P.E.S.T Analysis - Part 8

Understanding "Big Picture" Forces of Change(Also known as PESTLE, PESTEL, PESTLIED, STEEPLE and SLEPT Analysis)


PEST Analysis is a simple, useful and widely-used tool that helps you understand the "big picture" of your Political, Economic, Socio-Cultural and Technological environment. As such, it is used by business leaders worldwide to build their vision of the future.


It is important for these reasons:

First, by making effective use of PEST Analysis, you ensure that what you are doing is aligned positively with the powerful forces of change that are affecting our world. By taking advantage of change, you are much more likely to be successful than if your activities oppose it;
Second, good use of PEST Analysis helps you avoid taking action that is doomed to failure from the outset, for reasons beyond your control; and
Third, PEST is useful when you start operating in a new country or region. Use of PEST helps you break free of unconscious assumptions, and helps you quickly adapt to the realities of the new environment.


How to use the tool:


PEST is a simple mnemonic standing for Political, Economic, Socio-Cultural and Technological.
To use this tool, follow this three stage process:


Brainstorm the relevant factors that apply to you;
Identify the information that applies to these factors; and
Draw conclusions from this information.

To download our free worksheet to record your analysis, click here!


Tip:The important point is to move from the second step to the third step: it is sterile just to describe factors without thinking through what they mean. However, be careful not to assume that your analysis is perfect: use it as a starting point, and test your conclusions against the reality you experience.

The following factors may help as a starting point for brainstorming (but make sure you include other factors that may be appropriate to your situation):


Political:
Government type and stability
Freedom of press, rule of law and levels of bureaucracy and corruption
Regulation and de-regulation trends
Social and employment legislation
Tax policy, and trade and tariff controls
Environmental and consumer-protection legislation
Likely changes in the political environment


Economic:
Stage of business cycle
Current and project economic growth, inflation and interest rates
Unemployment and labor supply
Labor costs
Levels of disposable income and income distribution
Impact of globalization
Likely impact of technological or other change on the economy
Likely changes in the economic environment


Socio-Cultural:
Population growth rate and age profile
Population health, education and social mobility, and attitudes to these
Population employment patterns, job market freedom and attitudes to work
Press attitudes, public opinion, social attitudes and social taboos
Lifestyle choices and attitudes to these
Socio-Cultural changes


Technological Environment:
Impact of emerging technologies
Impact of Internet, reduction in communications costs and increased remote working
Research and Development activity
Impact of technology transfer

Figure 1 below shows this in diagrammatic format:
Figure 1: PEST Analysis in Diagrammatic Format

Other forms of PEST - PESTLE, PESTLIED, STEEPLE and SLEPT:

Some people prefer to use different flavors of PEST Analysis, using other factors for different situations. The variants are:
PESTLE/PESTEL: Political, Economic, Sociological, Technological, Legal, Environmental;
PESTLIED: Political, Economic, Social, Technological, Legal, International, Environmental, Demographic;
STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical; and
SLEPT: Social, Legal, Economic, Political, Technological
Choose the flavor that most suits you!

Example:

We’re going to avoid giving an example here, because of the huge potential for causing offense: few societies seem perfect to outsiders, and there are few things as irritating as having an outsider criticize one's own country...

However, a broad principle is that things that make activity more difficult for people or organizations raise the cost of doing business: business is either stopped altogether, or costs more as people spend time and money circumventing difficulties. The higher the cost of doing business in a region, the more project profitability is squeezed or eliminated. And given that businesspeople normally have at least some level of intelligence, businesses and projects that could otherwise operate are never launched - meaning that less economic activity takes place. (The lower the amount of economic activity, the poorer and less capable societies tend to be.)
Another broad principle is wherever there is rapid or major change in an area, there are likely to be new opportunities and threats that arise. Smart people and companies will take advantage of the opportunities and manage the threats.

And do remember that few situations are perfect: it is up to us to make the most of the situation in which we find ourselves.

Key Points:
PEST Analysis is a useful tool for understanding the “big picture” of the environment in which you are operating, and the opportunities and threats that lie within it. By understanding your environment, you can take advantage of the opportunities and minimize the threats.PEST is a mnemonic standing for Political, Economic, Social and Technological. These headings are used firstly to brainstorm the characteristics of a country or region and, from this, draw conclusions as to the significant forces of change operating within it.
This provides the context within which more detailed planning can take place to take full advantage of the opportunities that present themselves.

Problem Soving Part 7: SWAT Analysis

SWOT Analysis
Discover New Opportunities. Manage and Eliminate Threats.


SWOT Analysis is a powerful technique for understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats you face.
Used in a business context, it helps you carve a sustainable niche in your market. Used in a personal context, it helps you develop your career in a way that takes best advantage of your talents, abilities and opportunities.


Business SWOT Analysis


What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares.
More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market.


How to use the tool:


To carry out a SWOT Analysis, answer the following questions:


Strengths:


What advantages does your company have?
What do you do better than anyone else?
What unique or lowest-cost resources do you have access to?
What do people in your market see as your strengths?
What factors mean that you "get the sale"?


Consider this from an internal perspective, and from the point of view of your customers and people in your market. Be realistic: It's far too easy to fall prey to "not invented here syndrome". (If you are having any difficulty with this, try writing down a list of your characteristics. Some of these will hopefully be strengths!)
In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not a strength in the market, it is a necessity.



Weaknesses:


What could you improve?
What should you avoid?
What are people in your market likely to see as weaknesses?
What factors lose you sales?


Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.



Opportunities:


Where are the good opportunities facing you?
What are the interesting trends you are aware of?
Useful opportunities can come from such things as:
Changes in technology and markets on both a broad and narrow scale
Changes in government policy related to your field
Changes in social patterns, population profiles, lifestyle changes, etc.


Local events


A useful approach for looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities.
Alternatively, look at your weaknesses and ask yourself whether you could create opportunities by eliminating them.


Threats:


What obstacles do you face?
What is your competition doing that you should be worried about?
Are the required specifications for your job, products or services changing?
Is changing technology threatening your position?
Do you have bad debt or cash-flow problems?
Could any of your weaknesses seriously threaten your business?



Carrying out this analysis will often be illuminating - both in terms of pointing out what needs to be done, and in putting problems into perspective.
Strengths and weaknesses are often internal to your organization. Opportunities and threats often relate to external factors. For this reason the SWOT Analysis is sometimes called Internal-External Analysis and the SWOT Matrix is sometimes called an IE Matrix Analysis Tool.
You can also apply SWOT Analysis to your competitors. As you do this, you'll start to see how and where you should compete against them.


Tip:

SWOT can be used in two ways - as a simple icebreaker helping people get together and "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool. If you're using it as a serious tool, make sure you're rigorous in the way you apply it:
Only accept precise, verifiable statements ("Cost advantage of US$10/ton in sourcing raw material x", rather than "Good value for money").


Ruthlessly prune long lists of factors, and prioritize factors so that you spend your time thinking about the most significant factors.


Make sure that options generated are carried through to later stages in the strategy formation process.


Apply it at the right level - for example, at product or product line level, rather than at the much vaguer whole company level.


Supplement it with other option-generation tools - none is likely to be completely comprehensive.


Example:


A start-up small consultancy business might draw up the following SWOT matrix:


Strengths:

We can respond very quickly as we have no red tape, no need for higher management approval, etc.
We can give really good customer care, as the current small amount of work means we have plenty of time to devote to customers
Our lead consultant has strong reputation within the market
We can change direction quickly if our approach isn't working
We have little overhead, so can offer good value to customers.


Weaknesses:


Our company has no market presence or reputation
We have a small staff with a shallow skills base in many areas
We are vulnerable to vital staff being sick, leaving, etc.
Our cash flow will be unreliable in the early stages


Opportunities:

Our business sector is expanding, with many future opportunities for success
Our local council wants to encourage local businesses with work where possible
Our competitors may be slow to adopt new technologies


Threats:

Will developments in technology change this market beyond our ability to adapt?
A small change in focus of a large competitor might wipe out any market position we achieve.
The consultancy may therefore decide to specialize in rapid response, good value services to local businesses. Marketing would be in selected local publications, to get the greatest possible market presence for a set advertising budget. The consultancy should keep up-to-date with changes in technology where possible.

You can see this analysis in diagram format in figure 1 below.

Key points:

SWOT Analysis is a simple but powerful framework for analyzing your company's Strengths and Weaknesses, and the Opportunities and Threats you face. This helps you to focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

Risk Analysis & Risk Management

Evaluating and Managing the Risks You Face

Almost everything we do in today's business world involves a risk of some kind: customer habits change, new competitors appear, factors outside your control could delay your project. But formal risk analysis and risk management can help you to assess these risks and decide what actions to take to minimize disruptions to your plans. They will also help you to decide whether the strategies you could use to control risk are cost-effective.


How to use the tool:


Here we define risk as 'the perceived extent of possible loss'. Different people will have different views of the impact of a particular risk – what may be a small risk for one person may destroy the livelihood of someone else.


One way of putting figures to risk is to calculate a value for it as:


risk = probability of event x cost of event

Doing this allows you to compare risks objectively. We use this approach formally in decision making with decision trees.

To carry out a risk analysis, follow these steps:

1. Identify Threats:

The first stage of a risk analysis is to identify threats facing you. Threats may be:

• Human - from individuals or organizations, illness, death, etc.
• Operational - from disruption to supplies and operations, loss of access to essential assets, failures in distribution, etc.
• Reputational - from loss of business partner or employee confidence, or damage to reputation in the market.
• Procedural - from failures of accountability, internal systems and controls, organization, fraud, etc.
• Project - risks of cost over-runs, jobs taking too long, of insufficient product or service quality, etc.
• Financial - from business failure, stock market, interest rates, unemployment, etc.
• Technical - from advances in technology, technical failure, etc.
• Natural - threats from weather, natural disaster, accident, disease, etc.
• Political - from changes in tax regimes, public opinion, government policy, foreign influence, etc.
• Others - Porter's Five Forces analysis may help you identify other risks.
  

This analysis of threat is important because it is so easy to overlook important threats. One way of trying to capture them all is to use a number of different approaches:

Firstly, run through a list such as the one above, to see if any apply

Secondly, think through the systems, organizations or structures you operate, and analyze risks to any part of those

See if you can see any vulnerabilities within these systems or structures

Ask other people, who might have different perspectives.

2. Estimate Risk:

Once you have identified the threats you face, the next step is to work out the likelihood of the threat being realized and to assess its impact.
One approach to this is to make your best estimate of the probability of the event occurring, and to multiply this by the amount it will cost you to set things right if it happens. This gives you a value for the risk.

3. Managing Risk:

Once you have worked out the value of risks you face, you can start to look at ways of managing them. When you are doing this, it is important to choose cost effective approaches - in most cases, there is no point in spending more to eliminating a risk than the cost of the event if it occurs. Often, it may be better to accept the risk than to use excessive resources to eliminate it.

Risk may be managed in a number of ways:

By using existing assets:Here existing resources can be used to counter risk. This may involve improvements to existing methods and systems, changes in responsibilities, improvements to accountability and internal controls, etc.

By contingency planning:You may decide to accept a risk, but choose to develop a plan to minimize its effects if it happens. A good contingency plan will allow you to take action immediately, with the minimum of project control if you find yourself in a crisis management situation. Contingency plans also form a key part of Business Continuity Planning (BCP) or

Business Continuity management (BCM).

By investing in new resources:Your risk analysis should give you the basis for deciding whether to bring in additional resources to counter the risk. This can also include insuring the risk: Here you pay someone else to carry part of the risk - this is particularly important where the risk is so great as to threaten your or your organization's solvency.

4. Reviews:

Once you have carried out a risk analysis and management exercise, it may be worth carrying out regular reviews. These might involve formal reviews of the risk analysis, or may involve testing systems and plans appropriately.

Key points:

Risk analysis allows you to examine the risks that you or your organization face. It is based on a structured approach to thinking through threats, followed by an evaluation of the probability and cost of events occurring.

Risk analysis forms the basis for risk management and crisis prevention. Here the emphasis is on cost effectiveness. Risk management involves adapting the use of existing resources, contingency planning and good use of new resources.

Problem Solving Skills: Part 5

Flow Charts

Understanding and Communicating How a Process WorksRelated variants: Process Maps and Process Flow Diagrams

Flow charts are easy-to-understand diagrams showing how steps in a process fit together. This makes them useful tools for communicating how processes work, and for clearly documenting how a particular job is done. Furthermore, the act of mapping a process out in flow chart format helps you clarify your understanding of the process, and helps you think about where the process can be improved.

A flow chart can therefore be used to:

• Define and analyze processes;
  
• Build a step-by-step picture of the process for analysis, discussion, or communication; and
  
• Define, standardize or find areas for improvement in a process
  

Also, by conveying the information or processes in a step-by-step flow, you can then concentrate more intently on each individual step, without feeling overwhelmed by the bigger picture.

How to Use the Tool:

Most flow charts are made up of three main types of symbol:
Elongated circles, which signify the start or end of a process;

Rectangles, which show instructions or actions; and

Diamonds, which show decisions that must be made

Within each symbol, write down what the symbol represents. This could be the start or finish of the process, the action to be taken, or the decision to be made.

Symbols are connected one to the other by arrows, showing the flow of the process.

Tip:

There are many other flowchart symbols that can also be used. However, remember that an important use of flow charts is in communication: If you use obscure symbols that only part of your audience understands, there’s a good chance that your communication will fail. As ever, keep things simple!

To draw the flow chart, brainstorm process tasks, and list them in the order they occur. Ask questions such as "What really happens next in the process?" and "Does a decision need to be made before the next step?" or “What approvals are required before moving on to the next task?"

Start the flow chart by drawing the elongated circle shape, and labeling it "Start".

Then move to the first action or question, and draw a rectangle or diamond appropriately. Write the action or question down, and draw an arrow from the start symbol to this shape.

Work through your whole process, showing actions and decisions appropriately in the order they occur, and linking these together using arrows to show the flow of the process. Where a decision needs to be made, draw arrows leaving the decision diamond for each possible outcome, and label them with the outcome. And remember to show the end of the process using an elongated circle labeled "Finish".

Finally, challenge your flow chart. Work from step to step asking yourself if you have correctly represented the sequence of actions and decisions involved in the process.

And then (if you're looking to improve the process) look at the steps identified and think about whether work is duplicated, whether other steps should be involved, and whether the right people are doing the right jobs.

Tip:

Flow charts can quickly become so complicated that you can't show them on one piece of paper. This is where you can use "connectors" (shown as numbered circles) where the flow moves off one page, and where it moves onto another. By using the same number for the off-page connector and the on-page connector, you show that the flow is moving from one page to the next.

Example:
The example below shows part of a simple flow chart which helps receptionists route incoming phone calls to the correct department in a company:

Key Points:

Flow charts are simple diagrams that map out a process so that it can easily be communicated to other people.

To draw a flowchart, brainstorm the tasks and decisions made during a process, and write them down in order.

Then map these out in flow chart format using appropriate symbols for the start and end of a process, for actions to be taken and for decisions to be made.

Finally, challenge your flow chart to make sure that it's an accurate representation of the process, and that that it represents the most efficient way of doing the job.

Problem Solving Skills: Part 4

Welcome to Problem Solving Skills
Part 4


Appreciative Enquiry - Solving Problems by looking at what's going right


Imagine that your organization's order book is full, and you're desperate to expand your business - but you just can't find the staff you need. What's worse, cash is tight, your recruitment budget is stretched to breaking point, and you strongly suspect that some of the approaches you're using just aren't working.One approach here is to focus on the things that aren't working, and think about how you can fix them. This is the conventional approach to problem-solving. In many cases it's the right one to use. However in others, all it does is bring you up to the same bland level as everyone else.

Another approach is to shift to a positive perspective, look at the things that are working, and build on them. In some situations this can be very powerful because, by focusing on positives, you can build the unique strengths which bring real success.

This is the premise behind "Appreciative Inquiry", a method of problem solving that was pioneered by David Cooperrider of Case Western Reserve University in the mid 1980s.To understand the basis of Appreciative Inquiry it is useful to look at the meaning of the two words in context.

Appreciation means to recognize and value the contributions or attributes of things and people around us.
Inquiry means to explore and discover, in the spirit of seeking to better understand, and being open to new possibilities.

When combined, this means that by appreciating what is good and valuable in the present situation, we can discover and learn about ways to effect positive change for the future.


Using Appreciative Inquiry: The 4D Approach

To apply Appreciative Inquiry to a problem solving situation, it’s important to focus on positives. A positive energy approach helps you build on your strengths, just as conventional problem-solving can help you manage or eliminate your weaknesses.

The first step of the process is to identify and describe the problem you're trying to solve.

From there you go on to look at the issue in four phases: Discovery, Dream, Design and Deliver. This approach is described in the five steps below.

Tip 1:Appreciative Inquiry is often explained using four Ds: "Discovery", "Dream", "Design" and "Deliver"/"Destiny". We like to put a fifth D ("Define") in as the first step.


1. "Define" the Problem

Before you can analyze a situation, you need to define what it is you are looking at. And, just as your decision to look at the positives will move you in a positive direction, defining your topic positively will help you look at its positive aspects. So, rather than seeking “Ways to Fix Recruitment Problems”, for example, you’ll choose “Ways to Accelerate Recruitment.” This subtle change in wording can have huge implications for what you focus on.Also, make sure that your topic does not unduly constrain you: You want to explore many possibilities and avenues for change so keep your topic broad.


2. "Discovery" Phase

Here you need to look for the best of what has happened in the past, and what is currently working well. Involve as many people as sensibly possible, and design your questions to get people talking and telling stories about what they find is most valuable (or appreciated), and what works particularly well. Using the example from the first stage, a good way to do this would be to get new recruits to interview one another, focusing on getting to the core of what they liked about the job before they joined, and what they've enjoyed about the organization since joining. In this situation, the following might be good discovery questions:

When you think back to when you decided to join the company, what was the thing that most attracted you?

Tell me a story about a time when you were very enthusiastic about your work.

What do you think is most important for success at the company?

Tell me about the time you felt proudest about the company.

Another approach to solving this problem could be to look at the different approaches you use to recruit people, and identify the ones that bring the greatest volume of good recruits.When you’ve gathered enough raw information, you need to analyze the data and identify the factors that most contributed to the team or organization’s past successes.


What is most valued?

What did people find most motivating or fun?

What instills the greatest pride?

And so on.


3. "Dream" Phase

In this phase, you and your team dream of “what might be”. Think about how you can take the positives you identified in the Discovery phase, and reinforce them to build real strengths.

The way forward may be obvious from the results of the Discovery Phase. If it's not, a useful approach is to bring a diverse group of stakeholders together and brainstorm creative and innovative ideas of what the organization and team could accomplish.

In our example, you might choose to enhance and build the good points that everyone likes about the organization, and use this as a strong message to attract potential candidates during the recruitment process. You may also stop doing the things that aren't working, and use the money saved to reinforce the things that are.

Once you have agreed upon your dream or vision, you can take it to the Design phase.


4. "Design" Phase

Building on the Dream, this phase looks at the practicalities needed to support the vision. Here you start to drill down the types of systems, processes, and strategies that will enable the dream to be realized.


5. "Deliver" Phase

Sometimes called the Destiny phase, the last of the Ds is the implementation phase and it requires a great deal of planning and preparation. The key to successful delivery is ensuring that the Dream (vision) is the focal point. While the various parts of the team will typically have their own processes to complete, the overall result is a raft of changes that occur simultaneously throughout the organization, that all serve to support and sustain the dream.


Tip 2:The real strength of this technique comes from steps 1 and 2. Steps 3 to 5 are just standard implementation steps. If you have your own preferred approach for implementation, use this.

Tip 3:In this article, we're looking at Appreciative Inquiry as a problem-solving technique. You can also use it powerfully either as an organizational strategy tool or for personal development. In these contexts, you can simply focus on what you do well, and divert your efforts towards this, and away from the things you're not good at.


Key Points
When faced with your next challenge or problem, take a step back and look at if from the standpoint of what is good and is currently working well. This positive perspective brings about a whole new set of positive solutions you and your team may not have previously discovered. Use this process to get your organization looking at itself in unique and positive ways. The Deliver phase of the cycle is not so much an end but a place to start to re-evaluate and continue the process of Appreciative Inquiry to continuously improve. Once you embrace the idea of positive change you can apply the cycle over and over again to various aspects of your team or organization, and enjoy the positive outcomes that positive thinking brings.

Problem Solving for Executives Part 3

Affinity Diagrams - Organizing Ideas Into Common Themes


Is it ever a bad thing to have too many ideas?
Probably not, but if you've ever experienced information overload or struggled to know where to begin with a wealth of data you've been given, you may have wondered how you can use all of these ideas effectively. When there's lots of "stuff" coming at you, it is hard to sort through everything and organize the information in a way that makes sense and helps you make decisions.

Whether you're brainstorming ideas, trying to solve a problem or analyzing a situation, when you are dealing with lots of information from a variety of sources, you can end up spending a huge amount of time trying to assimilate all the little bits and pieces. Rather than letting the disjointed information get the better of you, you can use an affinity diagram to help you organize it.

Also called the KJ method, after its developer Kawakita Jiro (a Japanese anthropologist) an affinity diagram helps to synthesize large amounts of data by finding relationships between ideas. The information is then gradually structured from the bottom up into meaningful groups. From there you can clearly "see" what you have, and then begin your analysis or come to a decision.

Affinity diagrams can be used to:

Draw out common themes from a large amount of information.

Discover previously unseen connections between various ideas or information.

Brainstorm root causes and solutions to a problem.

Because many decision-making exercises begin with brainstorming, this is one of the most common applications of affinity diagrams.

After a brainstorming session there are usually pages of ideas. These won't have been censored or edited in any way, many of them will be very similar, and many will also be closely related to others in a variety of ways. What an affinity diagram does is start to group the ideas into themes. From the chaos of the randomly generated ideas comes an insight into the common threads that link groups of them together. From there the solution or best idea often emerges quite naturally.

This is why affinity diagrams are so powerful and why the Japanese Union of Scientists and Engineers consider them one of the "seven management tools."

Affinity diagrams are not the domain of brainstorming alone though. They can be used in any situation where:

The solution is not readily apparent.

You want to reach a consensus or decision and have a lot of variables to consider, concepts to discuss, ideas to connect, or opinions to incorporate.

There is a large volume of information to sort through.

Here is a step-by-step guide to using affinity diagrams along with a simple example to show how the process works.


How to Use the Tool


1) Describe the problem or issue

2) Generate ideas by brainstorming.

Write each idea on a separate sticky note and put these on a wall or flip chart.
Remember to:

Emphasize volume.

Suspend judgment.

Piggyback on other ideas





3) Sort ideas into natural themes by asking:

What ideas are similar?

Is this idea connected to any of the others?


If you're working in a team:


Separate into smaller groups of 3 to 4 people.

Sort the ideas IN SILENCE so that no one is influenced by anyone else's comments.

Keep moving the cards around until consensus is reached.



4) Create total group consensus:

Discuss the shared meaning of each of the sorted groups.

Continue until consensus is reached.

If some ideas do not fit into any theme, separate them as "stand-alone" ideas.

If some ideas fit into more than one theme, create a duplicate card and put it in the proper group.

Try to limit the total number of themes to between five and nine.


5) Create theme cards (also called affinity cards or header cards):

Create a short 3-5 word description for the relationship.

If you're working in a group, do this together, out loud.

Write this theme/header on a blank card and place at the top of the group it describes.

Create a "super-headers" where necessary to group themes.

Use a "sub-header" card where necessary as well.




6) Continue to group the themes/headers until you have reached the broadest, but still meaningful, categories possible:

Draw lines connecting the super-headers, themes/headers, and sub-headers.

You'll end up with a hierarchical structure that shows, at a glance, where the relationships are.


Tip:Grouping ideas under headings, and then grouping headings under super-headers in an affinity diagram is a practical way of "chunking" information generated in brainstorming sessions, during process mapping, or even a planning exercise.


Key Points

Affinity diagrams are great tools for assimilating and understanding large amounts of information. When you work through the process of creating relationships and working backward from detailed information to broad themes, you get an insight you would not otherwise find.

The next time you are confronting a large amount of information or number of ideas and you feel overwhelmed at first glance, use the affinity diagram approach to discover all the hidden linkages. And when you cannot see the forest for the trees, an affinity diagram may be exactly what you need to get back in focus.

To download the FREE Affinity Diagram Software, visit:

http://www.smartdraw.com/specials/affinity-diagram-software.htm?id=324616

Problem Solving for Executives Part 2

Welcome to Problem Solving Skills
Part 2


Cause and Effect Diagrams

Identifying the likely Causes of Problems related variants: Fish or Fishbone Diagrams, and Ishikawa Diagrams


Cause and Effect Diagrams help you to think through causes of a problem thoroughly. Their major benefit is that they push you to consider all possible causes of the problem, rather than just the ones that are most obvious.


The approach combines brainstorming with use of a type of concept map.


Cause and Effect Diagrams are also known as Fishbone Diagrams, because a completed diagram can look like the skeleton of a fish.


How to Use the Tool:


Follow these steps to solve a problem with a Cause and Effect Diagram:


Identify the problem:

Write down the exact problem you face in detail. Where appropriate identify who is involved, what the problem is, and when and where it occurs.

Write the problem in a box on the left hand side of a large sheet of paper.

Draw a line across the paper horizontally from the box.

This arrangement, looking like the head and spine of a fish, gives you space to develop ideas.


Work out the major factors involved:


Next identify the factors that may contribute to the problem.

Draw lines off the spine for each factor, and label it. These may be people involved with the problem, systems, equipment, materials, external forces, etc.

Try to draw out as many possible factors as possible. If you are trying to solve the problem as part of a group, then this may be a good time for some brainstorming.

Using the 'Fish bone' analogy, the factors you find can be thought of as the bones of the fish.


Identify possible causes:


For each of the factors you considered in stage 2, brainstorm possible causes of the problem that may be related to the factor. Show these as smaller lines coming off the 'bones' of the fish. Where a cause is large or complex, then it may be best to break the it down into sub-causes. Show these as lines coming off each cause line.



Analyze your diagram:


By this stage you should have a diagram showing all the possible causes of your problem that you can think of. Depending on the complexity and importance of the problem, you can now investigate the most likely causes further. This may involve setting up investigations, carrying out surveys, etc. These will be designed to test whether your assessments are correct.

Example:

The example below shows a Cause & Effect diagram drawn by a manager who is having trouble getting cooperation from a branch office:




To get a closer look on a Pdf file, e-mail Helena at: nyman@consultant.com. Please write Cause and Effect Diagram Pdf File in the subject line!

If the manager had not thought the problem through, he might have dealt with the problem by assuming that people were being difficult.

Instead he might think that the best approach is to arrange a meeting with the Branch Manager. This would allow him to brief the manager fully, and talk through any problems that he may be facing.

Key points:

Cause & Effect analysis (or Fishbone Analysis) provides a structured way to help you think through all possible causes of a problem. This helps you to carry out a thorough analysis of a situation.