Unsurprisingly, different problem-solving techniques are appropriate for different types of problems. The more complex the problem, the more detailed and usually protracted the techniques applied to resolving it. Simpler problems, such as whether to accept a new job, or whether to expand an operation, can be rationally approached through the basic exercise of listing the advantages and disadvantages of such questions. By dutifully listing the pros and cons of particular options, a rational decision can be arrived at, and the problem solved.
More complex problems or decisions, however, require a considerably more extensive process. Very often, the model applied to decision-making or problem-solving (the two are sometimes the same, and sometimes not) is the application of the so-called SWOT process. SWOT, which stands for strengths, weaknesses, opportunities, and threats, is a methodical process by which, as the initials suggest, a problem or decision is analyzed through four different prisms. Every option presents strengths and weaknesses (essentially, pros and cons), which need to be measured, but different options can also involve different opportunities while also opening the door to risks. Identifying risks, or threats, can be the most difficult part of the exercise, as it can involve any number of potential unknowns. As few can presciently look into the future for potential pitfalls – although some can be known at the outset – it is important that those tasked with conducting this exercise think each option through as thoroughly as possible.
As a hypothetical situation, let’s suggest that a multinational corporation is contemplating expanding into a new foreign market that both holds great promise in terms of size of market, affluence of the middle and upper classes, and a stable political environment. Let’s call that country China. Those factors constitute strengths. There is tremendous purchasing power in a country of over one billion people, over 300 million of whom comprise the middle class, with millions more representing the upper classes. That is both a strength and an opportunity. While China’s political structure is opaque and subject to dissension, the ruling Communist Party has a firm grip on the country’s political and economic systems. Weaknesses include China’s nebulous legal system, subject to corruption and heavily weighted against foreign investors, whose assets could be seized without compensation, and whose interests are often ignored in deference to local interests. In addition, China’s currency does not, unlike the dollar and euro, “float freely” in international markets. It is pegged to the U.S. dollar to ensure a favorable exchange rate for China, and can be manipulated more readily than other major currencies.
Opportunities, as noted, involve the enormous purchasing power of the Chinese middle and upper classes, a large, stable and highly trained labor force, and increased competitiveness courtesy of China’s lower wage structures (relative to much of the West). Threats include the growing problems of Chinese assertiveness in the South and East China Seas, which could lead to regional wars, and its ever-present threat to attack Taiwan, which it considers a breakaway province, and which enjoys security guarantees from the United States. Conflicts, or elevated levels of tensions, can have an enormously corrosive effect on the business environment, increasing fuel costs, and precipitating turbulence among labor pools. This, in abbreviated form, is a SWOT analysis for a company contemplating expanding its business presence in China. Similar analyses have to be conducted for many other countries in which business opportunities may exist but for which risks may also exist.
These are problem-solving techniques specific to business decisions, but which can be applied to nonbusiness situations. Other types of problems, obviously, require different solutions. At a more micro-level, a problem requiring resolution could involve dissension within the workplace that depresses productivity. Problem solving techniques for such issues could include game-playing exercises requiring employees, formed as teams, to work closely together in order to solve a problem. The exercise could involve building a structure, solving mysteries, or deciding upon a range of options the selection of which requires unanimity. These techniques are commonly used for improving morale and efficiency in offices and other organizations, and help to isolate weaknesses among the teams, which, in turn, facilitates the application of corrective measures.