PROBLEM IDENTIFICATION.

Although business problems in the form of a broken piece of machinery or an irate customer are readily apparent, many problems present themselves in a more subtle fashion. For example, if a firm's overall sales are increasing, but its percentage of market share is declining, there is no attention-grabbing incident to indicate that a problem exists. However, the problemsolving framework is still helpful in analyzing the current state of affairs and developing a management intervention to guide the firm toward the future desired state. Therefore, a solid approach to problem solving begins with a solid approach to problem identification. Whatever techniques are used, a firm's approach to problem identification should address three common identification shortfalls. First and most obviously, the firm wants to avoid being blindsided. Many problems develop over time; however, unless the firm is paying attention, warning signals may go unheeded until it is too late to effectively respond. A second common error of problem identification is not appropriating properly. This means that although a firm recognizes that an issue exists, they do not recognize the significance of the problem and fail to dedicate sufficient resources to its solution. It can be argued that not prioritizing properly has kept many traditional retail firms from responding effectively to emerging internet-based competitors. Finally, a third common error in problem identification is overreaction-the Chicken Little syndrome. Just as every falling acorn does not indicate that the sky is falling, neither does every customer complaint indicates that a crisis exists. Therefore, a firm's problem identification methods should strive to present an accurate assessment of the problems and opportunities facing the firm. While no specific problem-identification technique will be appropriate for every situation, there are several techniques that are widely applicable. Two of the most useful techniques are

statistical process control (SPC) and benchmarking. SPC is commonly used in the repetitive manufacturing industries, but can also prove useful in any stable production or service-delivery setting. A well formulated SPC program serves to inform managers when their operational processes are performing as expected and when something unexpected is introducing variation in process outputs. A simplified version of SPC is to examine performance outliers-those instances when performance was unusually poor or unusually good. It is believed that determining what went wrong, or conversely what went right, may inspire process or product modifications. Competitive benchmarking allows managers to keep tabs on their competition and thereby gauge their customers' evolving expectations. For instance, benchmarking might involve reverse engineering-disassembling a competitor's product-to study its design features and estimate the competitor's manufacturing costs. Texas Nameplate Company, Inc., a 1998 Malcolm Baldrige National Quality Award winner, uses competitive benchmarking by periodically ordering products from their competitors to compare their delivery-time performance. Additional listening and problem identification techniques include the time-tested management-by-walking-around, revamped with a Japanese influence as going to gemba. The technique suggests that managers go to where the action is-to the production floor, point of delivery, or even to the customer's facilities to directly observe how things are done and how the product is used. Other methods include active solicitation of customer complaints and feedback. Bennigan's Restaurants offer a five-dollar credit toward future purchases to randomly selected customers who respond to telephone surveys on their satisfaction with their most recent restaurant visit. Granite Rock Company, a 1992 Baldrige Award winner, goes even farther by allowing customers to choose not to pay for any item that fails to meet their expectations. All that

Granite Rock asks in return is an explanation of why the product was unsatisfactory. Read more: Problem Solving - organization, system, manager, definition, company, business, system http://www.referenceforbusiness.com/management/OrPr/Problem-Solving.html#ixzz1nVjy0smh