In any performance improvement projects, the sustainability of improvement depends on addressing the root causes of problem dragging down performance. Unfortunately, most organizations skip the difficult process of root-cause analysis in favor of quick, reactionary, patch-up measures that do not result in sustainable improvement.
A client of mine was having major problems with customer retention because of multiple service-related issues. A customer would call complaining about having received the wrong part and the client would go into firefighting mode: they would assign an Inside Salesperson to expedite pulling the part from the warehouse and overnighting it to the customer, a process that took a few hours and cost a lot of money. Then the supervisor would find out who made the error and talk to them. They went as far as terminating a couple of employees, but their problems didn’t cease and their customer attrition was quite higher than that of the rest of the industry. Surprisingly, this is a common case in many companies: they spend a good deal of time on putting out fires that keep erupting and never get to prevent these fires from recurring.
The main reason for continuing to suffer from such problems is not complex. In fact, most of us have seen it happen time and time again: a problem occurs, everyone goes into emergency mode to rectify it, and once it’s been corrected, life happens and everyone gets too busy to ask what really caused it and how to prevent it from recurring.
One way to cure this malady is establish a root-cause analysis framework to deal with any problems. One such framework is illustrated in the diagram below. While simple, it is not easy to implement. It consists of four main components:
- Identify a problem that has occurred or may occur. This requires the establishment and regular review of performance indicators that not only act as a gauge to performance, but also raise a red flag when things go wrong.
- Prioritize the problems to work on. In most organizations there is an abundance of problems to resolve. In order to maximize the return on investment, it is important to concentrate on resolving high impact problems.
- Analyze the problem to learn the root causes. Because there may be many different causes to a problem, it may be necessary to re-prioritize in order to tackle the high impact causes. This is why there is a feedback loop from Analyze to Prioritize.
- Resolve the problem by removing the root cause.
Applying the above framework is not difficult, but changing an organizational culture to ensure its application is. In the next installment we’ll go into more detail on application and some of the tools used in the implementation of the principles above. We will also go through a couple of case studies that illustrate the application of this framework.