An employee has an idea and brings it to her boss. The boss says “good idea!” and forms a team to do a feasibility study. The team determines the idea feasible for a new product.
The boss authorises the introduction of the new product. The product, however, does not sell. Customers think it’s too expensive. The boss kills the product. The employee who suggested the idea is fired. He gets rich when he sells the product on his own.
There is a fine line between an idea and a solution. Both are not the same. An idea is a thought that develops into a concept. A solution is an answer to a problem or it’s a process or method to deal with a problem.
More often than not, we mix up the two and we do a feasibility study without really thinking through whether what we’re studying the feasibility of is an idea or a solution.
Why is it important to know if we’re studying an idea or a solution? Because the best approach to doing a feasibility study is knowing the purpose of what we’re studying in the first place.
If we’re studying the solution, we’d need to make sure what the problem the solution is answering.
If we’re studying an idea, we’d need to know what we’re developing from the idea. What is the idea’s purpose?
Feasibility studies typically consist of the following steps:
If somebody is going to say I just laid out a problem-solving approach, I will say yes, I did.
A problem-solving approach is the core of a feasibility study. If it isn’t, it would make no sense to do a feasibility study. How can one judge the feasibility of something if one doesn’t know the purpose of that something or what problem it is solving?
In starting a feasibility study, it pays to know what the purpose is. Hence, the first step is problem definition.
A problem is not necessarily a disruption, a roadblock, or a painful symptom. A problem in the context of a feasibility study is what we’re trying to achieve. It typically comes in the form of a question that starts with “what” or “how.” And it should be as specific as possible.
What can we do to lower the cost of electricity in our factory?
How can we reduce our pending orders faster?
Please note that defining the problem is not as straightforward as it looks. Just asking a question does not mean we have defined the problem.
Defining the problem requires diagnosis. Diagnosis requires data and analysis.
A doctor does not simply define a patient’s problem just by the patient’s symptoms. The doctor would diagnose, that is, do tests, study the results, establish the cause, and prescribe a procedure to cure.
Likewise, with problem definition. We need to gather data, analyse the data, organise the evidence, identify root causes, and conclude what the problem is.
Inventories are high but we run out of stock every end of the quarter. We import in large lot sizes. Our stocks spike when the imports arrive. Arrivals of imported merchandise come in at the same time. Demand depletes our stock but some items run out faster than others. We order when we notice items nearing out-of-stock. It takes six (6) weeks for merchandise to arrive from the time we order and prepare the import documents.
What inventory policy should we develop for our imported merchandise?
We would also need to listen to what stakeholders are saying, especially what their ideas are. It may sharpen the problem definition further.
Our purchasing staff suggests we break up the imports into smaller quantities but that would mean foregoing bulk discounts from vendors. They suggest negotiating with vendors such that we can order in bulk but have the order shipped in staggered smaller quantities.
What inventory and purchasing policy should we develop for our imported merchandise?
Defining the problem is a significant step in the feasibility study. Once we know the problem clearly and specifically, it can be downhill from there in finding the solution or developing an idea.
One thought on “A Feasibility Study Starts with Defining the Problem”