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 The Business Realist

   A dose of reality for a saner workplace


Action has replaced thinking in many companies. Problem solving jumps right into developing solutions rather than understanding the problem. Finding root causes and fixing those can solve many problems at once.

Solving the Symptoms

Posted  on 7/23/09

Box of bandaidsBias for action. Hit the ground running. Action-orientation.  Believing these phrases can wreak havoc on an organization.


Example 1: Does this sound familiar to you?

The leadership team is concerned about the lack of morale amongst employees after a merger and decides to create a cross-functional team to address this issue. Each VP picks a high performer from his/her department to participate on the team and a team leader is chosen. When the team meets, they brainstorm ideas to improve morale and come up with an action plan full of fun events, a website dedicated to profiling enthusiastic employees, and leadership communications.  The team presents their ideas back to the leadership who wholeheartedly endorse the plan and allocate a small budget.

Social event number one occurs and employee turnout is pretty good,  though not great. The website is launched and at first seems well-received but then gradually loses traction. Event number two has poor turnout and the leadership communication meeting also is poorly received. After no one shows to even number three, all the events are cancelled and the website is taken down.  What went wrong?

The way the leadership team went about improving morale just fomented the discontent of the employees. No one actually tried to understand why morale was poor. The underlying reason was because employees did not feel their voices were being heard and felt that the leadership team had their own agenda they wanted to hoist upon everyone.  Another problem was that employees believed that it was always the same chosen few who were given advancement and development opportunities with the result of two classes of people in the company - those who mattered and those who didn't. All the actions promoted by the morale team just reinforced these beliefs and thus, morale actually deteriorated as a result.

Example 2: What about this one?

An affiliate company had outsourced their inventory management and distribution to a third-party distributor, but were suffering from a large number of stock-outs. Even though they had numerous discussions with the distributor and had implemented financial incentives to discourage stock-outs, the problem persisted. The inventory manager thought if they had a shared information system, they would be better able to control the amount of inventory at the distributor. They made initial investigations into available software and learned that they could use the same software as their sister company. They then contracted with their local IT department and embarked on the implementation of a shared inventory management program.

However, a large part of the  distributor's business was to supply information services to the numerous retailers who were their main customers. Use of their customer portal would lock them in as the sole supplier. To gain this market advantage, the distributor was heavily subsidizing these services which meant that their cash flow was tighter than normal. To manage their cash flow, they would often delay ordering inventory, thus, the large number of stock-outs.  No information system could possibly help. The stock-outs were part of their plan.

The problem is that our problem-solving methods start with solving the problem.

 Many problem solving processes start with Step 1: Define the problem and provide background information.  Typically, a team leader will write this down on a flipchart and provide some bullet points as background without really researching the problem.  However, one of the great things about having a scientific education is that you learn that understanding and framing the problem is more important than generating answers. Scientists spend much of their time trying to understand the issue they want to address, developing hypotheses for why it might be so, and then designing experiments to prove and disprove hypotheses before they actually do any experiments.  Yet, in our bias-for-action-based corporate cultures, we don't have time to understand or learn, we want to jump right to the solutions. Under stress and time pressure, we become even less concerned about understanding and just act in the hopes it will have the results we want. As a result, most of our solutions and actions are ineffectual and sometimes even harmful.

Both of those examples are real situations from my career, and I have many, many more. Much of our current economic crisis is due to lack of understanding: lack of understanding of mortgage-backed securities and how they work, lack of understanding of the real risks involved, lack of understanding of the role of regulation, and lack of understanding of how all these forces combined to create a huge bubble and the subsequent burst. 

Finding and addressing the root cause can solve many problems at once.


Example 3: Too much inventory, too little time, no understanding

A manufacturer of appliances had gradually over the years been moving from a limited, standardized product offering to more expensive and more customized appliances. Although the profit margins on these products were substantially greater than the standard goods, they found that their costs were sky-rocketing. They were unable to meet their production schedules, orders were often months overdue, the factory was filled with work-in-process parts, and their inventory levels were high. They hired a consultant who recommended that they implement very expensive scheduling and plant floor optimization software, and after a lengthy and costly implementation, the problem only got worse!

They brought in another consultant (me!) who spent days on the shop floor talking with workers and observing. The problem:  They were being paid a bonus based on the number of pieces produced, a holdover from the standard (volume)  goods production. Every time they had a lengthy machine changeover, which happened more frequently due to the custom pieces, they produced extra parts, which in turn created more inventory, ate up production time, used up supply materials and wreaked havoc with the schedules. All the management needed to do was change the bonus compensation.

Processes, tools, methods, and more

The next few pages are devoted to some root cause analysis tools and problem solving methods that have a focus on understanding over doing. Keep in mind, that these are tools, not answers nor formulae to find answers, but tools to ask better questions and understand problems.

Next article in this series  right arrow


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Featured Neologisms

Undue diligence   –
the endless process of collecting more information in order to avoid making a decision
Team vynamics   -
Group behavior wherein individuals at a meeting vie for dominance