Byron's Babbles

Decision Making vs Problem Solving — and Why the Difference Matters
By Scott Whitbread and Nat Greene

Decision-making and problem-solving are two very different techniques for conquering different challenges that businesses face. Choosing the right one in the right situation can mean the difference between business success and failure. However, businesses frequently use decision-making techniques when they should be using a problem-solving approach. This leaves important problems unsolved and value locked away.

The Difference Between-Decision Making and Problem-Solving

Both decision making and problem solving involve using information to inform an action. However, this is where their similarities end.

Decision-making involves choosing between different courses of action. The process of decision-making is clear: each option is evaluated based on a set of parameters or criteria. But the outcome is not as clear: the outcome from the decision only becomes clear when a decision is made.

Problem-solving involves finding a root cause among many possible root causes, whether or not the true root cause has emerged as a possibility in anyone’s mind. The outcome is clear: the problem should be solved in order to bring a business process back to optimal performance. But the process is not clear: what is causing the problem is not yet known, and the problem solver must explore the process without yet knowing their destination. They do not know their destination until they have discovered the root cause.

A detective is a problem-solver. Their role is to unequivocally determine who committed the crime, and thus exonerate all other suspects, and thus their objective is clear. Their journey is not clear: they may never find the criminal.

A judge is a decision-maker. Their journey is clear: they look at evidence, circumstances, and precedent in order to arrive at a judgment for a convicted criminal. But their purpose is not always clear: they face competing goals, including justly punishing the criminal, giving satisfaction to the victims, appeasing the public, setting an example for others, and not over-burdening the prison system.

In business, a problem to solve may be the explosion of the SpaceX rocket on September 1, 2016, which required detective work in order to identify the root cause. Product quality problems, talent retention problems, and customer service problems all fit this mold.

In business, decisions may include where to build a new facility and at how much capacity, what product to launch, who to hire, or what security system to use. All of these decisions are choosing between alternatives that are already apparent.

As in the case of a crime, decision-making frequently enters at the end of a problem-solving effort. Once the root cause to a problem is found, the business may need to decide between different possible solutions in order to maximize the value of the actions it takes. Before solving a problem, a business will choose which problem to devote resources to solving.

Why it Matters

When businesses correctly identify a challenge as a decision or a problem, they are able to apply the correct technique to overcome the challenge. But frequently a business will treat a problem as a decision, use the wrong approach, and fail to solve the problem.

One large chemical upgrader facility experienced frequent outages due to failing process pumps. These pumps cost millions of dollars apiece, and the outages were costing the business tens of millions per year. The pump seals were wearing down after a few months, causing the process chemical to leak. As pumps were replaced with spares, the business worked with its vendor to choose between potential upgrades for the pumps: harder seals, larger seals, or different geometries. They treated their problem like a decision to make, and despite multiple upgrades, they continued to experience outages.

When they pivoted to a problem-solving approach, and acted more like detectives, they closely observed the failures themselves, and found the presence of small, hard foreign grains. These grains caused excess friction and wore the seals down. Further problem-solving found the source of these grains–the “culprit”–and they were able to solve the problem.

How to Choose the Right Technique

A decision is the result of choosing among several alternative possibilities. You will see a decision in front of you when the business is attempting to take a step, and the next action requires identifying and evaluating the values and needs of the business in order to select an option that maximizes these.

A problem is an ongoing, intermittent, or one-time failure of a process or system to perform at an acceptable level. If a process produces errors or unacceptable products or outcomes, does not run as quickly or efficiently as it should, or poses a negative risk for a business during operation, you are experiencing a problem and should use a problem solving technique.

Choosing the right technique for your challenge requires understanding what kind of challenge lies before your business. Learning to recognize and differentiate between these kinds of challenges will help you pick the right approach, and successfully overcome the challenge.

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Nathaniel Greene is the co-founder and current CEO of Stroud International, and author of Stop Guessing: The 9 Behaviors of Great Problem-Solvers. Nat has a Masters of Engineering from Oxford University and studied design, manufacturing and management at Cambridge University, in addition to executive education coursework in Harvard Business School’s Owner/President Management program.