I spend a lot of my time in a wide range of businesses helping them to identify and implement measures to improve performance.  These types of assignment generally start with a review of the current state of affairs (the ‘as-is’ situation).  Whether I am working with operational processes, technology, organisational structure or governance, a consistent theme is that the problem I am investigating has been exacerbated by implementing ‘quick fixes’.  These fixes could be a combination of additional controls, new policies and procedures, governance or other regulation.  Inevitably this creates more work, reduces efficiency and can introduce new risks.

This propensity to implement a quick fix is only natural and is often a knee jerk reaction to a crisis.  As well as happening at a micro-level within a business process, it also happens at board level and indeed by governments when attempting to deal with a national crisis, as we saw with the recent economic turmoil – which I’ll come back to towards the end of this post.

These fixes are generally well intentioned and are implemented with the promise that a long term solution to the problem will be put in place in due course.  This inevitably never happens for many reasons.  The outcome is that we are left with lots of inefficiencies that are all targeted at symptoms of the problem, whilst the root cause never gets tackled.

Root Cause Analysis

Root Cause Analysis (RCA) is a problem solving technique that is designed to get to the bottom of the problem and help you answer the question of why the problem occurred in the first place.

RCA assumes that events are interrelated, so an action in one area triggers an action in another area, which triggers another action etc. You can discover the root cause of a problem by tracing back these actions, to see how they generated the symptoms you are facing.

RCA has five definable steps:

1. Define the problem  What are the symptoms?
2. Collect Data  What evidence do you have and do you have examples?  What is the impact of the problem?  How long has the problem existed?
3. Identify possible causal factors  What lead to the problem?  What conditions result in the problem?
4. Identify the root cause(s)  Why do the causal factors exist?  What is the real reason the problem occurred?
5. Recommend and implement solutions  What can you do to stop in happening again?  How will the solution be implemented?  Who will be accountable?

There are many well established tools you can use to help, but the main requirement is to not make too many assumptions and don’t be afraid of asking questions.  The ‘5 whys’ technique is very helpful for getting to the root of a problem.  I’ll cover some of these techniques in a future post.

A current manifestation of this problem

A good example of this tendency to not solve the root cause, is in the response to the financial crisis that started in 2008.  In recent years, both in the UK and elsewhere, we have seen the LIBOR rate fixing scandal, public outcry over bankers’ bonuses and various scandals over the mis-selling of financial products, to name just a few.  Here in the UK, we have seen a lot of government activity designed to stop a reoccurrence of these issues.  This has included changing the roles of regulators (the old FSA has been replaced by the FCA and PRA), forcing banks to hold more capital, separating the high street retail banks from their perceived riskier investment arms, plus many more.

No-one appears to be trying to identify or address the root cause of the problem.  This topic is the subject of a recent post by an associate of mine, Hiroo Chothia, from the8group.  Hiroo argues the case for better business ethics and how you can’t enforce ethical behaviour through additional rules and regulation.  It requires a change in the culture of the organisation, which has to come from within.  You can read the full post here.  Hiroo makes the case for going back to basics and defining what ethical leadership means, but this is not easy and requires strong commitment from the top of the organisation.  In the meantime, many of the organisations we work for continue to put the metaphorical sticking plaster over the cracks that appear…

This is just one example of where symptoms are addressed rather than the root cause.  What examples have you come across, and how can we learn from this?

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