Using a basic plaster on a major injury means you are going to bleed out. The same can be said for your business when thinking about those problems that impact on your profits.
How many times have you looked to get to the bottom of a specific problem, issue, or challenge but then daily tasks and emergencies take over? You started the process; you made some good initial progress but then the focus was lost, resulting in you introducing some basic workarounds.
The root cause was not identified, and the long-term problem was not resolved.
Don’t kick the can down the road
If you never get to the bottom of something—rooting out the real causes and doing something about them—your business will be left with unnecessary costs and reduced profitability. These inefficiencies will frustrate you, your teams, and your customers.
The problem will simply reappear in some form and bite you on the bum. Even if you’re really busy, this can’t be a good outcome.
5 steps to follow
Carrying out effective root cause analysis is an easy habit to pick up, something that just becomes part of your business DNA and the time spent making things better is a win / win for everyone concerned.
To get started, think of the approach like this:
- Define the problem – What’s going wrong? Begin by identifying any symptoms or signs indicating a decrease in profitability. This could include declining sales, rising costs, decreased customer satisfaction, etc.
- Identify the factors that might have caused the problem. Collect relevant data pertaining to the identified symptoms. This may involve financial statements, sales reports, customer feedback, employee feedback, market trends, etc.
- Investigate those factors to Identify the true root cause(s). Dig deeper into the prioritised root causes to gain a better understanding of why they are impacting profitability.
- Decide the corrective actions and do them. Once you have a clear understanding of the root causes, brainstorm potential solutions to address them. Ensure that the solutions are practical, feasible, and aligned with the organisation’s goals and resources.
- Check that your actions have solved the problem. Continuously monitor the impact of the implemented solutions on profitability. Track relevant metrics and KPIs to measure progress and identify any new issues that may arise. Evaluate the effectiveness of the solutions and make adjustments as needed
A world of solutions to choose from
To help you there are lots of simple-to-use approaches and tools to carry out the identification, investigation, and remedial steps.
You can find problem statements, fishbones, 5 whys, solution selection grids, and more on the internet. Don’t worry about the odd names, they’re proven to work and importantly ensure you really get to the root cause of whatever your problem is.
We’ve used this approach and these tools across many sectors to resolve a vast range of problems by sharing our knowledge and bringing root cause analysis to life.
This is part of what we do at UK Business Advisors – helping solve problems today and giving you the capability and skills to successfully solve problems in the future. Why not get in touch and let us help you.