Bootstrap Root Cause Analysis into Your Strategic Thinking

By Jon Miller Updated on June 8th, 2015

boot strap root caue analysis

I’ve had some interesting differences of opinion lately about if and how root cause analysis fits into an organization’s strategic planning. Both hoshin planning, the strategy deployment method practiced by Toyota and many other lean companies, and the practical problem solving method have common roots in TQM, Deming and the scientific method. The mainstream lean position goes that strategic planning is just another form of PDCA problem solving wherein the gap to be closed is not between the standard and the current performance which fails to meet it, but rather the gap between the current best performance and a vision of what it could be. Those who don’t see a role for root cause analysis in strategic planning say that it is fundamentally different, the gaps between the current and the vision are widespread and complex, and therefore root cause analysis is not useful.

Let’s take a moment to put both problem solving and strategy development in a common frame of logical thinking. For ease of recall, I’ve worded this into 7 sentences, starting with letters A through G. With tongue in cheek, let’s name it “A-G Thinking”.

  • Apprehend what the problem really is in terms of gap of current versus the ideal.
  • Bring to light the addressable reasons for the gap or gaps.
  • Choose the experiments to address the reasons for the gap.
  • Do the experiments.
  • Evaluate the process and results of the experiments performed.
  • Feed new standards and knowledge gained from the successes and failures into the new reality.
  • Go back to A.

In problem solving, root cause analysis is not the Holy Grail. A testable countermeasure that addresses the root cause of the gap between current situation and target situation is the Holy Grail. The same is true for strategic planning. The process of arriving at the testable countermeasures is only measured by how reliably it performs. Both the countermeasures we arrive at and how we arrive at them matters.

Strategic thinking is commonly focused on revenue improvement in the form of entry into new markets, either by region, consumer segment, price point, product / service variety or focus, innovation / category creation, etc. The common mistake people make when using root cause analysis as part of the strategy development process is that leaders have a set of usual suspects of strategic options. In the unfettered exchange of ideas for improvement, some may indeed come before root causes analysis has been fully performed. While de-selection and narrowing the focus are critically important, failing to understand cause and effect, failing to make the logical chain of causation of gap-cause-countermeasure, and failing to get out of the conference room and go to the gemba to confirm the existence of these root causes, is what causes many expensive strategy documents to succeed only by luck.

Why is it so important to have a logical chain of causation? It’s only important if we wish to test our ideas and learn form mistakes. We can do that through guesswork and storytelling or based on data from experimenting with cause-and-effect relationships between gaps and reasons for them. Whether in problem solving or developing strategy, I wouldn’t bet against the persistent application of the scientific method.

Root cause analysis is about asking, “Why are we in this current situation?” and “How did it happen?” as well as “What are our assumptions about the current situation and the likely course of things should no actions be taken?” In strategy development we often can ask, “What can close the gap?” but the only way to test our ideas in practice and learn more about reality is to have at least hypothesize a cause-and-effect relationship. We know the effects – the gaps between current and desired situations. In order to select the right strategic initiatives, a.k.a. countermeasures, we must look for the causes for the gaps. Examples of growth-related strategy questions that get at the root causes:

“Why are customers buying from the competitor, and not from us?”

“How can we grow our revenue by 20% sustainably?”

Or simply

“Why does the gap exist?”

Root cause analysis is especially important for thinking about strategy development is that it requires us to approach reality with humility. When strategic planning is simply idea generation followed by a narrowing of the strategic initiatives down to the few that the leadership team will commit to, this is just another form of solution-jumping. It is what one of my sensei used to call “making happy plans” because we choosing among the ideas to which we are partial to achieve our strategy, often regardless of hard facts or cause-and-effect hypotheses. Even for the unhappy strategic plans that force us to choose difficult, unpleasant actions when an organization is in duress, we jump to solutions. In this case, companies in duress are more likely to employ the traditional practical problem solving which includes the root cause analysis. Perhaps there is something in root cause analysis that takes the cheer out of strategic planning? In fact, cognitive scientists have identified “optimism bias” as a false believe that people hold in terms of underestimating the chances of bad things not happening to them overestimating the chances for good things happening. Combined with executive egos, yes men and a fear culture that buries bad news data, strategic plans lacking root cause analysis are often built on little fluffy clouds.

In the words of Robert F. Kennedy, “There are those who look at things the way they are, and ask, ‘Why?’ I dream of things that never were and ask, ‘Why not?’” Both are great questions. When strategies are failing, we need to address root causes. When strategic planning is failing, we need to address root causes. When root cause analysis is not delivering good strategic options, we need to ask, “Why not?” What’ been your experience with root cause analysis as a part of strategy development?

  1. Rob Thompson

    June 9, 2015 - 5:37 am

    Often the sort of root cause analysis discussed in this post only happens on an ad hoc basis. To achieve and sustain improvements build root cause analysis build into standard work. In the absence of this, performance will tend to revert to unacceptable levels. Leaders must adhere to the bowling chart review schedule. They must also focus on all items going off target. For these they should insist on solid countermeasures. This all takes courage, tenacity and rigor but the results are worth the effort demanded.

  2. Phillip Martin

    June 9, 2015 - 10:58 am

    I work for a prison system. Within our prisons, we have the custody side of the house and the industry side of the house. I am employed by the industry side, which brought LSS to this organization to be used as our continuous improvement strategy in 2006. We have used LSS extensively on the industry side with great success in the form of Lean Assessments, 5S Events, Green Belt Projects, Black Belt Projects, and the always cherished Quick Win’s. Root Cause Analysis has always been a tool used during the Analyze Phase. A few years ago, the custody side had some issues that they needed to be resolved. Not knowing where to start, I created a methodology for facilitating a Root Cause Analysis Event that has proven to be quite valuable in our environment. In situations where you have multitude of unrelated departments, people, processes, locations, and disciplines that share a common pain point, I feel that you must start with a Root Cause Analysis. I am not referring to just a simple fishbone diagram or chart. 1) You must first have a specific pain point. 2) Identify and map all processes in all departments that this pain point exists. 3) Place a marker of where in each process map the pain point appears. 4) Create a fishbone diagram and capture all possible causes. 5) List all of the possible causes. 6) Identify and list possible solutions for each of the possible causes (don’t limit your number of possible solutions per cause.) 7) Use a Solution Selection Matrix to prioritize all of your possible solutions based on Benefit vs. Effort. 8) Identify your top priority solutions. 9) Create an Improve Action/Pilot Plan and a RACI Chart. 10) Systematically run trials/pilots with your potential solutions with the highest priority first. When and if necessary, reassemble the team. I wish I could share the exact methodology, however, I fear that would violate intellectual property policy. I am sure, there will be some that try to blow holes in this concept, but it works for my organization and me. I hope it helps someone. Thank you!

    • Jon Miller

      June 11, 2015 - 11:37 pm

      Thanks for your comment Phillip! It sounds like on your own you came up with what you call Root Cause Analysis tha tis something very close to the practical problem solving process. Well done!

  3. Cliff

    June 10, 2015 - 2:53 am

    Process wise, establishing what is possible is the start, once understood set the expectation/challenge over a period time to deliver this to the responsible leaders. Visible measures and fact would have to have required to establish what is possible, use this data to create a Ramp up curve (the target/aspiration). Set up weekly agenda’d meetings from top to bottom to review progress and make performance visible. This applies positive pressure to the “people/leaders” which in turn provides the motive to drive improvement while making it a priority. (even better if this can be used with like for like teams who can be compared).

    Now we have the set up, information, target/aspiration and accountable leaders with the motive to improve. This drives out the issues/road blocks and where the root cause analysis is applied to achieve what is possible

    The issue can also be prioritised by evaluating their impact on the measure, therefore applying a priority order to impact

    If the issue requires resolution from another team/department pass this issue through the hierarchy to ensure ownership and follow up, so the higher level viewer can prioritise work that add the most value to improvement from a National/global view if required

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