Evaluate the Impact of Problem Solving
Evaluate the expected business impact of solving a problem and compare it to the effort required. Determine if the problem is worth solving before committing resources.
THE IDEA
Step 2. Understand the Impact of Finding a Solution
What is the expected business impact of solving the problem? And, just as important, what do you expect to happen if the problem is not solved? This is the time to ask whether the problem is even worth solving. Although asking this question is counterintuitive, great problem solvers know when to step away.
If you sense that the effort required to solve the problem might exceed the value of the solution, have a conversation with your boss. You can frame it like this: “I’ve spent some time looking into this problem, and I suspect that the benefits of solving it won’t be that great. I’m confident that I/my team can solve it, and here’s what the effort would involve. I think that our time would be better used to focus on other things. Do you agree?”
Thinking through and communicating the costs and benefits of solving the problem is not only a way to be sure the company is using its resources (that is, your time and the team’s time) well but also a way to find out how committed company leadership is to finding a solution. Clarifying the expected benefit also gives the team a reason for doing the work.
For example, if you’re trying to solve a customer-acquisition problem, you need to outline the financial upside. Will a 5 percent increase in sales result in an additional $2 million in revenue per year? A marketing expense of $250,000 can then be evaluated against the expected contribution to profit, the other costs of those sales, and the uncertainty of the forecast.
Without demonstrating the impact of solving the problem, your business problem might fade into the background as more pressing issues are addressed.
When to use it
A marketing team deciding whether to invest in a new campaign to solve a customer retention problem.
A product team evaluating whether to fix a low-priority bug versus developing a new feature.
An operations team considering a process improvement that requires significant upfront cost.
A leadership team deciding which strategic initiatives to prioritize given limited resources.
FROM THEORY TO EVERYDAY LIFE
In practice
Customer Acquisition Problem
Suppose a 5% increase in sales would yield an additional $2 million in annual revenue. Before approving a $250,000 marketing campaign, estimate the profit contribution of those sales and how much of the increase the campaign is likely to produce. Revenue alone does not establish the return on the expenditure.
A MOMENT TO REFLECT
Put it to work.
Think of a current problem you are facing at work. What is the expected business impact of solving it? Is it truly worth the effort?
How would you frame a cost-benefit conversation with your boss to ensure alignment on whether to proceed with solving a problem?
What assumptions are you making about the upside of solving a problem? How could you validate those assumptions before committing resources?
CONTINUE THE CONVERSATION
Source texts
- Thinking in Systems and Mental Models Think Like a Super Thinker (Dawson, Marcus P)