Ctitical Thinking Techniques Of Root Cause Analysis

Ctitical Thinking Techniques Of Root Cause Analysis

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Critical Thinking Techniques Used In Root Cause Analysis

Root cause analysis is a common term used by investigators and analysts that means different things to different people. However, in its most literal sense root cause analysis requires the performer to systematically break down a situation into individual components or processes in a search for truth that can be supported by facts (Eckhardt, 2007). This analysis should be conducted in the form of an investigation into both the apparent symptoms of a situation as well as the causes that led up to the situation being analyzed. As an example, if performed correctly, a police investigation will use root cause analysis to first determine what happened, and only after the event is understood, would the investigator begin to piece together who (if anyone) may have been responsible for the situation that transpired. A proper investigation may lead to the investigator finding that while a cause to the incident existed, no fault can be assigned to an individual.
To perform any type of root cause analysis, one must by necessity use critical thinking techniques as he or she attempts to uncover clues that would assist in a determination of what occurred. The analyst must be willing to remove all preconceived notions and consider the situation as objectively as possible to avoid contamination of the investigation. Because of the need for objectivity, critical thinking becomes a tool that can assist the user in uncovering clues and facts that will later support a conclusion. Critical thinking by its very nature requires that the thinker be flexible and willing to mold his or her conclusions around the facts that are uncovered and not vice versa (Kitzmiller, Jan-Feb 2003, p. 22). At this point, many thinkers begin to create an outcome based on what they believe and not what they uncover. This presupposition creates problems in the critical thinking process and may produce a faulty root cause analysis. The result will potentially be incorrect due to subjective reasoning that clouded the investigator’s judgment.
As one progresses through the steps required to isolate a problem, it is important to systematically review and eliminate potential factors in the same manner that an electronics technician would troubleshoot a circuit board. This action requires the analyst to have an understanding of the components involved and the process being investigated. By considering, then discarding or retaining scenarios that may have caused the situation, the analyst will be able to narrow the scope of the investigation until the source of the problem has been uncovered.

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My position with my company is tasked with performing root cause analysis to uncover problems related to employee compensation and payout. To accomplish this task, I am required to have an understanding of how the compensation plan functions, what compensation rules are in place, and to maintain a working knowledge of the order writing and compensation systems and data flow.
Recently, I was tasked with determining why my organization’s data product unit sales were not accelerating at the same pace as the revenue generated from the units sold. Many factors exist that could cause this scenario, including a higher quantity of speed upgrades, more higher-end product sales, or tracking problems. My first course of action was to ensure that there had been no change in order writing procedures or tracking methodology. Once I was comfortable that there was no change in procedure or methodology, I eliminated the possibility that there were missing units by verifying that all active product codes had sales posted from each order writing system. Performing these tasks allowed me to then begin an investigation into the data flow as it related to the valuation of each product type.
Upon investigating the Quota Retirement Value (QRV) associated with each product code, I noticed that the higher-end products had seen an increase in revenue that rose more sharply than the lower-end products on a per unit basis. While this is normal to an extent due to a delta value (new QRV – old QRV = Delta QRV) being paid for product upgrades, I noticed that there seemed to be sharper inclines than what were typical for each product set. This discovery let me to narrow my focus to products that were sold only as upgrade sales. An example of an upgrade that would pay a delta could be described as follows: A customer who subscribed to a certain product may choose to upgrade to a higher cost product This sale would be credited to the representative at a delta rate as described above. These sales are valuated based on delta tables that are maintained in the compensation system that used to determine sales quota attainment for each compensation plan participant.
As I reviewed the delta tables that were provided to me in Excel format, I noticed that products that had been retired or replaced with new products were listed with a QRV of $0 since these products no longer retired quota. The problem caused by changing the valuation to $0 was that there an overstatement of sales revenue for each upgraded unit when the product being removed was no longer available. Basically, each upgrade from a retired product generated a QRV that was equivalent to that of a new sale (new QRV - $0 = Delta QRV). I determined that this was the cause of revenue exceeding unit growth and after verifying that the retired products were no longer able to be added through the order writing systems, I updated the delta files to reflect the previous QRV that was generated for the sale of each of these products.
After identifying the issue and its impact on the sales channel, it was decided to correct the problem on a going-forward basis only to avoid the negative effect on morale and the high cost of rerunning 2007 compensation data. This decision was made after weighing the pros and cons of each potential scenario. Upon completion of the update, I notified the sales channel of the correction to ensure that the participants understood what happened to avoid concern when the revenue lift suddenly evaporated. To mitigate their frustration, I assured them that there would be no retroactive adjustments made that would negatively affect their current year-to-date compensation results.
In summary, critical thinking means not taking an event at face value but reserving judgment until after an investigation has been performed. In complex situations, the symptoms that are visible are not always the cause of the issue at hand. Unless critical thinking tools are used in root cause analysis, the correction put in place may very well be one which exacerbates the situation.


References
Eckhardt, B. (2007). Digging deep with root cause analysis. Concrete Products, (110.5).
Kitzmiller, G. (Jan-Feb 2003). The Importance of critical thinking: it is out of critical thinking that the best strategic plans come. Nutraceuticals World, 6.1, 22.
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