M1- application of bulletproof framework of problem solving

ASU W.P. Carey School of Business

  • Arizona State University

  • Dr. Asish Satpathy

Application of Bulletproof Framework of Problem Solving

Learning Goals

  1. Application of Bullet-Proof Problem-Solving Framework

  2. Case Study: Carey's Extreme Sports

Case Study: Carey’s Extreme Sports

  • Overview: A multi-million dollar online shop for extreme sports.

  • Target Audience:

    • Typical customer demographics: College students, ages 20-40.

    • Early in their professional lives, passionate about extreme sports.

  • Central Question: Should a brick-and-mortar store be opened in Tempe, Arizona by next year?

Remember: The Seven Steps of Problem Solving

  1. Define the Problem

  2. Disaggregate

  3. Analyze

  4. Prioritize

  5. Workplan

  6. Communicate

  7. Synthesize

I. Problem Definition

  • Emphasize that the problem statement must be specific, clearly measurable, and answered within a defined timeframe.

  • Geographically bound problem:

    • Issue at hand: Is Tempe, AZ a viable location for a physical store?

  • Problem Statement: Should the company open a brick-and-mortar store in Tempe, Arizona by next year?

II. Problem Disaggregation

  • Break down the main question:

    • Is opening a store in Tempe profitable?

    • Will opportunity costs be low?

    • Is there sufficient initial investment capital?

III. Prioritize the Issues

  • Evaluating key factors:

    • Profitability of the store

    • Opportunity costs involved

    • Adequate initial investment capital required

    • Revenue generation and break-even timeline

    • Meeting high customer demand

    • Costs considered:

      • Real estate

      • Inventory and technology (e.g., POS systems)

      • Employee salaries

      • Marketing and advertising costs

IV. Workplan and Timetable

Analysis & Responsibilities

Issue

Hypothesis

Analysis

Source

Responsibility + Timing

End Product

Revenue generation

Significant additional revenue anticipated

Assess current revenue & market size

Company books

David: Monday 9 am (in 2 weeks)

Graph/Chart indicating growth

Product demand

High demand for products in Tempe

Assess current demand & growth

Current sales data

Amit: Tuesday 9 am (in 3 weeks)

Demand chart for current/future

  • Use Gantt chart to manage project deliverables over a longer timeframe.

V. Conduct Critical Analysis

  • Identify factors impacting future revenue

    • Regression analysis for revenue modeling

    • Monte Carlo Simulation (M.C.) to validate forecasted revenue vs current revenue

    • M.C. Simulation to test if demand may continue to grow

VI. Synthesize Findings from Analysis

Return on Invested Capital (ROIC) Analysis

  • ROIC= Operating Income/Net Sales

  • Structure arguments in terms of Online vs. Brick & Mortar

    • Analyze various financial components contributing to net sales and profitability

Argument Structure

  • Clearly define:

    • Problem

    • Causes

    • Solutions (Recommendations)

VII. Prepare a Powerful Communication

  • Effective communication strategies:

    • Explore various storyline structures to ascertain clarity and impact

    • Use a storyboard for slide deck organization, ensuring logical progression of arguments.

Conclusion

  • Understand that good problem solving is a process rather than a quick calculation.

  • Importance of analysis methodologies, from simple estimates to sophisticated tools, is crucial for the success of problem-solving.

  • Final step: Synthesize analysis results to form a compelling narrative that facilitates decision-making.

Takeaways

  • Next Topic: Aligning Excel Functions with Problem Solving.