How to Write a Problem Statement

Hard work isn’t the problem—lack of clarity is. In this video, Steve shows you how to create a strategic problem statement that brings focus and direction to your business.

You’ll learn how to identify the root cause behind challenges, turn vague issues into clear, actionable insights, and use this process to drive smarter decisions. With real examples and practical advice, this framework will help you cut through confusion and lead with confidence.

Whether you're building a startup or scaling fast, this is the strategic clarity your business needs.

TRANSCRIPT:

Hey, it's Steve. In this video, I'm going to show you how to define your strategic problem, which is a critical step in the strategy process. All right, I'm going to draw some pictures here for you to drive home this point.

At the very top of my strategy framework is the strategic problem. And then down below, we have four different boxes where a company defines its shared aspiration, its market focus and position, its competitive behavior, and the resources and returns required to pursue the strategic option successfully. Now, at the center of these four boxes is the customer, right? The customer is very important as it pertains to strategy formulation, right? So we have the customer at the center, but at the top here, this is what I want to focus on in this video is the strategic problem.

Too many companies that I work with will show me their strategy at best if they have a strategy, but too many companies, they have a strategy more than that. You could check out my other video where I walk you through the difference between strategy and planning. So be sure to check that out if you haven't already, that's really important, but companies will show me whatever document they have, whether it's their strategy or their strategic plan.

And oftentimes I'll scan through it. And number one, I won't find the customer mentioned that frequently. That's a whole nother issue, but the bigger issue is that they don't identify the problem they're trying to solve or overcome with their strategy.

And that's why this is such a critical first step. Now I was working with a business owner just the other day and he said, Steve, instead of calling it a strategic problem, can we reframe it and make it more positive and talk about it as an opportunity? And I said, okay, we're not going to do that. We're not going to wordsmith things.

We're not going to just make sugar coat it. We want to identify what is the biggest obstacle that is getting in the way of a company achieving its fullest potential. Think about it.

You have this team right here, all these excited people on a team and in the way is this problem. This is the strategic problem right here. And the company has to get over the strategic problem if they want to achieve this treasure chest of whatever this is, right? So this, let's just say this is the company's purpose, the whole reason why they exist, why they're in business or their shared aspiration or whatever may be this winning this pot of gold, this treasure on the other side of this wall, this obstacle is where the leadership team exists in this organization.

And if a company cannot clearly identify what that problem is, then they're not going to be able to clearly identify what strategy they need to put in place to overcome that strategic problem. That's why it's real critical. You don't want to start identifying opportunities.

We're not there yet. This framework right here will help you to explore possibilities and opportunities, but you won't even know what to explore if you don't first start with your strategic problem. So that's what I'm going to help you do here in this video.

So let me keep going here. Now, if you feel like you have clearly identified your strategic problem in your organization, respond with either a yes or no in the comments box right now. Okay.

I want to hear from you. I want to know where you're at right now in the strategy journey. Now with a strategic problem, you have to start here.

You have to spend a lot of time identifying this. Sometimes I'll work with companies for days or for weeks to clearly identify this. And sometimes this isn't fun.

Let's face it because you're pointing out the problems of the organization. And oftentimes that requires us to take accountability and responsibility for our leadership because maybe we've caused these problems or maybe the problems are external, but there's a formula that you can follow to identify the strategic problem and to put it in a very clearly articulated statement. So the first part of a strategic problem statement is going to include the problems.

The problem or the issues that your company is currently facing. Now, the reason why this isn't called a strategic problem statement is because you have to get really macro and you do this by asking why five times, that's a really great resource that you can use or a tool rather to figure out what is the root cause of all these interrelated problems within a company. Because otherwise some people will come to me and they'll say, Steve, we have like three or four problems.

How do we refine it down to one? And I'll say, well, ask why five times. So if you say, Hey, look, our number one problem is that we can't fulfill customer orders. And I'll say, okay, well, why can't you fulfill customer orders? Well, because our process is broken.

Well, why is your process broken? Because we don't have the right technology in order to track these processes. Okay. Why don't you have the right technology? Because we don't have the capital in order to, you know, buy this technology.

Well, why don't you have the capital? And it's like, well, because we can't raise our prices. Bingo. There it is.

It's a pricing problem. That's causing all these interrelated problems. And that's why when you ask why multiple times, you can get down to the root cause.

So that's a super helpful tool. But what we want to do is identify the problem or these issues, which I'll get into that are leading to this, this bigger obstacle, then the second part. So I'll put plus number two is you want to identify why this is happening.

Abbreviate why this is happening is number two. Number three is we want to list out the implications or the consequences if you fail to take action. So you don't have to follow this exactly.

This is what I've used multiple times. It's been helpful to me. Maybe you have a different way of doing it, but these three parts have allowed me to successfully identify the strategic problem and put it in a statement that everybody can get aligned on and to start taking action.

So I have an example here. Let me try to write it out. I have a sticky note as a cheat sheet because I don't have this memorized, but I just did this with a company recently.

And this is their strategic problem that they identified. Profit margin and growth are suffering, right? This is the first part, the problem, the issue that they're dealing with. Profit margin and growth are suffering.

Okay. Profit margin is declining. Growth is stagnant.

The business is really struggling here. Here's the second part. Why is this happening? They've identified due to increased competition.

I'm abbreviating here and a lack of differentiation, meaning that the market is commoditized. Every company looks like each other. There's not a lot of differentiation.

So therefore the customers have a lot of choices and that drives margins down lower because competition is more fierce. Now here's the third part, the implications, the consequences. If we cannot optimize our processes, strengthen the talent base and improve bandwidth, then we may struggle to survive.

I wanted to write this down on the board so I can break this down for you. And you understand how it combines back into these three parts. So first the problem or issue at a hand, like I mentioned, the company is dealing with profit margin and growth issues.

That's the core fundamental problem that the company is experiencing right now. Okay. Why is this happening? This is happening because competition is increasing and there's this lack of differentiation.

All right. So that's part number two. If the company cannot optimize its processes, strengthen its talent base and improve its bandwidth, guess what? It will struggle to survive, which means it may go bankrupt, right? Draw a little picture here.

This is Sayonara to the company. Now, the reason why the strategic problem is so important to identify is because when we go back into these four quadrants, shared aspiration, market focus and position, competitive behavior and resources and returns. Ultimately, as the strategy then leads to the company, identifying what we call at Coltivar I A R S initiatives, actions, and results.

Guess what? This statement better be aligned with the that the company is pursuing. Otherwise there's going to be this major disconnect. And that's why I love spending so much time up here on the strategic problem and getting this right.

Because when you can nail this and you can clearly articulate what's going on here based on these three parts, then your initiatives will be aligned with your strategy and you'll be focused on the things. If you create a well-defined strategic problem and then you look at the initiatives and the initiatives are totally off the wall, then you're going to know that your strategy is not going to drive the results that you want to achieve. In other words, they're dealing with profit margin decline in stagnant growth because they don't have optimized processes.

They don't have a strong talent base and they don't have improved bandwidth. Well, guess what? Here are their initiatives right here. Optimize their processes, strengthen their talent base and improve their bandwidth.

If their initiatives instead appear or let's redo the website. Okay. That's not an initiative number one, but let's just say it is.

And it's like, okay, how's that going to improve your processes? How's that going to strengthen your talent base? And how's that improve your bandwidth? You're just pursuing initiatives that are just vanity initiatives. And that's not going to take your company where it needs to go. So that's why I love this framework.

Does this make sense to you? If it does, can I get a yes in the comments box below? Also, like I said before, I would love to hear from you. So please provide some feedback because this will help me to know what I need to focus on in future videos. All right.

Good luck to you. As you put this in place within your organization, make sure you take the time upfront to identify your strategic problem. Because when you do that, you're going to be in a great position to maximize value in your organization and to build an iconic company.

Remember to subscribe. So you get notified every time I drop a new video like this into the future. And in the meantime, take care of yourself.

Cheers.