Step 1: Problem Clarification

INSTRUCTIONS:

  1. Read the description of the situation in the first part of this short case on the following pages for step1.  
  2. Respond to each of the questions stated at the end of this section 
  3. Download the prepared A3 Case Study Worksheet (PDF or Excel) and complete the “Problem Clarification” step 1 on the A3 worksheet to record and visualise your final answer.
  4. Reveal the answer for step 1 and review against your answer for Learning
  5. Evaluate what level you achieved on your first attempt  and review the coaching questions that may have helped you achieved a higher level

Situation Description 

May 1

Partline, a mechanical component manufacturer, is situated near Paris. At the outset of this fiscal year (April to April) in May the President made the year’s business plan and declaration address to the employees in the main auditorium. Part of that address was as follows:

“One of this year’s priorities is cost. It is essential that we all work to improve the Company’s cost situation. Our raw materials cost has risen by 3.5% in the past year. We cannot increase our prices above those of our competitors. We must therefore reduce all other operating costs and our performance to offset this increase.

I hope that you will all consider what you can do to bring our overall costs down.”

May 4

A few days after the President’s address, the manager of Logistics Control Division briefed the employees on the Division’s business plan for this financial year.

“Following the annual speech and declaration by the President, I have adopted ‘Operating Costs Reduction’ as the priority for the Logistics Control Division. This will be our contribution to offset the rise in raw material costs. Operating costs include all expenses associated with transporting and handling materials and components. Those costs for the division are currently € 12,000 higher than the monthly average for last fiscal year. Ideally therefore, I want you to achieve a 6% reduction in operating costs excluding payroll from last Financial Year’s level. Going forward I would ultimately like to achieve at least a 5% reduction year on year which will be included in the budget reviews during September.

The chart (over page) shows a comparison of last year’s costs. I want each of the Group Leaders to set targets for annual operating expenses in line with the company and division’s business expectations.

Each group leader will need to create a plan for the group’s cost reduction activities and present it at our next staff meeting. After we agree on your targets you can proceed with developing your plans.”

May 8

A couple of days later, Charles discussed the target for his group with Michael, a co-worker who previously held Charles’s job.

Charles: How should I set a cost-saving target?

Michael: I think you should apply what you’ve learned in the Problem Solving Training in April. Create a picture of the group’s situation. That will help you get a clear cost-saving focus.

Charles: I’m in charge of the Company’s vehicle fleet group. Ideally, the Division’s wants to reduce the operating costs not including payroll by 6%. Should that be my target?

Michael: Whoa! Wait up we don’t even know what the problem is yet and you’re your already setting a target! Let’s go through the process and then decide upon the target. Now, what is the first step we need to go through?

Charles: Step 1.0, Problem Clarification as I recall.

Michael: Good, and what are we trying to do here? 

Charles: Understand what the gap is between the Ideal and Current Situation.

Michael: Excellent, so think about the Ideal Situation – where you need to be this year and the Current Situation where you were last year. By comparing the two you should see a gap hopefully.

Charles: Ok, and what about the Ultimate Goal?

Michael: Well, that’s where we are going, was anything mentioned about future expectations?

Charles: Ah, yes, 5% year on year to be included in the budget for next year.

Michael: Correct, you were listening well! So you also have an ultimate goal.

Charles: Yes, I can see it now, thanks for the advice, let me get to work.

Think about how you would answer the following Questions:-

  1. What is the Ultimate Goal?
  2. What is the Ideal Situation?
  3. What is the Current Situation?
  4. What is the Problem? (What is the gap between the Current and Ideal situations?)

Action Point :- 

  1. As if you were Charles, complete the “Problem Clarification” section using the space below. Some areas have been completed to help you make a start.
  2. When you have made your own notes , then complete the blank A3 worksheet together with your final answer.
  3. Be sure to visualise the Gap and answer the above questions to arrive at a Problem Statement.  (see hint in action item 4)

Hint – What Good Looks like for Step 1 – Problem Clarification 

  1. Review the “What good looks like for step 1” below to help you simply visualise the gap onto your A3 worksheet  

Answer Reveal for Step 1 – Problem Clarification 

  1. Reveal the attached answer for Step 1 Problem Clarification and review against the answer to understand and learn on what if different from your answer .

Evaluation for Step 1 – Problem Clarification

  1. Review your original answer against the evaluation level and coaching questions  to understand and learn on what you could improve for next time. 

Your Evaluation Level :- 

Summary – Key Learning points 

Avoid common mistakes in the thinking way of step 1 :- 

  • Step 1 is to clarify the problem and what the gap is ,( i.e where you are today vs where you want to be). This step it is not target setting , this comes later after we have really understood the problem better and broken it down to something we can specifically address. (not always the whole of the GAP)
  • The background – need to simply explained in short sentences (and visuals)  why is the problem so important we are spending time and resources working on it.
  • Visualizing the gap helps people you need to involve easily understand what the problem to ensure we can always go back and link to purpose of closing this gap 
  • The Ultimate goal should always be linked to your longer-term vision / strategic goals where possible, as the real “GAP” might be much larger and we should always have this in mind to influence how we think about the problem. Long term strategic goals / vision needs to be made clear to people who are not aware of it by snr management 
  • Achieving evaluation level 3 would be a great start – remember it takes much practice and feedback to achieve this standard of thinking way!