Four Types of

Problem Solving

by Art Smalley

Not For Sale or Reproduction

Lean Enterprise Institute

Cambridge, MA, USA
lean.org

March 2016
 Introduction
There is no shortage of problems today. Social problems, business problems—every
organization in every sector encounters problems daily that they confront, avoid,
or fail to even recognize. Naturally, we want to solve each problem we face. There
are many books and training classes on problem solving and you probably have
read many of the books and attended such training. But problem solving as a skill
seems stuck in first gear or, worse, to have slipped into reverse. That’s why we think
it’s time to step up and help others understand and coach the art and science of
effective problem solving.

Why Problem Solving?

Problem solving is arguably the most fundamental of human activities. We breath,
we eat, we sleep. Breathing and sleeping just happen. Then we get hungry or we
might get cold. That’s our first problem to solve. To be human is, quite literally,
to solve problems.

So the question of how to go about solving problems effectively is fundamental to

the reality of our daily existence. And it is certainly fundamental to what it means
for us humans as we organize ourselves for industrial endeavors. Any company
pursuing any form of improvement is well-advised to consider deeply this topic of
problem solving. Without question an organization with only pockets of problem
solving ability will struggle in the long run. An organization with an army of
problem solvers is much better suited to face the challenges of the competitive
marketplace. More powerful yet is the company that has problem solving capability
embedded throughout the organization. For this book that’s our starting point—
problem solving as part and parcel of industrial endeavor.

Industrial problem solving has been around as long as industry. As seasoned

problem solvers often note, there is little new under the sun when it comes to
problem solving. Logic, critical thinking, mathematics, and quality tools have

2 4 Types of Problem Solving

played large roles in the development of modern problem-solving. The industrial
revolution was, in itself, a problem-solving effort on a grand scale in terms of how to
be more productive. Humans came to live in ever-larger communities, producing
goods that both satisfied demand and created more of it. In turn, demand for ever
greater efficiency to make things better led directly to the need for problem
solving on a very practical level.

What Are Problems and What is the Problem with Them?

We have a problem with the very word problem. A problem sounds like a very bad
thing indeed. According to Dictionary.com, a problem is “a matter involving doubt,
uncertainty or difficulty; a question proposed for solution or discussion; or, in
mathematics, a statement requiring a solution”.

Lean thinking on the other hand defines a problem simply as the gap between the
way things are and the way we would like them to be. Recognizing problems as
welcome opportunities to improve any situation is arguably the most important
charracteristic of a continuous improvement organization. Hiding problems is,
conversely, the most intractable trait of any organization that wishes to improve.
As we like to say, “No problem is a problem!”

But no less an authority than the Oxford dictionary gives us this definition of a
problem: “A matter or situation regarded as unwelcome or harmful and needing
to be dealt with and overcome”. Contrast this with the middle English definition
(from old French, Latin and Greek) which defined a problem simply as a riddle or
question for discussion. Ah—that we could return to such simpler times!

So now we have this term—problem—that represents a concept that is essential

to lean thinking but that is loaded with negative, even anti-lean, nuance. What to
do? One option: use alternative terms. So some choose to refer to problems as
“opportunities”. But, an opportunity implies a situation in which taking action is
optional. But, when our product doesn’t’ work as intended for a customer—when
the brakes don’t stop the car – taking action is no option: it is mandatory!

So, in this guide, we will call a problem a problem with the aim of making us all
better problem solvers.

Introduction 3
 Why a Book about Problem Solving?
The purpose of the book is to address a very big concern. There is much noise in
the lean community and beyond that creates confusion around this important topic
of problem solving. What is a problem? How do we go about addressing them?
There are many methods and models of problem solving out there, and many of
them may have their place depending on the circumstance. The intent of this book
is to provide a framework, a context, to help serious problem solvers think about
the picture of problem solving and continuous improvement in a holistic way.

There’s not just one method that is best for all problems. But no “one best way”
does not mean there is not some basic thinking—a framework—that can make
sense of the many ways that problems come at us. So, what does lean thinking, or
Toyota thinking, have to say about all that? That’s the promise of this book—it’s
not a how-to-do book so much as a how-to-think book.

With this book we present a comprehensive body of problem-solving knowledge

in a format that we hope is easy for beginners to grasp yet useful even for
advanced practitioners. We have several specific goals in mind:

• A reference guide: This is an “owners manual” for individuals and teams

working at solving problems. In every new car, for example, you will find an
owner’s manual in the glove box. You don’t need to look at it every day, but
when you are in trouble, a reference guide is a wonderful thing. Think of this
as your quick and handy problem-solving owner’s manual.

4 4 Types of Problem Solving

 • Minimize problem-solving errors: If we problem solve to resolve errors,
shouldn’t we also do the same with the problem-solving process itself? As
we observe the current state of problem solving in general, we see certain
mistakes being made over and over again. Some of these are simply goofs
that are a part of the normal learning process and contribute to building up
our skill level. No one gets everything right the first time, and learning from
mistakes is a great way to learn. However, other errors and mistaken
assumptions exist that are needless, wasteful, and even harmful. With this
book—by outlining the types, examples, major steps, key points, reasons why,
and some coaching tools for problem solving—we wish to mitigate some of
the confusion and some of the errors we are all prone to make.
• Develop problem-solving skills: Problem solving must be a core part of the
DNA of any aspiring lean organization. It is fundamental lean thinking for
anyone at any level to think critically about work and solve problems on the
job. All skill-intensive endeavors require practice and honing of technique
over time—the same is true for the skill of problem solving.
• Boost effectiveness of improvement efforts: We hope this guide can speed
you along your improvement journey. That’s really what it’s all about, right?
Moving from any current state to an improved state is a transitional journey
by definition. Problems will arise, and it is our duty to solve them effectively
and efficiently as we create better value-creating processes for customers.

What’s in this Book?

The contents of this guide borrow quite heavily from Toyota Motor, where problem
solving is truly core to the company’s very DNA. Employees who remain with
Toyota long enough eventually learn the basic methods or at least the essential
thinking that is presented here. In this book, we’ll highlight basic skills to be
mastered. We’ll also present some skills that go beyond the basics.

Problem solving is an individual skill-related developmental activity and a critical

piece of the respect-for-people that Toyota embraces and that we insist on for all
lean practitioners. However, as the experienced reader will be well aware, problem
solving in general has many roots that go back in history, well beyond the domain
of Toyota-developed knowledge. So we have organized the chapters and progression

Introduction 5
 of this book to provide both a backbone and breadth of problem-solving ideas and
concepts as well as tactical tools to solve the problems you encounter.

In this book you will find:

• Problem-solving influences: Like the laws of physics, many of the problem-

solving concepts developed in past have been proven out by decades of
efficacy and are still highly applicable today. They also are embedded in more
modern problem-solving approaches, which you will find in Chapter 1. This
summary of problem-solving influences will help you understand and better
leverage all problem-solving tools.

• Types of problem solving: There are essentially four different types of

problems that require four different types of problem solving. We explain
the four types in Chapter 2, and in subsequent chapters offer examples of
each and describe their unique application:

– Troubleshooting: a reactive process of rapidly and often temporarily

fixing problems.

– Gap-from-standard problem solving: solving problems in relation to existing

standards or conditions.

– Target-state problem solving: achieving new, better standards or conditions

(i.e., kaizen or continuous improvement).

– Open-ended problem solving: tackling problems when we may not even

know exactly where we’re headed, sometimes in pursuit of a vision (new
products, processes, services, or systems) and often resulting in innovations
that we didn’t even anticipate.

• Seven steps common to solving most problems: Two of the four types of
problem solving—gap-from-standard method (Chapter 4) and the target-state
method, which together can help us solve most of our business problems—
rely on seven common problem-solving steps. So we dig a bit deeper into the
problem-solving routines of these two types, helping you to work through
each step as you solve real problems in your organization.

6 4 Types of Problem Solving

Who is Your Guide for this Deep Dive into Problem Solving?
Your guide for this deep-dive into problem solving is Art Smalley. Art has immersed
himself in the intricacies of problem solving since 1988, when he joined Toyota at
its Kamigo Engine Plant in Toyota City, Japan. At Kamigo, where Taiichi Ohno
was plant manager and conducted many of his famous experiments that led to the
development of the Toyota Production System—problem solving raised to its zenith.

Art learned directly about problem solving from Tomoo Harada, who led the
maintenance activities that created the stability that enabled Ohno’s innovations in
flow to succeed on a large scale. Without basic stability: no just-in-time. Without
problem solving: no basic stability.

Art’s study of problem solving continued from there, including apprenticeship with
Russ Scaffede and Isao Kato, consulting work with clients including organizations
such as Sandia National Laboratories and Donnelly Corp., as well as collaboration
with Prof. Durward Sobek, which resulted in an important book for the lean
movement and is used as a core resource by many lean practitioners: A3 Thinking.

How Should you Use this Book?

Even if you have years of problem-solving experience and know many problem-
solving approaches, please read this book at least once end-to-end. I’m betting
that you will learn things you did not previously know and that you may look at
familiar concepts in a new light. Most importantly, please do not merely read it
and put it on a shelf, never to be touched again. Pull this book out periodically,
whenever you need:

• Help when you are stuck with a problem: This book functions like a repair
manual. Sometimes we cannot remember every detail or nuance for how to
rigorously define a problem or conduct root-cause analysis. At those times we
encourage you to refer to this manual and look at the explanatory steps and key
points as a refresher and for clarification.
• A team guide: We envision teams that are newer to problem solving will use
this book as a team facilitation guide. Keep it with you in the team room where
problem-solving meetings occur. We have incorporated questions throughout for
you and your colleagues to reflect upon and try to answer. This is not a canned
“problem solutions” book; no one can solve your problems except you and your
team members.

Introduction 7
 • A coaching aid: This guide can be used as a way for people to effectively coach
and mentor teams. Simply asking vague Socratic-method type questions is not
sufficient for coaching to solve problems and develop problem-solving skills.
The problem-solving coaches in Toyota were like good sports coaches or martial
arts instructors: they knew the what, how, and why to do activities, and would
readily demonstrate the craft when necessary. Such coaching includes asking very
specific questions or providing very specific technical insights. This interaction
between mentor and mentee is highly situational and dependent upon the
learner, the complexity of the situation, and the needs of the organization. We
share basic insights for those who will be coaching others through problem
solving, knowing that it takes time and effort to develop the skills to address the
multitude of coaching situations that arise—no one size fits all in coaching.

No doubt you will find other uses for this book, and we’d like to hear about them.
Our process at LEI includes a feedback loop from end users for us to learn what
works, what does not work, and how certain tools actually get applied. We look
forward to learning from you how you actually use this guide. We’ll need your
ongoing help in solving the remaining problems with problem solving.

So, just what are the 4 kinds of problems and problem solving, you ask? Read on.

John Shook
Chairman and CEO, Lean Enterprise Institute
Chairman, Lean Global Network

problems
Having no problems is the
biggest problem of all.

— Taiichi Ohno

problems

8 4 Types of Problem Solving

Four Types of Problems Illustrated with the Five Whys

We often break up the four types problems and problem solving and consider
them as separate entities. In reality, the four types are merely lenses through which
we can view most any type of problem. Timing, resources, urgency, necessity, and
priorities often dictate your response. With some problems it is sufficient to apply
troubleshooting methods and then spend remaining time on larger issues that
require more attention. Other situations require the immediate use of different
problem-solving approaches—gap from standard, target state, or innovation. And
certain problems will, over time, require all four types of problem solving.

In this section we will illustrate this point, using Taiichi Ohno’s classic example of
the Five Whys and the personal experiences of Tomoo “Tom” Harada, an engineer
who worked for Ohno in Toyota’s main engine plant. We will show how the problem
—almost always presented as only a Type 2 problem—unfolded over time by the
work of different parties using the four different problem-solving methodologies.

Five Whys Background and Original Problem

The following Five Whys example is often used in problem-solving discussions to
illustrate root-cause thinking required to solve a problem. The basic concept is that
when something abnormal occurs, it is important to pursue the causes in depth in
order to get to a level where you can prevent it from happening again. This style
of thinking does not occur naturally with most people and requires persistent
investigation and thinking—thus, the emphasis on Five Whys instead of just one
or two levels of probing.

The problem involves a machine tool in an engine plant, which stopped working
and halted a production line. The Five Why sequence below involves first a question
and then the corresponding answer:

Introduction 9
 Situation: A machine tool has stopped working halting production

1) “Why did the machine stop working?”

• Because the machine overloaded blowing the fuse in the control panel”
2) “Why did the overload condition result?”
• Because there was insufficient lubrication to the spindle bearing.
3) “Why was there insufficient spindle bearing lubrication?”
• Because there was insufficient lubrication drawn up by the pump.
4) “Why was there insufficient lubrication draw from the pump?”
• Because the pump shaft was worn and rattling.
5) “Why was the pump shaft worn?”
• Because there was no strainer on the lubrication device inlet port, and
small metal cutting chips entered the system causing damage.

Conclusion: In order to prevent recurrence of the problem, the simple act of

adding a strainer to the inlet port of the lubrication device will, with a high degree
of certainty, stop this particular problem from recurring.

The Five Whys presents a good example of a Type 2 gap-from-standard approach

to solve a real problem. This specific problem-solving tack occurred several decades
ago. Now let’s consider this example in the context of the four types of problems.
In reality, Toyota solved this cutting-chip build up problem in different ways over
the years—not just with Type 2. Not every problem due related to cutting chips
was solved by adding a strainer inside a tank.

Type 1 Problems—Troubleshooting
The build up of cutting chips is a natural part of the machining process. A cutting
tool cuts into the metal of the workpiece and physically creates a “chip” that must
then be properly evacuated from the part and the machine. Failure to do so is a
recipe for a variety of issues, such as safety/minor cuts, machine downtime, and
dimensional quality issues.

10 4 Types of Problem Solving

In the early days of the Toyota Production System, cutting chips in machining
operations was a big problem. So big that it was continually listed on hourly
production charts for plan vs. actual production. This represents an historical
example of a common Type 1 problem inside Ohno’s machine shops. Hourly
production totals were often off by a few parts per hour, and the cause was
frequently listed as “cutting-chip buildup,” which necessitated unplanned cleaning
work and machine downtime.

The countermeasure in many cases was to clean the machines at the start, middle,
and end of shift using a variety of mechanisms, including brushes, small rakes,
manual air blow, and additional coolant flushes. Standardized work and job
instruction training was, of course, emphasized as well, but it had only a limited
effect on the problem. Cleaning worked in terms of immediate needs, but it did
not prevent the problem from recurring; a better approach was needed to get at
the real set of underlying issues.

Type 2 Problems—Gap from Standard

As the problem of cutting-chip buildup and contamination continued to occur,
supervisors, engineers, and managers were trained to think about the problems in
a different, fundamental way—Type 2 problem solving.

Leaders, such as Ohno, began to require that the real root causes of the safety,
downtime, and quality issues in machining be addressed more thoroughly. This
emphasis on the Five Whys occurred in the 1960s in conjunction with structured
problem-solving training and execution. Simple daily cleaning, expectation setting,
communication, and training were not enough.

Machine-by-machine and problem-by-problem these issues were tackled by

Toyota in the engine plant with a root-cause emphasis and goal of recurrence
prevention. The root causes of downtime, quality issues, and other abnormalities

What is the gap?

1 2 3 4 5

Current condition Target

An Example 11
 were considered more thoroughly. In the famous Five Whys example, the simple
act of adding a strainer solved this one specific problem, but other problems
required different solutions entirely.

Type 3 Problems—Target-State Improvements

The above problem-solving routines solved most cutting-chip issues in the
machine shops in a narrow sense: in many cases there no longer was a gap-from-
standard problem to be solved, and individual machine performance and
production line performance were achieving their daily goals. But structured root-
cause analysis with convergent thinking patterns (Type 2) wasn’t the only way to
study the problem. The bar for annual improvements within Toyota also had
moved higher, requiring better performance as well. Type 3 target-state problem
solving became both necessary and desirable for further improvement.

Target-state improvement involves first principles of flow, takt time, built-in quality,
safety, reliability, and an attitude of mental challenge. For example, 100% safety,
100% quality, and 100% uptime with a shorter lead time are target-state aspirations.
The act of cleaning cutting chips was viewed as wasteful in nature and also not
respectful of the human operator. Management and engineering looked at the
cutting-chip issue from an “aru beki sugata” or “ideally how should this process
work” point of view. Eliminating cutting chips is impossible, but one can still
consider what is the ideal size of the chip (e.g. smaller is better), how it is formed,
how it flows away from the part, how the machine is guarded, and how the
operator is protected.

This line of inquiry led to many instances of trial-and-error and improvement

suggestions over the years inside of Toyota machine shops. Improved control of
machine feeds and speed, with an emphasis on tooling and chip formation, led to
some improvements. Improved use of coolants, nozzle pressure, nozzle location,
nozzle angle, etc. contributed as well. Modifying the internal bed-plate angle and
fixture portions of the machines also helped cutting chips flow away more
effectively, greatly reducing the need for cleaning. Hydraulic, coolant, and
lubrication tanks were sealed better as well. Improved usage of machine guarding
and safety switches and doors contributed to greater safety.

12 4 Types of Problem Solving

Note that with Type 2 problem solving the cutting-chip problem was solved
outside of the machine, away from the point of generation by adding a strainer to
an external tank. In the subsequent decades the problem was better resolved by
managing the chip at the point of formation, which Toyota often calls “cutting-
point management” or “tooling-point management.” This also included special
routines for tool setting, tool cleaning, tool-holder cleaning, setup and
confirmation, and tooling programs (i.e., standardized work for the cutting program).
This approach represents a Type 3 solution or improvement pattern. The focal
lens for problem consideration was directed at an ideal or target state. This more
challenging consideration did not let the cutting chip escape from the machine,
instead controlling it inside at the source and at a more fundamental level. This
represents a classic example of kaizen and divergent creative thinking, in subtle
contrast to Type 2 convergent root-cause analysis.

Type 4 Problems—Innovation
Normally we think of innovation in conjunction with a product. However, any
area of a service, business, or operations can be innovated and improved. Over
decades Toyota even used innovative thinking routines to further improve
processes of cutting-chip management its machine shops.

The following examples—process technology, sensory technology, and industrial

washer—were not invented by Toyota, but they adapted the concepts to cutting-
chip management and made them work for their respective situation at the time:

Process technology: In the mid-1960s, Toyota eventually adopted transfer

machine technology, which was common in the West for high-volume production
lines. Transfer lines and flexible machining centers are also used today, depending
upon the situation. But in the 1960s, instead of using hundreds of small machines
in production, each with its own chip-management system (coolant flow, air blow,
tanks, pumps, separation system, etc.), larger combined systems were utilized in
transfer machines to great effect. This vastly reduced the number of systems to be
sequenced and managed at the local level and instead placed the burden of work
(and in reality waste) in a more central location where it could be better managed.
It simplified the task of waste management for cutting-chip control. Unlike most
competitors, however, Toyota built its own transfer machines at affiliated

An Example 13
 companies, like Toyoda Machine Works, or internal facilities like Teiho Machine
Tool Plant. This practice along with thoroughly documented machine standards
allowed Toyota to carry over its knowledge gained and best practices from Type 1,
Type 2, and Type 3 problem solving. Type 4 innovation in equipment is often (but
not always) done over longer periods.

Sensory technology: The famous jidoka concept is over 100 years old and dates
back to the loom business of Toyota. However, every generation of production
equipment since has involved greater use of sensory technology by Toyota process
designers to enhance safety, build in quality, and prevent equipment downtime.
Today sensors and lasers can check dimensional accuracy of work in process as well
as cleanliness of tools and critical work surfaces. In the continuing spirit of jidoka,
problems or abnormalities are highlighted before the machine can even cycle.

Industrial washers: No matter how carefully you manage cutting chips, some still
adhere to the part and must be removed by an industrial washer before the part
can be assembled into a precision engine. Every manufacturing company faces
similar problems requiring cleaning. The answer for decades at Toyota and other
companies was to utilize industrial-sized washing machines with pressure nozzles
mounted inside the machine and moving conveyor lines (like
a car going through an automated wash system). Every generation the washer
became larger, more expensive, more difficult to maintain, and harder to keep
clean. Some cutting chips still tended to remain, especially on square objects such
as cylinder heads or cylinder blocks.

One day an employee questioned the whole system design. The idea of using high
pressure nozzles outside the part to spray inward (pushing the chips further inside)
struck him as incorrect. What if (hypothesis) the part was simply dunked in a tank
via a robotic arm and swished around with an agitated motion. Wouldn’t this process
work better and be far simpler? Several experimental tests were conducted and the
multi-dunk tank and agitate solution was found to be far superior: cleaning the
problematic parts of foreign debris. Cost, ease, operation, space, energy, flexibility,
and every other dimension were considered.

14 4 Types of Problem Solving

Summary
The Five Whys examples of a simple cutting-chip control problem show why it is
necessary to consider a basic problem from different vantage points over time:

• Type 1 troubleshooting (daily cleaning and troubleshooting) helps

immediately, and often solves the hourly or daily problem, but it usually
fails to prevent problem recurrence in the long run.

• Type 2 gap-from-standard problem solving (use of strainers) emphasized

root causes at a more fundamental level. It strives to solve more persistent
problems and prevent them from recurring. This approach relies on
deliberate and convergent styles of thinking about actual cause and effect
relationships.

• Type 3 target-state problem solving (cutting-point management) presented

a more creative way to solve the problem, led by divergent and open-ended
thinking routines. The heart of the approach involves considering ideal-state
scenarios, which prevent or eliminate the problem from occurring at a more
fundamental level.

• Type 4 innovation routines (new equipment) build further upon the target-
state thinking of the previous approach and are even more open-ended. This
also can involve new technology and require a willingness to experiment with
completely new ideas.

Learn to use the four types of problem solving properly, and review improvement
potentials accordingly. There is no one way that necessarily works best all the
time. Whether you troubleshoot, solve a gap-from-standard problem, create a
target-state improvement, or seek innovation depends upon circumstances,
priorities, resources, timing, necessities, etc. Thoroughly understanding all the
types for improvement will help you foster greater improvement in the long run.

An Example 15
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