Did you know that a large chain store could easily have a trillion numbers to look at to help its decision-making? (More about that in next week’s post.) Suffice to say that picking the right number to focus on is important, and of course identifying interpreting the underlying problem is the most important.
One popular method of solving problems is ‘root cause analysis’. This is the science of getting to the root cause of problem.
I am going to generalise here, but I as far as generalisations go, I reckon this is a pretty good one:
Most people confuse symptoms with problems.
How often have you heard people identify the following as problems?
- Poor sales volume
- Poor product quality
- High levels of shrinkage
- High staff turnover
I could go on, but you get the picture.
None of these are actually ‘problems’ if you apply the principles of root cause analysis. (For those familiar with my work, this is where the famous chocolate mud cake analogy comes in.)
The ‘problems’ listed above are actually ‘outputs’ – which are by definition the result of something else. This “something else” is probably the root cause of the problem, and these ‘problems’ are nothing but symptoms…
Discover the root cause of a problem by asking yourself ‘WHY’ until the answer you get is ‘because…’.
Do you have poor sales?
- Why? A: Insufficient customers…
- Why? A: They don’t know where we are…
- Why? A: We have never told them…
- Why? A: We don’t know how…
- Why? A: We haven’t learned how…
- Why? A: Because we just haven’t…
This approach reveals that the real reason for the lack of sales is that the organisation lacks marketing skills.
If the answer to the first question was different, then the decision path would look very different and the solution – that addresses the root problem – would be very different.
The funny thing is, when you are looking at organisations (as opposed to production lines), the root problems are very often lack of training. It stands to reason therefore that the single most important thing that you can do to solve the problems – and even prevent problems, is to have a well-trained workforce.
Let me illustrate from our business:
A prospective client was apprehensive about implementing a training program. His concern was that because his staff turnover is so high, it isn’t worth it.
All he had to do was ask himself ‘WHY’ his staff turnover was so high and he would have realised that ‘staff turnover’ wasn’t the real problem.
(We never did the deal. He wanted a guarantee that it would not cost him anything. With the government subsidies in place that may well have been the case, but I prefer not to do business with people who buy training only because it is free.)
The million dollar question(s):
- What are the real problems in your business?
- Are you addressing the root cause or putting a band-aid on the symptom?
PS: TWO NEW YEAR GIFTS FOR YOU:
PS1: I have a root cause analysis template in the library here. It is quite detailed and has been designed for a manufacturing environment, but you are welcome to give it a crack.
AND, there are some US stats for GMROI benchmarks (department store categories) here if you are interested.
(And if you want to chat about why your staff turnover is so high… you know where to find me )
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