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The Problem with Problems
By Tom Liu

Often, when asked what I do for a living, my response is a droll “I solve problems.”  Which could mean just about anything, but generally strikes a resonant chord with those in business.   Indeed, at times it seems that the day is made up of an endless string of problems ranging from the supplier wondering where his payments are for four months’ worth of invoices to the accounts receivables program that is not balancing, to Sally’s complaint that Joseph looked at her funny in a meeting.  On those days, it is difficult to feel  productive or believe that much has been contributed to the bottom line of the organization.  Much has been written over the amount of time lost fixing mistakes and statistics abound regarding how much more expensive it is to repair work products than to create them correctly in the first place.

The fact is that business is about solving problems - almost any business activity can be couched in a problem statement.  Webster’s defines the word problem as “a question posed for solution”.  This covers a pretty wide territory, including the assertions of those who insist on calling problems “opportunities.”  For our purposes, we’ll use a more restrictive definition:  A problem is a situation where any (final or intermediate) business product or process has not functioned properly in the eyes of the (internal or external) customer.  Note that this definition includes not only the end consumers of a product but internal customers of business process output as well.

OK, so we have a definition, and we all know that problem solving is a major part of every businessperson’s life.  So what?  Why spend any time discussing problems?  Because in order to succeed, an organization must have in place a formalized, consistent, documented, maintained methodology for dealing with problems. But isn’t problem resolution just something that we intuitively do? Why do you need a formal methodology, and why is it so important.

  • Because customers expect and demand high quality products.

  • Because often the only opportunity an organization has to interact with the customer is during a problem resolution cycle.

  • Because customers have alternatives, and will switch allegiances quickly if they are not satisfied with product quality and service, especially now that the barriers to finding and hooking up with alternative product and service providers have crumbled.

  • Because efficient problem resolution processes have a direct positive impact on the bottom line, and can have a positive impact on the top line.

  • Because problems can be unexpected sources of ideas and information for improved products, new products, greater market share, and reaching out to new markets.

Problem categorization

Problems can be broken down first into product and process problems:

A product doesn’t physically function according to specification.  The engine doesn’t start.  The table arrived with 3 legs.  The printer prints green when it’s supposed to print red. Clicking on “OK” gets you a blue screen.

A process doesn’t function according to specification, or expectation.  The book didn’t arrive in 3 days.  It took too long to paint the house.  The customer wasn’t satisfied with the advice he got. 

Further classification can be accomplished in different dimensions:

Problem source:

  • Did the product ever work, or was it broken before it reached the consumer?

  • Was failure caused by defective raw materials?

  • Is the manufacturing process flawed?

  • Or is the process valid, but there was an error in executing the manufacturing process?

  • Did a faulty product get to the consumer as a result of a poor testing process or improper execution of the testing process?

  • Was the product damaged in delivery?

  • Was the product improperly assembled? At which point in distribution?

  • Is the process flawed, or was the process executed improperly?

  • Does the customer have an unrealistic expectation for product or process functionality?

Individual Problem resolution:

  • Repair the product.

  • Replace the product.

  • Bring in a business partner to jointly address the problem.

  • Perform the process or part of the process an additional time.

  • Reimburse the customer for his trouble.

  • Do nothing.

Problem solution:

  • Improve the quality of raw materials.

  • Improve the testing process.

  • Change the service process.

  • Change manufacturing/assembly process.

  • Improve communication, advertising, product description, etc.

  • Improve training.

  • Counsel/coach employees on execution.

There are, of course, numerous additional ways to categorize problems.  The personnel in each organization who know the products and customers best are the best suited to determine how problems should be categorized.  The categories themselves are of secondary importance:  the key is that the classification analysis be performed.  Only then can optimal methods be developed for resolving problems.

Problem resolution process

There are two primary objectives of problem resolution:

  1. To maximize customer satisfaction

  2. To maximize profits by minimizing the costs associated with problems.

In some aspects these objectives may seem to oppose one another.  It costs money to satisfy customers. Each organization must determine how many resources it makes sense to allocate to the problem resolution process.  Understanding that customer satisfaction is a key objective of problem resolution leads to the realization that the process of resolving problems has to encompass more than just the technical aspects of getting the problem fixed - it has to involve the customer at each step.  Obviously, many organizations have recognized this, as evidenced by the names of their problem resolution departments:  Customer Service, Customer Support, Customer Satisfaction, Customer Care, Help Desk, etc.

The problem resolution cycle is unique for each organization and product or service, but follows a generic pattern:

Problem identification:  

The preparation of any product or service for market typically involves several stages of testing before it reaches the end consumer.  Ideally, all but a very few problems are detected during these quality assurance phases.  Even after a customer obtains a product, self-monitoring processes should be incorporated to identify problems, perhaps before they occur.

Problem reporting and recording:

There are myriads of ways in which a problem can be reported: in person, telephone, mail, electronic mail, Internet, product return, etc.  Although it may be desirable to have problems reported in a single efficient manner, it is sometimes necessary to provide multiple avenues of problem reporting, depending on the product, distribution methods, and target audience.  For certain products, it is beneficial to provide information that will allow the customer to perform certain troubleshooting steps themselves, potentially allowing them to resolve problems themselves, avoiding the need to contact the problem resolution organization.  This is a clear opportunity to provide the customer with a positive experience.

Often, customers are not sure where to report problems, and bring them to the person or enterprise from which they obtained the product.  In many cases, this is a distributor that is not equipped to resolve the problem, but should be aware of how the customer can get help.  Hopefully the customer can be pointed in the right direction.  To maximize customer satisfaction, it must be clearly communicated to the customer and to business partners what steps should be taken to get problems taken care of.

The problem reporting transaction is what customer service experts often refer to as a moment of truth.  It’s an opportunity for the organization to make a positive impression on a customer, who is most likely, annoyed that the problem exists.  As mentioned previously, the customer should have a clear idea of how to report a problem.  If information is required, such as serial number, place of purchase, date of purchase, etc., the customer should know that before sitting down to make the phone call, write the Email, etc.   The information that the customer is asked to provide should be kept to a minimum.  If a human interaction is involved, all the rules regarding politeness, service with a smile, empathizing with the customer’s situation, etc. should be observed.  If the reporting is done through an automated process, such as an interactive voice response system, the transaction should be as simple as possible, and the menu selections should be straightforward.

The problem reporting transaction may provide an opportunity to gain additional business from the customer, but care must be taken to ensure that appeals for business are made in a low key manner that doesn’t add insult to injury.  Finally, customers should receive positive acknowledgement that their problem report has been received, and have a clear understanding of what the next steps are in the problem resolution process, and how and when they will be kept apprised of the status.

Once a problem is reported, it is recorded, along with details needed to fix the problem as well as provide data for further analysis.  This information should be recorded even if an immediate resolution was provided.

Assignment for resolution:

Various schemes exist for assigning problems to be resolved.  In some cases, they may be resolved through the automated reporting process, without being seen by human eyes.  Each problem resolution organization will develop their methods for dealing with reported problems in the most cost-effective manner possible.

Status reporting:

An easy way to frustrate customers is to keep them in the dark while their problem is being worked on.  Customers appreciate hearing from the problem solving organization on a periodic basis, even if it’s just to know that someone is working on the problem, that they haven’t been forgotten.  Problem solvers, especially technical specialists, sometimes have difficulty understanding this simple fact of human nature, and so it is necessary to formalize a standard status reporting process.  Here again it is often beneficial to provide customers with alternative means of obtaining status.

Problem resolution:

Problem resolution itself is the nuts and bolts of fixing problems - these details are unique for each organization.  Note that problem resolution may involve replacement or substitution of the original product, refunds, compensation for time and trouble, etc.

Problem escalation:

If a problem cannot be resolved to the customer’s satisfaction in a prescribed timeframe, or with an acceptable level of quality, problem escalation comes into play.  Problem escalation can be initiated either by the customer or (preferably) from within the problem resolution organization. In either case, the objective of escalation is customer satisfaction through expeditious resolution of the issue and provides another opportunity to demonstrate the quality of the organization to the customer.  Consistent and responsive communication with the customer is as important as problem solving activities during escalation.

Post-resolution activities:

Activities carried out after the initial problem has been resolved can provide the most valuable benefits of problem management.  These include:

Evaluation or “post-mortem” of the individual problem resolution cycle. This may involve measuring customer satisfaction through surveys or other means, and most certainly gauges how well internal processes worked. This provides information that can be used to improve the problem resolution process itself and ensure that the process is executed properly. 

Collective reporting of relevant dimensions of problems across products, product lines, distribution organizations, geographical regions, etc. points out patterns and helps to pinpoint the sources of recurring problems.

Recommendation and implementation of actions to reduce the occurrence of problems that show up consistently on reports.

Evaluation of how problems may be used to point to ways of improving the quality and sales of existing  products, or the development of new products, services or markets. 

Organization and staffing 

Each organization must determine how best to organize and staff to manage problems.  It depends, of course, on the work product, the nature of the customer audience, the size of the organizations involved, the industry, the competition, etc.  Again it is key to realize that the primary objective of problem resolution is customer satisfaction.  Problem resolution is most effectively carried out by personnel whose sole responsibility is to resolve problems.  If problem solving must compete for resources with other activities, the problems must often wait, leaving less than satisfied customers.


This article has pointed out the pervasiveness of problems and the importance of problem resolution to organizations today.  People don’t like problems much, but organizations must devote resources to dealing with them because customers demand quality, because the key to success is customer satisfaction, and because effective problem resolution positively impacts the bottom line.  In fact, a primary goal of problem resolution is customer satisfaction.  Categorization of problems in pertinent dimensions is an important early step in developing a problem resolution methodology.  The problem resolution process differs for each organization, but follows a number of distinct steps: identification, reporting, recording, assignment, communication with the customer, resolution, escalation, and post-resolution activities.  Organization and staffing to manage problems should be determined with customer satisfaction in mind.

Perhaps one day organizations will realize the importance of problems and expand upon a popular trend in business today by appointing a CPRO, or Chief Problem Resolution Officer.

About the Author:

Tom Liu is a Fellow of The Business Forum Association.  Tom currently manages the enterprise data center for Transamerica Corporation, where he has spent 22 years supporting the technology and service needs of internal and external customers.  Amongst the major accomplishments during his career Tom can list establishing consistent processes for technology deployment and support, the implementation of a UNIX/Oracle infrastructure from scratch when the technology was new, and two major data center moves.  Tom spent his early career in engineering and technical pursuits as diverse as, experimenting with magnetic bubbles, adapting lunar lander technology to the automated control of high rise office buildings and creating the infrastructure for international data communications.  Tom holds both Bachelor's and Master's degrees in Electrical Engineering from M.I.T.

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