Breaking Failure: How to Break the Cycle of Business Failure and Underperformance Using Root Cause, Failure Mode and Effects Analysis, and an Early Warning System

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Features

Master three powerful methods for breaking cycles of business failure and underperformance

• Based on techniques repeatedly proven in high-stakes, mission-critical environments ranging from defense and space exploration to manufacturing and healthcare
• Shows how to adapt Root Cause Analysis (RCA), Failure Mode and Effects Analysis (FMEA), and Early Warning Systems (EWS) for any business and marketing environment
• Will help you optimize performance in a wide spectrum of business activities, from marketing campaign development to new product introduction

Description

TIME-PROVEN TECHNIQUES FOR REDUCING RISK AND IMPROVING PERFORMANCE IN MISSION-CRITICAL BUSINESS ACTIVITIES

• Proven in high-stakes, high-risk environments—from defense to healthcare
• For business functions ranging from marketing to HR, R&D to M&A
• Indispensable for all executives, entrepreneurs, strategists, and product managers

This guide brings together simple, risk-free, and low-cost ways to break cycles of business failure and underperformance. These techniques aren’t new or trendy: they’ve repeatedly proven themselves in mission-critical disciplines ranging from manufacturing to space exploration, with lives and billions of dollars on the line. They work. And they’ll work for you, too.

First, you’ll learn how to use well-proven Failure Mode and Effects Analysis (FMEA) techniques to anticipate potential failure points before you introduce products, implement strategy, or launch marketing campaigns. Next, utilizing Root Cause Analysis (RCA), you’ll learn to uncover the root cause of business problems, so you can solve them once and for all. Third, you’ll discover how to use an Early Warning System (EWS) to identify “driver” variables in your business, gaining timely and actionable insights without complex predictive modeling.

Whatever your role in decision-making, leadership, strategy, or product management, Breaking Failure will help you mitigate risk more effectively, achieve better results—and move forward in your career

When lives are on the line, when billions of dollars are at risk, failure is not an option. That’s why industries such as aerospace, chemical engineering, and healthcare have pioneered world-class methods for identifying, anticipating, and mitigating failure. In Breaking Failure, Alexander D. Edsel helps you adapt these proven techniques to the realities of your business.

You’ll discover how to plan more effectively for contingencies, and how to uncover and address the root causes of poor performance in business functions ranging from marketing to hiring. Equally valuable, you’ll learn how to systematically improve your situational awareness, so you can uncover problems before they damage relationships, brand reputation, or business performance.

Adapted to be 100% practical and actionable, these techniques will help companies of all sizes, in all markets. As you move towards greater speed and agility, they will become even more indispensable.

A practical, systematic approach to “Breaking Failure” in your company

• Use Problem Framing to overcome the human bias towards thoughtless action
• Use Failure Mode & Effect Analysis (FMEA) to anticipate problems, prioritize risks, and plan corrective actions
• Use Root Cause Analysis (RCA) to identify true causes of failure in any process, product, or project
• Use an Early Warning System (EWS) to quickly recognize signs of underperformance
• Use Pre-Planned Exit Strategies and Exit Triggers to end failure and underperformance issues you can’t fix

Sample Content

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Table of Contents

Introduction xiv

State of Management xvi

Applicability of These Concepts xvii

Benefiting from the Topic xvii

Chapter 1: Failure & Stagnation 1

Failure, Failure Everywhere 1

Underperformance 6

The Overlooked Costs of Failure: The Intangibles and

Opportunity Costs 7

The Clogged Pipeline 8

The Causes of Failure 9

Why Is Failure So Prevalent? 10

Final Thoughts on Failure 12

Chapter 2: Don’t Start Off on the Wrong Foot 15

The Action Bias 16

Frames 16

Framework Selection 18

The Domain Transfer of Failure Mode and Effect Analysis 22

Brief History of FMEA and Its Adoption by Different Disciplines 23

Objectives of the FMEA 25

Best Practices for a Successful FMEA 25

Components That Make Up a FMEA 26

Examples of Preventive Measures 36

Detection Measures 41

Chapter 3: The Business Failure Audit and the Domain Transfer of Root Cause Analysis 43

How Should One Proceed? The Domain Transfer of Root Cause Analysis 45

Differences Between an RCA and Functional Area Audits 46

The Adoption of Functional Area Audits 47

Background and Use of the Failure Audit (Root Cause Analysis) 49

NASA’s RCA Methodology 51

How to Conduct the Failure Audit: An Overview 51

Chapter 4: The Early Warning System 61

Background 62

Creating a Z-Score Metric for Other Areas of Business 64

The Option of Building a More Sophisticated EWS 66

Creating the EWS and Its Foundation, the Causal Forecast 67

Chapter 5: Blind Spots and Traps 83

Areas of Failure: Knowns and Unknowns 84

The “Known-Knowns” 85

The “Known-Unknowns”: Forecasting 130

Improving Forecasts 135

The “Unknown–Unknowns” 139

Chapter 6: The Preplanned Exit Strategy 143

The Trigger 144

What Should Never Factor into the Decision 148

Company, Product, and Market Exits 148

The “In-Between” Strategies (or Plan B) 150

Exit Strategies 158

Faster Exit Strategies 164

Epilogue: Challenges with Domain Transfers and the Next Major Domain Transfer 171

Facilitating Adoption 171

Finding the Team Leader 172

Triggers, Protocols, and Documentation 173

Incentivizing Behaviors 174

Professional Certifications 174

An Unlikely but Potential Solution 176

The Future Domain Transfer: Artificial Intelligence 176

Appendix: The Early Warning System-Details 191

Step 5: Entering Leading, Lagging, and Connectors into a Spreadsheet 191

Step 6: Calculating the Variance 194

Step 7: Calculating a Weighed Scored 194

Step 8: The Early Warning System Dashboard 195

Step 9: Troubleshooting: When the EWS Shows

Underperformance 196

Digging Deeper 197

The Return on Promotion (ROP) 199

Endnotes 203

Chapter 1, “Failure & Stagnation” 203

Chapter 2, “Don’t Start Off on the Wrong Foot” 204

Chapter 3, “The Business Failure Audit and the

Domain Transfer of Root Cause Analysis” 205

Chapter 4, “The Early Warning System” 206

Chapter 5, “Blind Spots and Traps” 206

Chapter 6, “The Preplanned Exit Strategy” 209

Epilogue 209

Index 211

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