Problems are Doorways to Opportunities

Since the start of 2021, semiconductor chips, which are used in cars, trucks, computers, and smart-phones, have been in short supply.  Supply has been so short that automotive companies have shut down assembly lines and consumer electronics corporations have delayed roll-outs of new products. 

Bloomberg reported in its September 22, 2021 Supply Lines newsletter that the gap between “ordering a semiconductor chip and delivery is still growing.” 

But four years before in 2017 (see chart above), it was already taking at least 10 weeks to deliver a semiconductor chip from time of order.  So, while businesses in 2021 anxiously wait up to 20 weeks for their chips to arrive, why were industries tolerating long order-to-delivery times of up to 10 weeks in the first place?

The dictionary defines a problem as an “unsatisfactory situation.”  It is a “state of difficulty that needs to be resolved.” 

Many of us equate problems with crises and disruptions, that is, we see a problem only when it hurts us such that it becomes urgent to address it. 

Hence, we tend to avoid them or try to resolve them as quickly as possible.  The fewer problems we have, the better, we usually say. 

The dictionary, however, also says it is a “a question proposed for solution or discussion.” 

Problems can be doorways to opportunities, in which if we think of them that way, we should seek them out and solve them for the ideas that would benefit us. 

Enterprises and even governments are scrambling hard in 2021 to fix the semiconductor chip shortage that has crippled factories and caused supply shortfalls of many products, from cell-phones to computers.  Most saw the problem when order-to-delivery lead times extended from 10 to 20 weeks.

If enterprises in 2017, however, proposed the “question” of shortening the supply lead time of 10 weeks, and found a solution, would industries be undergoing a crisis in 2021?  Wasn’t there a way to bring the number of weeks of lead time down to 4 weeks or even less? 

It was obvious that since 2017, company executives had accepted the 10-week order-to-delivery cycle and adjusted their inventories and production schedules to cover for the waiting time.  Executives managed the 10-week lead time into their financial forecasts.  The 10-week lead time was not considered a problem. 

If one enterprise in 2017 had seen the 10-week lead time as a problem rather than as an acceptable fate, and in the process of “discussion” found a “solution,” one wonders how much of a competitive advantage that enterprise would have in 2021. 

It’s never really worthwhile to ask “what-if” questions especially after the fact of a crisis.  But in the process of problem solving, as a question becomes clearer, it would have been likely that a solution would have addressed future adverse situations. 

As companies see their businesses compromised by the semiconductor shortage of 2021, it becomes more sensible to seek out the problems and pose the questions for “discussion” and “solution.”

For the pain many had been experiencing in 2021, it would have been worth it if they had only sought and solve problems then. 

It’s never really good to dwell in the past unless we learn something from it. 

About Overtimers Anonymous

Why We Need to Define the Bigger Problem*

“Houston, We Have a Problem”

When Apollo 13 astronauts reported an explosion on their space module, NASA’s Houston Mission Control contemplated on continuing the mission and land on the moon.  It was only when NASA realized that the problems were life-threatening that it was decided to abort the mission and to have the astronauts return to Earth safely. 

We tend to define problems by its symptoms and how it affects our agenda.  NASA had an agenda to get Apollo 13 to the moon and at first stuck to that mission even with the reports of an explosion and the resulting problems. 

We apply this thinking in our daily lives. 

If we get sick, the first thing we look for is medicine to relieve pain and discomfort.  

If our car won’t start in the morning, we look under the hood to see if there is a quick fix.  If we can’t find any, we hail a taxi or find a ride via Uber or Grab so we won’t be late to wherever we’re going.  Car repair comes later when we have time or we delegate it to someone else to do the fixing. 

We try to solve problems with remedies and quick fixes that as much as possible won’t interfere with our agenda.  We almost all to often react to problems as obstacles that are to be removed or bypassed via the easiest means possible.

Hence, when it comes to problems, we all too often seek solutions as soon as possible.  

We classify problems as either big or small.  A small problem has an obvious and easy solution.  A big problem needs figuring out, planning, and allocation of resources. 

But sometimes a problem, whether big or small, is part of a bigger problem that may not be apparent. 

A bigger problem may be a root cause for the smaller problems or a flaw in a system that has yet to be detected.  It can also be an opportunity which is manifesting itself in a changing environment.

For example, a small online retail business that is experiencing steadily growing sales has hired more people to meet the growing demand.  The head count has grown to a point where preparing the payroll has become more time-consuming and complicated.  The business owners, in response, install a customized payroll system and train clerks to run it.  After a while, the business owners notice the overhead costs are going up so they engage an accountant to streamline the budgeting and charging of expenses.  Profits do grow but the accountant’s reports show rapid increases in the costs of rent, insurance, and electricity.  The business owners hire a consultant who recommends renegotiating the contracts for rent, finding another insurance provider, and buying a more efficient air-conditioning system that uses less electricity.

Finally, the business owners realize that their business is just getting too big to manage on their own so they form a partnership with an investor who infuses capital and hires professional executives.  The online business becomes a bigger company that grows tenfold in succeeding years

The online retail business company addressed problems as they came but wasn’t aware of the bigger problem until it became apparent.  The business was just getting too big to manage.  

Solving the bigger problem begins with a fuzzy situation.  The online retail business is getting too big.  That’s a fuzzy situation.  It spurs questions.  Why is it getting too big?  What makes us say it is getting too big?  How did it become too big? 

Answering the questions from the fuzzy situation provides information about the problem behind the fuzzy situation.  The information becomes the springboard to clarify what the problem is all about.  The online retail business is getting too big from the higher sales.  The organization has grown in head count.  Costs to accommodate the higher head count such as rent, insurance, and electricity have gone up.  The business has hired more people to manage the head count. 

From the information gathered, the business can then begin to define the problem.  Defining the problem does not necessarily mean identifying a cause or an issue.  One should avoid the pitfall of jumping to a conclusion such as, in the online business example, saying that the the business has become unproductive because of the higher head count.

Defining the problem requires asking in-depth questions.  How can we manage the business better in lieu of higher sales?  How might we become more productive?  In what ways can we reduce costs? 

The online retail business selected the first question:  how can we manage the business better in lieu of higher sales.  The owners chose this question as the one that defined the problem based on criteria.  That criteria come from the business owners’ mission, goals, and strategy.  The online business wanted to be a fast-growing company with high market share and revenue within five (5) years.  Hence, the owners chose the question “how can we manage the business better in lieu of higher sales” as their problem.

It doesn’t stop there.  The problem may be defined more sharply over more information and thought.  The problem may become “how might we increase sales without incurring higher costs?”  Or “how might we expand our product lines without having to hire more people?” 

It is when the owners settle on a specific question that they would have defined their problem. 

*originally published on February 8, 2019 on LinkedIn

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The Feasibility Study Ends with a Plan, Not A Solution

The feasibility study consists of the following steps:

  • Defining the Problem
  • Brainstorming Possible Solutions
  • Developing Criteria for the Solution
  • Evaluation and Selection of the Solution
  • Assessing the Solution’s Practicality and Benefits
  • Making a Plan

It starts with defining the problem.  It ends with a plan.

A lot of people make the mistake of ending a feasibility study with a solution. 

After they have the answer, many of them neglect to ask “what’s next?” 

They rely on the stakeholders to figure that last step out.  That’s a big mistake because most of the time, the stakeholders have no clue as to how to do so. 

The process of finding a solution begins with brainstorming.  This is already controversial as some would argue that one should first set criteria for whatever idea or answer is presented.

What inventory and procurement policy should we establish? 

Brainstormed ideas:

  • Buy only when customer orders?
  • Eliminate all items except ten (10) fast-selling products?
  • Keep no stock of top 20 most expensive items to make?
  • Have a single exclusive vendor for each material item and make vendor accountable for inventory?
  • Have at least three (3) suppliers per material item purchased and keep at least one (1) month’s equivalent worth of sales per item? 
  • Put all inventory on a huge container vessel that would constantly be at sea and move from one port to the next to load and unload merchandise?

Brainstorming comes first because it is a no-holds barred free-thinking exercise that allows minds to capture all the thoughts possible to address the problem.  Nothing is filtered or evaluated.  Every thought is acceptable and listed.

Criteria comes afterward but they should relate to values, principles, and strategic objectives. 

Examples of Criteria:

  1. Solution has to be easy to implement;
  2. There should be minimal risk in running out-of-stock;
  3. There should be minimal investment in training and education:
  4. Material costs should not increase;
  5. Working capital should decrease.    

Brainstormed ideas are then filtered based on the criteria.  Those that obviously wouldn’t fit are thrown out outright.  The ideas that qualify would remain.

The remaining ideas then pass through an evaluation process. 

The evaluation process is mostly an intuitive one.  Whereas defining a problem depends a great deal on data gathering, analyses, and presentation of evidence, evaluating candidates in search for the best idea or answer to a problem is mostly done via perception and insight. 

We weigh candidates against the criteria we developed earlier.  The weighing is an attempt at rational calculation but most of how we do it is based on opinion.  We predict benefits on what we think will happen, not really with any rationale. 

A feasibility study is a contrast between the rational definition of a problem and the intuitive search for a solution.  That’s why as soon as a solution is selected, we need to refine it and move forward to developing it into a plan on how to make it into a reality. 

Refining the selected solution or idea is simply clarification of what we think needs to be done.  Whereas a problem is best described in the form of a question, a solution should come out in the form of an action plan.

As an action plan, a solution or selected idea should follow a SMAC format.  It should be Specific, Measurable, Attainable, but Challenging. 

We will develop an ABC Inventory & Purchasing Policy. 

A feasibility study ends with a plan, not a recommended solution. Solutions are intuitive but a plan brings it into reality. 

With a plan, an organisation will know what to do next. 

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