Problem Formulation and Identification

Three decision making tools are described below from point of view of the process and their utility and limitations. The three tools described below are Brainstorming, Pareto Analysis and SWOT Analysis.Brainstorming: Brainstorming is group technique to generate improvement ideas with objective of identifying solutions for a problem.  Brainstorming is very effective tool for problem solving. Important aspect for effectiveness of Brainstorming is to understand the problem yourself and articulate the same problem to the audience.

The mix of participants is required to be selectively picked. In organization members form all relevant functions are invited for the brainstorming process. Benefit of cross functional team (representing production, finance, logistics, and sales etc) is that all round aspect of a problem are brainstormed. In event of small group discussion, there is limitation in developing big picture of the issue.

Pooling creativity and wisdom of a Group helps in identifying possible solutions to the problemsImportant outcome of the brainstorming session is generation of more and more numbers of ideas. While idea generation Quantity of ideas is as important as quality of ideas.A facilitator moderating the session has important role to ensure no evaluation or criticism of ideas. Organization hierarchy must be thrown out of window and no one should be allowed to ridicule or demean the ideas of others. Rather creative/ ‘out of the box’ ideas are encouraged.To ensure participation of audience, facilitator is required to provoke stake holders to admit or contest the problem, which in turn results in surfacing of some new idea.

Generation of ideas is only one half of the whole exercise. Important part is consolidation or grouping of the ideas using a two by two matrix. X- Axis of the matrix depicts impact or likely potential (in USD) in the idea and y- axis represents the feasibility or ease of implementation of the idea. This test on impact- feasibility matrix helps in prioritizing the ideas which are high on potential and also highly feasible.

Pros: Very good tool to problem solve, involving multi function team members.Cons: Brainstorming process is not suitable for developing business strategies. Also it is not a quantitative or statistical tool.Pareto Analysis:  (Popularly known as 80: 20 rule)Pareto analysis is handy quantitative tool used by all line managers to prioritize the issues/ data. As per Pareto Distribution, generally in a business area, any data set has 80: 20 mix. Which means that 20% of things/ causes account for 80% of the effects.

For illustration, 20% of population in a country owns 80% of the wealth or 20% of client accounts for 80% of sales. Pareto Principle has application in quality control, purchase, logistics and sales etc.Pros: Easy and effective quantitative tool to optimize resources and energy to address a business problem or activity.Cons: Many times Pareto analysis simplifies some of the complex business aspects, for which user need to be aware of, else sub- optimal decisions may be taken.

SWOTSWOT acronym stands for Strength Weakness Opportunity and Threat. It is less of quantitative and more of strategic planning tool.SWOT Analysis is primarily to collate all aspects of business which are favorable or unfavorable for a business objective. Developing an exhaustive SWOT matrix helps team in developing future action plan, which is likely to be in line with the business realities. SWOT analysis helps putting things in all round perspective.

For illustration, a SWOT analysis by General Motors on date would help them in realizing their strength (dominant position in US auto market), weakness (with respect to Toyota, which is gaining market share year after year and now has displaced GM from number one position), opportunities (to strengthen presence in emerging markets like India, China etc) and threat (growth is happening in fuel- efficient small car market which can further dent GM market share). With help of SWOT analysis, GM is in better position to address concerns and develop business strategy. Today GM needed to revisit their business tenets in order to survive and thrive in ever competitive automotive industry. Customers are more demanding, new requirement are emerging, and competition is more aggressive in globalized world.SWOT analysis is quite dynamic.

Every 6- month business environment undergoes some changes and also the performance of the organization improves or deteriorates every quarter. Hence as a process organization is required to carry out detailed SWOT analysis on regular basis and develop action points for team/ organization to take to improve strength, address weakness, capture opportunities and create barriers for threat.Pros: SWOT analysis give excellent snap shot of organization position in industry landscape.Cons: SWOT analysis is not a problem solving tool.

There is likelihood of subjectivity creeping into the various qualitative inputs captured.