A situation, in itself, is not necessarily a problem. It only becomes a problem when it impacts on a stakeholder, and someone then classifies it as a problem.
Identifying problems before or after they occur
There are two types of problem identification; before the fact and after the fact.
Identifying Problems Before the Fact
Before the fact or ‘inductive’ problem identification requires that you look for potential problems before they have an impact on an organisation’s operational performance.
According to Alfred W. Schoennan, this kind of problem identification requires a forward looking approach and can include the following audits to gather information:
- The change audit examines changes in environment, decisions, resources, and tasks to find any issues that might lead to future problems. For example, if a new competitor with a disruptive technology entered the marketplace, you would need to think about how to reposition your business to counter the competitive threat.
- The decision audit reviews organisational decisions against the environment, resources and activities as well as against each other. For example, do two different departmental managers make decisions that are aligned with corporate strategy, or are they in conflict? If they are in conflict, why isn’t this resolved before the decision is finalised?
- The implementation audit is about execution; whether an organisation implements its ideas and policies effectively and whether it communicates those policies and their implementation effectively to its staff or stakeholders. For example, an organisation may have a ‘recycling’ policy, which staff ignore and managers fail to enforce. There is a direct cost associated with managing the policy and providing recycling bins, but the policy is not implemented in staff behaviour.
- The resource audit can identify potential problems by identifying resource allocation issues that may get in the way of organisational goals. For example, the marketing department may launch a major new advertising campaign, while the sales department has nowhere near the resource required to handle the volume of incoming calls, and the factory is incapable of meeting the increased levels of demand. You can see that this resource issue arises directly from something that would have been addressed with the decision audit.
- The activity audit determines if organisational activities and behaviour are conducted in compliance with stated plans and goals. For example, the executives may agree on a diversification strategy, but the operational departments of the organisation continue to focus on their own ‘silos’. This is very much tied in to the implementation and decision audits.
Because of the difficulty and unreliability of identifying problems before they occur, most companies do not attempt to identify problems until after they experience their effects.
Even the arrival of disruptive technologies into a market could be predicted, because that is in the nature of market economies. However, the implication of trying to predict and avoid every possibility means that most managers focus on the here and now and choose to deal with problems as and when they arise. Of course, a problem may occur long before a manager becomes aware of it.
Identifying Problems After the Fact
After the fact, or ‘deductive’, problem identification usually focuses on organisational operations and involves five steps:
- Results analysis: Identify any deviations from plans, goals or expectations, such as a sudden increase in product returns due to customers’ quality concerns.
- Activity-Interaction analysis: Identify activities that could cause the deviations, such as a change in raw materials or a change in customer expectations set by new marketing literature.
- Resource analysis: Identify resource deficiencies, such as the absence of quality control staff.
- Environmental analysis: Identify environmental or external conditions or threats such as a change in the availability of raw materials, or a new competitor entering the market.
- Decision analysis: Determine if decisions take into account the environmental, resource, and activity factors, such as the decision to change marketing literature without understanding the impact of raw materials availability.
A situation, in itself, is not necessarily a problem. It may only become a problem when it impacts on a stakeholder, and you can then identify it as a problem.
A before the fact or ‘inductive’ approach seeks to identify potential problems before they impact on the business, using the following audits:
- Change: What has changed?
- Decision: Are decision s in line with goals?
- Implementation: What has been implemented?
- Resource: Are the right resources available?
- Activity: Are activities in line with goals?
An after the fact, or ‘deductive’ approach seeks to solve existing problems by analysing the following:
- Results: Are outputs in line with goals?
- Activity-Interaction: Are activities in line with goals?
- Resource: Are the right resources available?
- Environment: What external factors have changed?
- Decision: Are decisions in line with goals?
These sets of data are similar because the data that you need to gather in order to solve a problem is similar, regardless of when you choose to solve it.
AUTHOR: James Karis
29 April 2012