Cause and Effect – Finding the Root of Your Business Problems

Recently one of my Regional IAQ Training Reps mentioned that during a manager’s meeting with one of his dealers, they pinpointed some problems in the business that were causing a significant decrease in IAQ sales. It is customary for my training team to meet with our dealers’ management team after our onsite sessions to review and analyze the status of their IAQ sales and their effect on top-line revenue and bottom-line profit. This meeting was especially interesting because this dealer’s IAQ sales were down 17% over last year in a booming market. Consumer awareness about IAQ products is at an all-time high, and our dealers’ sales have increased substantially in the past two years. So why the decrease in IAQ sales for this specific dealer? Some of the reasons were obvious, and others were uncovered during this meeting. An action plan was put in place to affect a positive outcome on future sales.

Whether it’s challenges with sales, marketing, financial, manpower, or whatever, problems have always been part of businesses and will continue to be. So as business owners, we need to continually analyze our business, identify the problems, and understand the underlying causes and the effects that follow when they persist. Once establishing the cause of a problem and its effects, you can then tackle the problem better by proposing viable solutions. To this end, the need to undertake cause and effect analysis is vital for business success. It is necessary to understand the root cause of a problem. Whether it is analyzing why equipment or accessory sales are down or any other business challenges, determining the best methods to solve the problem may include implementing new management policies, changing a process, or even repositioning your team members to effectively achieve desired business outcomes by identifying and addressing the root cause of the business problem faced.

Analyzing these problems involves looking backward to what caused the problem, then looking forward with a plan.

Only about two-thirds of startups survive past their second year in business, and many companies that make it past their second year in business continue to struggle to be profitable. There are underlying reasons why this continues to happen, so it is crucial for your business to survive profitably to discover and understand these reasons. Looking backward into your business to find the root causes of your challenges calls for an analysis of past mistakes and problems. You must identify where these past issues have come from and put a plan together for avoiding them in the future.

Once this cause-and-effect analysis has taken place, it can be used for future planning. Looking forward into your business, this analysis is your basic planning tool to create a better future business outcome than you have experienced in the past.

This becomes a five-step process.

1. Identify and describe the problem. Describe the nature of the problem and how it is affecting your business.

2. Brainstorm with your management team the root cause of the problem. Break it down to the people involved, current processes and procedures, the material used, working conditions, etc.

3. Identify all internal and external causes.
a. You have control over your internal causes since they are mostly operational and employee relationship issues.
b. External problems such as supply chain issues, changing laws, weather conditions, the economy are out of your control but still need to be considered so you can adjust your business practices to account for some of these issues and have as much influence as you can on others.

4. Analyze your discoveries in steps one through three and prioritize what you can control and act on. Decide what action can be taken immediately, list what you have control over, identify where you can implement change, and influence what you can with issues out of your control.

5. From here, you can develop your plan of action. This plan should reflect proposed solutions to the problem and identify specifically who is responsible for the appropriate action. A point person should be assigned that holds others accountable to stay on task with target dates set to accomplish all implementation.

Although this process may sound time-consuming and laborious, depending on the issue at hand, it can also be fun. Over 30 years ago in my previous career, I worked for a janitorial and maintenance supply company owned by Howard Teidt. Howard used to have occasional problem-solving meetings that he called “Green-light / Red-light” sessions. We were a small company, and he would invite everyone into the conference room for a meeting. In the first part of the meeting, he called the “Green-light” segment. Howard would present a company problem then tell everyone to turn their green light on. This meant that anything goes. We would throw out solutions no matter how serious or ridiculous they were, and he would write them on a whiteboard. Not only did this foster creative thinking, but it was usually fun and hilarious. Once we exhausted the solutions, Howard would yell “Red-light,” then we would all stop and examine the ideas. The funny nonsense ideas were crossed out, and we were left with some great ideas.

As an example, in one session, the company problem at hand was our increased fuel and delivery cost. We had a company policy that if you placed an order by 2:00 pm, we would deliver your product the next day for free. Howard proposed the question: “How can we cut delivery expenses by $3,000 per month?”  “Green-light!” – on the funny side:

  • Fire John, our driver (he was in the meeting…)
  • Sell the delivery truck and save on insurance.
  • Stop delivering and have our accounts pick up their orders.
  • Quit selling so much.
  • And so on…

“Red-light!”

During the red-light segment of the meeting, after we stopped razzing each other, one of John’s ideas (our truck driver) stood out. He said because of our next-day delivery policy to all our accounts that he was driving all over a four-county area every day fighting traffic and racking up miles trying to get to everyone. John said, “Why don’t we map out our deliveries into smaller territories and offer deliveries only on certain days of the week to each territory?” The sales team was the first to object because “that’s a great selling benefit and we can’t change it now. Our customers will object!”

So, we surveyed our top accounts and discovered that no one really cared if they received their shipment the next day or not and set delivery days would be just fine. We implemented John’s plan, and it saved us thousands of dollars on fuel since he wasn’t driving all over our coverage area every day. This even gave John more time to organize our warehouse, solving another problem!

Green-light / Red-light problem-solving sessions can be fun, and they work!

Taken at face value, this is just another problem-solving tool. Still, any problem-solving process takes commitment to conduct the initial exercise, follow through with the implementation of the set plan, and holding people accountable for making it happen. The causes and effects of business problems won’t just go away. Any analysis and planning process is only as effective as the folks involved want it to be and how capable they are of taking the appropriate action to carry it through to its fruition.

 

Steve Mores is the Vice President of Training and Sales at Dynamic Air Quality Solutions.

Service Roundtable is dedicated to growing your bottom line and helping your business maximize its full potential. These groups of contractors work together to assist you with marketing, sales, business, and so much more. Twice a month, seminars around the United States and Canada are held to network and further assist your business. Visit Service Roundtable.com to see if there are Success Days in your area.

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