As any entrepreneur knows, there are a never-ending number of issues that will arise as you run your business and, if you want to succeed as an entrepreneur, you need to make sure that you’re able to keep all of these trouble spots under control so that your business continues to move forward. However, it can be really difficult for an entrepreneur to attend to all of these issues and still stay focused on the strategic management required to build a successful business. Getting sucked into dealing with all of these daily fires and not having time leftover for strategic planning is what people in the industry refer to as an entrepreneur who is working in the business instead of working on the business, and it doesn’t bode well for the company reaching its full potential.
This incredibly common issue is actually just a symptom of a larger problem, however. I’ve talked about this before here on New Venture Mentor, and I will probably talk about it again, but today we’ll discuss one specific method for combating it – the 5 Whys technique.
Let’s take a look at some definitions: A problem is “a matter or situation regarded as unwelcome or harmful and needing to be dealt with and overcome,” while a symptom is “a sign of the existence of something, especially of an undesirable situation.” So, in more concise terms, symptoms tell you that a problem is present, but they are not the problem itself. Therefore, addressing a symptom does not solve the underlying problem, which will rear its ugly head some other way. If you’re spending your time focused on the symptoms in your business – the daily fires that pop up – instead of addressing the underlying problems, you’ll always have more and more symptoms to deal with and won’t be able to make real progress.
So how do you tell what is a symptom and what is a real problem? One of the best methods is the 5 Whys method, originally developed by Sakichi Toyoda for use in the Toyota Motor Company. As with most things that lead to success, this technique is incredibly simple, but sometimes difficult to implement. Basically, all you have to do to find the real problem instead of getting caught up in the symptoms is to ask a series of 5 Whys about any issue that arises in your business. For example, let’s say your profit has gone down at the restaurant you own. You’re tempted to obsess about the fact that profit has gone and come up with a bunch of strategies for various ways of increasing your profit – maybe you need to advertise more, maybe you need to stay open longer hours, maybe you need to offer more dinner options – but you shouldn’t jump in to brainstorming solutions just yet, not at this stage. Even though it seems that profit being down would absolutely be a problem in a business, if you use the 5 Whys technique you’ll see that it’s actually just a symptom. So, profit is down at your restaurant. Stop and ask yourself:
“Why is profit down at the restaurant?”
Profit is down at the restaurant because margins are down.
Next, ask yourself:
“Why are margins down?”
Margins are down because we’re selling fewer alcoholic beverages and desserts, our highest margin items.
Continue on here:
“Why are we selling fewer high margin items?”
We’re selling fewer high margin items because customers don’t know we have a full bar and wine cellar, nor that we have a pastry chef on staff.
“Why don’t our customers know about our offerings?”
Our customers don’t know about our offerings because we don’t advertise in our menus or marketing and our staff doesn’t mention it.
Why don’t we promote our highest margin items?
We don’t promote our highest margin items because our owner has been brainstorming advertising options instead of looking at our root problem and updating our menus and training our staff.
Okay, I’m clearly joking a bit there with that last answer but you get the point here. By going through the exercise of 5 Whys we realize that the restaurant owner should create a cocktail menu and wine list, perhaps including pairing suggestions with the top entrees, profile the pastry chef, and have the servers ask all guests directly if they’d like anything to drink or would like any of the award-winning pastry chef’s amazing desserts. These small, inexpensive tweaks will be far more effective for improving the bottom line than increasing advertising spend, but you wouldn’t have realized it without getting down to the root problem instead of focusing on the symptoms.
Appropriately enough, an owner who is too swamped with all of the business’ fires to focus on strategic vision is also usually a symptom, not a problem. The real problem – once you work through the 5 Whys technique – is usually something along the lines of an owner’s inability to delegate or a lack of systemization within the business. Moving forward with your business – and your life, really – you should always force yourself through the 5 Whys technique to make sure you get to true problem and don’t waste time on symptoms. You’ll be amazed at the effect it can have on your business. Also, please note that the 5 Whys technique doesn’t necessarily require 5 Whys – sometimes you’ll need 3 and sometimes you’ll need 13 to get to the real problem. The point is not the number of times that you ask “Why?” it’s that you continue to ask it until you’ve found the true source of the issue.
That’s it for this week here on New Venture Mentor. Thanks for watching and I hope you found this video helpful. If you liked it, please let me know by giving me a thumbs up on YouTube and, if you’re feeling especially generous, I’d be greatly appreciative of any small fan funding donation you can make to help me keep my channel alive and these videos coming your way. If you don’t want to give, no worries, but you should still subscribe to the channel and to my email newsletter so you’ll always be the first to get the latest tips and info to help you plan, launch, and grow your business.
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