L4 - Problem Analysis Flashcards
Name two common problems with business strategy?
Overreliance on past experience - use tried and tested past solution for new and unfamiliar problems
Problem framing - capture the problem in an unhelpful way
Explain the creativity and level of analysis diagram?
Guessing - high creativity low LOA (e.g. untested solution)
Experience-based - risk copying past solutions for wrong problem (low creativity and low LOA)
Solely driven by frameworks - high LOA, low creativity
Structured problem solving - high creativity and low LOA (has the best elements of creativity and frameworks)
Name the two major types of analysis? What are the orders?
Problem analysis - the what, where, why sequence
Opportunity analysis - the why, where, what sequence
What is the problem diagnosis steps?
WHAT - (a) identify the results gap (e.g. lower profits than expected) (b) decompose gap by drivers (e.g. out of revenue and costs what is driving lower profit) (c) integrative process (e.g. use more than one dimension or feature)
WHERE - (a) Segment the result gap (e.g. the distribution of the gap across segments like geography, product, channel…) (b) 80/20 rule (e.g. 20% of explanatory factors explain 80% of results) (c) find where the biggest gaps are (d) uncover hidden gaps (inside some factors the problems are not evenly distributed and worth investigating)
WHY - (a) select a hypothesis (e.g. abductive reasoning which is the best possible explanation selected first) (b) test hypothesis (c) root cause (five why approach: collect data, interact with people, reason, infer) (d) 80/20 rules - if a root cause covers 80% of gap then focus on solution for this
What are the problems with client data?
Data owners may fear their job is at stake and provide biased data
NEVER accept data without an audit
How would segment the result gap?
Organise the absolute data
Calculate percentages
Use tables to calculate rows and columns to see which dimension or characteristics are more important
Example - revenue gap by country or product
Three types of reasoning? What do they all involve
Commonalities - (a) specific case (b) specific result (c) probable general rule
Abduction - best guess
Inductive reasoning - infer general rule by observing and analysis specific cases
Deductive reasoning - apply a general rule to a specific case, strongest form of inference
How to formulate a question?
Achieved results Disturbing events Desired result Key question Stakeholders Constraints Decision criteria
How can you logically structure gap causes?
MECE
Explain MECE rules?
(1) All members are part of the subject matter
(2) Collectively exhaustive - exhaust the subject matter
(3) Mutually exclusive - all root causes are unique and can only occur on their own
What does MECE aim to achieve
Collectively exhaustive - avoid omissions
Mutually exclusive - avoid duplications
Explain two further MECE rules
Balanced decomposition at each level - distribute the weight/importance/significance fairly evenly
Avoid information overload - only include the most important options
What is problem analysis?
The WHAT, WHY and WHERE issues of a problem
What is the problem statement?
Achieved results Disturbing events Desired result Key question Stakeholders Constraints Decision criteria
