What’s the Problem? A comprehensive problem definition approach to maximize outcomes
Caroline Conway

Many factors contribute to the success or failure of enterprise projects, whether they be intricate analytical implementations or complex, large-scale transformations. But failure can often be traced back to one of the most critical stages of any project: problem definition.

Though simple on the surface, correctly defining the problem to be solved is the most challenging and most important part of a successful project. Broad problem statements, like “change an organizational activity”, often miss the contextual political, organizational, and other factors specific to the situation. Narrow problem statements, like “implement a new tool”, can jump to a solution too fast, missing other parts of the problem and leading to a limited result.

Instead of being treated as an almost administrative step, problem definition should be viewed as a process that encourages ideation, facilitates discovery, and enables choices among possible approaches. There are three stages of assessment that enable this process.

Defining a complete future state
First, it is important to clearly understand all critical aspects of the current state and the desired future state of the business when the planned project is implemented. This ensures that the team developing the project defines clear and focused end goals from a business perspective, such as building capabilities that improve decision making or improving the efficiency of existing activities. It also allows the team to identify interconnections between different areas that may need to be changed in parallel to achieve the future state.  For example, a system implementation almost always implies changes in decision making and processes, which may require parallel action.

Using organizational lenses to understand context
Second, the team developing the project should consider the impact of organizational factors on the project like operating models, political interactions, functional connections, and established processes.  Going through these lenses systematically, it is possible to classify specific factors as constraints around which solutions must be designed or areas of change that need to be addressed as part of the solution. This further opens up the definition of the problem to include not only the immediate need but the context in which a project will need to operate to be successful.

Assessing capabilities and maturity in a structured way
Finally, it is important to understand the capabilities of the organization from analytical, technological, and talent perspectives. This step is particularly critical for the team developing the project to assess before making decisions about systems or methods to solve the problem.  A successful solution looks very different and incorporates different elements for an organization that is very mature in its use of systems but is lacking in its analytical capability and talent versus an organization with top talent but limited technology horsepower and no analytical frameworks.  This assessment during problem definition helps the team define what will deliver results today and seamlessly enables definition of what a roadmap to future capabilities may look like beyond the initial solution.

We can see how these stages of problem definition enhance the success of a project in two case studies on cost reduction and process innovation.

Cost management at a call center

A services client is looking at process improvements in its call centers to increase efficiency and reduce operating costs by 10%.

Future state analysis: The client’s problem definition clearly articulates the desired end state through a specific cost reduction metric. But a quick current state analysis shows that quality of service had also been steadily declining over the past year in conjunction with previous cost reductions.  In this case, we discuss objectives with the client and recommend expanding the problem definition to include a reversal of quality of service performance alongside reducing costs.  This means coming up with a solution that makes the process both more efficient and more effective.

Organizational analysis: When looking at the call centers from an organizational perspective, we find that the team structure is extremely siloed, with teams split by different activities within the call resolution process. This appears to be leading to significant inefficiencies, and quick mapping of process steps and times confirms major bottleneck exist between teams.  When looking at the call centers from a political perspective, we find that the team with the most technical expertise influences decisions the most during the process and therefore influences behavior across less technical teams dealing with customers.  As a result of the two analyses, we recommend not only finding efficiencies in the current process but evaluating team structures and job design to integrate team members with different expertise into functional cells that can more rapidly address customer needs.

Capability analysis: We find that the client has a well educated talent base and very robust training processes in place, further enhancing the possibility of cross-training, more advanced decision-making, and development of strong functional cells to address problems more effectively.  From an analytical and technology perspective, the call centers are very limited in their applications.  This opens up the opportunity to rapidly introduce fundamental analytics to improve decisions and speed up the process more than through process changes alone.  It also presents the opportunity to lay out a roadmap for further cost reductions and quality improvements through longer-term automation and advanced analytics without jumping to those solutions right away.

By defining the problem with the aid of these three assessments, we are able to help the client move from viewing the problem as a cost issue that can only be addressed through process changes to viewing the problem as a cost and quality issue that can be addressed through a mix of process, organizational, and analytical changes in the same timeframe.

Process innovation for retail returns

A retailer is evaluating multiple issues in its returns process driving up costs and impacting customer service.  They have decided the solution is to accept and resell all returns at their stores rather than dealing with the complexity of further returns management.

Future state analysis: The end state objective of improving customer service and reducing cost is a clear objective.  But the best end state to achieve both is less certain.  When evaluating the initial solution, reselling all product in the stores ends up presenting additional complications.  First, the stores are not equipped to handle the volume of returns even when setting aside sales floor space to move returned products faster.  Second, to move product, the stores would have to set discounts at a very steep rate, recouping almost no margin on most products, raising questions of whether using resellers or liquidation may offset added returns processing costs.  Third, brand perception concerns start to arise from having substantial returns in view.  This analysis leads us to recommend a more comprehensive solution that incorporates an appropriate level of store reselling and returns processing and liquidation outside the stores themselves.

Organizational analysis: We then look at the problem through an organizational lens by quickly mapping the way products and information flow between customers, stores, logistics, suppliers, and resellers.  This mapping identifies multiple disconnects that cause the process to be less efficient and effective in terms of recouping costs. From a political viewpoint, many teams are also not as engaged in the process as store operations and are not structurally aligned to collaborate on returns.  Therefore, the objective of making the process simple for stores is dominant.  This indicates the need for cross-functional leadership from a strategy or finance team that has a view of the total business objective and can push the necessary teams to collaborate in a new way.

Capability analysis: The retailer had strong teams across the organization. But from an analytics and technology perspective, it is facing many issues.  Analytical capabilities within teams are limited and across teams are non-existent while systems are in various stages of maturity and are not set up to communicate with each other.  In this case, optimizing the process will not solve the whole problem, and a roadmap to build in the right types of ongoing analysis and data integration is essential to making the project successful.

When we help the retailer take a bigger picture view of the problem and potential avenues to an effective solution, we are able to see many more possibilities than the pre-defined solution that was initially presented.  We are also able to identify the major organizational and capability roadblocks that must be addressed for a change in the process to be successful.  This leads to a more complete and effective solution overall.


Both of these examples illustrate the value of a robust problem definition activity at the start of any project.  This approach can help companies transform the way they define and address their business challenges. It allows problems to be evaluated within the relevant business context, creates a wider choice of possible solutions, aligns resources with desired outcomes, reduces risk of failure and ultimately leads to better, faster, and more complete realization of results.