7 Steps of Problem-Solving: Cracking the Code of Business Setbacks

7 Steps of Problem-Solving: Cracking the Code of Business Setbacks

In a business, organized problem-solving can be taken as an advantage to handle almost any complex challenge.

According to the Future of Jobs Report of the World Economic Forum, mastering complex problem solving is the number one skill everyone should have for a job in the future. An employee with the ability to define and respond to problems creatively is the number one priority companies are looking for.

The article of CEOWORLD MAGAZINE, “Problem Solving Is A Critical CEO Issue”, found an interesting fact. They explained that companies would have 3.5 times higher total return to shareholders as they have solid problem-solving capacity. That means problem-solving skills are essential for both individuals and enterprises.

Problem-solving is a Critical Leadership Skill

Leadership roles are not only about management and delegation. Further, it should also cover unnoticed aspects like problem-solving. Not only important, but this skill is also a crucial role any leaders have to put on the list.

Harvard Business Review ranked the problem-solving and issues-analyzing third out of 16 skills that every leader needs at every level. With the responsibility to get rid of barriers or challenges of business progress, leaders must be brain-racking. Owning the ability to solve any issues is a critical component for them.

Problem-solving looks like the core of what leaders exist to do in the organization.  Heads of any organization or company furthermore go along with a responsibility to minimize the occurrence of problems. They have to be ready with strategy in tackling issues head-on before the worst comes to their hand.

“All life is problem-solving”, that’s how Karl Popper, the most influential 20th-century philosopher of science remarked. When it comes to business, problems will always exist. Like competitors that successfully recast a long-standing client, that would create problems too. With a new product launched, a new industry relationship established, or a new invention of brand or corporate strategy found, problems will face the leaders all the time.

As a consequence, the Head of the company who lacks this ability would face difficulties. They would find it hard when bringing companies to grow and compete in the competitive marketplace. In the end, problems will always be the same but just packaged in different forms.

Handling Business Challenges with the 7 Steps Problem-solving Methods

Great problem solvers are created, not accepted. When problem-solving is so much needed, the skill itself is still thin on the ground. Therefore the 7-steps problem solving emerges.

It’s Charles Conn, the CEO of venture-capital firm Oxford Sciences Innovation, and Hugo Sarrazin, the McKinsey Senior Partner who came up with ideas of problem-solving methods.

The methods were formerly explained on the McKinsey Podcast “How to master the seven-step problem-solving process”. It operates the 7-steps systematic approach in the way of decoding the issues.

1. Pointing out the problems

How do leaders define a problem and recognize what decision they should make? The question is by taking the first step of this method. It begins with finding out the context and boundaries of the problem. Of course, to find clear problem statements, there should be agreed contexts and limitations.

The World Economic Forum held a survey of 106 company leaders. The data revealed that 87% of employees waste significant resources solving the wrong problems. The obstacles come from how decision-makers are trapped in long hours of analyzing problem statements. It’s because the problem statements are too vague, indefinite, and hazy. Effectively and efficiently framing the problems will be a thing that decision-makers have to be aware of.

2. Break issues down like a ‘tree’

Here, leaders have to disaggregate the issues and conceive hypotheses to analyze. Every problem comes up with its complexities and uncertainties. The process of disaggregating the problem sometimes leads problem solvers to get the answer effortlessly. Thus, the process of breaking down the issues has to be detailed into the core.

To break down the issues into pieces for analysis, it can use various logic trees. Logic trees further help problem-solvers to figure out what’s essential to handle, and what pieces can be delegated to their people.

The classic profit tree can be taken as an illustration of logic trees. In the profit or return-on-assets tree,  there are components of revenue which consists of price and quantity.

Further, the cost has two components, those are cost and quantities. When it comes to logic trees, each context can be disaggregated. From the cost, it will find the cost and fixed cost. Moreover, the component of price can be detailed into various pricing schemes. That simple example of a logic tree helps leaders find alternative hypotheses of the answer.

3. Prioritizing ‘branches’ of a logic tree

Prioritizing the issues allows leaders to understand what and what not to do. It reshapes the problem statements and finds out which one is important or has a huge effect. As the following action of logic trees, problem-solvers should know how important the branch of the tree is. From the overall outcome, leaders have to prioritize those which need to be achieved.

This part emerges as a solution to the long-hour process of decision-making. It’s common to find people spend a lot of time arguing about unimportant ‘branches.’ The issues may be hard to handle and none can change. Meanwhile, some levers have big-impact and big-outcome when it’s well-solved.

4. Bring them into work-plan and timetable

After leaders get the frame of the problem and map out the priority, the next move is developing a work plan. The work plan and timetable have to be based on what leaders have prioritized. To gather analytical tasks, the CEO needs to link each part.

As decision-makers, they need to formulate a plan of work that reflects a level of precision. Not only formulated precisely but also hung on to the time frame. Sometimes the work plan involves stakeholders. Thus, leaders should assure that all the workloads are transparent.

Once leaders determine specific outputs and completion dates, they need to deliver them to team members.

5. Analyzing critically with a structured approach

Work plans have been formulated, now it is time to start step five. Before taking massive and complex analytical approaches, leaders have to be well-informed about the ‘shape’ and ‘scope’ of the problem.

The bottleneck that confuses problem-solvers is cognitive biases. It ruins the way they gather facts and analyze the problem. To eradicate the cognitive bias, a structured approach is needed. Leaders can also consider a diverse team to gather different viewpoints to assemble.

However, some of the problems may need to be solved with ‘test’ and ‘learn’ methodology. By utilizing the technology and rapid feedback loops, the outcome will easily appear. On the flip side, complex challenges have to be handled with exploring data analysis.

6. Arrange determinations from the analysis

Leaders are stepping into step six with their completed analysis. But if they come with a lack of insights, this next step can fire them back. They confidently come with their analysis, but some of them may think that it’s the final answer. The fact? Well, it’s not.

The analysis gives the pieces that leaders need to synthesize. The key to this process is in how leaders can deliver and distinctly tell a story. So that they will find it easy to answer the question of “What should I do?”.

This process is about highlighting insights by collecting any findings from the analysis. As it pushes leaders to convince others, all the determinations need to depend on logical structure. Leaders have no choice but to ensure that their people find the findings a good solution.

7. Communicate Effectively

The final step is about how leaders communicate and motivate people to action. Of course, it should be done compellingly. Leaders don’t want to end up in the place they started. That means, when they couldn’t motivate their people to take action, they have not solved anything.

Hence they need to deliver the solution they have formulated successfully. Make it like a great story. An inspiring story that encourages others to work together. Make them voluntarily crack the code of their companies’ drawbacks, shoulder to shoulder.


When it comes to the C-suites, there will be enormous and complex problems they have to face. Current issues are likely elevating to CEO levels as the business model rapidly changes. Hence, as they need to build and maintain momentum for their company and people, leaders need to be resilient. That would be easy when they hold the ability to bounce back from any troubles, crises, or the worst situation.