fbpx
  • Management & Business Excellence Consultancy
Business problem identification

Business Problem Identification

Insights

Business Problem Identification – For family businesses and Start-ups

The biggest challenge with problem identification in businesses is that the owners and entrepreneurs are not aware of the underlying issues or unwilling to accept that their business is suffering from a problem.

At times, the problems are embedded in the design of the business model, which conceals them so that management either does not comprehend the gravity of the problem or does not render the situation a problem. It is akin to a patient suffering from an issue that he/she fails to identify or ignores until it leads to his/ her health crisis.

Business problems evolve with time; as the business grows, the nature of the issues also changes. At the earlier stages of business, anything that halts the growth is a problem; in the growth phase, financial parameters determine the problem’s gravity. In the sustainability phase, deviation from standards is the problem.

This article will help in defining business problems at various stages in the business life cycle that can cause fluctuations in the output of an organization. First, let us consider the definition of a business problem.

What is a Business Problem?

A business problem can be defined as any hurdle, situation, or variation that leads to a difference between the desired objectives and accomplished results. Some problems present themselves (machine failure), while others require in-depth analysis of the organization (declining or slow growth).

The identification of a problem holds tremendous value; once identified, management can rectify problems efficiently. Many business problems are universal, but some issues are specific to the type of business an organization is involved in.

Einstein once said:

If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it.

Subcontinent businesses are mostly owned by families. The leadership of the family businesses is passed from one generation to the next. Each generation applies its intellect to grow and sustain the company, but they sometimes lack to visualize the core problems that their business suffers from.

One such problem is that leadership ignores some severe issues while focusing on meager problems with less gravity.

The business problem identification model analyses the core areas of a business with a precise aim to identify and rectify the problems. Hence, helping businesses to sustain themselves for generations to come.

Business Problem Identification

A business can be divided into 3 phases; initiation/start-up, growth phase, and sustainability phase. At the initiation phase of a business, various business functions require the constant input of the entrepreneur. The delegation of power holds secondary status and is often ignored. Entrepreneurs are involved in every process and decision. But as the company enters the growth phase, the importance of power delegation and standardizing the processes becomes essential as one person cannot effectively be a part of every decision-making process.

In the context of the subcontinent family business practices, it has been observed that most problems are subject to the personal opinion and view of the owner. If the owner feels that the issue at hand can hurt the business, it’s considered a problem, but if the owner feels otherwise, then the case is not given the status of a problem, no matter how severe the issue might be. Mr. Abdul Rehman Arif (founder: MNBEC) expresses his concerns on lack of problem identification in a conventional business as:

In a conventional business, the definition of a problem is different from the actual definition of a business problem. In a family business, a problem is defined as per the Saith’s (business owner) understanding of the issue at hand. Unfortunately, in our business environment, if the owner’s feelings about an issue change, the issue is no longer seen as a problem.

A conventional business or start-up can be segmented into 3 phases. At each phase the problem statement evolves and differs from its prior definition. Also, each step requires a profound understanding of the business needs.

The first segment is the initiation phase. At this primitive stage the teams are usually small and processes are easily scalable. An entrepreneur’s vision and understanding of the issue defines if it is a business problem or not. Anything beyond the comfort zone of the individual running the show can be a problem.

The second segment is when the business enters a growth phase. In this phase, the problem is defined in terms of financial parameters. Anything that increases the loss is a problem. This is the phase when organizations must start heeding attention to process standardization.

The third segment decides the future of a business. At this point, a business either sustains or declines, and it all depends on “how a business defines its problems?” If the business follows standardized processes, then it will have more chances to sustain and grow. The problem statement evolves into anything that deviates from the standard. It helps businesses achieve targets by following the standard practices and identifying the problems at their earliest. If results are deviating from the standards, there is a problem that needs to be resolved.

business problem identification model

However, if the business is still defining its problems as per the owner’s understanding and instinct, it is liable to decline. The decline will lead the company back to its conventional practices, and fluctuations in business output will start emerging after a short time.

Once the organization moves towards standardization, the problem statement can be defined as a deviation from standards. The company can identify causes for variation and take action to resolve the problem.

How we help our clients

The MNBEC Business Problem Identification Model helps entrepreneurs make conscious efforts to apply standardization protocols at each organizational level and function.

The detailed version of the model is capable of problem identification and anticipation. It also allows the leadership to evaluate their current state and apply standardization protocols.