Business leaders have categorized the problems confronting them as "complex" since the phrase "business problem" was coined. And those problems are only getting more complex. The pace of technology, new competitive landscapes (e.g. web-based business models), globalization and the general speed at which markets are changing have increased the complexity of business problems and generally reduced the time available to solve them.
Recent research out of the University of Amsterdam identified two key components for successful problem solving, paraphrased roughly as: "(1) depicting the problem with a visual schematic; and (2) relating the solution components back to the problem and to each other."
These techniques require a methodical approach, discipline and patience. Business people tend to be action-oriented; when they encounter a problem they dive in and start solving it. If progress isn't being made, they will add more resources (horsepower). All too often you end up with multiple people trying to solve components of the same problem, each with a different perspective on the relationships between the variables and what the problem really is. They use different language in discussing the issue, and as a result, there isn't an appreciation of the broad implications of the problem.
As an example, Nolan recently worked with a multi-state Managed Medicaid health plan. The company had been struggling for years with issues regarding "encounters" that had significant financial implications. As it turns out there were a couple of key issues that were impacting the organization's ability to adequately solve the problem.
Encounters can be used to describe separate transactions in the Managed Medicaid world (one describes what a provider submits to the health plan and the other what a health plan submits to the state). It wasn't clear to those involved in solving the problem which encounter they were addressing. The health plan had a central shared service organization that performed much of the heavy lifting associated with encounter processing. The local, state-based plans executed many of the activities that involved communicating directly with their respective states. The exact activities performed by the shared service organization and the local plans varied by state.
In this case, the teams tasked with solving the encounter issue weren't always clear on which encounter process they were addressing, and because the processes varied by state, it wasn't widely understood that there was variation. They were using the same vocabulary to mean different things. The Nolan Company worked with the organization to develop a conceptual view of the encounter process (the one they were trying to solve) which highlighted the differences in processing by state. The clarity from having the "visual schematic" alone drove improvement in the process. Once the team clearly understood the problem they were trying to solve and developed a common understanding of what was happening they were able to develop solutions in a matter of a few weeks. Again, the encounter issue had been plaguing the organization for years. Developing a clear framework to align the team allowed them to solve the issue with fewer resources in a shorter amount of time and arrive at a more robust solution.
When an organization is faced with a complex problem, it is best served by resisting the temptation to immediately jump into trying to solve it. Take the time to frame the problem and define the relevant problem components and their relationships. Only when that is done, when the big picture is made clear, should anybody move on to resolving it. Solving problems one component at a time without a cohesive approach is a complexity we can't afford to add to our business problems.
Scot McConkey is an EVP at The Nolan Company, a management consulting firm specializing in the insurance industry.
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