then tabulated and organized to facilitate analysis. Tables, charts, graphs, indexes and matrices are some of the standard ways to organize raw data.

Analysis is the critical prerequisite of sound business decision making. What does the data reveal.

What facts, patterns, and trends can be seen in the data. Many of the quantitative techniques covered below can be used during the step to determine facts, patterns, and trends in data. Of course,computers are used extensively during this step.

Generate Alternative Solutions

After the analysis has been finished, some specific conclusions about the nature of the problem and its resolution should have been reached. The next step is to develop alternative solutions to the problem and rank them in order of their net benefits.

But how are alternatives best generated. Again, there are several well established techniques such as the Nominal Group Method, the Delphi Method and Brainstorming, among others. In all these methods a group is involved, all of whom have reviewed the data and analysis. The approach is to have an informed group suggesting a variety of possible solutions.

Develop an Action Plan and Implement

Select the best solution to the problem but be certain to understand clearly why it is best, that is, how it achieves the objectives established in Step 2 better than its alternatives. Then develop an effective method (Action Plan) to implement the solution.

At this point an important organizational consideration arises – who is going to be responsible for seeing the implementation through and what authority does he have.

The selected manager should be responsible for seeing that all tasks, deadlines, and reports are performed, met, and written. Details are important in this step: schedules, reports, tasks, and communication are the key elements of any action plan. There are several techniques available to decision makers implementing an action plan.

The PERT method is a way of laying out an entire period such as an action plan.

Evaluate, obtain Feedback and Monitor

After the Action Plan has been implemented to solve a problem, management must evaluate its effectiveness. Evaluation standards must be determined, feedback channels developed, and monitoring performed. This Step should be done after 3 to 5 weeks and again at 6 months. The goal is to answer the bottom line question. Has the problem been solved?

Next: Mastering the Art of Decision Making

BizEducator