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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

Book 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

  • UseProblem Framingto overcome the human bias towards thoughtless action

  • UseFailure Mode & Effect Analysis (FMEA)to anticipate problems, prioritize risks,and plan corrective actions

  • UseRoot Cause Analysis (RCA)to identify true causes of failure in any process, product, or project

  • Use anEarly Warning System (EWS)to quickly recognize signs of underperformance

  • UsePre-Planned Exit StrategiesandExit Triggersto end failure and underperformance issues you can’t fix

  • Table of Contents

    1. About This eBook
    2. Title Page
    3. Copyright Page
    4. Praise for Breaking Failure
    5. Dedication Page
    6. Contents
    7. Acknowledgments
    8. About the Author
    9. Introduction
      1. State of Management
      2. Applicability of These Concepts
      3. Benefiting from the Topic
    10. 1. Failure & Stagnation
      1. Failure, Failure Everywhere
      2. Underperformance
      3. The Overlooked Costs of Failure: The Intangibles and Opportunity Costs
      4. The Clogged Pipeline
      5. The Causes of Failure
      6. Why Is Failure So Prevalent?
      7. Final Thoughts on Failure
    11. 2. Don’t Start Off on the Wrong Foot
      1. The Action Bias
      2. Frames
      3. Framework Selection
      4. The Domain Transfer of Failure Mode and Effect Analysis
      5. Brief History of FMEA and Its Adoption by Different Disciplines
      6. Objectives of the FMEA
      7. Best Practices for a Successful FMEA
      8. Components That Make Up a FMEA
      9. Examples of Preventive Measures
      10. Detection Measures
    12. 3. The Business Failure Audit and the Domain Transfer of Root Cause Analysis
      1. How Should One Proceed? The Domain Transfer of Root Cause Analysis
      2. Differences Between an RCA and Functional Area Audits
      3. The Adoption of Functional Area Audits
      4. Background and Use of the Failure Audit (Root Cause Analysis)
      5. NASA’s RCA Methodology
      6. How to Conduct the Failure Audit: An Overview
        1. The Start of the RCA—The Fault Tree (Step 5)
        2. Step 6: Creating the Event and Causal Tree
        3. Step 7: The Final Recommendations
    13. 4. The Early Warning System
      1. Background
      2. Creating a Z-Score Metric for Other Areas of Business
      3. The Option of Building a More Sophisticated EWS
      4. Creating the EWS and Its Foundation, the Causal Forecast
        1. Step 1: The Assumptions
        2. Leading Versus Lagging Indicators (The Foundation for Steps 2–4)
        3. Step 2: Identifying All the Available Data
        4. Step 3: Best Practices When Selecting and Categorizing Leading and Lagging Indicators
        5. Step 4: Adding the “Connector” Assumptions
        6. Step 5: Entering Leading, Lagging, and Connectors into a Spreadsheet
        7. Step 6: Calculating the Variance
        8. Step 7: Calculating a Weighed Scored
        9. Step 8: The EWS Dashboard
        10. Step 9: Troubleshooting: When the EWS Shows Underperformance
    14. 5. Blind Spots and Traps
      1. Areas of Failure: Knowns and Unknowns
      2. The “Known-Knowns”
        1. Problem 1: Faulty Research
        2. Problem 2: Leaving Out Key Questions or Data Points
        3. Problem 3: The Purchase Intent Fallacy
        4. Problem 4: Correlation Does Not Imply Causation
        5. Problem 5: Cherry-Picked Data
        6. Problem 6: The Shiny Object Compulsion and Losing Sight of the “Basics”
      3. The “Known-Unknowns”: Forecasting
      4. Improving Forecasts
      5. The “Unknown–Unknowns”
    15. 6. The Preplanned Exit Strategy
      1. The Trigger
      2. What Should Never Factor into the Decision
      3. Company, Product, and Market Exits
      4. The “In-Between” Strategies (or Plan B)
        1. Differences Between Retrenchment, Contraction, and Retargeting
        2. Tools for Uncovering Contraction and Retargeting Strategies
        3. Different Scenarios
      5. Exit Strategies
        1. The Psychology of the Exit Decision
        2. The Harvesting Strategy: The Slow Exit
      6. Faster Exit Strategies
        1. The Spin-Off
        2. The Sale
        3. Liquidation and Voluntary Closure
    16. Epilogue. Challenges with Domain Transfers and the Next Major Domain Transfer
      1. Facilitating Adoption
      2. Finding the Team Leader
      3. Triggers, Protocols, and Documentation
      4. Incentivizing Behaviors
      5. Professional Certifications
      6. An Unlikely but Potential Solution
      7. The Future Domain Transfer: Artificial Intelligence
        1. How Artificial Intelligence Works
        2. Artificial Intelligence Players
        3. Walled Garden Ecosystem Versus “Democratized” Artificial Intelligence
        4. Failure and Artificial Intelligence
        5. The Potential of AI in Business
        6. Artificial Intelligence: The Known-Unknown
    17. Appendix. The Early Warning System-Details
      1. Step 5: Entering Leading, Lagging, and Connectors into a Spreadsheet
      2. Step 6: Calculating the Variance
      3. Step 7: Calculating a Weighed Scored
      4. Step 8: The Early Warning System Dashboard
      5. Step 9: Troubleshooting: When the EWS Shows Underperformance
      6. Digging Deeper
      7. The Return on Promotion (ROP)
    18. Endnotes
      1. Chapter 1, “Failure & Stagnation”
      2. Chapter 2, “Don’t Start Off on the Wrong Foot”
      3. Chapter 3, “The Business Failure Audit and the Domain Transfer of Root Cause Analysis”
      4. Chapter 4, “The Early Warning System”
      5. Chapter 5, “Blind Spots and Traps”
      6. Chapter 6, “The Preplanned Exit Strategy”
      7. Epilogue
    19. Index