Root Cause Analysis: Designing for Root Cause Analysis

This is part 5 of our series on Root Cause Analysis, previous segments are available in our archives.

As you have seen this week, identifying root causes can be challenging. The best way to ensure you can identify root causes reliably is to design your business processes to make it easier. The key is to ensure you have recorded all the data you need, and it’s easily accessible, in order to find a root cause.

Here are some best practices:

  • Record Your Actions. Keep track of significant business decisions and actions on a shared calendar. This will allow you to easily identify all the possible internal factors that might have contributed to the change.
  • Track External Forces. Monitor all the external forces that might affect your business, including competition, economics and governmental policy. There are many services that will do this for you, but your task is to identify the most significant as you cannot monitor the entire world.
  • Segment Your Data. Ensure that your metrics are segmented so that you can effectively evaluate the likelihood of any given segment contributing to the change. If you can’t segment your metrics, you will have to spend a lot of time eliminating potential factors through other means.
  • Map Your Processes. Your business processes should be written down, so that you can map out the difference between contributing and root causes.

The more of these you can put in place, the faster and more easily you will be able to identify the root causes of issues in the future.

One word of caution: after you have done many root cause analyses, it is tempting to rely on your intuition when a new change event occurs. It may look and feel like others you have analyzed in the past, which makes it tempting to jump to a conclusion based on your previous experience. This is dangerous because you make an assumption that the future is just like the past, while many other things might have changed. Even if you think you know the root cause, go through the analysis and make sure you didn’t miss anything.

In Review: Identifying the root cause of a change in your business involves three steps. First, identify all the possible factors that might have contributed to the change. Second, use your metric segmentation to select the most likely factors from that collection. Finally, recreate the timeline of the change and use that to classify the factors, identifying the root cause among them.

Do you do root cause analysis in your business? Outlier is a product designed to help! Outlier helps you understand the root causes of major changes in your business, especially changes that are unexpected. If you’re interested in seeing a demo, schedule a time to talk to us.

 

Quote of the Day: “I’m afraid that sometimes you’ll play lonely games too. Games you can’t win ’cause you’ll play against you.” ― Dr. Seuss