Join Mike Figliuolo for an in-depth discussion in this video Breaking big problems into small problems, part of Solving Business Problems.
At one point, I worked for the financial services firm, and we had a program where we were making offers to consumers. And when that program first launched, we were making about $5 million a year. The problem was, after a few months, we started losing $5 million a year. So this was a huge issue. And there were a lot of things that could contribute to it. So we used the problem solving process to get a better understanding of what issues are really driving the problem before we rush off and solve it.
So we broke it down in, into what's called the logic map. And we looked at technology. We looked at training. We looked at systems. We looked at hiring. We looked at processes. And we broke that really big problem down into smaller issues that we could bite off and actually solved. Now the good news is, once we broke the problem down, we identified the core issue, followed the rest of the problem-solving process, and turned that program around from losing $5 million a year to actually making $20 million a year a few years after that.
So let me walk you through what a logic map is, and how you can use it to break down your own problem solving. So, let's imagine we have a problem where profits are down. So in the logic map, what we're going to do is take profits and break it down into its component parts of revenue and cost. And by doing so, what we've done is taken a larger problem and broken it down smaller. But those are still large issues to try and solve. So let's use the logic map to break it down further.
We'll break revenues down into volume and price. And further break down our volume in to current customers and perspective customers. And by doing so, we've taken a really large item that we wouldn't be able to solve easily and broken it down into smaller parts that are going to be much easier to figure out. Now you need to make your logic map complete, you can't just stop there, because we want to identify what all the possible issues are.
So we need to look at the cost side of things. In terms of cost, maybe we're buying more, or we're paying more for the things that we're buying. And in terms of paying more, potentially that's an issue where we're getting fewer discounts, or base prices have gone up. So by breaking that logic map down and saying we had a profit issue, and really walking it all the way through the smaller and smaller components, the problem gets a lot easier to solve. Now there are multiple ways that you can break your logic maps down.
It's not always about revenues and costs. Sometimes you'll break it down and it's a sales problem, and you look at, we have product A, B, and C. And that may be the first level of your logic map. Or you may break things in terms of short-term, medium-term and long-term challenges. You may break it down like I broke down that financial services one where we looked at HR, and technology, and processes. So, they're going to be multiple ways that you can break your logic map down. And as it's called, just break it down logically in a way that will logically make sense.
And blow it out to a level where you can start seeing some of the smaller solutions potentially emerge. So what I'd like you to do is take your personal problem, your personal challenge. Take that pinned problem statement that you generate in the first step, and then generate a logic map that starts identifying what all the issues are that are contributing to your particular problem.