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The Most Underrated Skill in Management

by Nelson Repenning, Don Kieffer and Todd Astor

Here’s how to up your game — and avoid some common mistakes — as you go about developing what we believe to be the most underrated skill in management.

OVER THE PAST TWO DECADES, we have worked with dozens of organizations, helping them with everything from managing beds in a cardiac surgery unit to sequencing the human genome. While the work itself has been highly varied, one thing has become clear to us: Problem formulation is the single most underrated skill in all of management practice.

There are few questions more powerful than, ‘What problem are you trying to solve’? In our experience, leaders who can formulate a clear problem statement get more done with less effort and move more rapidly than their less-focused counterparts. Before we describe how to improve this capability within yourself, let’s take a quick look at something that often gets in the way: the workings of the human mind.

Resisting the Associative Machine

Research indicates that our brains have two primary methods for tackling problems, and which method dominates — and thus determines the final answer — depends on both the surrounding context and the current state we are in.

CONSCIOUS PROCESSING. As the name suggests, conscious processing represents the part of your brain that you control. Whenever you are aware of your mental effort or tell someone that you are thinking about something, you are using conscious processing. This type of cognition can be both powerful and precise. It is the only part of the brain capable of what psychologists call cognitive decoupling and mental simulation — the abilities to form a mental picture of a situation and then play out different possible scenarios, even if those scenarios have never occurred before. Conscious processing is the domain of logic, in that it uses knowledge about the world to construct possibilities that extend beyond our own experience.

Mentally comparing a desired state to the current one is likely to lead to the desired change.Tweet this

AUTOMATIC PROCESSING. We cannot control this type of thinking or even ‘feel’ it happening; we are only aware of the results — such as hitting the brakes when someone stops suddenly on the road in front of us. If a piece of long sought-after information has ever just ‘popped’ into your head days later, you have experienced the workings of your automatic-processing function. Because we lack direct access or control, the workings of the automatic processing function sometimes feel magical and we use words like ‘gut instinct’ and intuition to describe them.

Not surprisingly, our automatic processing functions tackle problems very differently than their conscious counterparts. When we tackle a problem consciously, we proceed logically, trying to construct a consistent path from the problem to a solution. In contrast, the automatic system works based on associations or ‘pattern matching’. When confronted with a problem, the automatic processor tries to match the challenge to a previous situation and then uses past experience as a guide for how to act. Because automatic processing is reliant on patterns from our past experience, it can bias us towards the status quo.

As you attempt to improve your problem-formulation skills, it is important to be aware of these two very different types of thinking. If you don’t take the time to formulate a clear problem statement, you are essentially relying on your brain’s automatic processor, which is a lot faster but only reaches into your own library of past experiences for solutions.

The Art of Problem Formulation

A powerful problem statement has four key elements.

1. IT REFERENCES SOMETHING THAT YOUR ORGANIZATION CARES ABOUT AND CONNECTS THAT ELEMENT TO A CLEAR, SPECIFIC GOAL. You should be able to draw a direct path from the problem statement to your overall mission. Too many efforts to introduce new tools like those embodied in TQM, Six Sigma and Lean have failed because their considerable power was directed at irrelevant problems.

2. IT CONTAINS A CLEAR ARTICULATION OF THE GAP BETWEEN THE CURRENT STATE AND THE GOAL STATE. Research shows that mentally comparing a desired state to the current one — a process known as mental contrasting — is likely to lead to the desired change. In contrast, focusing only on the future state or on the challenges in your way is less productive. Research also shows that people draw significant motivation from the feeling of progress — the sense that their efforts are moving towards an important goal. A clearly articulated gap will help you plan and focus your efforts. 

3. THE KEY VARIABLES—THE TARGET STATE, CURRENT STATE AND GAP—ARE ALL QUANTIFIABLE. Being able to measure the gap between the current state and your target will support an effective project. However, not everything that matters can be measured accurately. Structured problem solving can be successfully applied to settings that do not yield immediate and precise measurements. Even if they cannot be objectively measured, most attributes can be ‘subjectively quantified’. This simply means that the attribute you are following has a clear direction and that you know that more or less of it is better or worse. For example, organizations often struggle with ‘soft’ variables like customer satisfaction and employee trust. Though these can be hard to measure precisely, they can be quantified: In both cases, we know that more is better.

4. IT IS SUFFICIENTLY SMALL IN SCOPE THAT YOU CAN TACKLE IT QUICKLY. A good problem statement is ‘scoped down’ to a specific manifestation of the larger issue you care about. Many organizations have become overly enamoured of large-scale change initiatives — often labelled with acronyms that are enshrined on T-shirts and coffee mugs. But this approach to change is a bad match with our natural propensity for pattern matching. As indicated, our brains love to ‘match’ new patterns — it quite literally feels good — but we can only do so effectively when there is a short time delay between taking an action and experiencing the outcome. Well-structured problem solving capitalizes on this by focusing on decomposing big problems into little ones that can be tackled quickly. Put simply, you will make faster progress if you do 12 one-month projects rather than one 12-month project. 

Having researched and taught this material for over a decade, we have observed two common failure modes. Avoiding them is critical to formulating effective problem statements and focusing your attention on the issues that really matter.

ERROR 1: ‘WE ALREADY KNOW WHAT THE PROBLEM IS’. The most common mistake is skipping problem formulation altogether. Sometimes people assume that because they ‘agree’ on the problem, they should just get busy trying to fix it. Unfortunately, such clarity is usually unfounded: Without explicit attention to and discussion of various problem statements, we all rely on our individual past experience to guide our actions. If you are in a meeting that seems to wander, chances are that the lack of a clear problem statement is at the root. Nothing brings aimless conversation to a halt faster than our favourite question: What problem are we trying to solve?

ERROR 2: PROBLEM STATEMENT AS DIAGNOSIS OR SOLUTION IN DISGUISE. A problem statement that presumes the diagnosis sounds something like, ‘The problem is, we lack marketing capability’, or ‘the problem is that the people in manufacturing are poor communicators’. Both statements could easily be true, but neither is an effective problem statement, because they don’t reference goals or targets that the organization cares about. The overall target is implicit and the person formulating the statement has jumped straight to a diagnosis as to why that target is not being met. Allowing diagnoses to creep into problem statements means that that you have skipped a step in the logical chain and missed an opportunity to engage in conscious cognitive processing. In our experience, this mistake tends to reinforce existing disputes.

When tackling a problem in the field, the most relevant knowledge resides in the heads and hands of the people doing the work.Tweet this

A Hybrid Approach

We have developed a hybrid approach to structured problem solving that is both simple and effective. The framework is essentially a simplified version of Toyota’s renowned A3 approach to structured problem solving and continuous improvement. 

STEP 1: ARTICULATE THE PROBLEM STATEMENT. The first step is to formulate a clear problem statement following our guidelines. In the Background section of the framework, you should provide enough information to clearly link the problem statement to your organization’s larger mission. Much of structured problem solving is simply stating assumptions that would otherwise be implicit—thereby hopefully engaging more conscious processing. The Background section gives you the opportunity to articulate the ‘why?’ for your problem-solving effort.

STEP 2: EXAMINE THE CURRENT DESIGN. When tackling a problem in the field, the most relevant knowledge resides in the heads and hands of the people doing the work. The challenge is that, due to automatic processing, most people cannot accurately describe how they actually execute their work. They have developed a set of habitual actions and routine responses of which they are not entirely aware. As a result, when you begin digging into a problem, you cannot rely on self-reports. Instead, you must get as close to the locus of the problem as you can and watch the work being done. Of course, as you analyze the results of your investigation, your own automatic processing functions will be mapping the observations made onto past experiences in ways that are consistent with your existing beliefs, making it difficult to find new solutions.

To offset this tendency, the next task in this step is to analyze root causes. Toyota Industries Corporation founder Sakichi Toyoda suggested asking ‘the five whys’: For each observed problem, the investigator should ask why five times. Why won’t the car start? The battery is dead. Why is the battery dead? The alternator isn’t charging it. Why isn’t the alternator working? etc. — in the hope that five levels of inquiry will reveal the fundamental cause.

STEP 3: CREATE A TARGET DESIGN. In some sense, this step is just a mirror image of the previous step’s root-cause analysis. Having linked features of the work system to the problem you want to solve, you now propose an updated system that will generate less of the problem. In this step, you map out the structure of an updated work system that would function more effectively. This might be as simple as saying, ‘From now on, we will always print the general ledger code on the invoice form’ or ‘Make changes to the employee training qualification program’. The changes should be specific, targeted modifications to the existing system that are built on your root cause analysis.

A good goal statement builds directly from the problem statement by predicting both how much of the gap you aim to close and how long it will take. Thus, if your problem was ‘24 per cent of our service interactions do not generate a positive response from customers — greatly exceeding our target of five per cent or less’, then a target statement might be: Reduce the number of negatively related service interactions by 50 per cent in 60 days.

STEP 4: EXECUTE THE PLAN. In the upper portion of the project framework, you lay out a plan for implementing your proposed design. Be sure that the plan is broken into a set of distinct activities (e.g. ‘Have invoice form reprinted with the GL code’ or ‘hold a daily meeting to review quality issues’) and that each activity has an owner and a clear delivery date. Even as you start executing, you are not done, because you will need to absorb all of the associated lessons along the way. Track each activity relative to its due date and note when activities fall behind. These gaps can also be the subject of structured problem solving.

Keep in mind that in the realm of manufacturing, service design and new product development, fixing one problem typically reveals three or more other pressing issues. Close out your project form by outlining the next problem that you need to focus on.

In closing

Formulating a good problem statement is a skill that anyone can learn, but in our experience, it takes continued practise and discipline. More than 15 years after we began this work, we still sometimes find ourselves devolving to automatic processing. By embracing the principles outlined herein, you will be on your
way to developing what we believe to be the most underrated skill in management. 

Nelson Repenning is the Associate Dean of Leadership and Special Projects and the Distinguished Professor of System Dynamics and Organization Studies at MIT’s Sloan School of Management. Don Kieffer is a Senior Lecturer in Operations Management at the Sloan School. Todd Astor, M.D., is Medical Director for Lung Transplant at Massachusetts General Hospital. A longer version of this article recently appeared in MIT Sloan Management Review (

This article appeared in the Fall 2018 issue. Published by the University of Toronto’s Rotman School of Management, Rotman Management explores themes of interest to leaders, innovators and entrepreneurs.

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