7/36 - Crafting a Problem Statement
"Problems are not stop signs, they are guidelines." - Robert H. Schuller
What Is A Problem Statement?
A problem statement is a short, clear explanation of an issue or challenge that sums up what you want to change. It helps you, team members, and other stakeholders to focus on the problem, why it’s important, and who it impacts.
A problem statement is a formal business report written by either a business leader or consultant to define and describe an issue an organization is facing. Its goal is to propose a detailed method to solve the problem and recommend how those responsible can prevent it from reoccurring in the future.
While these statements are native to the research field, they have become a prominent business resource. It is an effective communication tool that informs senior managers about a potential threat. In the long run, the practice promotes innovation and technological advancement across the industry.
Defining A Problem
For a problem to successfully receive the attention of key stakeholders, it is required to address the 'five w's and one h'. They include:
What? Define the problem.
Why? Reason for the problem's occurrence.
When? When the problem began or was first noticed.
Where? Place of the problem's first occurrence or sighting.
Who? The person or thing that the problem affects.
How? The sequence of events that resulted in the problem.
A problem statement has to address these six questions to build a clear representation of an issue. Without it, problems may go unnoticed or ignored, leading to larger problems in the future.
Why Is A Problem Statement Important?
A problem statement is an important communication tool because it establishes a foundation for research and development. It gives a comprehensive view of what is going on to the people who can make a sizable shift in the organisation's objectives.
It is important because it examines an issue from multiple angles. It identifies who the problem impacts, what the impacts are, where the problem occurs and why and when it needs to be fixed. This helps organisations determine the extent of an issue. Thus, a problem statement ensures individuals investigate the entire scope of an issue and approach the solution with clear goals in mind.
It is essentially the beginning of a new project. It sets the criteria for dealing with a problem and gives them a framework to execute it to a high standard. Near the project's completion, this statement can help you verify if the solution addressed the initial problem effectively.
Components of a Problem Statement
A problem statement is a concise description of the problem or issues a project seeks to address. The problem statement identifies the current state, the desired future state and any gaps between the two. A problem statement is an important communication tool that can help ensure everyone working on a project knows what the problem they need to address is and why the project is important.
The background of a problem: Which organization or department has the problem and what is the problem? Why has the problem arisen? Note that in some cases you may not know the exact causes of the problem. This is what discoveries are for: to uncover root causes.
The people affected by the problem: There could be multiple user groups affected by a specific problem in different ways. In the problem statement, you should call out how the problem affects users. In some cases, internal employees (particularly customer-support staff) can be affected by a problem, as they often bear the brunt of poor user experiences –- for example, by handling disgruntled customers.
The impact of the problem on the organization: If the problem is not fixed, what will be the effect on the organization? Reputational damage? Paying unavoidable costs? Losing out-of-market share? In some cases, you may want to quantify the impact in order to convince your organization to fix the problem. Your discovery could involve working out how much this problem costs the organization, and this information could end up in your problem statement
Your final problem statement should be “SMART” ( Specific, Measurable, Actionable, Relevant, Time Bound)
Object : What “thing” is the problem affecting?
Defect : What is the specific defect that we are seeing?
Extent : How big is the problem?
Impact : What is the business impact of this problem?
Timeframe : How long has this been a problem?
Crafting a Problem Statement
Sample Scenario
Background: You work for the internal consulting team of an automobile manufacturer that recently implemented autonomous cars which must have controls surrounding automated operations that fit the standards set by the Automotive Industry Action Group (AIAG).
Based on a recent industry report and customer complaints, compliance to operations regarding parking activities have been highlighted as a concern. Your team has been tasked with validating key issues, identifying root cause, generating and implementing prioritized solutions, and evaluating subsequent improvements .
Facts Supplied:
Source of Data: 2018 Consumer Reports Survey / Safety Data
Data Available: 1000 parking events graded as higher risk of incident (Parallel Parking) -Parking Distances as measured from front/rear/side of car to boundaries of parking space -Documented Accident (Failure Type)
AIAG requires cars to be centered in parking spaces -Distance to Front of Spot must match Distance to Rear of Spot within +/-4 feet -Distance to Curb Side of Spot must match Distance to Traffic Side of Spot within +/- 3 feet -25% of events fail to meet at least 1 of these criteria
Insurance Claims related to parking incidents increased 20% from previous year
Final Problem Statement:
Consumer Report Survey Safety Data from 2018 shows that 25% of parallel parking events exceeded AIAG parking standards, resulting in a 20% increase in parking related insurance claims from the previous year.
Examples of a Problem Statement
It's a good idea to write a problem statement as early as possible in your discovery, as it can help set discovery goals and objectives.
From September to December 2016 (Timeframe), 4.9% (Extent) of invoices (Object) led to the creation of a credit note (Defect). This results in a delay to receive revenue with an impact on working capital, a reduction in efficiency (while the team rectifies the problem), cost of raising credit notes, and customer frustration (Impact).
In 2016 (Timeframe), approximately 750 (Extent) Treasury wire transactions (Object) required manual recording to the Oracle GL (Defect). This resulted in significant workload for the General Ledger team (approximately 4 days per month), potential FX exposure due to lack of timely reporting, and is an obstacle to supporting growing transaction volumes (Impact).
