The problems that affect a company’s success don’t always result from not understanding how to solve them. In many cases, their root causes aren’t easily identified. That’s why root cause analysis is vital to creating organizational change.
According to research described in the Harvard Business Review, 85 percent of executives believe their organizations are bad at diagnosing problems, and 87 percent think that flaw carries significant costs. As a result, more businesses seek organizational leaders who avoid costly mistakes.
If you’re a leader who wants to problem-solve effectively, here’s an overview of root cause analysis and why it’s important in organizational leadership.
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Root cause analysis is the process of uncovering problems’ causes to suggest specific solutions. Root cause analysis (RCA) helps you find problems’ main contributing factors. This way, you can solve and address the root of the issues instead of just treating smaller symptoms.
“Leaders must perform as beacons,” says Harvard Business School Professor Joshua Margolis, who co-teaches the online course Organizational Leadership with HBS Professor Anthony Mayo. “Namely, scanning and analyzing the landscape around the organization and identifying current and emerging trends, pressures, threats, and opportunities.”
By working with others to understand a problem’s root cause, you can generate a solution. If you’re interested in performing a root cause analysis for your organization, here are eight steps you must take.
How to Do Root Cause Analysis: 8 Essential Steps
1. Identify Performance or Opportunity Gaps with the Congruence Model
The first step in a root cause analysis is identifying the most important performance or opportunity gaps facing your team, department, or organization. Performance gaps represent how your organization falls short or fails to deliver on its capabilities, while opportunity gaps reflect something new or innovative it can do to create value.
Finding those gaps requires running diagnostics on your organizational architecture. While there are several methods, HBS Online’s Leading Change and Organizational Renewal course focuses on one: the congruence model.
The congruence model—created by organizational theorist David Nadler with HBS Professor Michael Tushman and Stanford Graduate School of Business Professor Charles O'Reilly, who co-teach Leading Change and Organizational Renewal—allows business leaders to structure their organizational data in a way that better identifies performance and opportunity gaps and their root causes.
The congruence model features five elements:
- Component tasks: The work required to support the company's short- and long-term goals
- Interdependencies: How each piece of work affects the other
- Capabilities: Your employees’ skills, talents, and backgrounds
- Formal organization: The hierarchy of how your employees are grouped, such as by product or function
- Culture: Your organization’s social control system, or the pattern of behavior reinforced by people and systems over time
“Instinctually, most leaders go straight to solutions,” says Tushman in Leading Change and Organizational Renewal (LCOR). “A core LCOR idea is you must do a thorough diagnosis first, determine the root causes of your gap, and only then can you move to an integrated intervention based on this diagnosis.”
Utilizing the congruence model enables managers to leverage a form of leadership called “leader as beacon," as described in Organizational Leadership.
“Leaders are called upon to illuminate what's going on outside and around the organization, identifying both challenges and opportunities and how they inform the organization's future direction,” says Margolis in Organizational Leadership.
Without those insights, you can’t reap root cause analysis's benefits because external forces—including industry trends, competitors, and the economy—can affect your company’s long-term success.
2. Create an Organizational Challenge Statement
The next step is writing an organizational challenge or problem statement explaining the gap and its importance. The statement should be three to four sentences and encapsulate the challenge’s essence.
It’s crucial to explain where your organization falls short, what problems that poses, and why it matters. Describe the gap and why you must urgently address it.
A critical responsibility is deciding which gap requires the most attention and focusing your analysis on it. Concentrating on too many problems at once can dilute positive results.
To prioritize issues, first think about which ones are urgent and essential. Then, consider which can please stakeholders.
3. Analyze Findings with Colleagues
It's essential to work with colleagues to gain different perspectives on a problem and its root causes. This involves understanding the problem, gathering information, and developing a comprehensive analysis.
While this can be challenging when you’re a new organizational leader, using the double helix of leadership—the coevolutionary process of executing organizational leadership's responsibilities while developing the capabilities to perform them—can help foster collaboration.
Research shows diverse ideas improve high-level decision-making, which is why you should connect with colleagues with different opinions and expertise to enhance your root cause analysis’s outcome.
4. Formulate Value-Creating Activities
Next, determine what your company must do to address your organizational challenge statement. Establish three to five value-creating activities for your team, department, or organization to close the performance or opportunity gap you’ve identified.
This means sharing the organization's direction. It should be a clear and strong path forward to help stakeholders understand and work toward the same goal.
“Setting direction is typically a reciprocal process,” Margolis says in Organizational Leadership. “You don't sit down and decide your direction, nor do you input your analysis of the external context into a formula and solve for a direction. Rather, setting direction is a back-and-forth process; you move between the value you'd like to create for customers, employees, investors, and your grasp of the context.”
5. Identify Necessary Behavior Changes
After listing the activities that can help your company, identify the behavior changes needed to solve your challenge.
“Your detective work throughout your root cause analysis exposes uncomfortable realities about employee competencies, organizational inefficiencies, departmental infighting, and unclear direction from leadership at multiple levels of the company,” Mayo says in Organizational Leadership.
Factors that can affect your company’s long-term success include:
- Ineffective communication skills
- Resistance to change
- Problematic workplace stereotypes
Not all root cause analyses reveal behaviors that must be eliminated. Sometimes you can identify behaviors to enhance or foster internally, such as:
- Collaboration
- Innovative thinking
- Creative problem-solving
6. Implement Behavior Changes
Although behaviors might be easy to pinpoint, putting them into practice can be challenging.
To ensure you implement the right changes, gauge whether they’ll have a positive or negative impact. According to Organizational Leadership, you should consider the following factors:
- Motivation: Do the people at your organization have a personal desire for and commitment to change?
- Competence: Do they have the skills and know-how to implement change effectively?
- Coordination: Are they willing to work collaboratively to enact change?
Based on your answers, decide what behavior changes are plausible for your root cause analysis.
7. Map Root Causes
The next step in your analysis is to map the root causes you found to the parts of organizational alignment. Doing so helps you determine which components to adjust or change to implement employee behavior changes successfully.
Three root cause categories unrelated to behavior changes are:
- Systems and structures: The formal organization component, including talent management, product development, and budget and accountability systems
- People: Individuals’ profiles and the workforce’s overall composition, including employees’ skills, experience, values, and attitudes
- Culture: The informal, intangible part of your organization, including the norms, values, attitudes, beliefs, preferences, common practices, and habits of its employees
8. Create an Action Plan
Using your findings from the previous steps, create an action plan for addressing your organizational problem’s root cause and consider your role in it.
To make the action plan achievable, ensure you:
- Identify the problem’s root cause
- Create measurable results
- Ensure clear communication among your team
“One useful way to assess your potential impact on the challenge is to understand your locus of control,” Mayo says in Organizational Leadership, “or the extent to which you can personally drive the needed change or improvement.”
A good way to show your control is with three circles. The innermost circle represents full control of resources. The middle circle shows your ability to influence but not control. The outermost circle refers to changes outside your influence and control.
Consider these circles when implementing your action plan to ensure your goals don’t overreach.
The Importance of Root Cause Analysis in Organizational Leadership
Root cause analysis is a critical organizational leadership skill for effectively addressing problems and driving change. It helps you understand shifting conditions around your company and confirm that your efforts are relevant and sustainable.
As a leader, you must not only effect change but understand why it’s needed. Taking an online course, such as Organizational Leadership or Leading Change and Organizational Renewal, can enable you to gain that knowledge.
Using root cause analysis, you can identify the issues behind your organization’s problems, develop a plan to address them, and make impactful changes.
Do you want to elevate your leadership skills? Explore our online certificate courses Organizational Leadership and Leading Change and Organizational Renewal to dive deeper into root cause analysis to ensure your company’s long-term success. Not sure which course is right for you? Download our free flowchart to find the right fit.
This post was updated on December 3, 2024. It was originally published on March 7, 2023.
