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Getting to the Root; The Bottom Line to Solving Problems - part 1 - Stanford Management Consulting

Tips and Tools“Julia, you are always saying WHY, WHY, WHY, WHY, WHY! What is so important about why?”

All businesses have problems. The problems in a small business are unique for many different reasons. One being we wear so many different hats that problems tend to be pushed aside to be dealt with later. Pushing them aside leads to small problems becoming big expensive problems. This is why it’s important that we learn to tackle the problems quickly and effectively by getting to the root cause and implementing a proper solution.

What is a Problem?

A problem is a deviation from acceptable performance.

There can always be a gap between what is actually happening and what is supposed to be happening. By solving the problem that is causing the issue we will close the performance gap.

Why Solve Problems?
Where problems exist but remain unsolved the following can occur:

  • Demotivation of staff/self
  • Loss of customers
  • Waste of resources
  • Reduction of profit
  • Compromised growth/survival potential

Solving a problem effectively leads to:

  • Increased productivity
  • Increased enjoyment at work
  • Less stress
  • Improved quality
  • Improved efficiency

Every business has problems.  Problems are just opportunities to make improvements, forcing us to make necessary changes that will eventually show up on the bottom line. To find an acceptable solution to a problem we must first identify the root cause of the problem.

Symptoms are usually the visible manifestation of the problem and because they are visible they can attract attention.  In many organizations, effort is often spent eradicating symptoms of a problem, however the unseen parts of the problem – the root cause, is still there needing attention.

Types of Problems
Each problem category has its own peculiarities that must be taken into consideration when tackling them.
Problems can be broadly grouped into 3 categories:

  • People problems
    These may be difficult to resolve because people are not totally logical and emotions can play a part.  Plus no two people are alike, and what works for one will not work for another.
  • Process problems
    Processes are in place to ensure that everything happens as it should, every time, and by everybody. Usually people are a key element of processes. This adds another level of complexity to system problems.
  • System problems
    Systems are used to execute the process.  These cover mechanical, electrical, electronic, or informational. These problems are usually logical but complex and requiring a high level of technical knowledge.

For the small business, most problems are going to fall under the People and Process categories.

Identifying the Root Cause

To get to the real cause of your problem, you must dig down past your assumptions and excuses.  For example, many small business owners blame decrease profits on lack of sales due to a poor economy.  In reality, the economy doesn’t dictate “if” we do business, it dictates “how” we do business.  In this example, our decrease profits are due to our failure to adjust our business model and control our expenses.

There are many techniques available to help you determine your root cause. We suggest a few simple approaches.

  • The 5 W’s
  • The 5 Why’s
  • Cause and Effect Analysis

The 5 W’s

This is a simple technique that allows you to dig into the problem by asking:

  • What
  • Where
  • When
  • Who
  • Why

You may also ask How.  This technique gets you to dig into the problem in more detail so that all available information can be gathered.

  1. What: We are over budget on expenses.
  2. Where: We are over budget on Travel/Entertainment/Meals
  3. When: Month/Quarterly (the month of May)
  4. Who: Me
  5. Why: Went to multiple unplanned Networking events

The 5 Why’s

This is another simple technique that allows you to strip away layers from the problem and tackle root cause. This technique can be used alone or in conjunction with the 5 W’s.

  • Ask why the problem occurred
  • Get an answer and ask why it is so
  • Do this 5 times to reach a depth of 5 layers of causes.

Depending on the problem, you may not need to do this 5 times. This method begins to give robust information beyond the third Why.

We’re over budget:

  1. Why? Sub-contract labor was over budget
  2. Why was sub-contract labor over? Sub-contractor double-billed us
  3. Why we were double billed? It wasn’t a double bill, labor hours for 2 months was actually billed in 1 month.
  4. Why were we billed incorrectly? We failed to make a change order for extra labor hours.
  5. Why did we not make the change order? Bookkeeper failed to enter job costing.

So the root cause of our problem is a training issue with the bookkeeper.

Cause & Effect Analysis
Our third simple technique forces you to focus on possible causes of a problem. Once you identify possible causes of a problem you can analyze each to get to the root cause.  You may find simple solutions or links several problems to one root cause.

  • Identify all possible causes of the problem
  • Write them on Post-it stickers
  • Begin to analyze and cluster the potential causes
  • Analyze for root cause
  • Test the reality of each cause

Benefits are:   

  • Focus is on the cause
  • Different perspectives emerge
  • Allows linkages to be established

Now that you have identified the root cause of the problem, you must develop and implement a solution. And the rest of the Root Cause story is…until next time!

Click here for part 2