Why is the Business Problem Statement is Important
The business problem statement provides the impetus for a business initiative in practical business related terms. It is a description of an issue currently existing and the context for how it will be addressed.
In a business setting, anyone who is involved in problem-solving or decision-making should be involved in developing a business problem statement. This could include managers, executives, analysts, project managers, or subject matter experts.
Typically, the responsibility for developing a problem statement falls on the person or team that is leading the effort to address the problem. This may be a project manager, a cross-functional team, or an individual responsible for a specific area of the business – including the Business Analyst!
In some cases, it may be appropriate to involve external consultants or experts in developing a problem statement. This can bring fresh perspectives and specialised knowledge to the problem-solving process.
Ultimately, the goal is to involve all relevant stakeholders in developing a problem statement to ensure that the problem is fully understood and the proposed solutions are feasible and effective.
Developing a business problem statement is important for several reasons:
- Clarify the problem: Developing a problem statement helps you to clarify and define the problem you are trying to solve. This can help you to focus your efforts on the key issues and avoid wasting time and resources on non-essential tasks.
- Identify the root causes: A well-crafted problem statement can help you to identify the root causes of the problem. This is important because it allows you to develop effective solutions that address the underlying issues rather than just treating the symptoms.
- Communicate with stakeholders: A problem statement provides a clear and concise summary of the problem and its impact. This can help you to communicate effectively with stakeholders and get their buy-in for your proposed solutions.
- Measure progress: A problem statement provides a baseline for measuring progress. By defining the problem and its impact, you can track your progress over time and determine whether your solutions are effective.
- Prioritise resources: A problem statement can help you to prioritise your resources and focus on the most critical problems. This is especially important in situations where resources are limited, and you need to make strategic decisions about where to allocate your time and money.
Developing a business problem statement is essential for effective problem-solving. It helps to clarify the problem, identify the root causes, communicate with stakeholders, measure progress, and prioritise resources.
When to Develop Problem Statements
You can develop a problem statement whenever you need to identify and analyse a problem, and develop solutions to address it. Some specific situations where this can occur include:
- Project initiation: When starting a new project, a problem statement template can be used to define the scope and objectives of the project, and identify potential risks and issues that may impact the project’s success.
- Process improvement: When looking to improve a business process, product, or service, a problem statement template can be used to identify and analyse the root causes of the problem, and develop solutions to address them.
- Research projects: When developing a research project, a problem statement template can be used to formulate research questions, and identify the gaps and limitations in existing literature or data.
- Policy development: When developing policies and programs to address social, economic, or environmental issues, a problem statement template can be used to identify and analyse the policy issue, and develop evidence-based solutions.
- Strategic planning: When developing a strategic plan for an organisation, a problem statement template can be used to identify and analyse the challenges and opportunities facing the organisation, and develop a roadmap for achieving its goals.
Overall, you can use a problem statement template whenever you need to identify and analyse a problem, and develop solutions to address it. Categorisation will help you develop a structured, consistent, and efficient approach to problem-solving.
Categorisation of Business Problem Statements
There are several ways to categorise business problem statements, and the specific categories may vary depending on the organisation or industry. Here are some common ways to categorise business problem statements:
- Functional area: Categorise the problem statement based on the functional area of the business that is affected. For example, problems related to marketing, finance, operations, human resources, or information technology.
- Customer impact: Categorise the problem statement based on the impact on customers or clients. For example, problems related to customer satisfaction, retention, acquisition, or loyalty.
- Business process: Categorise the problem statement based on the business process that is affected. For example, problems related to supply chain management, product development, sales, or customer service.
- Strategic priority: Categorise the problem statement based on the strategic priority of the organisation. For example, problems related to growth, innovation, cost reduction, or risk management.
- Industry or market: Categorise the problem statement based on the industry or market in which the business operates. For example, problems related to competition, changing customer needs, or regulatory compliance.
- Business architecture. Categorise the problem statement based on capabilities to help you understand business capability maturity, the impacts on change, and opportunities for improvement. See below for categories.
By categorising business problem statements, you can better understand the scope and nature of the problems and develop targeted solutions that address the root causes of the problems. This can help to improve the efficiency and effectiveness of your problem-solving efforts.
Business Architecture Categories
Problem statements can be described in a single statement followed by a real example to emphasise the issue. When developing an understanding of the problems to be resolved think across the seven broad areas shown below and ask questions accordingly. Examples are given for each category using the architectural approach with the capability subsets of: strategy; service/products, people; processes; applications; information, and infrastructure.
1. Strategy
- Poor alignment with business objectives.
- Initiatives are currently not aligned to an overall vision.
- Siloed implementation of projects.
2. Service / Products
- Impediment to service delivery due to untimely retrieval of information.
- Slow responsiveness in engaging sales leads due to untimely retrieval of information.
- High level of product returns due to errors made on sales orders.
3. People
- Inadequate training of staff and/or lack of capacity for staff to support areas of the business experiencing bottlenecks.
- Poorly defined roles and responsibilities creates confusion and poor responsiveness to operational demands.
- Poor service delivery due to staff capacity and training issues.
4. Processes
- Myriad of duplicated business processes and applications.
- Intensive manual processing due to physical handling of paperwork, mail outs and manual coordination of events.
- Double data entry and manual maintenance of data in spread sheets or personal databases.
5. Applications
- Poorly developed functionality due to inadequate definition of business and functional requirements.
- Out of date functionality caused by a constantly evolving business climate.
- Little or no application support due to proprietary or redundant software.
6. Information
- Unstructured information and content stored on various devices making search and retrieval very difficult.
- No metadata attached to information making search and retrieval difficult.
- Disparate methods of coding the same types of datasets in disparate repositories.
7. Infrastructure
- Not a lot known about all systems making the strategic coordination of maintenance difficult.
- Multiple applications are supported on multiple systems creating unnecessary maintenance overheads by supporting duplicate systems.
When you have understood problems, describe the risks associated with each to fully emphasise the potential impacts on the business (e.g. costs, inefficiencies, and lost opportunities).
A Problem Statement Example in Business
Below is an example describing a problem statement, description and associated risk for a highly manual business process that can easily be resolved with technology.
Problem Statement: Intensive manual processing due to physical handling of paperwork.
Description: Annual leave forms are typically filled out by the Employee, printed, sent to the Manager/Delegate for approval, sent to Human Resources for verification and data entry, scanned and uploaded to the EDRMS, and then sent to Payroll for (re) data entry.
Risk: This highly manual scenario leads to ‘bottlenecks’ in service delivery and promotes the risk of poor organisational response to business and lost time that should be spent carrying out core business.
Tools for Developing Problem Statements
To develop the problem statement and associated risks of a project, engage with managers and subject matter experts within the relevant business areas. Ask them questions specific to your categorisation approach to bring out the details of where the problems lie. This approach can be implemented in the project’s initial set up and analysis phases irrespective of the methodology (i.e., Agile or Waterfall) being utilised. It is useful for developing project mandates and business cases.
There are several tools you can use to write a business problem statement, including:
- Brainstorming: Gather a group of stakeholders or team members and brainstorm all of the potential problems facing the business. Narrow down the list to the most pressing issues and identify the root cause of each problem.
- SWOT analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to identify the internal and external factors impacting the business. Use this analysis to pinpoint the key problem areas.
- Fishbone diagram: Use a fishbone diagram (also known as an Ishikawa diagram) to identify the potential causes of a problem. This tool can help you visualise the different factors contributing to the problem and narrow down the root cause.
- 5 Whys: Ask “why” five times to get to the root cause of a problem. This technique can help you dig deeper into the underlying issues and identify the root cause of a problem. The Five Whys is an excellent technique to support your questioning approach.
- Problem Statement Template: Use a template to guide you through the process of writing a problem statement. A good problem statement template will prompt you to identify the problem, the impact it’s having on the business, the root cause, and potential solutions.
- Consult an expert: If you’re struggling to identify the problem or need help framing it in a concise and clear manner, consider consulting an expert in business analysis or strategy. They can provide valuable insights and guidance.
Specific Steps in Developing Problem Statements
Here are some steps to help you develop a problem statement:
- Identify the problem: Start by identifying the problem you want to solve. The problem should be specific, measurable, and relevant to your goals or objectives.
- Understand the context: Gather information about the problem and its impact. This could include data, research studies, reports, or input from stakeholders.
- Define the problem: Clearly define the problem by breaking it down into its key components. Use one of the tools mentioned above to get a comprehensive understanding of the problem.
- Analyse the problem: Analyse the problem by identifying the root causes, the impact on stakeholders, and the potential consequences of not addressing the problem.
- Create a problem statement: Use the information gathered in the previous steps to create a problem statement that summarises the problem, its impact, and its root causes. The problem statement should be concise, clear, and focused on the key issues.
- Refine the problem statement: Review and refine the problem statement to ensure that it accurately and clearly describes the problem and its impact. Refine the language, structure and categorisation as needed.
- Validate the problem statement: Validate the problem statement by testing it with stakeholders and subject matter experts. Get feedback on the clarity, accuracy, and relevance of the problem statement.
By following these steps, you can develop a problem statement that provides a clear and concise overview of the problem and its impact. This will help you to focus your efforts on developing effective solutions that address the root causes of the problem.