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# Structured Problem Solving & Hypothesis Generation

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Training on how to address and solve problems in a structured way. Has a strong focus on hypothesis generation techniques.

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### Structured Problem Solving & Hypothesis Generation

1. 1. Structured Problem Solving & Hypothesis Generation
2. 2. 4 DEFINE THE PROBLEM STRUCTURE THE ANALYSIS FIND THE SOLUTION Our problem solving approach begins by answering a simple series of questions • Is there a problem or opportunity? • If so where does it lie? • Why does it exist? • What could we do about it? • What should we do about it? IDENTIFY ROOT CAUSE This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
3. 3. 7 Start with the right definitions – Is this Chart MECE? US Car MarketUS Car Market Light Trucks Light Trucks Passenger Cars Passenger Cars Big 3Big 3 Mini VansMini Vans Sport Utility Vehicles Sport Utility Vehicles FordFord GMGM ChryslerChrysler Clarity of the problem up front will set your subsequent analysis up to succeed! - This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
4. 4. 10 Hypothesis generation ensures that we get to the Root Cause of our business problem Form Hypotheses Form Hypotheses Define the Issues Define the Issues Gather DataGather Data Analyze DataAnalyze Data Find InsightsFind Insights Develop Conclusions and Make Recommendations to Implement Develop Conclusions and Make Recommendations to Implement So what? —aha, new thought What you should do… and how What are the questions keeping you awake at night? Factual information gathered to prove or disprove hypotheses Analyze what the data tells us Statements that provide direction and structure for the analysis “Hypothesis: a Tentative Assumption made in order to draw out and test its logical or empirical consequences” Webster’s Dictionary This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
5. 5. 14 How to find a good hypothesis Think outside the Box: Start by Asking Questions: • Talk to lots of people about the core problem • Brainstorming during case team meeting • Ask “5 Why’s” Validate Your Initial Hypothesis: • Assume perfect rationality — how should the business system behave? • Look for analogies (other industries or problems) • Imagine that you had perfect information — what would the ideal analysis look like? • Think about the problem from a different angle • Talk to people who think differently This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
6. 6. 17 Exercise 1: Hypothesis Generation This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
7. 7. 20 To structure our Root Cause Identification, we can use the Fishbone Technique Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step7 Problem/ Effect Problem/ Effect Cause 1Cause 1 Cause 2Cause 2 Cause 3Cause 3 Cause 4Cause 4 Cause 5Cause 5 Cause 6Cause 6 Sub-cause 1 Sub-cause 2 Sub-cause 1 Sub-cause 2 Identify Major Root Causes Identify Major Root Causes Identify the Problem Identify the Problem Brainstorm Sub-Root Causes Brainstorm Sub-Root Causes Gather Data Gather Data Identify Most Likely Causes Identify Most Likely Causes Choose Most Likely Cause Choose Most Likely Cause Select and Test the Best Solution Select and Test the Best Solution This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
8. 8. 23 Step 3: Brainstorm In the team: – Brainstorm a list of sub-causes (follow the rules of brainstorming) – Add the sub-causes to the fishbone diagram, using post-it notes Problem/ Effect Problem/ Effect Theme 1Theme 1 Theme 1Theme 1 Theme 3Theme 3 Theme 4Theme 4 Theme 5Theme 5 Theme 6Theme 6 Sub-cause 1 Sub-cause 2 Sub-cause 1 Sub-cause 2 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
9. 9. 26 Step 5: Identify most likely causes In the team: – Analyze the data and information gathered – Through open discussion, clarify and identify most likely causes – Challenge each other’s ideas as necessary – Rank most probable root causes through voting (each person ranks each probable cause on a 1-5 basis, where 1 is lowest, and 5, highest probability) [See left-hand graphic.] – Circle the top vote-getters on the fishbone diagram as probable root causes [See right-hand graphic.] Proble m/ Effect Proble m/ Effect Theme 1Theme 1 Theme 1Theme 1 Theme 3Theme 3 Theme 4Theme 4 Theme 5Theme 5 Theme 6Theme 6 Sub-cause 1 Sub-cause 2 Sub-cause 1 Sub-cause 2 Probable Causes: Keywords Probable Causes: Keywords AA RankingRanking 11 22 33 44 55 TotalTotal BB CC DD EE SampleThis document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
10. 10. 29 Let’s use Caterpillar’s Issue as an example of how it works Poor knowledge about Caterpillar’s overall products Significant time delays across Caterpillar’s divisions in responding to the customers requests for bids Significant time delays across Caterpillar’s divisions in responding to the customers requests for bids ProcessProcess Corporate structure (different P&Ls) Corporate structure (different P&Ls) Poor system support Poor system support Divisional as opposed to holistic view Divisional as opposed to holistic view Blurred understanding of market Blurred understanding of market TrainingTraining No dedicated CRM processes in place No integrated customer database available No single point of contact across the divisions Market segmentation outdated / not appropriate “Divisional egoisms” Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company accepts bids for its equipment. Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company accepts bids for its equipment. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
11. 11. 32 Let’s Practice on Time Warner’s Issue – Each Team Select 3 Sub-Root Causes and 1 Diagnostic Joey Smith – CEO Time Warner Sales are Down by 20% Joey Smith – CEO Time Warner Sales are Down by 20% This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
12. 12. 35 Helpful hints Do Root Cause Analysis with a team of people who are owners or stakeholders in the process (who will see the benefits of solving the problem) Follow brainstorming rules when generating initial ideas: – Generate as many ideas as possible and list them under main headings as possible causes – Do not allow criticism of any idea initially (no idea is a bad idea) – Build on the ideas of others Avoid working the solution of any cause early in the process Don’t be hindered by excessive neatness during the construction of the diagram. Ideas must flow freely Verify root causes through data gathering and testing Rewrite or restate the problem statement if the group is derailing and needs to refocus Identify the criteria against which you will evaluate the final solutions in advance Challenge the solution Agree, in advance, how you will measure the effectiveness of the solution in the pilot This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/structured-problem-solving-and-hypothesis-generation-95
13. 13. 1 Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com