Strategic Issues Diagnosis and Problem Analysis

Introduction
A strategic issue is essentially an issue - an unresolved question (i.e., a fundamental policy question) or critical challenge needing a decision or waiting for some clarifying future event. It is strategic in that it affects or has a major impact on successfully achieving the organization's mission. It is an issue that must be resolved if the organization is to achieve its mission.

An organization may believe that the strategic issue will be relatively easy to resolve or extremely difficult or even impossible to resolve (or somewhere in between). The degree of difficulty should not be the focus, but rather, the focus should be on the degree to which the issue is an obstacle to the organization achieving its mission. ​The identification and prioritization of strategic issues sets the strategic focus for the development of strategies.

The strategic issue is derived from the facts and data provided by the external and internal analysis and its synthesis through the SWOT model. Strategic issues are triggered by any one of a myriad of organizational issues or events of strategic relevance, such as:
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1. Mandates - Issues related to carrying out mandates successfully.
2. Mission and values - Issues related to successfully accomplishing the mission.
3. Stakeholders - Issues related to meeting stakeholders' expectations.
4. Internal Analysis - Identifying the strengths and weaknesses of the organization and Issues related to successfully leveraging the organizational strengths such as resources, structure, processes, management, product offering, financing, or organizational design; or avoiding weaknesses.
5. External Analysis - Identifying the Opportunities and threats and Issues related to capitalizing on those opportunities - clients/customers, users or payers, or mitigating threats to minimize risk of loss. 

In order for an issue to be raised and resolved effectively, the organization must be prepared to deal with the conflicts associated with the issue. Strategic issues by definition embody conflicts. These conflicts may be over ends ("what"); means ("how"); philosophy ("why"); location ("where"); timing ("when"); and who might be helped or hurt by the different ways of resolving the issue ("who").

Strategic Issues Diagnosis
Strategic issues diagnosis is a problem formulation process involving strategic decisions and decision-making processes to identify problems underlying strategic issues that are of strategic relevance, and deciding on potential courses of action (strategies) to pursue to resolve those problem(s). Strategic issues diagnosis defines the methods/process for identifying strategic issues and problems facing the organization. Deciding how to solve the problem, i.e., strategy development, creates the need for more information and analysis. 

Strategic Issues Identification
Strategic issues identification focuses organizational attention on what is truly important for the survival, prosperity and effectiveness of the organization - and provides useful advice on how to achieve these aims. The strategic issues identification step focuses organizational attention on what is truly important for the survival, prosperity and effectiveness of the organization - and provides useful advice on how to achieve these aims. It is vital that strategic issues be identified and dealt with expeditiously and effectively if the organization is to survive and prosper. An organization that does not address its strategic issues may be unable to head off threats, and unable to capitalize on important opportunities, or both.

Problem Formulation 
​Strategic issues must clearly relate to specific strategic problems facing the organization; additionally, they must be specific to the particular organization or industry. Analysis is the process of organizing and presenting information in an analytical way/manner that assists in better defining the problem scope or narrowing  down its causes so that solutions may be more effectively created. This includes such things as determining what caused the problem, why does it continue to exist, will it go away on its own, how long has it existed, how serious is it, how soon does it have to be solved, and what internal and external factors contribute to the problem. 

Problem Analysis
​Problem analysis requires you to build a model of the problem, collect some data and information to test your hypotheses and assumptions underlying the problem to even discover what the real problems are to solve. The process is akin to an "empirical discovery loop" that enables systematic discovery and formulation of problems in complex real world situations such as strategy and policy making. Deciding how to solve a problem once its been stated creates the need for more information and data gathering, and analysis and synthesis.

Problem Statements
Defining problems of strategic relevance is hard because identifying these problems are difficult, partly because of complexity induced by the complicated structures of these problems, uncertainty due to incomplete information, and turbulence in the environment. Strategic issue problems are cross-functional in nature and have major long-term consequences for the organization's success because they impact the organization's competitive position - performing better than rivals/competitors. A strategic issue problem is composed of many interrelated sub-problems, possibly from different domains, e.g., such as expressed through business architecture domains, etc.
 
A problem statement for a strategic issue is based on a model comprising three (3) elements:

1. Description - The issue should be described succinctly, preferably in a single paragraph. The issue itself should be framed as a question the organization can do something about.
2. Factors - Factors that make the issue a fundamental policy question should be listed. In particular, what is it about mandates, mission, values or internal strengths and weaknesses, and external opportunities and threats that make this a strategic issue?
3. Consequences - The organization should state the consequences of failure to address the issue. A review of the consequences will inform judgments of just how strategic, or important various issues are. 

The problem statement describes the problem scope, variables and factors, and narrows the assumptions of cause-effect relationships so that potential solutions may be more effectively explored.

Strategic Issues Diagnosis Outputs/Results
The substantive outputs of strategic issues diagnosis are assumptions, cause-effects understanding (beliefs), predictive judgments, and symbolic language labels. These elements facilitate decision-making during the strategy (solution) development stages of strategic planning.

• Assumptions - Assumptions are premises, conditions, events or attributes that are or must be taken as 'given' or true by any individual or group in exploring a strategic issue or problem. They are those data points, facts, or beliefs which in the view of individuals represent elements of the world around them. 
• Cause-effect understandings - In the course of resolving an issue or problem individuals generate understandings of how various events/conditions and concepts relate together in a causal manner. These beliefs are like the causal links which comprise cognitive maps except that they are specific to a particular strategic problem/issue.
• Predictive judgments - Predictive judgments are judgments that involve assessments of future events surrounding a strategic issue or problem. Assumptions and cause-effect understandings, tacitly accepted or consciously explicated, are crystalized in the form of predictive judgments. Some examples include: Estimates of the likely effects of changes in such variables as marketing expenditures; definition of market boundaries; cash flow projections based on current or desired portfolio; R&D expenses and investment intensity on performance in ROI, cash flow, and/or market share.
• Symbolic Elements - Language and label for defining domain concepts. 

These elements can constrain or facilitate strategic decision-making during the issues diagnosis and subsequent strategy formulation stages of strategic management. Strategic decision making requires the decision makers to provide judgement, evaluation, and insights into the problem definition. 

Solutions (Strategy) Formulation
Defining solutions to strategic issues' problems is a problem solving process that results in the formulation of a set of strategic alternatives/options. A solution - option/alternative - is a set of hypothetical solution approaches to solving the problems identified from strategic issues diagnosis. Solutions lead to the generation of possible strategic objectives. 

Linking Strategic Issues to Strategy Formulation and Mission
A solution may link strategic issue(s) directly to strategy formulation. The strategy derives most of its content directly from the strategic issues. This content is restated and augmented with additional information in the form of decisions - captured in a formal model - which clearly enunciates the organization's vision as to future course and direction. Formulation involves crafting appropriate strategies to respond to the strategic issues/problems, and is an intellectual and entrepreneurial endeavor. It often requires you to build a model of the problem, collect some data and information to test your hypotheses and assumptions underlying the problem, to even discover what the real problems are to solve. A model of the strategy allows us to explore and evaluate the upside potential, the downside risk, the resource consumption and the probabilities of success for the alternatives, and select the best direction.

Strategic issues may also link to the mission - defines the future role of the organization and organization goals - general and continually intended results necessary and sufficient to satisfy the organization's concept of success. This is a two (2) relationship: (1) these may arise because of the recognition that the organization is not fulfilling the commitments made in the mission statement; (2) the content of the mission statement and goals reveals some misalignments. These lead to identification of those strategic initiatives required in the next year or so to close the gap