Process Problems: Hidden Treasures, Part II

Written by Randy Cook and Alison Jenkins, McKinsey & Company

Published October 19, 2015

Most of the leaders we meet pride themselves on their problem-solving ability. But when we watch how they work, we often see them behaving instinctively rather than following a rigorous problem-solving approach. All too often they fail to define the real problem, rely on instinct rather than facts, and jump to conclusions rather than stepping back and asking questions. They fall into the trap of confusing decisiveness with problem solving and rush into action instead of taking time to reflect.

Why does this happen? Following a systematic problem-solving process takes discipline and patience. There are no shortcuts, even for leaders with a wealth of experience. An organization that consistently uses a single, simple problem-solving approach across its entire enterprise can achieve more than just greater rigor in asking the right questions—it can create a new “shared language” that helps people build capabilities more quickly and collaborate across internal boundaries more effectively. But to do so, it will need to avoid getting caught up in sophisticated problem-solving techniques until it captures all that can be learned from the simple ones. The main objective is to uncover problems, ask the right questions, engage everyone in the problem-solving effort, and develop the organization’s problem-solving muscles. An effective process for identifying and solving problems involves five steps:

  1. Define the problem. Clarify what should be happening and what is happening.
  2. Identify root causes. Learn as much as possible about the problem, preferably by observing it as it occurs.
  3. Develop a solution. Crafting a good solution rests on distinguishing cause from effect.
  4. Test and refine the solution. The solution must be tested to ensure it has the expected impact. If it solves only part of the problem, further rounds of the problem-solving process may be needed before the problem disappears completely.
  5. Adopt new standards. The last step is to incorporate the solution into standards for work, with training and follow-up to make sure everyone has adopted the new method.

Recognition that observations are often more valuable than data Most organizations are good at gathering and analyzing financial and accounting data for reporting purposes. The average executive is inundated with management information on revenues, cost of sales, valuations, variances and volumes. It is of little or no use for identifying operational problems and uncovering root causes or helping leaders and frontline teams do their jobs better. Instead, organizations struggle to understand basic questions about their capacity and level of demand. How many transaction requests did we receive today? What was our planned capacity? How many transactions did we complete? What was the quality of the work?

Why don’t organizations have this information at their fingertips, as they do with financial information? Probably because they have never asked these questions or understood how the answers could help them improve the way they work. Once they appreciate how useful the information could be, they tend to assume that some kind of IT solution must be put in place before they go any further. But the cost and time involved in application development can be enough to stop the problem-solving effort in its tracks.

There is another way. Taiichi Ohno, the executive often cited as the “father” of lean manufacturing, noted that while data is good, facts are more important. When operational data is not routinely available, teams can often find what they need not by commissioning new reports but simply by observing team members as they work and talking to them to find out exactly what they are doing and why. Observation and questioning provide a powerful and immediate source of insights into processes, work flows, capabilities and frustrations with current ways of working. Teams can typically get the information they need within a week, sometimes sooner.

From problem solving to continuous improvement Executives are often amazed at the sheer number of problems their organization is able to identify and fix in the first few months of a lean transformation. Some wonder whether it can last. But the good news is that in our experience, problem solving is immune to the law of diminishing returns. Quite the opposite: problems never cease to arise. One company we know has been on a lean journey for 20 years without seeing any letup in the flow of improvement opportunities. Year after year it surprises itself by managing to achieve yet another 10 percent increase in productivity and speed.

Building a problem-solving culture that lasts is not about fixing particular problems but about always striving to do things better. To help create this kind of environment, leaders must themselves change, respecting the expertise of the people on their team and finding ways to support them. No longer pretending to have all the answers, they should focus instead on defining targets, creating a safe environment for raising problems, ensuring people have enough time for problem solving, and helping them develop their skills. Adjusting to this change in role can take time for leaders accustomed to being the “team hero.” But by learning how to help others participate to the full, they can find a new identity and an even more powerful way to add value to their organization.


Randy Cook is an expert in McKinsey’s Detroit office, and Alison Jenkins is a senior expert in the Washington, DC, office. Copyright © 2014 McKinsey & Company. All rights reserved.