Break it down!

I’m not trying to get down with the kids (innit), I’m describing an approach to problems.  Some people call them challenges, whatever you call them, we all have them.  Solving them can sometimes be technically challenging, fun or stressful.

Working within a Japanese business for over 15 years, I never cease to be impressed by the way they approach problems.  Everything is always de-constructed, rigorously reviewed, all potential outcomes are scrutinised and the best possible solution applied.  You could call it an art or a science, either way, it’s impressive to see.  The core element is that the problem is always broken down into constituent parts such as what elements are in their control or outside of their control, problem analysis is used to identify the best approach, problem by problem.

Which approach you use depends on the complexity of your problem plus the speed and resources required, potential impact on your business model amongst many things.  Over the years, I’ve witnessed BIG problems get solved by creativity, logic or just sheer effort.  The main thing is not to be daunted by problems.  If you’re not being presented with problems regularly, you may not be trying hard enough.  You might not be pushing your barriers as far as they could go.  Your potential may not be fully realised.  Growing businesses embrace problems, tackle them, solve them and move on.

Cost of Poor Quality

It’s horrid when things go wrong. Ultimately it results in customer disattisfaction plus loss of reputation and sales, if not dealt with swiftly and fairly.  There are also lot’s of other costs too.  The time it takes to put things right, compensatory gestures, handling costs, increases in stock – all sorts.  With the increase in user generated content and social media “right to reply”, businesses spend a lot of time sorting out the problem, but sometimes not getting to the root of why it happened and how to prevent it happening again.  Or, in other words, “continuous improvement.”

We don’t plan to slip up, it’s just a by product of running a business sometimes, call it an unintended consequence.  The resultant costs are known as the cost of poor quality.  In my own business, we measure satisfaction and disattisfaction, complaints and compliments and look to improve wherever we can, by applying the learning.  Reason being, we understand the cost of poor quality and – often – it can be a hidden cost such as lots of administration, which doesn’t always bubble to the surface (hence the graphic being an iceberg).

To run an efficient business, you do need to regularly examine your processes and give them a good healthcheck to see if they are standing up, particularly with the rate of change in the world.  When things do go wrong, a good way to try and get to the root of the problem is to use the 5 xWhy’s technique.  Basically, just keep asking why?  Why did the shipment not not get completed?  Because we were late.  Why were we late?  Because the shipment didn’t leave on time.  Why didn’t the shipment leave on time?  Because we missed the cut off for the warehouse.  Why did we miss the cut off time?  Because the EDI failed.  Why did the EDI fail?  Because the part codes were incorrect on the order.  And so on and so on.  Eventually you’ll get to the root cause, then you figure out how to fix it.  Normally it takes around 5 x Why’s, I’ve extended this for the sake of an example.

When you get to really understand what contributes to the cost of poor quality in your organisation, you can start to deal with inefficiency, you can improve customer service and reputation and ultimately increase the size of your business.  If you choose to ignore it and keep making the same mistakes. you’ll end up working very hard to keep your customers satisfied.

When process takes over….

Big companies need processes. As your small business grows, you’ll need better processes too. They become the framework by which your company operates, its convention. However, they aren’t the be all and end all because sometimes processes overrule common sense. We can all remember the famous Little Britain sketch when “the computer says no”. The bigger you get, the worse it can get as the process rules all. If you ever deploy an SAP system, the first thing they ask you to do is to review the way your business runs and run it the SAP way, using best practice processes (according to them). However, all businesses grow from understanding their marketplaces or by creating differentiation in customer experiences, not by “out of the box” process management, you risk ending up being like everyone else. Rigorously review your processes, chuck the out of date ones in the bin and don’t assume that because you implemented a process a year ago, that it’s valid today.