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Root Cause Analysis: What It Is & How to Perform One
- 07 Mar 2023
The problems that affect a company’s success don’t always result from not understanding how to solve them. In many cases, their root causes aren’t easily identified. That’s why root cause analysis is vital to organizational leadership .
According to research described in the Harvard Business Review , 85 percent of executives believe their organizations are bad at diagnosing problems, and 87 percent think that flaw carries significant costs. As a result, more businesses seek organizational leaders who avoid costly mistakes.
If you’re a leader who wants to problem-solve effectively, here’s an overview of root cause analysis and why it’s important in organizational leadership.
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What Is Root Cause Analysis?
According to the online course Organizational Leadership —taught by Harvard Business School professors Joshua Margolis and Anthony Mayo— root cause analysis is the process of articulating problems’ causes to suggest specific solutions.
“Leaders must perform as beacons,” Margolis says in the course. “Namely, scanning and analyzing the landscape around the organization and identifying current and emerging trends, pressures, threats, and opportunities.”
By working with others to understand a problem’s root cause, you can generate a solution. If you’re interested in performing a root cause analysis for your organization, here are eight steps you must take.
8 Essential Steps of an Organizational Root Cause Analysis
1. identify performance or opportunity gaps.
The first step in a root cause analysis is identifying the most important performance or opportunity gaps facing your team, department, or organization. Performance gaps are the ways in which your organization falls short or fails to deliver on its capabilities; opportunity gaps reflect something new or innovative it can do to create value.
Finding those gaps requires leveraging the “leader as beacon” form of leadership.
“Leaders are called upon to illuminate what's going on outside and around the organization,” Margolis says in Organizational Leadership , “identifying both challenges and opportunities and how they inform the organization's future direction.”
Without those insights, you can’t reap the benefits an effective root cause analysis can produce because external forces—including industry trends, competitors, and the economy—can affect your company’s long-term success.
2. Create an Organizational Challenge Statement
The next step is writing an organizational challenge statement explaining what the gap is and why it’s important. The statement should be three to four sentences and encapsulate the challenge’s essence.
It’s crucial to explain where your organization falls short, what problems that poses, and why it matters. Describe the gap and why you must urgently address it.
A critical responsibility is deciding which gap requires the most attention, then focusing your analysis on it. Concentrating on too many problems at once can dilute positive results.
To prioritize issues, consider which are the most time-sensitive and mission-critical, followed by which can make stakeholders happy.
3. Analyze Findings with Colleagues
It's essential to work with colleagues to gain different perspectives on a problem and its root causes. This involves understanding the problem, gathering information, and developing a comprehensive analysis.
While this can be challenging when you’re a new organizational leader, using the double helix of leadership —the coevolutionary process of executing organizational leadership's responsibilities while developing the capabilities to perform them—can help foster collaboration.
Research shows diverse ideas improve high-level decision-making, which is why you should connect with colleagues with different opinions and expertise to enhance your root cause analysis’s outcome.
4. Formulate Value-Creating Activities
Next, determine what your company must do to address your organizational challenge statement. Establish three to five value-creating activities for your team, department, or organization to close the performance or opportunity gap you’ve identified.
This requires communicating organizational direction —a clear and compelling path forward that ensures stakeholders know and work toward the same goal.
“Setting direction is typically a reciprocal process,” Margolis says in Organizational Leadership . “You don't sit down and decide your direction, nor do you input your analysis of the external context into a formula and solve for a direction. Rather, setting direction is a back-and-forth process; you move between the value you'd like to create for customers, employees, investors, and your grasp of the context.”
5. Identify Necessary Behavior Changes
Once you’ve outlined activities that can provide value to your company, identify the behavior changes needed to address your organizational challenge statement.
“Your detective work throughout your root cause analysis exposes uncomfortable realities about employee competencies, organizational inefficiencies, departmental infighting, and unclear direction from leadership at multiple levels of the company,” Mayo says in Organizational Leadership .
Factors that can affect your company’s long-term success include:
- Ineffective communication skills
- Resistance to change
- Problematic workplace stereotypes
Not all root cause analyses reveal behaviors that must be eliminated. Sometimes you can identify behaviors to enhance or foster internally, such as:
- Collaboration
- Innovative thinking
- Creative problem-solving
6. Implement Behavior Changes
Although behaviors might be easy to pinpoint, putting them into practice can be challenging.
To ensure you implement the right changes, gauge whether they’ll have a positive or negative impact. According to Organizational Leadership , you should consider the following factors:
- Motivation: Do the people at your organization have a personal desire for and commitment to change?
- Competence: Do they have the skills and know-how to implement change effectively?
- Coordination: Are they willing to work collaboratively to enact change?
Based on your answers, decide what behavior changes are plausible for your root cause analysis.
7. Map Root Causes
The next step in your analysis is mapping the root causes you’ve identified to the components of organizational alignment. Doing so helps you determine which components to adjust or change to implement employee behavior changes successfully.
Three root cause categories unrelated to behavior changes are:
- Systems and structures: The formal organization component, including talent management, product development, and budget and accountability systems
- People: Individuals’ profiles and the workforce’s overall composition, including employees’ skills, experience, values, and attitudes
- Culture: The informal, intangible part of your organization, including the norms, values, attitudes, beliefs, preferences, common practices, and habits of its employees
8. Create an Action Plan
Using your findings from the previous steps, create an action plan for addressing your organizational problem’s root cause and consider your role in it.
To make the action plan achievable, ensure you:
- Identify the problem’s root cause
- Create measurable results
- Ensure clear communication among your team
“One useful way to assess your potential impact on the challenge is to understand your locus of control,” Mayo says in Organizational Leadership , “or the extent to which you can personally drive the needed change or improvement.”
The best way to illustrate your control is by using three concentric circles: the innermost circle being full control of resources, the middle circle representing your ability to influence but not control, and the outermost circle alluding to shifts outside both your influence and control.
Consider these circles when implementing your action plan to ensure your goals don’t overreach.
The Importance of Root Cause Analysis in Organizational Leadership
Root cause analysis is a critical organizational leadership skill for effectively addressing problems and driving change. It helps you understand shifting conditions around your company and confirm that your efforts are relevant and sustainable.
As a leader, you must not only effect change but understand why it’s needed. Taking an online course, such as Organizational Leadership , can enable you to gain that knowledge.
Using root cause analysis, you can identify the issues behind your organization’s problems, develop a plan to address them, and make impactful changes.
Are you preparing to transition to a new leadership role? Enroll in our online certificate course Organizational Leadership —one of our leadership and management courses —and learn how to perform an effective root cause analysis to ensure your company’s long-term success. To learn more about what it takes to be an effective leader, download our free leadership e-book .
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