what does problem solving mean in business

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What Is Problem Solving in Business?

Problem-solving in business is defined as implementing processes that reduce or remove obstacles that are preventing you or others from accomplishing operational and strategic business goals.

In business, a problem is a situation that creates a gap between the desired and actual outcomes. In addition, a true problem typically does not have an immediately obvious resolution.

Business problem-solving works best when it is approached through a consistent system in which individuals:

• Identify and define the problem
• Prioritize the problem based on size, potential impact, and urgency
• Complete a root-cause analysis
• Develop a variety of possible solutions
• Evaluate possible solutions and decide which is most effective
• Plan and implement the solution

Why Problem Solving Is Important in Business

Understanding the importance of problem-solving skills in the workplace will help you develop as a leader. Problem-solving skills will help you resolve critical issues and conflicts that you come across. Problem-solving is a valued skill in the workplace because it allows you to:

• Apply a standard problem-solving system to all challenges
• Find the root causes of problems
• Quickly deal with short-term business interruptions
• Form plans to deal with long-term problems and improve the organization
• See challenges as opportunities
• Keep your cool during challenges

How to Solve Business Problems Effectively

There are many different problem-solving skills, but most can be broken into general steps. Here is a four-step method for business problem solving:

1) Identify the Details of the Problem: Gather enough information to accurately define the problem. This can include data on procedures being used, employee actions, relevant workplace rules, and so on. Write down the specific outcome that is needed, but don’t assume what the solution should be.

2) Creatively Brainstorm Solutions: Alone or with a team, state every solution you can think of. You’ll often need to write them down. To get more solutions, brainstorm with the employees who have the greatest knowledge of the issue.

3) Evaluate Solutions and Make a Decision: Compare and contrast alternative solutions based on the feasibility of each one, including the resources needed to implement it and the return on investment of each one. Finally, make a firm decision on one solution that clearly addresses the root cause of the problem.

4) Take Action: Write up a detailed plan for implementing the solution, get the necessary approvals, and put it into action.

What Are Problem-Solving Skills?

Problem-solving skills are specific procedures that can be used to complete one or more of the four general steps of problem-solving (discussed above). Here are five important examples:

Using Emotional Intelligence: You’ll solve problems more calmly when you learn to recognize your own emotional patterns and to empathize with and guide the emotions of others. Avoid knee-jerk responses and making assumptions.

Researching Problems: An effective solution requires an accurate description of the problem. Define simple problems using quick research methods such as asking, “What? Where? When? and How much?.” Difficult problems require more in-depth research, such as data exploration, surveys, and interviews.

Creative Brainstorming: When brainstorming with a group, encourage idea creation by listening attentively to everyone, and recognizing everyone’s unique contributions.

Logical Reasoning: Develop standard logical steps for analyzing possible solutions to problems. Study and apply ideas about logical fallacies, deductive reasoning, and other areas of analytical thought.

Decisiveness: Use an agreed-upon system for choosing a solution, which can include assigning pros and cons to solutions, identifying mandatory results, getting feedback about solutions, choosing the decision-maker(s), and finishing or repeating the process.

How to Improve Problem-Solving Skills

Learning how to solve business problems takes time and effort. Though some people appear to have been born with superior problem-solving skills, great problem solvers usually have practiced and refined their abilities. You can develop high-level skills for solving problems too, through the following methods:

Ask and Listen: Don’t expect to solve every problem alone. Ask for advice, and listen to it carefully.

Practice Curiosity: Any time you’re involved in solving a problem, practice researching and defining the problem just a little longer than you would naturally.

Break Down Problems: Whenever possible, break large problems into their smallest units. Then, search for solutions to one unit at a time.

Don’t Label Yourself Negatively: Don’t allow a problem to mean something negative about you personally. Separate yourself from it. Look at it objectively and be part of the solution.

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10 Step Process for Effective Business Problem Solving

Posted august 3, 2021 by harriet genever.

When you start a small business or launch a startup, the one thing you can count on is the unexpected. No matter how thoroughly you plan, forecast , and test, problems are bound to arise. This is why as an entrepreneur, you need to know how to solve business problems effectively.

What is problem solving in business?

Problem solving in business relates to establishing processes that mitigate or remove obstacles currently preventing you from reaching strategic goals . These are typically complex issues that create a gap between actual results and your desired outcome. They may be present in a single team, operational process, or throughout your entire organization, typically without an immediate or obvious solution. 

To approach problem solving successfully, you need to establish consistent processes that help you evaluate, explore solutions, prioritize execution, and measure success. In many ways, it should be similar to how you review business performance through a monthly plan review . You work through the same documentation, look for gaps, dig deeper to identify the root cause, and hash out options. Without this process, you simply cannot expect to solve problems efficiently or effectively. 

Why problem solving is important for your business

While some would say problem-solving comes naturally, it’s actually a skill you can grow and refine over time. Problem solving skills will help you and your team tackle critical issues and conflicts as they arise. It starts from the top. You as the business owner or CEO needing to display the type of level-headed problem solving that you expect to see from your employees.

Doing so will help you and your staff quickly deal with issues, establish and refine a problem solving process, turn challenges into opportunities, and generally keep a level head. Now, the best business leaders didn’t just find a magic solution to solve their problems, they built processes and leveraged tools to find success. And you can do the same.

By following this 10-step process, you can develop your problem-solving skills and approach any issue that arises with confidence. 

1. Define the problem

When a problem arises, it can be very easy to jump right into creating a solution. However, if you don’t thoroughly examine what led to the problem in the first place, you may create a strategy that doesn’t actually solve it. You may just be treating the symptoms.

For instance, if you realize that your sales from new customers are dropping, your first inclination might be to rush into putting together a marketing plan to increase exposure. But what if decreasing sales are just a symptom of the real problem? 

When you define the problem, you want to be sure you’re not missing the forest for the trees. If you have a large issue on your hands, you’ll want to look at it from several different angles:

Competition 

Is a competitor’s promotion or pricing affecting your sales? Are there new entrants in your market? How are they marketing their product or business?

Business model 

Is your business model sustainable? Is it realistic for how fast you want to grow? Should you explore different pricing or cost strategies?

Market factors

How are world events and the nation’s economy affecting your customers and your sales?

Are there any issues affecting your team? Do they have the tools and resources they need to succeed? 

Goal alignment 

Is everyone on your team working toward the same goal ? Have you communicated your short-term and long-term business goals clearly and often?

There are a lot of ways to approach the issue when you’re facing a serious business problem. The key is to make sure you’re getting a full snapshot of what’s going on so you don’t waste money and resources on band-aid solutions. 

Going back to our example, by looking at every facet of your business, you may discover that you’re spending more on advertising than your competitors already. And instead, there’s a communication gap within your team that’s leading to the mishandling of new customers and therefore lost sales. 

If you jumped into fixing the exposure of your brand, you would have been dumping more money into an area you’re already winning. Potentially leading to greater losses as more and more new customers are dropped due to poor internal communication.

This is why it’s so vital that you explore your blind spots and track the problem to its source.

2. Conduct a SWOT analysis

All good businesses solve some sort of problem for customers. What if your particular business problem is actually an opportunity, or even a strength if considered from a different angle? This is when you’d want to conduct a SWOT analysis to determine if that is in fact the case.

SWOT is a great tool for strategic planning and bringing multiple viewpoints to the table when you’re looking at investing resources to solve a problem. This may even be incorporated in your attempts to identify the source of your problem, as it can quickly outline specific strengths and weaknesses of your business. And then by identifying any potential opportunities or threats, you can utilize your findings to kickstart a solution. 

3. Identify multiple solutions with design thinking

As you approach solving your problem, you may want to consider using the design thinking approach . It’s often used by organizations looking to solve big, community-based problems. One of its strengths is that it requires involving a wide range of people in the problem-solving process. Which leads to multiple perspectives and solutions arising.

This approach—applying your company’s skills and expertise to a problem in the market—is the basis for design thinking.

It’s not about finding the most complex problems to solve, but about finding common needs within the organization and in the real world and coming up with solutions that fit those needs. When you’re solving business problems, this applies in the sense that you’re looking for solutions that address underlying issues—you’re looking at the big picture.

4. Conduct market research and customer outreach

Market research and customer outreach aren’t the sorts of things small business owners and startups can do once and then cross off the list. When you’re facing a roadblock, think back to the last time you did some solid market research or took a deep dive into understanding the competitive landscape .

Market research and the insights you get from customer outreach aren’t a silver bullet. Many companies struggle with what they should do with conflicting data points. But it’s worth struggling through and gathering information that can help you better understand your target market . Plus, your customers can be one of the best sources of criticism. It’s actually a gift if you can avoid taking the negatives personally .

The worst thing you can do when you’re facing challenges is isolating yourself from your customers and ignore your competition. So survey your customers. Put together a competitive matrix . 

5. Seek input from your team and your mentors

Don’t do your SWOT analysis or design thinking work by yourself. The freedom to express concerns, opinions, and ideas will allow people in an organization to speak up. Their feedback is going to help you move faster and more efficiently. If you have a team in place, bring them into the discussion. You hired them to be experts in their area; use their expertise to navigate and dig deeper into underlying causes of problems and potential solutions.

If you’re running your business solo, at least bring in a trusted mentor. SCORE offers a free business mentorship program if you don’t already have one. It can also be helpful to connect with a strategic business advisor , especially if business financials aren’t your strongest suit.

Quoting Stephen Covey, who said that “strength lies in differences, not in similarities,” speaking to the importance of diversity when it comes to problem-solving in business. The more diverse a team is , the more often innovative solutions to the problems faced by the organization appear.

In fact, it has been found that groups that show greater diversity were better at solving problems than groups made up specifically of highly skilled problem solvers. So whoever you bring in to help you problem-solve, resist the urge to surround yourself with people who already agree with you about everything.

6. Apply lean planning for nimble execution

So you do your SWOT analysis and your design thinking exercise. You come up with a set of strong, data-driven ideas. But implementing them requires you to adjust your budget, or your strategic plan, or even your understanding of your target market.

Are you willing to change course? Can you quickly make adjustments? Well in order to grow, you can’t be afraid to be nimble . 

By adopting the lean business planning method —the process of revising your business strategy regularly—you’ll be able to shift your strategies more fluidly. You don’t want to change course every week, and you don’t want to fall victim to shiny object thinking. But you can strike a balance that allows you to reduce your business’s risk while keeping your team heading in the right direction.

Along the way, you’ll make strategic decisions that don’t pan out the way you hoped. The best thing you can do is test your ideas and iterate often so you’re not wasting money and resources on things that don’t work. That’s Lean Planning .

7. Model different financial scenarios

When you’re trying to solve a serious business problem, one of the best things you can do is build a few different financial forecasts so you can model different scenarios. You might find that the idea that seemed the strongest will take longer than you thought to reverse a negative financial trend. At the very least you’ll have better insight into the financial impact of moving in a different direction.

The real benefit here is looking at different tactical approaches to the same problem. Maybe instead of increasing sales right now, you’re better off in the long run if you adopt a strategy to reduce churn and retain your best customers. You won’t know unless you model a few different scenarios. You can do this by using spreadsheets, and a tool like LivePlan can make it easier and quicker.

8. Watch your cash flow

While you’re working to solve a challenging business problem, pay particular attention to your cash flow and your cash flow forecast . Understanding when your company is at risk of running out of cash in the bank can help you be proactive. It’s a lot easier to get a line of credit while your financials still look good and healthy, than when you’re one pay period away from ruin.

If you’re dealing with a serious issue, it’s easy to start to get tunnel vision. You’ll benefit from maintaining a little breathing room for your business as you figure out what to do next.

9. Use a decision-making framework

Once you’ve gathered all the information you need, generated a number of ideas, and done some financial modeling, you might still feel uncertain. It’s natural—you’re not a fortune-teller. You’re trying to make the best decision you can with the information you have.

This article offers a really useful approach to making decisions. It starts with putting your options into a matrix like this one:

Use this sort of framework to put everything you’ve learned out on the table. If you’re working with a bigger team, this sort of exercise can also bring the rest of your team to the table so they feel some ownership over the outcome.

10. Identify key metrics to track

How will you know your problem is solved? And not just the symptom—how will you know when you’ve addressed the underlying issues? Before you dive into enacting the solution, make sure you know what success looks like.

Decide on a few key performance indicators . Take a baseline measurement, and set a goal and a timeframe. You’re essentially translating your solution into a plan, complete with milestones and goals. Without these, you’ve simply made a blind decision with no way to track success. You need those goals and milestones to make your plan real .

Problem solving skills to improve

As you and your team work through this process, it’s worth keeping in mind specific problem solving skills you should continue to develop. Bolstering your ability, as well as your team, to solve problems effectively will only make this process more useful and efficient. Here are a few key skills to work on.

Emotional intelligence

It can be very easy to make quick, emotional responses in a time of crisis or when discussing something you’re passionate about. To avoid making assumptions and letting your emotions get the best of you, you need to focus on empathizing with others. This involves understanding your own emotional state, reactions and listening carefully to the responses of your team. The more you’re able to listen carefully, the better you’ll be at asking for and taking advice that actually leads to effective problem solving.

Jumping right into a solution can immediately kill the possibility of solving your problem. Just like when you start a business , you need to do the research into what the problem you’re solving actually is. Luckily, you can embed research into your problem solving by holding active reviews of financial performance and team processes. Simply asking “What? Where? When? How?” can lead to more in-depth explorations of potential issues.

The best thing you can do to grow your research abilities is to encourage and practice curiosity. Look at every problem as an opportunity. Something that may be trouble now, but is worth exploring and finding the right solution. You’ll pick up best practices, useful tools and fine-tune your own research process the more you’re willing to explore.

Brainstorming

Creatively brainstorming with your team is somewhat of an art form. There needs to be a willingness to throw everything at the wall and act as if nothing is a bad idea at the start. This style of collaboration encourages participation without fear of rejection. It also helps outline potential solutions outside of your current scope, that you can refine and turn into realistic action.

Work on breaking down problems and try to give everyone in the room a voice. The more input you allow, the greater potential you have for finding the best solution.

Decisiveness

One thing that can drag out acting upon a potential solution, is being indecisive. If you aren’t willing to state when the final cutoff for deliberation is, you simply won’t take steps quickly enough. This is when having a process for problem solving comes in handy, as it purposefully outlines when you should start taking action.

Work on choosing decision-makers, identify necessary results and be prepared to analyze and adjust if necessary. You don’t have to get it right every time, but taking action at the right time, even if it fails, is almost more vital than never taking a step.  

Stemming off failure, you need to learn to be resilient. Again, no one gets it perfect every single time. There are so many factors in play to consider and sometimes even the most well-thought-out solution doesn’t stick. Instead of being down on yourself or your team, look to separate yourself from the problem and continue to think of it as a puzzle worth solving. Every failure is a learning opportunity and it only helps you further refine and eliminate issues in your strategy.

Problem solving is a process

The key to effective problem-solving in business is the ability to adapt. You can waste a lot of resources on staying the wrong course for too long. So make a plan to reduce your risk now. Think about what you’d do if you were faced with a problem large enough to sink your business. Be as proactive as you can.

Editor’s note: This article was originally published in 2016. It was updated in 2021.

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Harriet Genever

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What is problem-solving? And why is it important in the workplace?

September 28, 2023 by MindManager Blog

If there’s one thing you can count on as a business professional, it’s that you’ll never run short of new problems to solve. Thankfully, whether it includes handling difficult or unexpected situations in the workplace, or resolving complex organizational challenges, we all have the capacity to develop our business problem-solving skills.

The best way to get better at tackling problems productively is to start at the beginning. After all, the better you understand what problem-solving is – and the significant role it plays in every organization – the easier you’ll find it to improve on problem-solving skills in the workplace.

Let’s dive in!

What is problem-solving?

Problem-solving refers to the act of find solutions to difficult or complex issues.

A good problem-solving definition might be finding solutions to difficult or complex issues . In practice, however, solving problems in the workplace is a little more immersive than that.

In the workplace, problem-solving includes a variety of tools, resources, and techniques to:

• Identify what’s not working.
• Figure out why it’s broken.
• Determine the best course of action to fix it.

Whether you know them as obstacles, glitches, or setbacks, problems are a part of our everyday lives. The good news is that our brains excel at reasoning out intricate scenarios and making calculations in situations we’ve never experienced before. That means every one of us is hard-wired to be an adept problem-solver.

The trick is to learn how to take that innate ability and apply it in a deliberate and practiced way.

However, one thing is certain: successfully resolving business and workplace issues is essential.

Not only does effective problem-solving create value that encourages growth, it goes hand-in-hand with impactful decision making.

What are the benefits of problem-solving in business?

Practically speaking, problem-solving provides a golden opportunity to improve your processes, products, and systems – especially when you work through those challenges with others.

Learning to face difficulties calmly, and deal with them intentionally, can also:

• Ramp up your confidence.
• Increase your resilience.
• Help you develop valuable critical thinking skills.

Applying problem-solving skills in the face of an obstacle that seems insurmountable trains you to shift your perspective and look at potential hurdles in a different way.

It also gets you used to examining multiple options for dealing with a problem, which can help you feel more confident in the direction you take.

Solving problems as a team

Business problem solving as a team offers an even wider range of benefits since active collaboration tends to make good things happen at both the individual and group level.

For example:

• Team-based problem-solving is akin to having a built-in sounding board when you explore new approaches and ideas.
• As each team member’s critical thinking skills evolve, they bring fresh insights to the collective problem-solving process, bearing out the old adage that many heads are better than one.
• Solving problems as a team also reduces the feeling of personal risk and exposure that’s common when one person is tasked with solving a puzzle. When that same problem is shared, the sense of risk gets dispersed, and individual team members are less likely to feel singled out.

Not only is there less chance of arriving at an unreasonable or biased solution when you problem-solve as a group, team members assigned to carry that solution out will feel more invested in its success.

Examples of problem solving skills in the workplace

Improving on your problem-solving skills helps you make the most of your brain’s natural capacity to analyze and reason things out.

There are dozens of problem-solving skills that play out in the average workplace – all of which can contribute to your ability to correct oversights, resolve conflict , and work around unexpected obstructions.

Here are a few common examples of problem-solving skills in the workplace, and tips on how to improve them.

1. Data gathering

Figuring out the cause of a problem hinges on collecting relevant data. Consulting efficiently with colleagues, conducting online research, and brainstorming with your team are all valuable data gathering skills.

2. Active listening

As opposed to listening in a purely supportive or empathetic way, active listening involves concentrating fully on what the other person is saying so you can understand the content, respond accordingly, and remember what was said later.

3. Troubleshooting

The ability to analyze and troubleshoot a situation with the help of any data and human input you’ve gathered is essential for drilling down into the core of a problem, and scrutinizing potential solutions.

4. Brainstorming

Brainstorming has become synonymous with creative thinking, innovative idea generation, and problem-solving. The more productive your brainstorming sessions, the more likely you and your group are to put together a list of quality, workable solutions.

It’s interesting to note that effective decision making is both a contributor to, and a by-product of, effective problem-solving.

For example, honing your analytical abilities and other problem-solving skills will inevitably help you make better decisions. The more efficient your decision-making process becomes, meanwhile, the better you’ll get at uncovering and acting on the most promising solution to any dilemma.

A simple problem-solving scenario

It’s clear that we can all benefit from getting more comfortable with problem-solving in the workplace.

Examples of situations where your problem-solving skills will come in handy aren’t difficult to find, and might include:

• Fixing a technical issue for your customer.
• Improving your student’s test performance.
• Reducing the theft of your in-store merchandise.
• Bumping up your marketing reach.

But, here’s the interesting thing. While it’s evident in each of these situations that there’s a problem to be solved, the exact nature of that problem isn’t so obvious.

In the student’s case, for example, you’d need additional input to help you figure out why they’re performing poorly. Only then would you be able to take steps to find the best-fit solution and achieve the desired learning outcome.

Here’s a simple scenario to help demonstrate that idea:

Bringing new customers onboard in a timely manner is an important part of your client relations strategy. Since hiring Alex a few weeks ago, however, your onboarding process has been taking longer than it should and team members are beginning to complain.

While you can see that the problem in this scenario is the fact that your team isn’t meeting their client onboarding goals, the key is to get clear on exactly what’s causing the hold-up.

You could jump to the conclusion that Alex has time management issues and that it’s time to start looking for a replacement. But, since one of the most common mistakes in business problem-solving is attempting to seize on a solution right away, that might cause you to waste time and resources on a remedy that ultimately proves unnecessary, or that doesn’t provide a viable fix.

Instead, it’s time to put your problem-solving skills to work.

Using data gathering and troubleshooting to pinpoint and clarify the bottleneck in your onboarding process – and active listening to interpret the situation from Alex’s perspective – you soon determine that the real cause of the problem is not what you thought.

In truth, an administrative oversight during the hiring process (yet another problem to be solved!) left Alex unaware of, and without access to, the business process map that’s so vital to efficiently onboarding new customers. Once you provide the necessary resources, it doesn’t take Alex long to get up to speed – and your client onboarding process to revert back to the well-oiled machine that it was.

Even with a team of eager problem-solvers by your side, the truth is that it’s often necessary to have the right problem-solving tools in place to achieve your desired results. That’s where versatile mind mapping software can help.

Not only does MindManager® provide a visual framework that fully supports the problem-solving process, it improves comprehension, inspires more creative solutions, and boosts your ability to make the best possible decisions.

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Six problem-solving mindsets for very uncertain times

Great problem solvers are made, not born. That’s what we’ve found after decades of problem solving with leaders across business, nonprofit, and policy sectors. These leaders learn to adopt a particularly open and curious mindset, and adhere to a systematic process for cracking even the most inscrutable problems. They’re terrific problem solvers under any conditions. And when conditions of uncertainty are at their peak, they’re at their brilliant best.

Six mutually reinforcing approaches underly their success: (1) being ever-curious about every element of a problem; (2) being imperfectionists , with a high tolerance for ambiguity; (3) having a “dragonfly eye” view of the world, to see through multiple lenses; (4) pursuing occurrent behavior and experimenting relentlessly; (5) tapping into the collective intelligence , acknowledging that the smartest people are not in the room; and (6) practicing “show and tell” because storytelling begets action (exhibit).

Here’s how they do it.

1. Be ever-curious

As any parent knows, four-year-olds are unceasing askers. Think of the never-ending “whys” that make little children so delightful—and relentless. For the very young, everything is new and wildly uncertain. But they’re on a mission of discovery, and they’re determined to figure things out. And they’re good at it! That high-energy inquisitiveness is why we have high shelves and childproof bottles.

When you face radical uncertainty, remember your four-year-old or channel the four-year-old within you. Relentlessly ask, “Why is this so?” Unfortunately, somewhere between preschool and the boardroom, we tend to stop asking. Our brains make sense of massive numbers of data points by imposing patterns that have worked for us and other humans in the past. That’s why a simple technique, worth employing at the beginning of problem solving, is simply to pause and ask why conditions or assumptions are so until you arrive at the root of the problem. 1 This approach was originally developed by Sakichi Toyoda, the founder of Toyota.

Natural human biases in decision making, including confirmation, availability, and anchoring biases, often cause us to shut down the range of solutions too early. 2 Daniel Kahneman, Thinking, Fast and Slow , New York, NY: Farrar, Straus and Giroux, 2011. Better—and more creative—solutions come from being curious about the broader range of potential answers.

One simple suggestion from author and economist Caroline Webb to generate more curiosity in team problem solving is to put a question mark behind your initial hypotheses or first-cut answers. This small artifice is surprisingly powerful: it tends to encourage multiple solution paths and puts the focus, correctly, on assembling evidence. We also like thesis/antithesis, or red team/blue team, sessions, in which you divide a group into opposing teams that argue against the early answers—typically, more traditional conclusions that are more likely to come from a conventional pattern. Why is this solution better? Why not that one? We’ve found that better results come from embracing uncertainty. Curiosity is the engine of creativity.

We have to be comfortable with estimating probabilities to make good decisions, even when these guesses are imperfect. Unfortunately, we have truckloads of evidence showing that human beings aren’t good intuitive statisticians.

2. Tolerate ambiguity—and stay humble!

When we think of problem solvers, many of us tend to picture a poised and brilliant engineer. We may imagine a mastermind who knows what she’s doing and approaches a problem with purpose. The reality, though, is that most good problem solving has a lot of trial and error; it’s more like the apparent randomness of rugby than the precision of linear programming. We form hypotheses, porpoise into the data, and then surface and refine (or throw out) our initial guess at the answer. This above all requires an embrace of imperfection and a tolerance for ambiguity—and a gambler’s sense of probabilities.

The real world is highly uncertain. Reality unfolds as the complex product of stochastic events and human reactions. The impact of COVID-19 is but one example: we address the health and economic effects of the disease, and their complex interactions, with almost no prior knowledge. We have to be comfortable with estimating probabilities to make good decisions, even when these guesses are imperfect. Unfortunately, we have truckloads of evidence showing that human beings aren’t good intuitive statisticians. Guesses based on gut instinct can be wildly wrong. That’s why one of the keys to operating in uncertain environments is epistemic humility, which Erik Angner defines as “the realization that our knowledge is always provisional and incomplete—and that it might require revision in light of new evidence.” 3 Erik Angner, “Epistemic humility—knowing your limits in a pandemic,” Behavioral Scientist , April 13, 2020, behavioralscientist.org.

Recent research shows that we are better at solving problems when we think in terms of odds rather than certainties. 4 Annie Duke, Thinking in Terms of Bets: Making Smarter Decisions When You Don’t Have All the Facts , New York, NY: Portfolio/Penguin, 2018. For example, when the Australian research body Commonwealth Scientific and Industrial Research Organisation (CSIRO), which owned a core patent on the wireless internet protocol, sought royalties from major companies, it was initially rebuffed. The CSIRO bet that it could go to court to protect its intellectual property because it estimated that it needed only 10 percent odds of success for this to be a good wager, given the legal costs and likely payoff. It improved its odds by picking the weakest of the IP violators and selecting a legal jurisdiction that favored plaintiffs. This probabilistic thinking paid off and eventually led to settlements to CSIRO exceeding $500 million. 5 CSIRO briefing to US Government, December 5, 2006. A tolerance for ambiguity and a willingness to play the odds helped the organization feel its way to a good solution path.

To embrace imperfectionism with epistemic humility, start by challenging solutions that imply certainty. You can do that in the nicest way by asking questions such as “What would we have to believe for this to be true?” This brings to the surface implicit assumptions about probabilities and makes it easier to assess alternatives. When uncertainty is high, see if you can make small moves or acquire information at a reasonable cost to edge out into a solution set. Perfect knowledge is in short supply, particularly for complex business and societal problems. Embracing imperfection can lead to more effective problem solving. It’s practically a must in situations of high uncertainty, such as the beginning of a problem-solving process or during an emergency.

Good problem solving typically involves designing experiments to reduce key uncertainties. Each move provides additional information and builds capabilities.

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3. take a dragonfly-eye view.

Dragonfly-eye perception is common to great problem solvers. Dragonflies have large, compound eyes, with thousands of lenses and photoreceptors sensitive to different wavelengths of light. Although we don’t know exactly how their insect brains process all this visual information, by analogy they see multiple perspectives not available to humans. The idea of a dragonfly eye taking in 360 degrees of perception 6 Philip Tetlock and Dan Gardner, Superforecasting: The Art and Science of Prediction , New York, NY: Crown, 2015. is an attribute of “superforecasters”—people, often without domain expertise, who are the best at forecasting events.

Think of this as widening the aperture on a problem or viewing it through multiple lenses. The object is to see beyond the familiar tropes into which our pattern-recognizing brains want to assemble perceptions. By widening the aperture, we can identify threats or opportunities beyond the periphery of vision.

Consider the outbreak of HIV in India in the early 1990s—a major public-health threat. Ashok Alexander, director of the Bill & Melinda Gates Foundation’s India Aids Initiative, provided a brilliant example of not just vision but also dragonfly vision. Facing a complex social map with a rapidly increasing infection rate, he widened the problem’s definition, from a traditional epidemiological HIV transmission model at known “hot spots,” to one in which sex workers facing violence were made the centerpiece.

This approach led to the “Avahan solution,” which addressed a broader set of leverage points by including the sociocultural context of sex work. The solution was rolled out to more than 600 communities and eventually credited with preventing 600,000 infections. The narrow medical perspective was sensible and expected, but it didn’t tap into the related issue of violence against sex workers, which yielded a richer solution set. Often, a secret unlocks itself only when one looks at a problem from multiple perspectives, including some that initially seem orthogonal.

The secret to developing a dragonfly-eye view is to “anchor outside” rather than inside when faced with problems of uncertainty and opportunity. Take the broader ecosystem as a starting point. That will encourage you to talk with customers, suppliers, or, better yet, players in a different but related industry or space. Going through the customer journey with design-thinking in mind is another powerful way to get a 360-degree view of a problem. But take note: when decision makers face highly constrained time frames or resources, they may have to narrow the aperture and deliver a tight, conventional answer.

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4. pursue occurrent behavior.

Occurrent behavior is what actually happens in a time and place, not what was potential or predicted behavior. Complex problems don’t give up their secrets easily. But that shouldn’t deter problem solvers from exploring whether evidence on the facets of a solution can be observed, or running experiments to test hypotheses. You can think of this approach as creating data rather than just looking for what has been collected already. It’s critical for new market entry—or new market creation. It also comes in handy should you find that crunching old data is leading to stale solutions.

Most of the problem-solving teams we are involved with have twin dilemmas of uncertainty and complexity, at times combined as truly “wicked problems.” 7 A term coined in a now famous 1973 article: Horst W. J. Rittel and Melvin Webber, “Dilemmas in a general theory of planning,” Policy Sciences , 1973, Number 4, pp. 155–69. For companies ambitious to win in the great unknown in an emerging segment—such as electric cars or autonomous vehicles, where the market isn’t fully established—good problem solving typically involves designing experiments to reduce key uncertainties, not just relying on existing data. Each move (such as buying IP or acquiring a component supplier) and each experiment (including on-road closed tests) not only provides additional information to make decisions but also builds capabilities and assets that support further steps. Over time, their experiments, including alliances and acquisitions, come to resemble staircases that lead to either the goal or to abandonment of the goal. Problem-solving organizations can “bootstrap” themselves into highly uncertain new spaces, building information, foundational assets, and confidence as they take steps forward.

Risk-embracing problem solvers find a solution path by constantly experimenting. Statisticians use the abbreviation EVPI—the expected value of perfect information—to show the value of gaining additional information that typically comes from samples and experiments, such as responses to price changes in particular markets. A/B testing is a powerful tool for experimenting with prices, promotions, and other features and is particularly useful for digital marketplaces and consumer goods. Online marketplaces make A/B testing easy. Yet most conventional markets also offer opportunities to mimic the market’s segmentation and use it to test different approaches.

The mindset required to be a restless experimenter is consistent with the notion in start-ups of “failing fast.” It means that you get product and customer affirmation or rejection quickly through beta tests and trial offerings. Don’t take a lack of external data as an impediment—it may actually be a gift, since purchasable data is almost always from a conventional way of meeting needs, and is available to your competitors too. Your own experiments allow you to generate your own data; this gives you insights that others don’t have. If it is difficult (or unethical) to experiment, look for the “natural experiments” provided by different policies in similar locations. An example would be to compare outcomes in twin cities, such as Minneapolis–St. Paul.

It’s a mistake to think that your team has the smartest people in the room. They aren’t there. They’re invariably somewhere else. Nor do they need to be there if you can access their intelligence via other means.

5. Tap into collective intelligence and the wisdom of the crowd

Chris Bradley, a coauthor of Strategy Beyond the Hockey Stick , 8 Chris Bradley, Marin Hirt, and Sven Smit, Strategy Beyond the Hockey Stick: People, Probabilities, and Big Moves to Beat the Odds , Hoboken, NJ: Wiley, 2018. observed that “it’s a mistake to think that on your team you have the smartest people in the room. They aren’t there. They’re invariably somewhere else.” 9 For more from Chris Bradley, in a conversation with Rob McLean, see “ Want better strategies? Become a bulletproof problem solver ,” August 2019. Nor do they need to be there if you can access their intelligence via other means. In an ever-changing world where conditions can evolve unpredictably, crowdsourcing invites the smartest people in the world to work with you. For example, in seeking a machine-learning algorithm to identify fish catch species and quantities on fishing boats, the Nature Conservancy (TNC) turned to Kaggle and offered a $150,000 prize for the best algorithm. This offer attracted 2,293 teams from all over the world. TNC now uses the winning algorithm to identify fish types and sizes caught on fishing boats in Asia to protect endangered Pacific tuna and other species.

Crowdsourced problem solving is familiar in another guise: benchmarking. When Sir Rod Carnegie was CEO of Conzinc Riotinto Australia (CRA), he was concerned about the costs of unscheduled downtime with heavy trucks, particularly those requiring tire changes. He asked his management team who was best in the world at changing tires; their answer was Formula One, the auto racing competition. A team traveled to the United Kingdom to learn best practice for tire changes in racetrack pits and then implemented what it learned thousands of miles away, in the Pilbara region of Western Australia. The smartest team for this problem wasn’t in the mining industry at all.

Of course, while crowdsourcing can be useful when conventional thinking yields solutions that are too expensive or incomplete for the challenge at hand, it has its limitations. Good crowdsourcing takes time to set up, can be expensive, and may signal to your competitors what you are up to. Beware of hidden costs, such as inadvertently divulging information and having to sieve through huge volumes of irrelevant, inferior suggestions to find the rare gem of a solution.

Accept that it’s OK to draw on diverse experiences and expertise other than your own. Start with brainstorming sessions that engage people from outside your team. Try broader crowdsourcing competitions to generate ideas. Or bring in deep-learning talent to see what insights exist in your data that conventional approaches haven’t brought to light. The broader the circles of information you access, the more likely it is that your solutions will be novel and creative.

Rookie problem solvers show you their analytic process and math to convince you they are clever. Seasoned problem solvers show you differently.

6. Show and tell to drive action

We started our list of mindsets with a reference to children, and we return to children now, with “show and tell.” As you no doubt remember—back when you were more curious!—show and tell is an elementary-school activity. It’s not usually associated with problem solving, but it probably piqued your interest. In fact, this approach is critical to problem solving. Show and tell is how you connect your audience with the problem and then use combinations of logic and persuasion to get action.

The show-and-tell mindset aims to bring decision makers into a problem-solving domain you have created. A team from the Nature Conservancy, for instance, was presenting a proposal asking a philanthropic foundation to support the restoration of oyster reefs. Before the presentation, the team brought 17 plastic buckets of water into the boardroom and placed them around the perimeter. When the foundation’s staff members entered the room, they immediately wanted to know what the buckets were for. The team explained that oyster-reef restoration massively improves water quality because each oyster filters 17 buckets of water per day. Fish stocks improve, and oysters can also be harvested to help make the economics work. The decision makers were brought into the problem-solving domain through show and tell. They approved the funding requested and loved the physical dimension of the problem they were part of solving.

Rookie problem solvers show you their analytic process and mathematics to convince you that they are clever. That’s sometimes called APK, the anxious parade of knowledge. But seasoned problem solvers show you differently. The most elegant problem solving is that which makes the solution obvious. The late economist Herb Simon put it this way: “Solving a problem simply means representing it so as to make the solution transparent.” 10 Herbert Simon, The Sciences of the Artificial , Cambridge, MA: MIT Press, 1969.

To get better at show and tell, start by being clear about the action that should flow from your problem solving and findings: the governing idea for change. Then find a way to present your logic visually so that the path to answers can be debated and embraced. Present the argument emotionally as well as logically, and show why the preferred action offers an attractive balance between risks and rewards. But don’t stop there. Spell out the risks of inaction, which often have a higher cost than imperfect actions have.

The mindsets of great problem solvers are just as important as the methods they employ. A mindset that encourages curiosity, embraces imperfection, rewards a dragonfly-eye view of the problem, creates new data from experiments and collective intelligence, and drives action through compelling show-and-tell storytelling creates radical new possibilities under high levels of unpredictability. Of course, these approaches can be helpful in a broad range of circumstances, but in times of massive uncertainty, they are essential.

Charles Conn is an alumnus of McKinsey’s Sydney office and is a board member of Patagonia and former CEO of the Rhodes Trust. Robert McLean is an alumnus of the Sydney office and is the advisory-board chair of the Nature Conservancy Australia. They are the authors of Bulletproof Problem Solving: The One Skill That Changes Everything (Wiley, 2018).

This article was edited by David Schwartz, an executive editor in the Tel Aviv office.

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Table of Contents

The problem-solving process, how to solve problems: 5 steps, train to solve problems with lean today, what is problem solving steps, techniques, & best practices explained.

Problem solving is the art of identifying problems and implementing the best possible solutions. Revisiting your problem-solving skills may be the missing piece to leveraging the performance of your business, achieving Lean success, or unlocking your professional potential. 

Ask any colleague if they’re an effective problem-solver and their likely answer will be, “Of course! I solve problems every day.” 

Problem solving is part of most job descriptions, sure. But not everyone can do it consistently. 

Problem solving is the process of defining a problem, identifying its root cause, prioritizing and selecting potential solutions, and implementing the chosen solution.

There’s no one-size-fits-all problem-solving process. Often, it’s a unique methodology that aligns your short- and long-term objectives with the resources at your disposal. Nonetheless, many paradigms center problem solving as a pathway for achieving one’s goals faster and smarter. 

One example is the Six Sigma framework , which emphasizes eliminating errors and refining the customer experience, thereby improving business outcomes. Developed originally by Motorola, the Six Sigma process identifies problems from the perspective of customer satisfaction and improving product delivery. 

Lean management, a similar method, is about streamlining company processes over time so they become “leaner” while producing better outcomes. 

Trendy business management lingo aside, both of these frameworks teach us that investing in your problem solving process for personal and professional arenas will bring better productivity.

1. Precisely Identify Problems

As obvious as it seems, identifying the problem is the first step in the problem-solving process. Pinpointing a problem at the beginning of the process will guide your research, collaboration, and solutions in the right direction. 

At this stage, your task is to identify the scope and substance of the problem. Ask yourself a series of questions: 

• What’s the problem? 
• How many subsets of issues are underneath this problem? 
• What subject areas, departments of work, or functions of business can best define this problem? 

Although some problems are naturally large in scope, precision is key. Write out the problems as statements in planning sheets . Should information or feedback during a later step alter the scope of your problem, revise the statements. 

Framing the problem at this stage will help you stay focused if distractions come up in later stages. Furthermore, how you frame a problem will aid your search for a solution. A strategy of building Lean success, for instance, will emphasize identifying and improving upon inefficient systems. 

2. Collect Information and Plan 

The second step is to collect information and plan the brainstorming process. This is another foundational step to road mapping your problem-solving process. Data, after all, is useful in identifying the scope and substance of your problems. 

Collecting information on the exact details of the problem, however, is done to narrow the brainstorming portion to help you evaluate the outcomes later. Don’t overwhelm yourself with unnecessary information — use the problem statements that you identified in step one as a north star in your research process. 

This stage should also include some planning. Ask yourself:

• What parties will ultimately decide a solution? 
• Whose voices and ideas should be heard in the brainstorming process? 
• What resources are at your disposal for implementing a solution? 

Establish a plan and timeline for steps 3-5. 

3. Brainstorm Solutions

Brainstorming solutions is the bread and butter of the problem-solving process. At this stage, focus on generating creative ideas. As long as the solution directly addresses the problem statements and achieves your goals, don’t immediately rule it out. 

Moreover, solutions are rarely a one-step answer and are more like a roadmap with a set of actions. As you brainstorm ideas, map out these solutions visually and include any relevant factors such as costs involved, action steps, and involved parties. 

With Lean success in mind, stay focused on solutions that minimize waste and improve the flow of business ecosystems. 

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4. Decide and Implement

The most critical stage is selecting a solution. Easier said than done. Consider the criteria that has arisen in previous steps as you decide on a solution that meets your needs. 

Once you select a course of action, implement it. 

Practicing due diligence in earlier stages of the process will ensure that your chosen course of action has been evaluated from all angles. Often, efficient implementation requires us to act correctly and successfully the first time, rather than being hurried and sloppy. Further compilations will create more problems, bringing you back to step 1. 

5. Evaluate

Exercise humility and evaluate your solution honestly. Did you achieve the results you hoped for? What would you do differently next time? 

As some experts note, formulating feedback channels into your evaluation helps solidify future success. A framework like Lean success, for example, will use certain key performance indicators (KPIs) like quality, delivery success, reducing errors, and more. Establish metrics aligned with company goals to assess your solutions.

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Problem-Solving in Business: PROBLEM-SOLVING DEFINED AND WHY IT IS IMPORTANT

• ABOUT THIS LIBGUIDE
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Overview of the Problem-Solving Mental Process

Kendra Cherry, MS, is a psychosocial rehabilitation specialist, psychology educator, and author of the "Everything Psychology Book."

Rachel Goldman, PhD FTOS, is a licensed psychologist, clinical assistant professor, speaker, wellness expert specializing in eating behaviors, stress management, and health behavior change.

• Identify the Problem
• Define the Problem
• Form a Strategy
• Organize Information
• Allocate Resources
• Monitor Progress
• Evaluate the Results

Frequently Asked Questions

Problem-solving is a mental process that involves discovering, analyzing, and solving problems. The ultimate goal of problem-solving is to overcome obstacles and find a solution that best resolves the issue.

The best strategy for solving a problem depends largely on the unique situation. In some cases, people are better off learning everything they can about the issue and then using factual knowledge to come up with a solution. In other instances, creativity and insight are the best options.

It is not necessary to follow problem-solving steps sequentially, It is common to skip steps or even go back through steps multiple times until the desired solution is reached.

In order to correctly solve a problem, it is often important to follow a series of steps. Researchers sometimes refer to this as the problem-solving cycle. While this cycle is portrayed sequentially, people rarely follow a rigid series of steps to find a solution.

The following steps include developing strategies and organizing knowledge.

1. Identifying the Problem

While it may seem like an obvious step, identifying the problem is not always as simple as it sounds. In some cases, people might mistakenly identify the wrong source of a problem, which will make attempts to solve it inefficient or even useless.

Some strategies that you might use to figure out the source of a problem include :

• Asking questions about the problem
• Breaking the problem down into smaller pieces
• Looking at the problem from different perspectives
• Conducting research to figure out what relationships exist between different variables

2. Defining the Problem

After the problem has been identified, it is important to fully define the problem so that it can be solved. You can define a problem by operationally defining each aspect of the problem and setting goals for what aspects of the problem you will address

At this point, you should focus on figuring out which aspects of the problems are facts and which are opinions. State the problem clearly and identify the scope of the solution.

3. Forming a Strategy

After the problem has been identified, it is time to start brainstorming potential solutions. This step usually involves generating as many ideas as possible without judging their quality. Once several possibilities have been generated, they can be evaluated and narrowed down.

The next step is to develop a strategy to solve the problem. The approach used will vary depending upon the situation and the individual's unique preferences. Common problem-solving strategies include heuristics and algorithms.

• Heuristics are mental shortcuts that are often based on solutions that have worked in the past. They can work well if the problem is similar to something you have encountered before and are often the best choice if you need a fast solution.
• Algorithms are step-by-step strategies that are guaranteed to produce a correct result. While this approach is great for accuracy, it can also consume time and resources.

Heuristics are often best used when time is of the essence, while algorithms are a better choice when a decision needs to be as accurate as possible.

4. Organizing Information

Before coming up with a solution, you need to first organize the available information. What do you know about the problem? What do you not know? The more information that is available the better prepared you will be to come up with an accurate solution.

When approaching a problem, it is important to make sure that you have all the data you need. Making a decision without adequate information can lead to biased or inaccurate results.

5. Allocating Resources

Of course, we don't always have unlimited money, time, and other resources to solve a problem. Before you begin to solve a problem, you need to determine how high priority it is.

If it is an important problem, it is probably worth allocating more resources to solving it. If, however, it is a fairly unimportant problem, then you do not want to spend too much of your available resources on coming up with a solution.

At this stage, it is important to consider all of the factors that might affect the problem at hand. This includes looking at the available resources, deadlines that need to be met, and any possible risks involved in each solution. After careful evaluation, a decision can be made about which solution to pursue.

6. Monitoring Progress

After selecting a problem-solving strategy, it is time to put the plan into action and see if it works. This step might involve trying out different solutions to see which one is the most effective.

It is also important to monitor the situation after implementing a solution to ensure that the problem has been solved and that no new problems have arisen as a result of the proposed solution.

Effective problem-solvers tend to monitor their progress as they work towards a solution. If they are not making good progress toward reaching their goal, they will reevaluate their approach or look for new strategies .

7. Evaluating the Results

After a solution has been reached, it is important to evaluate the results to determine if it is the best possible solution to the problem. This evaluation might be immediate, such as checking the results of a math problem to ensure the answer is correct, or it can be delayed, such as evaluating the success of a therapy program after several months of treatment.

Once a problem has been solved, it is important to take some time to reflect on the process that was used and evaluate the results. This will help you to improve your problem-solving skills and become more efficient at solving future problems.

A Word From Verywell​

It is important to remember that there are many different problem-solving processes with different steps, and this is just one example. Problem-solving in real-world situations requires a great deal of resourcefulness, flexibility, resilience, and continuous interaction with the environment.

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You can become a better problem solving by:

• Practicing brainstorming and coming up with multiple potential solutions to problems
• Being open-minded and considering all possible options before making a decision
• Breaking down problems into smaller, more manageable pieces
• Asking for help when needed
• Researching different problem-solving techniques and trying out new ones
• Learning from mistakes and using them as opportunities to grow

It's important to communicate openly and honestly with your partner about what's going on. Try to see things from their perspective as well as your own. Work together to find a resolution that works for both of you. Be willing to compromise and accept that there may not be a perfect solution.

Take breaks if things are getting too heated, and come back to the problem when you feel calm and collected. Don't try to fix every problem on your own—consider asking a therapist or counselor for help and insight.

If you've tried everything and there doesn't seem to be a way to fix the problem, you may have to learn to accept it. This can be difficult, but try to focus on the positive aspects of your life and remember that every situation is temporary. Don't dwell on what's going wrong—instead, think about what's going right. Find support by talking to friends or family. Seek professional help if you're having trouble coping.

Davidson JE, Sternberg RJ, editors.  The Psychology of Problem Solving .  Cambridge University Press; 2003. doi:10.1017/CBO9780511615771

Sarathy V. Real world problem-solving .  Front Hum Neurosci . 2018;12:261. Published 2018 Jun 26. doi:10.3389/fnhum.2018.00261

By Kendra Cherry, MSEd Kendra Cherry, MS, is a psychosocial rehabilitation specialist, psychology educator, and author of the "Everything Psychology Book."

Why problem-solving Is Important in Business

Problem-solving is a critical skill in business.

It involves the ability to identify and solve problems efficiently and effectively to move a company forward.

Whether it’s resolving a technical issue, finding a new solution to an age-old problem, or simply making a difficult decision, strong problem-solving skills are essential for the success of any business.

In this blog post, we’ll explore why problem-solving is so important in the business world and how it can help organizations thrive.

The Importance of Problem-Solving in Business

As mentioned in the introduction, problem-solving is a crucial skill in the business world. It allows organizations to identify and address challenges in a timely and effective manner, which is essential for driving progress and growth.

Without strong problem-solving abilities, businesses may struggle to adapt to change and overcome obstacles, ultimately hindering their success.

But the importance of problem-solving goes beyond just overcoming challenges.

It can also help businesses to identify and seize new opportunities, allowing them to stay ahead of the competition and remain innovative.

Whether it’s finding a new market to tap into or developing a more efficient production process, problem-solving skills are key to driving innovation and staying ahead of the curve.

In short, strong problem-solving skills are essential for businesses of all sizes and industries.

They help organizations to overcome challenges, stay adaptable, and identify and seize new opportunities.

In the following sections, we’ll delve deeper into the various ways that problem-solving can benefit businesses and the different techniques and strategies that can be used to tackle problems effectively.

Developing Problem-Solving Skills

Developing strong problem-solving skills is essential for the success of any business, and there are several ways that organizations can help their employees to hone these skills. Some strategies for developing problem-solving skills include:

Providing training and development opportunities

Many organizations offer training programs or workshops specifically designed to help employees develop problem-solving skills. These programs may include simulations, case studies, or hands-on exercises that allow employees to practice and apply their skills.

Encouraging a growth mindset

A growth mindset is a belief that abilities can be developed through effort and learning. By fostering a culture of continuous learning and encouraging employees to embrace challenges and failures as opportunities to grow and improve, businesses can help to develop problem-solving skills.

Encouraging collaboration and open communication

Collaboration and open communication can be key to solving problems effectively. By creating an environment where employees feel comfortable sharing ideas and seeking help, businesses can foster a culture of problem-solving and continuous improvement.

Providing resources and support

Organizations can also support the development of problem-solving skills by providing employees with the resources and support they need to tackle problems. This may include access to data and analytics tools, training materials, or guidance from experienced colleagues.

By implementing these strategies and providing opportunities for employees to practice and develop their problem-solving skills, businesses can build a strong problem-solving culture and equip their teams with the skills they need to drive success.

The Role of Leadership in Problem-Solving

Effective leadership is crucial for driving problem-solving within an organization. Leaders play a key role in setting the tone and culture of a business, and by fostering a culture of problem-solving and continuous improvement, they can help to develop strong problem-solving skills throughout the organization.

Some specific ways that leaders can support problem-solving within their organization include:

Modeling good problem-solving behavior

Leaders can set a good example by demonstrating strong problem-solving skills themselves. This can include taking a proactive approach to identifying and addressing challenges, seeking out new opportunities, and continuously learning and improving.

Encouraging a culture of continuous improvement

Leaders can create an environment that supports problem-solving by encouraging employees to embrace challenges, think creatively, and seek out new opportunities for improvement.

Leaders can also support problem-solving by providing employees with the resources and support they need to tackle problems effectively. This may include access to data and analytics tools, training materials, or guidance from experienced colleagues.

Recognizing and rewarding problem-solving efforts

By recognizing and rewarding employees who demonstrate strong problem-solving skills, leaders can encourage a culture of problem-solving and continuous improvement within the organization.

By taking an active role in fostering a problem-solving culture and providing the resources and support needed to tackle challenges, leaders can help their organizations to thrive and succeed.

The Benefits of Problem-Solving in Business

In addition to helping businesses to overcome challenges and seize opportunities, strong problem-solving skills can bring a range of other benefits to an organization. Some of the key advantages of problem-solving in business include:

Improved decision-making

Problem-solving skills help organizations to make informed and effective decisions. By using structured approaches and analyzing data, businesses can develop a clear understanding of the issues they face and identify the best course of action.

Enhanced adaptability

Problem-solving skills help businesses to stay adaptable and responsive to change. By being able to identify and address challenges quickly and effectively, organizations can better navigate the constantly-evolving business landscape.

Increased productivity

By resolving issues and identifying efficiencies, problem-solving can help businesses to increase productivity and reduce waste. This can lead to cost savings and improved profitability.

Improved customer satisfaction

Strong problem-solving skills can also help businesses to better serve their customers. By being able to identify and address issues promptly and effectively, organizations can improve customer satisfaction and build stronger relationships with their clients.

Enhanced innovation

Problem-solving skills can also drive innovation within an organization. By encouraging employees to think creatively and critically , businesses can identify and seize new opportunities, leading to new products, services, or processes that set them apart from the competition.

Problem-solving is a critical skill in business, with the potential to drive progress, increase productivity, improve customer satisfaction, and drive innovation. By developing strong problem-solving skills and fostering a culture of continuous improvement, organizations can set themselves up for success.

Conclusion: The Vital Role of Problem-Solving in Business

Problem-solving is a vital skill in the business world. It allows organizations to identify and address challenges efficiently and effectively, helping them to overcome obstacles and seize new opportunities.

Strong problem-solving skills also drive innovation and improve decision-making, leading to increased productivity and customer satisfaction.

Developing and fostering a culture of problem-solving is essential for the success of any business.

By providing training and development opportunities, encouraging a growth mindset, and recognizing and rewarding problem-solving efforts, organizations can help their employees to hone their skills and drive progress.

Effective leadership also plays a key role in fostering a culture of problem-solving, providing the resources and support needed to tackle challenges and seize opportunities.

In short, problem-solving is a critical skill for businesses of all sizes and industries. By developing and fostering strong problem-solving abilities, organizations can set themselves up for success and thrive in today’s fast-paced business environment.

Are you good at problem-solving? Find out with our self-assessment!

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More From Forbes

What’s the problem a different approach to problem solving.

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J. Todd Phillips , Founder & CEO, Parson Partners.

Surely you have experienced this scenario: An employee walks into a manager’s office and declares, “We have a problem.” The manager, not at all phased by this statement, replies calmly, “Well, I know you have the solution, right?” Everyone knows that they must bring a solution to every problem they identify.

For decades, managers have implored their team members to focus on solutions. Many argue that this empowers employees to think critically, solve problems independently, and communicate good news (a.k.a. “solutions”) not just bad news (a.k.a. “problems”). A quick Google search will produce hundreds of articles on this “solution-oriented” approach, touting it as one of the most effective management tools. These articles consistently repeat the chorus: “Focus on the solution, not the problem.”

However, as a lifelong problem-solver, I believe that taking a “problem-oriented” approach can be far more effective than many of these authors have been willing to admit. Business leaders, in particular, could benefit from being more problem-oriented, and much less solution-oriented.

Just what do I mean by a problem-oriented approach?

Let’s talk about it.

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The problem-oriented approach is a different way of thinking. It encourages leaders and teams to examine every possible aspect of any problem they may be facing before hammering out any possible approach to solving that problem. While it can easily be viewed as a time suck, or a costly delay when action is needed, I wager that it is much better to pause to examine a problem than risk failure with solutions adopted in haste.

Here are four steps that could get you to the right solution.

Step One: Get The Facts

This is an examination of what actually happened. Before jumping immediately to asking “what is the solution,” ask:

• Is it really a problem? How big is this problem?

• What actually happened? Who or what was impacted by the problem?

• What are we doing about it right now?

• What risks does the problem pose? What happens if we do nothing?

Once you’ve established the facts and have a legitimate problem, move on to the following steps.

Step Two: Examine Your Environment

Conventional wisdom advises us not to ask why something happened. In contrast, it’s really healthy to ask “why” repeatedly. This is a critical step that will help you get to the root causes of a problem. Go on a broad exploration to find out:

• Why did this happen?

• What conditions made it possible for this to occur?

• What conditions should have been in place?

• How could this have been avoided?

Step Three: Dig Into Your Processes

This step gets into the nitty gritty, the uncomfortable truth, of how you got to the point of having a problem in the first place. Take the time to work your way through:

• How exactly did this happen?

• What is not working?

• At what point did things go astray?

• What could we have done to avoid this?

Step Four: Consider The Human And Organizational Implications

This is perhaps the most critical step because it affects the welfare of your team. Try hard to avoid looking through the lens of assigning blame and ask:

• Who is responsible for the problem?

• Who is accountable for the problem?

• Who will be affected by the problem?

• Who should be informed about the problem?

• Who can assist with solving the problem?

Depending on the size of your organization and the nature of the problem, you might run through these questions with dispatch. Large, systemic problems may require a more significant investment of time. Whatever the circumstances, it is important to flip the paradigm and try the problem-oriented approach.

Once you have worked through these steps, either self-guided or with the help of a consultant, developing a solution—if indeed one is needed—becomes the easy part.

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Innovation in Business: What It Is & Why It’s So Important

• 08 Mar 2022

Today’s competitive landscape heavily relies on innovation. Business leaders must constantly look for new ways to innovate because you can't solve many problems with old solutions.

Innovation is critical across all industries; however, it's important to avoid using it as a buzzword and instead take time to thoroughly understand the innovation process.

Here's an overview of innovation in business, why it's important, and how you can encourage it in the workplace.

What Is Innovation?

Innovation and creativity are often used synonymously. While similar, they're not the same. Using creativity in business is important because it fosters unique ideas. This novelty is a key component of innovation.

For an idea to be innovative, it must also be useful. Creative ideas don't always lead to innovations because they don't necessarily produce viable solutions to problems.

Simply put: Innovation is a product, service, business model, or strategy that's both novel and useful. Innovations don't have to be major breakthroughs in technology or new business models; they can be as simple as upgrades to a company's customer service or features added to an existing product.

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Types of Innovation

Innovation in business can be grouped into two categories : sustaining and disruptive.

• Sustaining innovation: Sustaining innovation enhances an organization's processes and technologies to improve its product line for an existing customer base. It's typically pursued by incumbent businesses that want to stay atop their market.
• Disruptive innovation: Disruptive innovation occurs when smaller companies challenge larger businesses. It can be classified into groups depending on the markets those businesses compete in. Low-end disruption refers to companies entering and claiming a segment at the bottom of an existing market, while new-market disruption denotes companies creating an additional market segment to serve a customer base the existing market doesn't reach.

The most successful companies incorporate both types of innovation into their business strategies. While maintaining an existing position in the market is important, pursuing growth is essential to being competitive. It also helps protect a business against other companies affecting its standing.

Learn about the differences between sustaining and disruptive innovation in the video below, and subscribe to our YouTube channel for more explainer content!

The Importance of Innovation

Unforeseen challenges are inevitable in business. Innovation can help you stay ahead of the curve and grow your company in the process. Here are three reasons innovation is crucial for your business:

• It allows adaptability: The recent COVID-19 pandemic disrupted business on a monumental scale. Routine operations were rendered obsolete over the course of a few months. Many businesses still sustain negative results from this world shift because they’ve stuck to the status quo. Innovation is often necessary for companies to adapt and overcome the challenges of change.
• It fosters growth: Stagnation can be extremely detrimental to your business. Achieving organizational and economic growth through innovation is key to staying afloat in today’s highly competitive world.
• It separates businesses from their competition: Most industries are populated with multiple competitors offering similar products or services. Innovation can distinguish your business from others.

Innovation & Design Thinking

Several tools encourage innovation in the workplace. For example, when a problem’s cause is difficult to pinpoint, you can turn to approaches like creative problem-solving . One of the best approaches to innovation is adopting a design thinking mentality.

Design thinking is a solutions-based, human-centric mindset. It's a practical way to strategize and design using insights from observations and research.

Four Phases of Innovation

Innovation's requirements for novelty and usefulness call for navigating between concrete and abstract thinking. Introducing structure to innovation can guide this process.

In the online course Design Thinking and Innovation , Harvard Business School Dean Srikant Datar teaches design thinking principles using a four-phase innovation framework : clarify, ideate, develop, and implement.

• Clarify: The first stage of the process is clarifying a problem. This involves conducting research to empathize with your target audience. The goal is to identify their key pain points and frame the problem in a way that allows you to solve it.
• Ideate: The ideation stage involves generating ideas to solve the problem identified during research. Ideation challenges assumptions and overcomes biases to produce innovative ideas.
• Develop: The development stage involves exploring solutions generated during ideation. It emphasizes rapid prototyping to answer questions about a solution's practicality and effectiveness.
• Implement: The final stage of the process is implementation. This stage involves communicating your developed idea to stakeholders to encourage its adoption.

Human-Centered Design

Innovation requires considering user needs. Design thinking promotes empathy by fostering human-centered design , which addresses explicit pain points and latent needs identified during innovation’s clarification stage.

There are three characteristics of human-centered design:

• Desirability: For a product or service to succeed, people must want it. Prosperous innovations are attractive to consumers and meet their needs.
• Feasibility: Innovative ideas won't go anywhere unless you have the resources to pursue them. You must consider whether ideas are possible given technological, economic, or regulatory barriers.
• Viability: Even if a design is desirable and feasible, it also needs to be sustainable. You must consistently produce or deliver designs over extended periods for them to be viable.

Consider these characteristics when problem-solving, as each is necessary for successful innovation.

The Operational and Innovative Worlds

Creativity and idea generation are vital to innovation, but you may encounter situations in which pursuing an idea isn't feasible. Such scenarios represent a conflict between the innovative and operational worlds.

The Operational World

The operational world reflects an organization's routine processes and procedures. Metrics and results are prioritized, and creativity isn't encouraged to the extent required for innovation. Endeavors that disrupt routine—such as risk-taking—are typically discouraged.

The Innovative World

The innovative world encourages creativity and experimentation. This side of business allows for open-endedly exploring ideas but tends to neglect the functional side.

Both worlds are necessary for innovation, as creativity must be grounded in reality. You should strive to balance them to produce human-centered solutions. Design thinking strikes this balance by guiding you between the concrete and abstract.

Learning the Ropes of Innovation

Innovation is easier said than done. It often requires you to collaborate with others, overcome resistance from stakeholders, and invest valuable time and resources into generating solutions. It can also be highly discouraging because many ideas generated during ideation may not go anywhere. But the end result can make the difference between your organization's success or failure.

The good news is that innovation can be learned. If you're interested in more effectively innovating, consider taking an online innovation course. Receiving practical guidance can increase your skills and teach you how to approach problem-solving with a human-centered mentality.

Eager to learn more about innovation? Explore Design Thinking and Innovation ,one of our online entrepreneurship and innovation courses. If you're not sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

About the Author

Food security: Can war-torn Sudan recover and help address the global food crisis?

Sudan produces cereal grains, oil seeds such as groundnuts and sesame, sugarcane, millet, sorghum, vegetables and fruits. Image:  FAO

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Abir ibrahim.

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Stay up to date:, agriculture, food and beverage.

• Sudan is the largest agricultural producer in Africa and the Middle East, and seen as a potential “breadbasket” for the region and beyond.
• Sudan is strategically positioned to address global food scarcity, offering three vital ingredients: massive production potential, a neutral geopolitical position and a strong traditional farming practices.
• But the country’s food security and agricultural capacity are threatened by the ongoing war, which is already impacting neighbouring countries.
• As the World Economic Forum prepares for its Special Meeting in Saudi Arabia, we look at Sudan’s agricultural potential, the impact of the war and what will be required to grow the sector.

Sudan has long been viewed as a future “breadbasket” for the Middle East, Africa and beyond, especially with food insecurity on the rise worldwide. However, the country’s own food security, agricultural output and future prospects are increasingly under threat as a result of its ongoing civil war.

Experts rank natural resource shortages of food and water as one of the top five risks facing the world in the next 10 years. This pressing issue will also be on the agenda of the World Economic Forum’s Special Meeting in Saudi Arabia this April.

So, why is Sudan’s agricultural potential so critical for Africa and the Middle East? And how can global and regional cooperation protect and build up the country’s agricultural capacity?

Achieving food security at home and abroad

Sudan’s history of ongoing conflict continues to dominate international news headlines about the nation. As Africa’s largest agricultural country by land area, farming is the backbone of its economy, accounting for 60% of total national exports and generating a third of GDP in 2022, according to the African Development Bank (AfDB). Agriculture also provides work for more than half of Sudan’s workforce, the bank adds.

With its large landmass and water resources – including from the Red Sea and the Nile, which it straddles – Sudan is the world's largest exporter of oily seeds such as groundnuts, sunflower, soybean, safflower and sesame as well as sugarcane and sorghum. It is also abundant in vegetables and fruits like mangoes, lemons and oranges, BLNews reports.

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With gold as its top export , Sudan is also one of the top five producers of sesame globally and provides more than 80% of the world’s gum Arabic (acacia gum), which is used in food additives, paints and cosmetics. In addition, Sudan has an underdeveloped fishing industry but with high potential, and is home to more than 110 million livestock, according to BLNews.

These fundamentals mean the country has vast opportunities to both help itself and fulfill the vision of becoming a source of food for the Arab world and beyond. Since the 1970s, the Gulf countries have made major investments in Sudan to shore up the region’s food security.

But Sudan has the right ingredients to address global food scarcity more widely: it offers a potentially massive production potential, has strong traditional farming practices and lies in a neutral geopolitical position.

However, less than a third of farming land is currently in use with low productivity overall. This has been further exacerbated by the continuing global food and energy crises, as well as increases in fertilizer prices, according to the AfDB.

By far the biggest threat to food provision, however, is the continued civil war.

War threatens Sudan’s agricultural heartland

In July last year, the International Rescue Committee (IRC) found that around 40% of Sudan’s population was experiencing hunger , largely as a result of the conflict. By early February 2024, the UN World Food Programme (WFP) reported that people were dying of starvation and that the number of those experiencing hunger had doubled over the past year . UNICEF has also since highlighted that at least four million children are suffering from acute malnutrition , 700,000 of whom are suffering from “severe acute malnutrition”. High-risk regions such as Darfur, Kordofan and Khartoum are of the greatest concern, the aid agency says.

The ongoing conflict has severely impacted Sudan’s agricultural sector , leading to halts in harvesting, declining production as well as disrupted planting in much of the country. Farmland, livestock and factories have been damaged or destroyed.

The impact of the war on the country’s agricultural sector is not only threatening its own food security but could also impact neighbouring countries that import from Sudan, including Ethiopia, South Sudan, Chad and Egypt, the IRC says.

With Sudan and its neighbours also facing one of the worst displacement crises in the world, according to the UN’s WFP, the pressure on already scarce food resources will be even greater.

Ending war and transforming Sudan’s agricultural sector

With Ukraine, one of the major “breadbaskets of the world”, still impacted by war , the hope that Sudan could step up and fill some of the food supply gap will depend on several factors.

Bringing the current war to an end and supporting the country’s recovery will be vital to creating a secure environment for farmers to resume their activities without disruption – and without fear of future disruption, the IRC has stated.

There is also an onus on the international community to help with the transformation of Sudan’s agriculture sector – this includes overcoming outdated production techniques. To ensure Sudan can sustainably produce food for its people and the region, modern technologies in cultivation and harvesting processes are needed, according to BLNews.

USAID has stepped in with a $60 million agricultural development initiative. Due to the war, its scope had to be relocated from the capital, Khartoum, to Eastern and Central Sudan. This cropping season, it will cover seven states, providing subsidized inputs for smallholders and livestock owners . At a time when there is an acute shortage of capital and financial institutions are not functioning, this is a major intervention to keep the agricultural sector solvent.

Beyond this immediate response, additional stumbling blocks like inadequate infrastructure and limited access to credit need to be addressed to realize the vision of Sudan as a breadbasket for the world. A stable environment, sound legal frameworks and administrative reforms will be critical to securing the support of regional and international investors. This will only be possible if there is peace and a new government is in place.

Most importantly, Sudan needs the cooperation of its African and Middle Eastern neighbours, along with the international community, to move on from its war-torn history and play a vital part in global trade.

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Here's what happens if Trump can't pay his $454 million bond

Andrea Bernstein

Rachel Treisman

Forty Wall Street, a Trump-owned building, stands in downtown Manhattan. Former President Trump says he can't secure a bond to appeal the $454 million penalty in his civil fraud case. But New York Attorney General Letitia James says she is prepared to seize the former president's assets, including the building at 40 Wall Street, if he is unable to pay. Spencer Platt/Getty Images hide caption

Forty Wall Street, a Trump-owned building, stands in downtown Manhattan. Former President Trump says he can't secure a bond to appeal the $454 million penalty in his civil fraud case. But New York Attorney General Letitia James says she is prepared to seize the former president's assets, including the building at 40 Wall Street, if he is unable to pay.

Former President Donald Trump needs to arrange a $454 million bond to comply with a New York court ruling in less than a week, but the presumptive Republican presidential nominee says he can't find a company to put up the bond.

Trump's lawyers are asking an appeals court to stay the judgment, but the clock is ticking.

How did Trump come to owe the state of New York some $454 million?

Trump ordered to pay over $355M for fraudulent business practices in New York

This is the ruling that Judge Arthur Engoron issued last month , after finding that Donald, Eric and Donald Trump Jr., along with Trump Organization employees, engaged in a decade-long conspiracy to lie about the value of their assets.

In New York, if you make money by persistently committing fraud, you owe the ill-gotten portion back to the state. In this case, Judge Engoron determined that Donald Trump made over $350 million more than he should have if he'd been honest and when you add in interest, you get to $454 million.

Why does Trump have to come up with the money now?

Trump doesn't have to actually pay that money now, but he has to get a company to make a guarantee to the court that they will pay the money if he loses his appeal. That's the bond part.

But to get a bond, you have to put up assets, and in a court filing Monday Trump lawyers said they'd approached 30 companies but that getting a bond was a "practical impossibility," because they'd need a billion dollars in cash, which they don't have.

Trump unable to post $450M bond in New York fraud case, his lawyers say

They submitted an affidavit from an insurance executive who had testified at trial, and whom the trial judge had already discredited.

Trump says he's a billionaire. Why can't he just come up with the money himself?

Trump said during a deposition for this case, taken about a year ago, that he had plenty of cash. He said, "I believe we have substantially in excess of $400 million in cash ." And, he added, it's "going up very substantially every month."

News organizations have estimated that Trump actually has about $300 million in liquid assets — but he already had to set aside $100 million or so to put up a bond to pay the verdict in the E. Jean Carroll civil case . The rest of his money is largely tied up in buildings and golf courses, and while he could sell a property, that can't happen right away. Trump said Tuesday that would be a "fire sale," though he said many times during the trial he could always find a buyer to pay top dollar.

Jury orders Trump to pay $83 million for defaming columnist E. Jean Carroll

While Trump's political action committees have spent millions of dollars on his legal fees, they're unlikely to be of help to him in this case because of campaign finance laws .

Trump has accused the judge in the case of trying to take away his rights, posting on social media that any assets he may be forced to sell would be gone even if he ultimately wins his appeal.

That's a concern that any defendant could raise, whether they're liable for $450 or $450 million, says Adam Pollock, a former assistant attorney general in New York.

"But if you want to bond the appeal — stop enforcement of the judgment — you have to put up the full amount," he told Morning Edition . "That's what the law says. And that's a policy decision that Albany has made."

The deadline is Monday. What does Trump do if the appeals court doesn't rule his way?

He can appeal to New York's highest court and ask that court to stay the judgment. If they don't, he can ask a benefactor or he could try and stall some more until he comes into money from the upcoming sale of his social media company, or he could — though it has many disadvantages — declare bankruptcy.

But New York Attorney General Letitia James has been clear: If Trump doesn't pay, she will move to seize his assets.

"If he does not have funds to pay off the judgment, then we will seek judgment enforcement mechanisms in court," she said. "And we will ask the judge to seize his assets."

Trump's noncash assets run to $3 billion, Forbes estimates, so there's plenty of value there. The law limits the AG to seizing properties that were a part of the case, but there's about two dozen of those, everything from the Doral Golf Club to 40 Wall Street to Trump Tower. She's not limited to New York properties, though there are extra steps if she chooses to go out of state.

She could, in theory, send a sheriff or a marshal to enforce the judgment, and that brings on another legal process with many more opportunities for delay.

Can Trump be forced to pay up?

James can begin enforcement of the judgment immediately after the 30-day grace period expires next week, says Pollock. And there are several devices she can use to try to get him to pay.

For one, he says, she could serve Trump a restraining notice that would restrict his spending in other areas until he pays his bond.

"The restraining notice would say: 'Don't spend money, don't fill up your jet at the pump, until you pay the state of New York, or you'll be held in contempt of court,' " Pollock says. "And my impression is that ... Engoran, the judge here in New York, would be quick to hold him in contempt of court."

He says it's theoretically possible that James' could consider settling, especially if Trump were to write a check for something like $250 million. But short of that, he doesn't see any reason for her to proactively lower his bond, especially since she has the tools to go into banks and drain his accounts.

"The entire trial was effectively a roadmap to his financial assets," Pollock adds. "She can now send out a sheriff or a marshal of the city of New York to go walk into a financial institution holding what's known as an execution and empty his bank account short of $3,000, which is the statutory floor."

Pollock acknowledges that Trump has said he doesn't have $450 million in cash. But if he wants to stave off enforcement, "he needs to find a way to raise it."

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Is Your AI-First Strategy Causing More Problems Than It’s Solving?

• Oguz A. Acar

Consider a more balanced and thoughtful approach to AI transformation.

The problem with an AI-first strategy lies not within the “AI” but with the notion that it should come “first” aspect. An AI-first approach can be myopic, potentially leading us to overlook the true purpose of technology: to serve and enhance human endeavors. Instead, the author recommends following 3Ps during an AI transformation: problem-centric, people-first, and principle-driven.

From technology giants like Google to major management consultants like McKinsey , a rapidly growing number of companies preach an “AI-first” strategy. In essence, this means considering AI as the ultimate strategic priority , one that precedes other alternative directions. At first glance, this strategy seems logical, perhaps even inevitable. The figures speak for themselves: the sheer volume of investment flowing into AI technologies shows the confidence levels in an increasingly AI-driven future.

• Oguz A. Acar is a Chair in Marketing at King’s Business School, King’s College London.

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Trump's Truth Social is losing money and has scant sales. Yet it could trade at a $5 billion value.

By Aimee Picchi

Edited By Anne Marie Lee

Updated on: March 22, 2024 / 5:48 PM EDT / CBS News

Former President Donald Trump will soon be at the helm of a publicly traded company that will trade under the ticker "DJT," after his initials, and boast a potential valuation of more than $5 billion — a lofty amount for a business that's losing money and has scant revenue. 

Trump's next career move as head of a publicly traded company comes after shareholders of Digital World Acquisition Corp. (DWAC), a so-called blank-check company, also known as a SPAC ,  approved a merger on Friday morning with the Trump Media & Technology Group. With the nod, DWAC will combine with Trump Media & Technology Group and could soon begin trading under the latter name. 

Typically, investors put their money into companies they believe will provide solid returns for their investment, though time-honored fundamentals such as profit and revenue growth, dividends and share appreciation. But Trump Media's main business, Truth Social, is a social media platform that is lagging rivals such as Facebook and "X" (formerly Twitter), with scant revenue and mounting losses, according to regulatory filings. 

That hasn't fazed investors in DWAC, some of whom appear to be supporters of Trump, who are touting the stock on Truth Social. "I am holding and not selling! I believe in TRUTH and MAGA," one member of a Truth Social group focused on the DWAC stock posted on Friday morning. 

Typically, a company with the financial profile of Trump Media & Technology Group would be hard-pressed to reach a valuation of $5 billion, but the stock does not appear to be trading on traditional financial mileposts like revenue and profit, said Kristi Marvin, chief executive of SPACInsider.com. 

"This has never traded on fundamentals, and I don't expect it to, going forward," Marvin told CBS MoneyWatch. "This is almost like a barometer for Trump and how he's doing in the election."

The majority of the DWAC shareholders are retail investors, meaning they are individual investors rather than institutional , Marvin noted. Essentially, she added, DWAC, as well as its next iteration as Trump Media, is a "retail meme stock." 

Meme stocks and SPACs

Special purpose acquisition companies, or SPACs, are shell companies created to take a private business public without conducting an initial public offering. 

In 2021, DWAC announced its intent to merge with Trump's media group, sending shares of Digital World upward by more than 800%, sparking comparisons  with meme stock businesses like GameStop. At that time, SPACs were also drawing outsized attention from small investors after some gained endorsements from celebrities and investors alike.

Investors who own DWAC stock will receive one share of the new company for each share of DWAC they owned, according to a regulatory filing. 

With about 136 million shares outstanding after the merger, the new business could have a valuation of $5.4 billion, based on DWAC's current price. Trump, who will serve as chairman of Trump Media & Technology Group, will own about 58% of the company, which would value his stake at about $3.5 billion .

To be sure, there's no guarantee the newly merged company will continue to trade at the same price as DWAC. Companies can sometimes trade lower in the months after a SPAC merger, as some early investors sell their stock, Marvin noted. 

"You have a washing out of the original shareholders," she said.

But it's likely the newly merged company will continue to appeal primarily to individual investors, as some institutional investors may shy away from the company based on political concerns, among other issues, Marvin added. 

Risk factors: Bankruptcy, failure and jail 

Investors in Trump Media & Technology Group are buying shares in a fledgling social media business that booked $3.3 million in revenue for the first nine months of 2023, according to a regulatory filing. 

But like many other tech startups, Trump Media is hemorrhaging money, with its losses mounting to $49 million during that same period last year. Of course, a company's financial struggles aren't necessarily a hindrance to earning a lofty public valuation, as seen in the case of money-losing Reddit, whose IPO this week gave it an $8 billion market cap.

Truth Social had roughly 5 million active members in February of this year — including mobile users as well as website visitors, according to research firm Similarweb estimates. Truth Social doesn't disclose its user numbers.

By comparison, TikTok has 2 billion users and Facebook 3 billion. However, in the so-called "alt-tech" space, Truth Social fares better than rivals such as Parler, which just returned to Apple's app store this week  after being offline for more than a year , and Gettr, which had less than 2 million visitors in February.

The question is whether Truth Social can ramp up revenue by attracting new advertisers to a platform that critics say is squarely focused on Trump's personality and conservative views. Expanding its user base will be key to its success, according to risk factors listed in a regulatory filing related to the merger. 

That isn't the only risk for the business, according to the filing. Among others are the "death, incarceration or incapacity" of Trump, as well as Trump's history with some of his earlier businesses, including the bankruptcy of the Trump Taj Mahal in 1991 and the bankruptcy of the Trump Hotels and Casinos Resorts in 2004, among other bankruptcies. 

"A number of companies that were associated with President Trump have filed for bankruptcy," the filing states. "There can be no assurances that [Trump Media & Technology Group] will not also become bankrupt."

—with reporting by the Associated Press Board of Directors.

• Donald Trump
• Truth Social

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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What the National Association of Realtors' settlement means for consumers and real estate brokers

A groundbreaking $418 million settlement announced Friday by the powerful National Association of Realtors is set to usher in the most sweeping reforms the American real estate market has seen in a century. It could dramatically drive down homebuyers’ costs — and push some real estate brokers out of business.

Here’s a look at how we got here and what to expect in the months ahead.

NAR already lost a big case

For decades, the NAR has required home sale listing brokers to provide an offer of compensation to a buyer’s agent up front. That usually comes out to about 6%, split between a seller’s broker and a buyer’s agent.

But that model has come under intensifying scrutiny from critics who have likened it to a cartel . Late last year, a jury in a Kansas City federal court found the longstanding practice to be a form of collusion that artificially inflated real estate fees, awarding a massive $1. 7 8 billion judgment against NAR .

What changes now for homebuyers and sellers

If the settlement announced Friday is approved by a federal court, the standard 6% commission goes away. Sellers would no longer have to make a compensation proposal to prospective buyers and their agents. Critics have said the encouraged brokers to push their clients toward more expensive properties.

Another new rule would see homebuyers having to sign an explicit deal with a broker before they start working with one — something experts say would lead many homebuyers to forgo using brokers entirely.

The new rules would kick in within months of approval, currently expected around mid-July.

What about the next few months?

Everyone involved in the market should expect “a certain amount of uncertainty for the coming months,” said Marty Green, principal at mortgage law firm Polunsky Beitel Green.

“The industry will be in transition as everyone digests the settlements and market forces begin working,” he predicted. “We will begin to see some creative buyer’s agent arrangements that may have been harder to get traction on before.”

Home buyers and their agents will need to decide on a commission and put it in writing. Sellers, likewise, will need to work carefully with their listing agents as the new rules come into effect.

U.S. consumers might save in the long run ...

The changes could mean buyers will save on commissions, eventually bringing U.S. fees more in line with the much lower transaction costs seen in other residential property markets around the world.

Some commissions could even be cut in half, Jaret Seiberg, housing policy analyst for TD Cowen Washington Research Group, told clients in a note Friday.

The new rules “should lead to commissions falling 25% to 50%, which we view as benefiting online real estate brokers,” Seiberg wrote, but he warned it’s too early to declare “the end of local real estate agents given their local expertise and reputation in neighborhoods. It is why we do not see this following the travel agency model in which online eclipsed local offices.”

... but buyers could face more confusion

Holden Lewis, a home and mortgage expert at NerdWallet, warned of a “potential negative trade-off”: “Buyer-seller negotiations will become more complex, and buyers with plenty of cash might navigate the process more easily than buyers who don’t have a lot of savings,” he said. Seiberg flagged a similar concern in his note, saying it could particularly affect first-time buyers with limited means to pay for an agent.

Brokers and agents have come out against the settlement, saying it will make the home-buying process more byzantine for consumers and discounts the important role agents play in helping them navigate it.

“I’m a full-service real estate agent, so when I go to list my client’s house, I align their goals with my goal, and that goal is selling for the highest amount possible,” said Roy Remick, a realtor based in Northern Virginia, who said he often pays thousands of dollars of his own for services like staging homes to aid the sale process.

“This is ultimately someone saying, ‘You guys make too much money,’ which I don’t think is right for someone to dictate,” he said.

Buyers’ agents will be left “flying blind” since they won’t know how much they’ll end up making from a given home, Remick warned. “We’ll have to make a bunch of phone calls, because now we don’t know what [the commission] is because we can’t see it in the MLS. But we’ve already got an agreement with buyer how much they’ll be able to compensate us.”

Christine Romans is the senior business correspondent at NBC News.

Rob Wile is a breaking business news reporter for NBC News Digital.

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What We Know About Trump’s Quest for a Half-Billion-Dollar Bond

Donald J. Trump failed to arrange a bond to halt collection of a $454 million judgment. The New York attorney general might begin to collect very soon.

• Share full article

By Kate Christobek and Ben Protess

Here’s the latest on Trump’s bond in the N.Y. civil fraud case .

Donald J. Trump is running out of time to stave off a financial crisis.

The former president is racing to secure an appeal bond for roughly half a billion dollars in his civil fraud case in New York, but has so far failed.

If he cannot, the New York attorney general’s office, which brought the fraud case, could begin to collect. The attorney general, Letitia James, could have enforced the judgment last month, but provided Mr. Trump a 30-day grace period that expires on Monday.

Ms. James might start slowly. She could even wait for an appeals court to decide whether to pause the judgment, a decision that could come as soon as this week.

But if she wanted to take a more aggressive stance, Ms. James could freeze some of Mr. Trump’s bank accounts, which might send the Trump family business into a tailspin.

She could also seek to seize some of his New York properties, and public records show that Ms. James has formally posted the judgment in Westchester County, a preliminary step toward staking a claim to Mr. Trump’s private estate and golf club there.

In recent days, The New York Times has received many questions about Mr. Trump’s financial woes. Here are answers to several:

What was Trump accused of?

Ms. James took Mr. Trump, his company and his adult sons to trial last fall, accusing them of fraudulently inflating the value of golf clubs, office buildings and other properties to the tune of about $2 billion.

Mr. Trump exaggerated the property values, and in turn his own net worth, to obtain favorable terms from banks and insurers, according to Ms. James.

At the trial, which lasted months, Ms. James’s lawyers argued that Mr. Trump’s company had ignored appraisals and manipulated numbers to sometimes absurd degrees.

The judge overseeing the case — there was no jury — ruled in favor of Ms. James.

How was he punished?

The judge, Arthur F. Engoron, came down hard on Mr. Trump, imposing a judgment of $355 million plus interest, amounting to $454 million.

The judge also imposed penalties that could curb Mr. Trump’s influence over his family business, barring him from serving as a top executive at a New York company for three years.

Can he appeal?

Yes. Mr. Trump is appealing Justice Engoron’s punishments, and has asked a higher court, the Appellate Division in Manhattan, to pause the financial judgment. If the appeals court denies that, he might ask the state’s highest court, the Court of Appeals in Albany.

Although he does not have to pay Ms. James’s office the $454 million while he appeals, he must either cut a check to the New York State court system for the full amount, or, more likely, obtain a bond.

What is an appeal bond?

An appeal bond is a document in which a company guarantees the $454 million judgment, plus interest, should Mr. Trump lose his appeal and fail to pay.

Mr. Trump would need to pledge significant collateral to a bond company — about $557 million, his lawyers said — including as much cash as possible, as well as stocks and bonds he could sell quickly.

He would also owe the bond company a fee that could amount to nearly $20 million.

Does he have enough cash to obtain one?

Short answer: No.

A recent New York Times analysis found that Mr. Trump had more than $350 million in cash as well as stocks and bonds, far short of what he would need in collateral for the bond.

In a court filing March 18, Mr. Trump’s lawyers said they had contacted more than 30 bond companies, and none had agreed to a deal.

But I thought he was a billionaire?

While Mr. Trump has long bragged about his wealth, his true financial position remains something of a mystery. Most of his fortune is tied up in real estate holdings, which bond companies don’t typically accept as collateral.

He also has less liquid collateral available today than he did even a few weeks ago. Mr. Trump this month had to post a $91.6 million bond in the defamation case he lost to E. Jean Carroll. For that, he most likely had to pledge more than $100 million in collateral to Chubb, the insurance company that provided guarantee. That money cannot be used as collateral for a second bond.

What is the deadline for the appeal bond?

There is no formal deadline. She offered the 30-day grace period and now may wait for the appeals court to weigh in on whether to pause the judgment.

How could Ms. James collect?

It could get ugly for Mr. Trump.

Ms. James could start by merely issuing a list of properties and accounts she is eyeing, or sending subpoenas to locate assets. Or she could move swiftly to freeze and ultimately seize his assets.

If she opted for the more aggressive path, Ms. James could send so-called restraining notices to Mr. Trump’s banks and brokerage firms, effectively freezing his accounts.

It’s a powerful weapon, legal experts said. She can send the notices on her own, without needing a judge to bless them.

To then collect, Ms. James can ask a judge to grant her an order directing the banks to hand over his assets to the state.

“The low-hanging fruit for the state to enforce the judgment in this case is to issue restraining notices to banks,” said Daniel W. Levy, a former federal prosecutor who is now a lawyer at McKool Smith in New York, where he has represented creditors in judgment proceedings.

What about seizing his properties?

Easier said than done.

Mr. Trump does not directly own his properties — in general, they are owned by corporate entities that he controls — and Ms. James would have to fight in court to pierce those layers. Even if Ms. James could take control and force a sale, Mr. Trump’s lenders would be first in line to collect.

The most sensible option, legal experts said, would be for Ms. James to pursue New York properties — specifically the buildings directly owned by a corporate entity that was a defendant in Ms. James’s case. That would include Mr. Trump’s Seven Springs estate in Westchester.

If she took control of the property, she could instruct a local sheriff to auction it.

She might also try to seize some of Mr. Trump’s marquee Florida properties, including his Doral golf resort, which was a defendant.

And she has threatened to take aim at his office tower on Wall Street in Lower Manhattan. But Mr. Trump does not actually own it: Instead, he effectively controls the property and pays rent to the owner.

Trump Tower also poses a challenge, because it was not a defendant, nor is it directly owned by one.

The legal experts cautioned that actually seizing any property through the courts could take significant time without a guarantee of a huge payoff.

But should Mr. Trump win delays, they could cost him. Under New York law, he must continue to pay 9 percent interest on the judgment.

Can she throw him in jail?

Although Ms. James can’t jail Mr. Trump — it is a civil case, not a criminal one — Justice Engoron could issue an arrest warrant if Mr. Trump repeatedly flouts court orders. That, however, is unlikely to happen.

What other options does Trump have?

Mr. Trump could quickly sell a property or another asset, or seek a supporter’s help. He might also try to obtain a loan from a bank, hedge fund or private equity firm that he could then post as collateral. The attorney general has suggested that Mr. Trump could pledge his properties to the court.

And his net worth could soon leap when shares of his social media company start trading on the stock market as soon as Monday. His stake is valued at roughly $3 billion. Although he is prohibited from selling shares for six months, Mr. Trump could find ways around that restriction that enable him to raise cash for the bond.

If all else fails, he could have the corporate entities implicated in the case file for bankruptcy, which would automatically halt judgments against them. Ms. James’s penalty against Mr. Trump himself would continue to be in force, and she would most likely seek to hold him accountable for his company’s debts.

Could Trump use campaign money to pay?

Probably not.

A super PAC supporting Mr. Trump’s candidacy can raise unlimited amounts, but it is banned from coordinating with him and cannot pay the judgment.

And although the former president has used a political action committee under his control to pay for lawyers and witnesses in his legal cases, that group lacks the money to address the $454 million penalty.

What else is happening Monday?

Mr. Trump has a crucial hearing in his Manhattan criminal case, which could be the first prosecution of a former American president.

The district attorney, Alvin L. Bragg, has accused Mr. Trump of covering up a sex scandal involving a porn star to bolster his 2016 presidential campaign.

Jury selection was originally scheduled to start on March 25, but the trial was delayed late last week after the disclosure of more than 100,000 pages of records that had been in the possession of the federal prosecutors

Justice Juan M. Merchan set the hearing to determine whether the new tentative trial date of April 15 should hold, and to rule on Mr. Trump’s motion for an outright dismissal.

The Manhattan case is among four prosecutions Mr. Trump faces.

Ben Protess is an investigative reporter at The Times, writing about public corruption. He has been covering the various criminal investigations into former President Trump and his allies. More about Ben Protess