The Impact

 No description of a problem should be considered complete without some explanation of the impact. Impact is simply stated as the result of not solving the problem. All statements of impact should have a cost, a timeline to realize the impact, and a likelihood or probabibility of realization. None of these are precise measurements, because measurement would only be valid after the impact was realized. These are informed conjecture.

Let me walk through an example:

In a manufacturing plant, a piece of equipment essential to making hottentot widgets breaks down. We are currently manufacturing to back fill our inventory, and do not have any open customer orders for hottentot widgets. This piece of equipment is one of two that are capable of doing the required work, so that I can continue to manufacture, but at half speed.

In this case, impact is only realized after I have sufficient customer orders to exhaust my inventory of hottentot widgets, and insufficient capacity to meet my customers delivery expectation (causing my customer to cancel the order and place with an alternate supplier). The immediate cost would be the profit on the canceled order. A subsequent cost might be that the customer would then favor the alternate supplier in a way that causes me a longer term loss of profitable business.

Given that I have three clients who purchase hottentot widgets regularly, my timeline to the immediate cost would be determined by the normal schedule for those clients and my current inventory. The probability of this impact would be realtively high 95% – in that if I don't fix that machine, it will happen. The longer term cost might only happen on one client, and only after two missed ship dates, amybe only with a 60% probability. This second risk can be mitigated by byuying the widgets from the competitor myself and selling them at a loss to keep my customer happy.

Let's say that the immediate cost is $10000, and the timeline to realization is 2 weeks, with a probablility of 95%. That is an easy impact to understand. If I have the machine fixed with 2 weeks, there is a strong likelihood, I can get by with no impact. Call the service company and schedule the technician. However, if by the middle of week 2, things have not been resolved, I might get a little excited. I would probably be calling the service provider daily or more frequently, escalating with their management, potentially threatening to use a competitor if they can't meet my need.

Understanding the impact in terms of the cost, timeline and probability are important to assessing the urgency of a solution. They tell me when I need to get out my cape and tights, and when even that is too late. More than anything, they allow me to manage my customers' and my management's expectations and to react to their concerns in ways that build confidence and credibility.

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