Writing THE ROOT CAUSE #3

            People ask me WHY I wrote THE ROOT CAUSE: Rethink Your Approach To Solving Stubborn Enterprise-Wide Problems? So, let me tell you.

            What is your FIRST reaction when everyone agrees there is a BIG problem, and everyone denies making any mistakes; they are just doing their jobs?

            I was assigned that project and it became my favorite one ever! Years later I discovered that the operative pattern at play was what is officially known as Human Error. No, it’s not how it is frequently described; an individual or group of people messing up.

            Financial accounting of the branch network of a major European bank showed inexplicable fluctuations; the monthly Profit and Loss (P&L) statement was late, inaccurate and incomplete. Consequently, what went wrong in the reporting of the previous month had to be corrected in that of the following month. But, here’s the rub; mistakes on the December P&L statement CANNOT be corrected on the January statement. As a results, the director of finance spent Christmas and New Year at the office for two years running and he was not looking forward to doing that again.

            The director of finance blamed the IT department but they, in their defense, showed the computer log, which showed no error messages. The director of finance just knew his department was not at fault either YET, he caught all the Flak from the executive committee for the erratic P&L statements. Needless to say, relationships between finance and IT were polarized; they were no longer talking to each other. Application management had hired consultants on two occasions, and none were successful diagnosing the root cause.

            With the passing of time, finance observed a discernable pattern in the mistakes, and in anticipation of what they expected to go wrong, they started to fudge the numbers. Why, you may ask? Well, finance was catching all the Flak from the executive committee for the erratic P&L statements. Unfortunately, this counter measure only reduced the problem to some extent when “the system” was wrong. The flip side was that when “the system” was right, the reporting was much worse than before.

            How we diagnosed the root cause and created a solution is a story for another day. This was a perfect example of a SYSTEMIC problem; a problem INHERENT to the system’s BUSINESS GOVERNANCE—how it was designed, structured or organized, implemented or operated, maintained, and managed. Note that these governance functions are UNIQUE executive responsibilities BECAUSE no one has more authority to change the system. Yet, they were absent, apart from yelling at the director of finance. In conclusion, poor business governance sets people up to fail, which is a typical characteristic of human error.

            In a sense, the Chief Executive is the GOVERNOR (see illustration above) of a business system, which was defined by the physicist James Clerk Maxwell as ” … a part of a machine by means of which the velocity of the machine is kept nearly uniform, notwithstanding variations in the driving power or the resistance.” The operative word here is “uniform.”

            And so, I wrote a book about my experiences, and McGraw Hill published it. Take a peek inside The Root Cause: https://lnkd.in/gPjsn4wE