Get to the Root of the Problem

Whether or not you have a formal planning process, you have a set of expectations about what your company will achieve in the near future. It is inevitable that your results will not turn out the way you expected all the time. All companies face unexpected results. The difference between more and less successful companies is what they do about it. Here are a few tips on how to deal with unexpected results:

Don’t Confuse Symptoms with Problems. Most people know they have a problem, they just haven’t defined it correctly and therefore don’t know what to do next. If you have had key employees leave, borrowings under your bank lines increase, or sales decline, you are seeing a symptom, an indication that a problem may exist. If you react to the symptom rather than the underlying problem you may not get the results you want. A quick reaction to sales declines, for example, may be to lean on your sales people. If the problem is with their performance, that may do the trick. But you may be missing the point. You should dig deeper, get to a specific cause—a problem that has a clear solution. Which leads to the next tip…

Ask the “5 Why’s.” This simple tool is part of the highly respected Toyota Production System. It basically says to keep asking follow-up questions. To continue with the previous example: Why are sales declining? Because add-on sales are way down. Why? Because our long-time customers aren’t buying. Why? Because they have another problem they are focusing on. Why? Because their business has changed…and so on.

Embrace the Answer, “I Don’t Know.” If you reach the point that your answer is “I don’t know,” you may be on to something. Do some more homework. Go back to the dependable sources of fresh information: your customers, employees, and industry research. You may learn something completely new and truly get to the root of your problem.

When you finally identify a specific fact such as, “Because we don’t have that feature,” you have probably gotten to a root of your problem. Now you have something concrete you can deal with. But remember that symptoms and problems often come in bunches. You need to weigh this against the other issues and data you examine. If you see problems that should be addressed, move forward using Michael’s tips below.

-Mary Adams (adams@trekconsulting.com)

Turnaround Management Industry

Since we are talking this month about identifying and dealing with problems in your business, we thought it would be appropriate to talk about the turnaround industry. The identity and visibility of this industry has been created and promoted by the Turnaround Management Association. Some of the members of TMA have specific expertise in the unique challenges of companies in or close to bankruptcy. However, many other members focus on what is sometimes called “corporate renewal.” This broader term is used to describe those of us who work with companies facing serious challenges well before bankruptcy is at hand. Information about the very active local chapter of TMA can be found at www.tmanortheast.org.

In our experience, every company hopes to achieve breakthrough performance, which is the essence of turnaround management. Many are “turnarounds” in that they are facing serious challenges such as declining sales, insufficient cash flow, or troubled lending relationships. Still others are successful companies facing the equally serious challenges of creating and maintaining a high growth company. Corporate renewal for both kinds of companies starts through effective problem-solving such as that described above.