Personal Development
Understanding a problem is most of the battle! by Alan Nelson
Understanding a problem is most of the battle!
by Alan Nelson
Whether advising their clients, or working inside a business, accountants have always been problem solvers. But it has tended to be a skill that they have picked up along the way, rather than something they have formally learned to do. Now, with many accountancy jobs under threat of automation, there has never been a better time to develop your problem-solving skills and ensure that you remain relevant in the future.
The first and most important step in the problem-solving process is recognising that there is a problem and successfully defining it. Unless you are able to describe clearly what the issue is, you are unlikely to identify an effective solution.

So, if you feel a particular situation is causing you difficulties, it’s important to find out as much about the situation as possible so that you can pinpoint and define the problem.

There are four steps you can follow to do this:

  1. Summarise the issue in one sentence.
  2. Think about why this is a problem.
  3. Understand the nature of the problem.
  4. Write a problem statement.

Let’s look at each of these steps in turn.

Summarise the issue in one sentence
It is a useful exercise to try to describe the problem briefly in one sentence. Doing so will provide you with some focus and give you a starting point for your problem statement.

Let’s say we have received lots of complaints from our clients. This issue could be summarised in one sentence as, “Clients aren’t happy with the service they have been receiving”.

Think about why this is a problem
Next, we need to think about why this situation is a problem. What are the consequences of the problem, and who is affected? Well, clients aren’t happy with the service they are receiving. They may not renew our services and we will lose income. If we lose too many clients and too much income, there will be job cuts. Problems are only problems in the effect that they have.
Woman in office meeting
Understand the nature of the problem
If you don’t fully understand the nature of the problem, it’s often easy to make the mistake of defining, and therefore solving, the wrong problem. The problem you start off with is not necessarily the one you should be trying to solve. The first step is to try to break the problem down.

So, “customers complaints are up”, could be broken down by asking, what are customers complaining about? Which customers are complaining? How are we responding to their complaints?

Here are some more questions you could ask to understand the nature of the problem you are dealing with:

  • Is it a temporary or more long-lasting problem? When did the problem first occur? How long has it been a problem for?
  • Is it an isolated or widespread problem? More specifically, who is affected? A few stakeholders, or lots?
  • Is it a straightforward problem, or is it complex and far-reaching in its effects?
  • Is the problem quantifiable, or are the consequences intangible?

In this example, by attempting to understand the nature of the problem, we uncover that a number of different clients have complained (suggesting this is a widespread issue) about our poor communication, which is why they are unhappy with the service they have been receiving. Because of this, clients may not renew our services, in which case we could lose a significant amount of fee income – so this has the potential to be a long-lasting problem. The complaints are all fairly recent, however they started around the time two staff members left, whom we have yet to replace which suggests there is a straightforward solution. The problem is quantifiable: if clients don’t renew our services, we will lose X amount, which will have Y effect on our organisation.

Write a problem statement
The notes you make for these first three steps will enable you to write your problem statement.

The problem statement is a short description, comprising one or two sentences, which defines and summarises the problem or issue that you want to address. The problem statement should define the problem in a way that everyone understands. It should not, however, suggest a solution.

So, here is a possible problem statement for our example:

“Recently, a number of our clients haven’t been happy with the service they have been receiving, because of our poor communication. As a result, they may not renew our services, which will have a negative impact on our organisation’s finances and potentially put jobs at risk.”

It is important to spend some time on this final step, as getting your problem statement right will set you up well for the process of working through the correct issue and coming up with an appropriate solution.

The four steps above have enabled us to clearly define our problem, much more so than saying “we have received lots of complaints from our clients”, which is where we started.

This process may seem a bit pedantic, and you might be tempted to skip to the end more quickly, but the efforts you put in up front defining the problem correctly, will save you time later. As Albert Einstein said:

“If I had one hour to save the world, I’d spend 55 minutes defining the problem and five minutes finding the solution.”

As accountants, we are always looking for issues that can be improved or solved to drive the business forward. But you must remember that not every problem you uncover is important or needs solving.

Once you have defined a problem, you must assess its impact. In fact, assessing the impact of a problem may cause you to redefine it. You may find that you need to rewrite your problem statement if, say, you downplayed the issue originally.

You must be careful when assessing a problem that you are honest and realistic about its importance. It can be easy to avoid addressing problems by not taking them seriously, or to panic and assume that they are bigger than they are.

This is sometimes known as the trap of the three Ds.

Problems are dismissed without understanding the impact. For example, “Oh forget it, it was just one client moaning.”

Problems are assumed to be trivial and unimportant. For example, “Never mind, we always get problems at this time in the tax year.”

Problems are seen as far more serious, and their effect exaggerated. For example, “We need to change the entire payroll system, immediately.”

All these responses indicate that there is no real understanding of whether this is an important problem.

So how do you avoid the three Ds and determine whether your problem is worth taking any further?

Does your problem need solving?
The first step in identifying whether a problem is important, is to consider the following questions:

  • What and who does the issue affect?
  • How is the issue affecting me/my colleagues/my clients/the business?
  • Who else is affected by this issue?
  • How urgent is the issue?

If you can answer these questions fully, you will be well on the way to assessing how serious the problem is and whether it needs to be solved.

It can help to consider what will happen if you don’t solve the problem. Ask yourself what the impact would be of carrying on regardless? Alternatively, some problems may not be serious enough to warrant solving them, for example if the solution would cause more disruption than the problem itself.

It’s also important to try and put the problem in perspective by exploring different dimensions. For example, how much have client complaints increased? Are sales affected? When did the problem start?

You may well be thinking that this is whole article on problem solving that doesn’t actually tell you how to solve a problem, but accountants are good at that part. Add in this preliminary analysis and you will find the job of choosing which problems to solve and how, much easier.

Alan Nelson headshot
Alan Nelson
Alan Nelson is the Founder and Managing Director of and the author of their course, Problem Solving for Accountants. He is a past Chair of the ICAEW’s Practice Assurance Committee, and has been a member of ACCA’s SME Committee, and of CPA Ireland’s IPSAS Advisory Board. He is currently a member of the Bank of England Decision Maker Panel.