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Synopsis

What is problem-solving? It is the steps, processes, and techniques used to overcome obstacles to complete a task. Sometimes this task is a question to be answered; other times it's a physical objective to achieve. Through the art of problem-solving, you deconstruct problems and break them down into a series of smaller steps. But what are problem-solving skills?

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To learn and use the top skills to break down a problem, you can download our Problem-Solving Frameworks presentation template to gain new tools that survey and identify a problem, explore potential causes, brainstorm potential countermeasures, implement proposals for change, and then evaluate the outcome. These tools include slides on A3 Problem-Solving, Work Planning, Root Cause Analysis, Fishbone, FMEA Matrix, Problem Analysis Canvas, Critical Decision Plan, Affinity Diagram for Brainstorming, Outcome Evaluation, Countermeasure Implementation, and many more. If you read to the end, we'll explain how a company Netflix could use these tools to solve its recent subscriber-loss problem.

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Tool highlights

A3 problem-solving

To solve any problem, you need to follow these four steps: 1. Define the problem. 2. generate alternate solutions. 3. evaluate and select a solution. 4. implement and follow-up. This four-step framework is essentially the famous process and development improvement "Plan-Do-Check-Act" cycle or PDCA.

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The most comprehensive problem-solving tool in this toolkit is the A3 Problem-Solving sheet. Created by Toyota, the A3 system got its name from the small size of the A3 card paper that forces collaborators and team members to focus on the most important aspects of the "full picture." A visualized action plan, A3 corresponds to the PDCA framework.

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  • Steps 1-4 of this A3 problem sheet cover the "Plan" of the PDCA. Step 1 requires a good grasp of the history of the problem to understand it.
  • Step 2 describes the current condition.
  • Step 3 requires a root cause analysis to find potential reasons behind the problem.
  • After that, jot down the desired future state in Step 4.
  • Step 5 corresponds to "Do" in PDCA, where countermeasures for experimentation are developed to address the problem.
  • Step 6 is the implementation of all these ideas to solve the problem across a set timeline. Ideally, this covers the what, when, and who of the responsibilities as well.
  • Step 7 corresponds to "Check", which evaluates the implementations that were made, collects the data, and compares the before and after of the implementation.
  • Step 8 is the follow-up, where plans are made to sustain the improvement over the mid-term and long-term. This could be weekly, monthly, or quarterly check-ins, as well as an analysis of whether the problem is case closed or still needs improvement. (Slide 4)
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Work planning

Problem-solving doesn't happen in a vacuum. Work planning is actually a problem-solving tool in that it lays out the work plan and timelines and assigns roles and responsibilities to address issues. If you were paying attention above, this corresponds to Step 6 of A3 and the "Do" step of PDCA. In this work planning sheet, the first column in the table covers the issue and hypothesis, followed by the analysis that needs to be done to address the issue, the data sources used (like customer surveys or extensive market research), the role of the stakeholder or team responsible, and the due date. (Slide 10)

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Root cause analysis

It's often important to break down the root cause of a problem. This root cause analysis chart has three columns that cover the identity of the issue, likely root causes, and possible solutions. Subtopics are listed below, including a column for quantifiable metrics. For instance, for the identity of the issue, the quantifiable element to measure could be its "criticality." Ask yourself, "how severe of an issue are you dealing with?" The source could come from a client, HR, or other business areas.

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Under root cause, the "likelihood" of this root cause could be the quantifiable metric. The root cause column also highlights "information", which is meant to help define how the data is used to identify the root cause. Under possible solutions, the "risk level" of any action to solve the problem could be the quantifiable metric. You don't want your solution to wind up worse than the root problem, after all. The purpose here is that once you do find the root cause of a problem, it will be indicative of what the potential solution could be to solve it. (Slide 19)

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Fishbone diagram

Another tool to identify cause and effect is a fishbone diagram, also known as an Ishikawa diagram. In this diagram, the team first agrees on what the problem statement is. The spine of the fish connects to all the major categories of possible causes. These categories are usually "materials", "measurements", "method", "machine", "people", and "environment." Since these are broad buckets, most contributing factors will fit under one of these six bones, so list the possible factors in each possible cause category. In order to see beyond the obvious for deeper analysis, use the 5 whys framework to ask the "why" behind any of these potential problems until the root of the issue is uncovered. (Slide 13)

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Case study: Netflix

So how could a company like Netflix use these problem-solving frameworks? Let's say Netflix wanted to use the A3 problem-solving framework to solve its recent subscriber loss problem. First, Netflix would need to make a plan. In Step 1, they would identify their goal is to stop the loss of subscribers and continue to show growth to investors. The background is that when Netflix reported its recent Q1 earnings, it reported it lost 200,000 subscribers - the first time it lost subscribers in 10 years, and its share price dropped 30%, so this is an existential threat to Netflix's status as a growth tech stock.

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The current condition is that Netflix has increased competition from rival streamers, so it is currently in a red ocean market. It also has widespread account sharing that accounts for about 100 million viewers who don't pay. Netflix also has high market penetration in North America and Latin America, so it will need to focus on growth in Europe and Asia. While Netflix has over 200 million subscribers which generate roughly 27 billion in revenue, it needs to spend more on content and marketing to win these markets. This is a problem if its net revenues start going down with more subscriber loss.

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Root case of subscriber loss

  1. Too much competition. With so many new rivals like Disney+, Paramount+, and HBO Max, Netflix has to pursue a broad strategy to capture as wide an audience as possible. This means it's no longer focused on the prestige level shows that got it started, and could have lost subscribers as it tried to win new ones.
  2. Too much content. There are now over 817,000 shows on US streaming services. Perhaps viewers can't find what they want on Netflix, so they turn it off and leave. The pandemic-driven boost to streaming might also be coming to an end now that more people are traveling again and going out more often.
  3. Price increases. Among so many subscription offers, Netflix blamed its subscriber loss in North America on its recent price hikes. Since it has to spend upwards of $18 billion on content this year, it can't just go lower its prices without some way to make that up.
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Possible solutions

  1. A lower-cost ad-supported tier. Netflix could appeal to price-conscious consumers and potentially offset $4 billion in lost revenue with ad sponsors. To put it in perspective, Roku makes something like $40+ monthly revenue per user with ads compared to Netflix's $14 from subscriptions. If Netflix does this, it could be ready by 2023 or 2024.
  2. Sports rights. Two of the growth markets Netflix could win over are Europe and Asia. So Netflix could pursue the rights to a popular European sports league, like Formula 1 or FIFA. FIFA just launched its own streaming service FIFA+, so Netflix will probably pursue Formula 1 first, given the fact that its popular docuseries on the sport reignited the sport's popularity on social media and in the US. Let's say Netflix is able to regain its stock momentum, and in a year or two from now, FIFA+ ends up a failed experiment; Netflix could try to be first in line to buy it.
  3. Video games. The other growth market Netflix has is in Asia, so Netflix could double down on its mobile game strategy and turn itself into an app fortress that offers video games. The video game industry is the largest entertainment industry in the world and will grow to reach $268 billion by 2025. While Netflix has tried and largely failed to lure Indian viewers to its app with a low-cost tier, it could pivot to focus on Southeast Asia entertainment consumers. As of 2021, there are around 250 million mobile gamers across all of Southeast Asia.
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Netflix's desired outcome is to reach a billion global users outside of China. So a strategy that involves a lower-cost ad-supported tier, a premier sports league like Formula 1 or FIFA, and a robust mobile gaming offering could help be countermeasures needed to offset its losses and get it closer to that desired outcome. Next, it has to implement these strategies, evaluate their success, and follow up on what's working.

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