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By Nicolas Cesare

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A problem statement is a powerful tool that helps businesses ask the right questions. Used properly, it can lead to efficient solutions and make problem-solving feel like a breeze. Done poorly, it can delay solutions and lead teams astray.

"A common challenge for organizations of any size is to become better at asking the right questions to focus on the right problems," Laurie Barkman, Adjunct Professor of Entrepreneurship at Carnegie Mellon University's Tepper School of Business, told Newsweek.

We explain the basics of problem statements, talk about how and when to write them and review some actionable examples.

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What Is a Problem Statement?

A problem statement is a brief, neutral description of a business problem. It explains the problem as clearly and exhaustively as possible without leaning towards any particular solutions.

Good problem statements don't involve any opinions about the problem. They deal in provable facts that are immediately relevant to the issue at hand.

Good problem statements are also easy to read. Someone from outside the team tackling the problem should be able to review the problem statement, understand the issue and be ready to contribute their own ideas based on what they read.

The Anatomy of a Problem Statement

No two problem statements are exactly the same, but they should adhere to the same general structure.

According to Barkman, problem statements should have three parts:

1. A clear statement of the problem.
2. An explanation of why solving the problem is important.
3. A list of stakeholders the problem involves.

Problem statements aim to solve issues, so in addition to these elements they should always end with solutions.

Problem statements should also include answers to the 5 W's in journalism:

• Who is involved with the problem?
• What is the current situation? What should it be instead?
• When does the problem come up? What timeframe does it exist in?
• Where does the problem occur? A specific department, office or region?
• Why is it important to solve this problem?

When To Write a Problem Statement

You should write a problem statement whenever you encounter a problem at work that doesn't have an immediately clear solution. For example, when managing a retail store and this year's holiday sales period doesn't match projections.

However, problems aren't always this obvious. Here are some other examples of times when you might write a problem statement:

• Abstract problems, like a sense of decreased employee morale at a business intelligence firm.
• Problems that appear in the data, like employee productivity numbers falling from their position last year.
• Projects that need clear goals for the team to unite behind.
• Times when teams need to collaborate on a single issue, despite having different backgrounds.

How to Write a Problem Statement

To write a problem statement, break the process down into three steps: gathering information, describing the problem and revising until it's ready for your problem-solving team.

Step 1. Gather Information

"A problem statement starts with understanding the current conditions of the business situation," Barkman said. "Before writing a problem statement, gather information."

Barkman recommends asking the following questions:

• What issues are surfacing?
• Why am I posing this problem?
• What is the broader business context of the issue?
• How much? How long? How many?

First-person perspectives, objective data and time for reflection illuminate problems that would be difficult to understand otherwise.

"Don't make assumptions," Barkman cautions. "Talk with individuals who are on the front line of the issues."

The information gathering process should give you a clear picture of the problem. It should also fill in the components of your problem statement: a clear statement of the problem, why it's important and who it involves.

2. Describe the Problem

Once you have all the relevant information, start assembling it into a clear and coherent narrative describing the problem. As you write:

• Use direct and precise language.
• Reference data whenever possible.
• Avoid jumping to conclusions about the problem.

Good language for problem statements should make the problem clear to those who read it, even if they haven't dealt with the issue before.

"Having facts and the reality of the condition enable the team to understand and debate the actual nature of the situation," Barkman said.

3. Review and Revise

No first draft is perfect. The final step to writing a problem statement is to review your work. Edit for:

• Bias. Problem statements should not favor any approach to the problem.
• Clarity. Other people should be able to read your problem statement and quickly grasp the problem, its importance and relevant stakeholders.
• Exhaustiveness. Problem statements should include all the relevant information. Make sure you didn't miss anything.

Why Problem Statements Are Important

For most managers, the most important thing about problem statements is that they bring issues to light and lead to solutions. However, problem statements also have some positive side effects for organizations that use them.

Recalling her time as CEO, Barkman says using problem statements helped her organization exercise teamwork, one of its core values. "It encourages a management style based on responsibility rather than a command-and-control style of authority," she said. "Companies can develop leaders who discover root causes rather than jumping to solutions without addressing underlying issues."

Problem statements can also drive innovation. They help leaders think of interesting new solutions that wouldn't come up without the clarity and freedom problem statements offer.

The bottom line: "Clarifying the importance of issues is the core foundation to finding solutions and securing resources to address market challenges," Barkman said.

Problem Statement Example

This example problem statement demonstrates the ideas discussed above. Use this template to apply what you've learned to your own problem-solving strategies.

Problem:

A hypothetical company, LetterTech, manufactures letter openers from two factories. This year, letter opener production in the Boston factory is down 5 percent compared to this time last year. This is despite demand remaining the same and production keeping level in the company's other factory, located in Seattle.

Background:

Letter opener production is a relatively stable industry. The demand for letter openers rarely changes, so LetterTech has used roughly the same procedures year after year.

The company has thrived in this industry for many decades now. They first opened in Boston and later expanded their operations to include the Seattle factory.

Because the industry is slow to change, many staff at the Boston factory—including managers and production line workers—have been there for their entire careers. Those workers are retiring or will retire soon.

The Boston factory also uses older equipment than its Seattle counterpart. That equipment breaks down more often and requires more time spent on maintenance.

Tardiness has also increased among the Boston workforce, alongside the decrease in productivity. Workers complain that roadwork on a major route near the factory makes it harder to get to the office on time.

The 5 W's:

• Who: LetterTech's production workers, floor managers, executives and clients are all stakeholders in this problem.
• What: Letter opener productivity is down 5 percent compared to last year. It should be the same or higher.
• When: Production slowed down this year. It was stable year-over-year before now.
• Where: The production slow-down is happening at the Boston factory.
• Why: If LetterTech cannot restore productivity in Boston, they won't be able to satisfy every order from that factory. They could lose customers.

Solutions:

There may be more than one solution to LetterTech's problem. Here are a few the team may discuss before moving forward with one or more.

• The company has hired replacement workers for retirees as needed, but they don't have the same experience as the older workers. The company should hire replacements before workers retire so the new employees can train with the old workforce and learn their skills.
• The company should invest in new equipment that has less down time. This may also be an opportunity to explore more efficient equipment and boost productivity.
• The factory needs its workforce to arrive on time and ready to work. The company should implement transportation initiatives to improve attendance, like carpooling to reduce traffic or public transportation reimbursement.

What to Do After You Write a Problem Statement

After you write your problem statement, share it with your team and start brainstorming solutions.

However, remember that this is only the beginning of the problem-solving process. Don't assume that finishing the problem statement means you're almost done.

"Good people want to get work done, and might take shortcuts with quick fixes that would likely fail in the long-run," said Barkman, recalling her CEO experience. "There may be problems beneath the problems! Take the time to work through the process."

Problem statements are just one step toward improving strategic planning in your organization.

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