Using Root Cause Analysis to Better Understand Your Business’ Problems

By QuickBooks Canada Team

2 min read

Root Cause Analysis is a common-sense technique for addressing business problems, especially those problems centered around humans and subjective interpretations. It is really a series of simple steps wrapped up in a fancy title, but you should not underestimate it because of its simplicity.

You can employ Root Cause Analysis to dig into the deeper truths behind conflicts and system failures, identify possible corrective actions, and build consensus within your team about the appropriate solution.

How Root Cause Analysis Works

Running a successful business requires the ability to navigate a laundry list of potential problems. You may have employees fight or slack off on the job. You might have machines malfunction or software corrupted by a virus. Your customers may report service issues or you might struggle collecting on your receivables.

It can be tempting to respond with patchwork solutions that amount to short-term appeasements, especially for small businesses. This is because taking small corrective actions can feel like industrious busy work. Unfortunately, it is really inefficient to constantly run around and put out fires, and problems can fester if you don’t address their underlying issues.

The idea behind Root Cause Analysis is to keep uncovering layers of superficiality until the problem is clearly defined and understood, and a solution is confirmed. Think of RCA as a method to treating the cause of a problem and not its symptoms.

Most RCA is done visually, with the consequences of a problem linked to various causes. Often, those causes have underlying causes, which is when it pays to dig further. Each cause and effect is pursued patiently and logically, and then mapped out so everyone involved can follow the same train of thought.

The 5 Whys Technique for Root Cause Analysis

A popular method of root cause analysis is the 5 Whys Technique. This version gained recognition after Toyota adopted its format in the 1970s.

To use the 5 Whys Technique, begin by identifying and clearly describing any problematic situation your company encounters. For example, your problem might be a conflict between two members of your marketing team that materially affects business productivity. You might write down a statement like “Jack and Jill disagreed about Project X, it got personal, and now they refuse to work cooperatively.” Ask why the conflict took place; this is the first “why” in your root cause analysis.

Do not be satisfied with the initial, off-the-cuff, and potentially superficial, answer to your first question. Instead, turn the answer you receive into a second “why.” Remember to look for evidence that the given answers are true.

Each successive answer leads to another “why” until enough causes and effects have been identified that you feel comfortable treating the root cause of the issue.

You don’t need to ask five whys exactly. Some problems might need three whys. Others might need 12. You may find that some problems have multiple root causes, and you will draw out very large cause-and-effect maps. What is important is confidence that the underlying issues are exposed and addressable.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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