Tuesday, April 24, 2012

Digging to the roots of the problem with RCA

This week's buzzwords and ideas: constant entrepreneurship, industrial innovation revival, back-to-basics strategy, reordering of the global economy/emerging markets, being nuanced in foreign markets, large-scale entrepreneurship, identifying long-term market shifts, leadership by fiat, technology-led-innovation agenda, necessity of having a simple/clear/succinct strategy statement that everyone can internalize, strategy statement to improve formulation and implementation, 3 critical components of a good strategy statement (objective, scope, advantage), defining the objective/scope/advantage requires trade-offs, if your firm's strategy can be applied to another firm then revise it, setting ambitious growth targets at multiple points, offering distinctive value propositions, strategic sweet spot is where a company meets its customers' needs in a way that rivals can't, clarification of decision rights, ensuring information flows, execution = thousands of decisions made every day by employees acting according to the info they have, 4 building blocks of execution (clarifying decision rights, designing information flows, aligning motivators, making changes to structure), quick information relays, supporting root-cause analysis, blocking info results in poor decisions/limited career dev/reinforcement of structural silos, assess informal networks to understand key decision-making and info-gathering, reach across org boundaries, post-monopoly prosperity, don't away from the past --> build on it, build on legacies by using deep reservoirs and expertise, apply core assets to new markets.

When reading the articles this week, I came upon a phrase which I am not familiar with: "root-cause analysis". According to an article by Gary Neilson et al. entitled "The Secrets to Successful Strategy Execution", a supporting root-cause analysis supplied with regular reports between separate business units is key to getting information flowing freely across organizational boundaries.

The rationale behind root-cause analysis (RCA) is that a lot of times in companies, it is typical for employees to approach a problem at work by glossing over it with a quick-fix solution. If upper management sets a premium on RCA's, the organization can treat the underlying problem at its core. According to Mind Tools, an online career skills website, RCA is a powerful five-step problem-solving process with the following purpose: to determine what happened, why it happened, and how you can reduce the likelihood of it happening again.

RCA investigates interrelated patterns between different causal characteristics. The causes to a problem can be physical (usually material/mechanical items), human, or organizational (i.e. a faulty policy). The five-step process identifies causes at all levels and gets to the root of the problem:
STEP 1: define the problem. Just like in medicine, begin by identifying the symptoms (i.e. Production at the G.E. manufacturing plant has slowed significantly).
STEP 2: collect data. Gather everyone that is affected and/or understands the problem together to better understand what's going on. Look at CATWOE: Customers, Actors (who implement solutions), Transformation process affected, World view, process Owner, and Environmental constraints. (it might be useful here to represent the data visually with interconnected arcs and a color scheme).
STEP 3: identify causal factors. What events and conditions may have led to this state of affairs? It's important to identify a long laundry list of potential causes. There a few tricks to extract every single potential cause from your trouble-shooting staff:

  • ask "So what?" to get to the root of the problem
  • ask "Why?"
  • break down a problem into detailed parts (perhaps by using tree diagrams)
  • cause and effect diagrams (chart of causal factors)
STEP 4: identify root causes. Use the tactics from step 3 to extract the roots of each causal factors. Classify the causes as physical, human, or organizational.
STEP 5: recommend and implement solutions. What steps will you take to stay on a path of prevention and solution implementation? Identify changes needed in various systems and processes. Use Failure Mode and Effects Analysis (FMEA) to identify where a solution could fail (i.e. map out problems before they materialize). Use Impact Analysis to explore positive and negative consequences of change. Finally, Kaizen is another strategy (which we have talked about in class) that prizes continuous improvement.

Source: http://www.mindtools.com/pages/article/newTMC_80.htm

All in all, root-cause-analysis is a methodic way for people close to the problem to identify the root causes of that very problem by bringing in other departments and points of view that they might never have considered before. An RCA should be supplied along with a more positive, optimistic evaluation of the business unit or company (such as quarterly reports).

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