Tuesday, May 15, 2018

My New Book Part 6

My new book Part 6
In my last post, we looked a bit deeper into two of the three different types of problems that exist as follows: 
  1. Problems that have resulted from a change or adjustment from existing conditions or change-related problems.
  2. Problems that are persistent and have seemingly been around forever and are therefore chronic problems.

In today’s post I will complete the DNA of problems by looking at the final type of problem which I refer to as a hybrid problem.

The DNA of Problems (con’t) 

Hybrid Problems
Now that we understand the differences between a change-related problem and the chronic problem, you might wonder if it's possible to have both types of problems acting together simultaneously?  The answer is an emphatic and categorical yes!  When you have an expected level of performance, which has never been achieved and it suddenly worsens, you are in the midst of a hybrid problem.

Consider the situation in the above figure.  Here we see actual % EBITDA by month, compared to budgeted % EBITDA.  The actual % EBITDA has been below budget by approximately 2.5 % for the first seven months of the year.  In August, the situation worsens, and the gap between expected performance (i.e. % EBITDA) and actual performance grows to about 8 %.  A situation that I’m sure was filled with pressure and negative energy, just became worse.

If you were the owner of these dreadful and deplorable financials, imagine how you would feel and what your actions might be.  You have two competing priorities here.  On the one hand, you must determine what changed to make the already dismal situation deteriorate, while on the other you must close the gap to the budget.  You are in the midst of a hybrid problem, with each part of it competing against the other.  The logical approach would be to return to “ground zero” by finding the change that caused the performance shift, reverse it if possible, and then develop a plan to improve the % EBITDA.

Although both are serious problems, one is short term and requires immediate attention, while the other is chronic and requires thoughtful and considerate action!  One thing to remember when you are faced with a hybrid problem, is to separate the problem into its constituent parts.  Disconnect the change related problem, from the chronic problem, because the solution to each will be different.
The 4 C’s of Problem Solving
No matter what type of problem you are faced with, there is usually always pressure and anxiety associated with it.  You have demands placed on you that can be overwhelming at times.  You must take action and implement counter measures, but that doesn’t preclude you from following some sort of logical process.  You must remain calm and composed, and sometimes that is difficult to do in the face of a crisis.  Most of the time the immediate actions you take, after the problem surfaces, are crucial.  It is important to realize that the basic actions we take, in the face of all problems, follow the same logical cycle or sequence of Contain, Cause, Correct and Control.

In my next post, we will complete our discussion on the 4 C’s of problem solving.  As you go through my postings, if you have any questions for me, send me an email to ras8202@live.com.

Bob Sproull

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