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Flevy.com - 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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Flevy.com - Structured Problem Solving & Hypothesis Generation

1. 1. Structured Problem Solving &Hypothesis Generation
2. 2. What We Will Cover • What Is Structured Problem Solving? • How Do We Define the Problem? • How Do We Generate Hypothesis about the Root Cause of a Problem? • How Do We Structure our Hypothesis using the Fish Bone Approach? 2
3. 3. What is Structured Problem Solving? Structured problem solving is a formal approach to organizing peoples’ thinking 1. Define the Problem • Understand the problem statement • Facilitate understanding of the issue 2. Develop a Hypothesis • Used to prove (or disprove) our logic • Which if ―true‖ we can use to solve the underlying cause 3. Structure the Analysis • Use a logical framework to analyze the problem • Use the Root Cause Analysis to group your ideas To help you solve a problem, your structure must disaggregate the problem into smaller and easier to solve components. 3
4. 4. Our problem solving approach begins by answering a simple seriesof questions • Is there a problem or opportunity? DEFINE THE PROBLEM • If so where does it lie? IDENTIFY ROOT CAUSE • Why does it exist? STRUCTURE THE ANALYSIS • What could we do about it? • What should we do about it? FIND THE SOLUTION 4
5. 5. Defining the issue is the 1st step in the journey to final recommendations Develop Conclusions and Define the Form Analyze Gather Data Find Insights Make Issues Hypotheses Data Recommendations to Implement What are the Statements Factual Analyze what So what? - What you questions that provide information the data tells aha, new should do… keeping you direction and gathered to us thought and how awake at structure for prove or night? the analysis disprove hypotheses Because “If you don’t know where you are going, any road will take you there.” Anonymous - 5
6. 6. How do we define a problem? Start your thinking by being ... Mutually Exclusive and MECE Comprehensively Exhaustive 6
7. 7. Start with the right definitions – Is this Chart MECE? US Car Market Light Passenger Big 3 Trucks Cars Sport Mini Vans Utility Ford GM Chrysler Vehicles Clarity of the problem up front will set your subsequent analysis up to succeed! - 7
8. 8. Typically, logical pyramids help you to define, disaggregate, structure andultimately, solve the business problem To understand the problem, assertions or ideas must be: • Summaries of the ideas grouped below them • The same kind of idea, and they must answer the same question implied by their summary • In a logical order: - Deductively or inductively - Trace course or time order - Divide or structural order (e.g., Sales, Marketing, Manufacturing, etc.) - Classify or degree order (e.g., most important, 2nd most important, etc.) Main Assertion Key Line Source: Barbara Minto, ―The Pyramid Principle‖. 8
9. 9. Logical pyramids increase the effectiveness of problem solving, resultsdelivery, and communication Logical pyramids  Vertical structure have simple  Horizontal structure rules…  Key line / narrative …but help ensure  The effectiveness of our work depends heavily on how thorough compellingly we can argue that the solution we put forward serves analysis… the organization best …while  The reasoning we have to apply to come to our solution is complex decreasing and difficult to summarize for brief stakeholder interactions complexity… …and increasing  To build succinct and compelling presentations of our work, we use the power of logical pyramids as the preferred communication style: presentations – Pyramids make information more memorable and meaningful – They lead to a clearer definition of the problems we solve …which will make your work/life much – They structure our solutions to these problems and make them more easier to handle compelling Source: Barbara Minto, ―The Pyramid Principle‖. 9
10. 10. Hypothesis generation ensures that we get to the Root Cause of ourbusiness problem Develop Conclusions and Define the Form Gather Data Analyze Data Find Insights Make Issues Hypotheses Recommendations to Implement What are the Statements that Factual Analyze what So what? —aha, What you should questions provide information the data tells us new thought do… and how keeping you direction and gathered to awake at night? structure for the prove or analysis disprove hypotheses “Hypothesis: a Tentative Assumption made in order to draw out and test its logical or empirical consequences” Webster’s Dictionary 10
11. 11. A hypothesis should identify not only the issue but also the cause and theimpact Think through these 3 stages as you create a hypothesis to help you plan out how you will test it: What is the issue? ―X is xxx‖ or ―X is an • What is the underlying opportunity? opportunity …‖ • Where is the advantage? What do you think causes the issue? ―… due to …‖ • What are the key drivers of the process? What is the impact of the issue? • How can we tell there is an opportunity? ―… resulting in …‖ • Why do we care? 11
12. 12. Hypotheses are developed in 3 steps 1 • What are the real strategic issues? Define the • What is the impact on the Is there a market for white label question organisation? insurance products? • What are the priorities? 2 • We believe this to be true . . . • Direct channels are growing Review and Describe • A series of statements, not yet • Retailers have a strong Multiple backed by data channel and brand Assertions • Based on initial data search or • There are existing products expert opinions 3 • We think . . . Chubb Insurance can access • It looks like . . . new business by using the Form the brand strength of Tesco hypothesis • The right answer may be . . . resulting In low cost acquisitions • The options could be . . . and profitable business A number of assertions need to be true for a hypothesis to be valid. 12
13. 13. How to find a good hypothesis 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 outside the Box: • Think about the problem from a different angle • Talk to people who think differently 14
14. 14. What if your hypothesis is proven wrong? You Win! Hypothesis-driven thinking requires frequent reviews of the prevailing and current hypotheses: Do we still think they are right? Are we making progress towards disproving them? Are they at the right level of generality/predictiveness? If proven wrong you’ve already made a big step towards answering your question! “A wise man sometimes changes his mind, but a fool never” - Arabic Proverb 15
15. 15. Another powerful tool to for hypothesis development is abduction—whichis a variation on deductive and inductive reasoning 1. Rule Rule If we put the price too high, sales will go down Case We have put prices too Deduction 3. Result high 2. Case Result Therefore, sales will go down 1. Case Case We have put prices up Result Sales have gone down Induction 3. Rule Rule Sales have gone down because the price is too 2. Result high 1. Result Result Sales have gone down Rule Sales go down when prices are too high Abduction 3. Case Case Probably we have put 2. Rule prices too high HypothesisSource: Barbara Minto, ―The Pyramid Principle‖. 16
16. 16. Exercise 1: Hypothesis Generation 17
17. 17. Exercise 1 — Disaggregate the problem into a diagnostic solution tree –You Try! ? Joey Smith goes to the doctor ? ? Physical Head ? ? Hurts ? Mental ? ? ? Source: Barbara Minto, ―The Pyramid Principle‖. 18