www.pwc.com
Analytical Problem
Solving Techniques
Present at
Actuarial Competencies
Seminar
2 April 2012
" One certain thing in an ever-changing world is
there will always be problems to solve. Problem
solving is required of every person in almost every
aspect of life. The best way to escape from a
problem is to solve it.“
Analytical Problem Solving
PwC
April 2012
Slide 2
This presentation is to review steps in
solving problems and tools that could be
used in those steps.
Analytical Problem Solving
PwC
April 2012
Slide 3
Steps in Problem Solving
1
2
Define the problem
Analytical Problem Solving
PwC
3
Analyse
problem and
generate
solutions
Generate
solutions
and select an
optimal
April 2012
Slide 4
Define the problem
1
Define the problem
Purpose
Identify gap between the current situation and the
desired situation and define key question
Outcome
Prioritized list of problems
Problem definition statement / key questions
Sample Tools
Analytical Problem Solving
PwC
Brainstorming
Pareto Diagram
Issue Tree
Cause-and-effect Analysis
Process Mapping
April 2012
Slide 5
First, you need to define the key question
The key question defines the objective of the analysis to solve problem
The key question will also guide data collection and analysis for problem
The key question
A clear statement of the
problem to be solved or
the issue to be resolved
Analytical Problem Solving
PwC
A key question is
• A leading question or firm
hypothesis
• Specific/focused not
general
• Contentful (not a statement
of fact or non-disputable
assertion)
• Actionable
• Focuses on what the
decision maker needs to
move forward
A good key question
addresses these
questions
• What is the impact or
“pain” on our customers,
business or employees?
• How extensive is the
problem?
• What is wrong or not
working?
• When, where and how
often does the problem
occur?
April 2012
Slide 6
How to develop the key question
• Use the Situation – Complication – Question approach:
Situation
• ABC Insurance is looking to expands its operations in the
pursuit of profitable growth
Complication
• Increasing cost pressures in its core business are having a
negative impact on margins
Key Question
• What are the implications from likely changes in the industry
to ABC Insurance’s growth targets?
Analytical Problem Solving
PwC
April 2012
Slide 7
Key question example
×
×
×
Key question
Evaluation
ABC Insurance is successful and profitable and wishes to focus on growth
Statement of fact
Should ABC Insurance grow to offset emerging pressures in its core business?
Statement of fact
Can ABC Insurance grow in its current geography?
What are the key implications of likely changes to the Thai Insurance
industry for ABC Insurance’s strategy, over the next 5-10 years, in light of its
aspirations to grow earnings at a 10% CAGR?
Analytical Problem Solving
PwC
Too general
Specific,
actionable
April 2012
Slide 8
However, it is easy to consider one aspect of
problems
Of the five figures below, select the one that is different from all of the others
How many of you answer "B"?
A : only figure with a continuous line and no points of discontinuity
B : only figure that has all straight lines
C : only figure with two straight and two curved lines
D : only one with one curved and one straight line
E : only figure that is nonsymmetrical or partial
There can often be more than one problem definition, more than one right answer,
and more than one perspective from which to view a problem
Analytical Problem Solving
PwC
April 2012
Slide 9
Define the problem
1
Define the problem
Differentiate fact from opinion
Tap everyone involved for
information
State the problem explicitly
Identify what standard is
violated
Determine whose problem it is
Einstein is quoted as saying:
“If he had one hour to save the
world he would spend fifty-five
minutes defining the problem
and only five minutes finding
the solution”
Avoid stating the problem as a
disguised solution e.g. "The
problem is that we need to
motivate the slow employees"
Analytical Problem Solving
PwC
April 2012
Slide 10
Analyse problem and generate solutions
1
2
Define the problem
Analyse problem
and generate
solutions
Purpose
Identify root causes for the problem
Identify a range of creative alternative to achieve
desired outcomes
Outcome
Identified root causes and / or potential solutions
Sample Tools
Analytical Problem Solving
PwC
Issue Tree
Cause-and-effect Analysis
Process Mapping
Pareto Diagram
Affinity Diagrams
Six Thinking Hats Techniques
April 2012
Slide 11
Then, you need to identify the root causes and
solutions
What is an issues tree?
• Identifies all of the issues or possible
solutions to a key question
• Focuses your work on thoroughly
answering the key question and turning
a broad question into testable possible
solutions or issues i.e. hypotheses
• Built on a key question at the top and
then moving down subsequent layers
until you can identify specific
hypotheses that can be tested
Analytical Problem Solving
PwC
Why use an issues tree? To...
• Break a problem into component parts so that
• Problem solving can be divided into
intellectually manageable pieces
• Priorities can be set between the parts
• Responsibilities can be allocated to
individuals
• Ensure problem solving integrity is
maintained
• Solving the parts will really solve the
problem
• The parts are mutually exclusive and
collectively exhaustive (i.e., no overlaps,
no gaps) - 'MECE’ or 'NONG’
April 2012
Slide 12
What do we mean by “MECE” - Mutually Exclusive
and Collectively Exhaustive
How can we reduce
energy costs?
No overlaps
(Mutually Exclusive)
By reducing
number of energy
units used
By reducing cost of
each energy unit
Use lower cost
fuels in
existing
equipment
Add new
equipment
using less
costly fuel
Create new
equipment to
use less fuel
Fix existing
equipment to
use less fuel
Nothing left out
(Collectively Exhaustive)
Analytical Problem Solving
PwC
April 2012
Slide 13
What does an issues tree look like?
How can ABC create excess capacity
of 130+ FTE in call centres?
Level 1 – Key Question
Level 2 – Possible solutions
Identifying all possible high level
solutions guides the key areas for review,
and can assist to structure the project
onto streams of work
By increasing the
proportion of time phone
staff spend answering
calls
By decreasing the
average call length
for phone staff
By improving processes
and behaviours of offphone staff (eg. Team
Leaders)
Level 3 – Possible solutions
Identifying all possible next-level
solutions assists to ensure that “all bases
are covered” and guides the analysis. You
will find that not all of these solutions are
validated, eg. there may not be much
irrelevant dialogue occurring, but at least
you have covered the possibility
By reducing the
time spent to
understand the
reason for the call
By reducing
the time spent
to identify the
caller
By reducing the
time spent on
irrelevant dialogue
By reducing the
time spent to
resolve the caller’s
issue
By reducing the
time spent on
attempts to crosssell products
Level 4 – Possible solutions
Solutions should continue to a level
where it is possible to conduct analysis to
prove or disprove the solutions
Analytical Problem Solving
PwC
By improving the ID
process
By improving staff
behaviour in identifying
callers
By improving call centre
technology regarding
customer identification
April 2012
Slide 14
Tips for building an issues tree
Tip
Rationale
• Bear in mind that some of the possible solutions will • No need to boil the ocean on tasks that are out of
be out of scope and will not need to be explored
scope
further
• Use team
• Rough hypothesis sessions tap everyone's creativity,
tend to get better answers and are fun
• If stuck, try building them backward in addition to • It is sometimes easier to think up sub-issues and
forward
analysis then group them, than to work linearly
• Try multiple trees and constantly update and revise
• Different trees provide new perspectives
• Ensure your issues tree is MECE (Mutually
Exclusive and Comprehensively Exhaustive)
• Ensures problem solving integrity is maintained
• There should be 3 to 5 points in each grouping
• Less than 3 or more than 5 points in each grouping
may indicate incomplete thinking ie Not MECE
• Use frameworks to guide questions
• Using frameworks provides a problem solving
structure, which leverages pervious experience
Analytical Problem Solving
PwC
April 2012
Slide 15
How about Fishbone Diagram?
What is a Fishbone Diagram?
• A graphic technique for identifying
cause-and-effect relationships among
factors in a given situation or problem
Why use a Fishbone Diagram? To...
• To allow a team to identify, explore, and
graphically display, in increasing detail, all of
the possible causes related to a problem or
condition to discover its root cause(s)
• Enable a team to focus on the content of the
problem, not on the history of the problem or
differing personal interests of team members
• Create a snapshot of the collective knowledge
and consensus of a team around a problem
• Focus the team on the causes, not symptoms
Analytical Problem Solving
PwC
April 2012
Slide 16
How does Fishbone Diagram work?
1.
Select the most appropriate cause & effect format
•
Dispersion Analysis Type: Constructed by placing individual causes within each
“major” cause category then asking of each individual cause “Why does this cause happen?”
This question is repeated for the next level of detail until the team runs out of causes
•
Process Classification Type: Uses the major steps of the process in place of the major
cause categories.
2. Generate the causes needed to build a Cause & Effect diagram using Brainstorming
3. Construct the Fishbone diagram
Machinery/Equipment
Poor handling
of large orders
People
People don’t
show up
Late pizza deliveries on
Fridays & Saturdays
Run out of
ingredients
High turnover
Poor use of space
Lack of training
Methods
Analytical Problem Solving
PwC
Inaccurate
ordering
Materials
April 2012
Slide 17
You will need data to determine rank causes
What is a Pareto Diagram?
• A simple graphical technique for rank
ordering causes from most-to-least
significant, identifying major factors,
and distinguishing between the few
critical causes and potentially less
significant ones, help locate where
maximum performance improvement
can be made for the effort expended
Why use a Pareto Diagram? To...
• To focus efforts on the problems that offer the
greatest potential for improvement by
showing their relative frequency or size in a
descending bar graph
• Help a team to focus on the causes that will
have the greatest impact if solved
Based on the proven Pareto principle: 20%
of the sources cause 80% of the problem
• Display the relative importance of problems in
a simple, quickly interpreted, visual format
• Help prevent “shifting the problem” where the
“solution” removes some causes but worsens
others
Analytical Problem Solving
PwC
April 2012
Slide 18
How does Pareto Diagram work?
1. Decide which problem you want to know more about
Example: Consider the case of HOTrep, an internal computer network help line – Why do
people call the HOTrep help line; what problems are people having?
2. Choose the causes or problems that will be monitored, compared, and rank ordered by
brainstorming or with existing data
Brainstorming: What are typical problems that users ask about on the HOTrep help line?
Existing Data: What problems last month have users called in to the HOTrep help line?
3. Choose the most meaningful unit of measurement, such as frequency or cost
4. Choose the time period for the study
Example: Review HOTrep help line calls for 10 weeks (May 22 – August 4)
5. Gather the necessary data on each problem category either by “real time” or reviewing
historical data
Gathered HOTrep help line calls data based on the review of incident reports (historical)
Analytical Problem Solving
PwC
April 2012
Slide 19
How does Pareto Diagram work?
6.
Compare the relative frequency or cost of each problem category
7.
List the problem categories on the horizontal line and frequencies on the vertical line
List the categories in descending order from left to right on the horizontal line with bars above
each problem category to indicate frequency or cost – list unit of measure on vertical axis
80
Frequency
Reflections misc.
System configuration
System integrity
Others
Total:
Analytical Problem Solving
PwC
6
16
19
15
206
50
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60
R
Print problems
Reflection hang
Reflection sys. Integrity
70
# of Occurences
3
68
8
20
pr
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Bad configuration
Boot problems
File problems
Lat. connection
Bo
ot
Problem Category
April 2012
Slide 20
How does Pareto Diagram work?
8.
Interpret the results
Generally, the tallest bars indicate the biggest contributors to the overall problem
However, the most frequent or expensive problem is not always the most important
Always ask: What has the most impact on the goals of our business and customers?
80
# of Occurences
70
60
50
40
30
20
10
R
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ot
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Analytical Problem Solving
PwC
April 2012
Slide 21
Sometimes, you need ways to help generate ideas
What is an Affinity Diagram?
• A way to gather and group ideas in a
meaningful way
Why use an Affinity Diagram? To...
• To allow a team to creatively generate a large
number of ideas/issues and then organize and
summarize natural groupings among them to
understand the essence of a problem and
breakthrough solutions
• Encourage creativity by everyone on the team
at all phases of the process
• Encourage non-traditional connections
amongst ideas
• Overcomes “team paralysis”, which is brought
on by an overwhelming array of options and
lack of consensus
Analytical Problem Solving
PwC
April 2012
Slide 22
How does Affinity Diagram work?
1. Phrase the issues under discussion in a full
sentence
2. Brainstorm at least 20 ideas or more
• Record each idea on a post-it in large
letters
• Use at a minimum a noun and a verb
What are the issues involved in planning fun family
vacations?
Ask kids for
ideas
Find a good
range of price
alternatives
Look at family
pictures
Consider
everyone’s
hobbies
Determine
total budget
• Avoid using single words; 4-7 words
work well
3. Without talking, sort ideas simultaneously
into 5-10 related groupings
• Move post-it notes where they fit best
for you
• Stop sorting when each person feels
comfortable with the groupings
Analytical Problem Solving
PwC
Ask kids for
ideas
Look at family
pictures
Find a good
range of price
alternatives
Determine
total budget
Consider
everyone’s hobbies
April 2012
Slide 23
How does Affinity Diagrams work?
4. For each grouping, create summary or header
cards using consensus
• Gain a quick team consensus on a
word/phrase that captures central idea of
each grouping; record it on a post-it and
place it at the top of each grouping. These
are Draft Header Cards
• For each grouping, agree on a concise
sentence that combines the grouping’s
central idea and what all of the specific
post-it notes add to that idea. These are
Final Header Cards
Header Cards
Define an ideal
vacation through
family consensus
Ask kids for
ideas
Look at family
pictures
Determine the most
your budget will
buy
Find a good
range of price
alternatives
Determine
total budget
Consider
everyone’s hobbies
• Divide large groupings into subgroups as
needed and create appropriate subheaders
• Draw the final Affinity Diagram connecting
all finalized header cards with their
groupings
Analytical Problem Solving
PwC
April 2012
Slide 24
More ways to help generate ideas
What is De Bono's 6 Thinking Hats?
• A brainstorming technique used to look
at the effects of a decision from a
number of different points of view
Why use Six Thinking Hat? To...
• To allow necessary emotion and skepticism to
be brought into what would otherwise be
purely rational decisions; It opens up the
opportunity for creativity within Decision
Making.
• Focus and improve the thinking process
• Encourage creative, parallel and lateral
thinking
• Improve communication
• Speed up decision making
• Avoid debate
Analytical Problem Solving
PwC
April 2012
Slide 25
How does a Six Thinking Hats work?
The white hat considers only the
data and information at hand.
The blue hat controls the
brainstorming process.
The red hat presents their feelings
or intuition about the subject
without explanation or need for
justification.
The green hat makes time and space
available for creative thinking.
The yellow hat has optimism and a
positive view of things.
The black hat calls for caution
and critical judgment.
Analytical Problem Solving
PwC
April 2012
Slide 26
Example - Sequence of Hats – When Seeking an
Idea
Green: To further explore information and generate alternatives
White: To find supporting data for each alternative
Yellow: To assess the benefits and feasibility of each alternative
Black: To assess the weaknesses and dangers of each alternative
Blue:
To facilitate process in choosing alternative
Black:
To make the final judgment on the chosen alternative
Red:
To find out the feelings on the outcome
Analytical Problem Solving
PwC
April 2012
Slide 27
Analyse problem and generate solutions
1
2
Define the problem
Differentiate fact from opinion
Tap everyone involved for
information
State the problem explicitly
Identify what standard is
violated
Determine whose problem it is
Avoid stating the problem as a
disguised solution e.g. "The
problem is that we need to
motivate the slow employees"
Analyse problem
and generate
solutions
All alternatives should be
proposed before evaluation is
allowed
Alternatives are proposed by
all individuals involved in the
problem
Alternative solutions are
consistent with organizational
goals or policies
Specify both short-term and
long-term alternatives
Build on others ideas
Specify alternatives that solve
the problem
Analytical Problem Solving
PwC
April 2012
Slide 28
Select an optimal
1
2
Define the problem
Analyse problem
and generate
solutions
3
Select an optimal
Purpose
Weigh alternative solutions against agreed upon
criteria
Outcome
Strengths and weakness of alternative solutions
Evaluation scores of each alternative solution
Sample Tools
Weighted Ranking Assessment / Prioritization
Matrices
Analytical Problem Solving
PwC
April 2012
Slide 29
Finally, you need to select a solution
What is Prioritization Matrix?
• A method for reviewing options and
choosing top priorities based on a set of
criteria established by the group
Why use Prioritization Matrix? To...
• To narrow down options through a systematic
approach of comparing choices by selecting,
weighting, and applying criteria
• Quickly surface basic disagreements so they
may be resolved upfront
• Force a team to focus on the best thing to do,
and not everything they could do, increasing
chances for implementation success
• Increase the chance of follow-through because
consensus is sought at each step in the
process
Analytical Problem Solving
PwC
April 2012
Slide 30
How does Prioritization Matrix work?
1. Agree on the ultimate goal to be achieved in a clear, concise sentence and create the list of
criteria
2. Weight each criterion against each other
Choose the most
enjoyable vacation
for the whole family
Criteria
Cost
Cost
•
•
•
•
Cost
Educational value
Diverse activity
Escape reality
Rankings
Diverse
activity
Escape
reality
Row
Total
Relative
Decimal
Value
1/5
1/10
5
5.3
.15
1/5
5
10.2
.28
5
20
.55
.60
.02
Ed. Value
5
Diverse
activity
10
5
Escape
reality
1/5
1/5
1 – Equal cost
5 – Less expensive
10 – Much less expensive
1/5 – More expensive
1/10 – Much more expensive
Analytical Problem Solving
PwC
Ed.
Value
1/5
Grand
Total
36.1
Criteria
weighting
April 2012
Slide 31
Prioritization Matrices: Method
3.
Compare all options relative to each weighted criteria
Options vs. Each Criterion
Cost
Create additional
matrices for each
option, i.e.
escape reality,
diverse activity,
educational value
Rankings
Disney
World
Disney
World
Gettysbu
rg
New
York
City
Uncle
Henry’s
Row
Total
Relative
Decimal
Value
1/5
5
1/10
5.3
.12
10
1/5
15.2
.33
1/10
.40
.01
25
.54
Gettysburg
5
New York
City
1/5
1/10
Uncle
Henry’s
10
5
1 – Equal cost
5 – Less expensive
10 – Much less expensive
1/5 – More expensive
1/10 – Much more expensive
10
Grand
Total
36.1
Option rating
Analytical Problem Solving
PwC
April 2012
Slide 32
Prioritization Matrices: Method
5. Using an L-Shaped summary matrix, compare each option based on all criteria combined
6. Choose the best option(s) across all criteria
Summary Matrix: Options vs. All Criteria
Criteria
Cost
Ed. Value
(.15)
(.28)
Diverse
activity
Escape
reality
(.55)
(.02)
Row
Total
Relative
Decimal
Value
.32
.32
.22
.22
.38
.38
.09
.09
Options
Disney World
Gettysburg
New York City
Uncle Henry’s
.12X.15
.24X.28
.40X.55
.65X.02
(.02)
(.07)
(.22)
(.01)
.33X.15
.37X.28
.10X.55
.22X.02
(.05)
(.10)
(.06)
(0)
.01X.15
.37X.28
.49X.55
.12X.02
(0)
(.10)
(.27)
(.01)
.54X.15
.01X.28
.01X.55
.01X.02
(.08)
(0)
(.01)
(0)
Grand Total
Analytical Problem Solving
PwC
1.01
April 2012
Slide 33
Generate alternative solutions
1
2
Define the problem
Differentiate fact from opinion
Tap everyone involved for
information
State the problem explicitly
Identify what standard is
violated
Determine whose problem it is
Avoid stating the problem as a
disguised solution e.g. "The
problem is that we need to
motivate the slow employees"
Analyse problem
and generate
solutions
Select an
alternative
All alternatives should be
proposed before evaluation is
allowed
Evaluate relative to an optimal
standard rather than a
satisfactory standard
Alternatives are proposed by
all individuals involved in the
problem
Evaluate systematically so
each alternative given due
consideration
Alternative solutions are
consistent with organizational
goals or policies
Organizational goals should be
met but individual preferences
should also be considered
Specify both short-term and
long-term alternatives
Evaluate main effects and side
effects
Build on others ideas
State the selected alternative
explicitly
Specify alternatives that solve
the problem
Analytical Problem Solving
PwC
3
April 2012
Slide 34
Hints for Applying Problem - Solving
Techniques
Give yourself some relaxation time: The more intense your work, the more your need for
complete breaks. Break out of your routine sometimes. This frees up your mind and gives room
for new thoughts
Find a place (physical space) where you can think: It should be a place where interruptions are
eliminated, at least for a time. Reserve your best time for thinking
Talk to other people about ideas: Isolation produces far fewer ideas than does conversation.
Make a list of people who stimulate you to think. Spend some time with them
Ask other people for their suggestions about your problems: Find out what others think about
them. Don’t be embarrassed to share your problems, but don’t become dependent on others to
solve them for you
Read a lot: Read at least one thing regularly that is outside your field of expertise. Keep track of
new thoughts from your reading
Protect yourself from idea killers: Don’t spend time with “black holes”—that is, people who
absorb all of your energy and light but give nothing in return. Don’t let yourself or others
negatively evaluate your ideas too soon
Analytical Problem Solving
PwC
April 2012
Slide 35
Thank You
Any questions regarding this presentation please contact
Ukrit Salyapongs
Director
Advisory Services
PricewaterhouseCoopers FAS Co. Ltd.
Office: 66 (0) 2344 1103
Mobile: 66 (8) 1555 9339
ukrit.salyapongs@th.pwc.com
Home Page: www.pwc.com
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