Do you want to know what drives me the most crazy as a parent? Something that drives me so far off my rocker that I want to pull my hair out and stamp on it while muttering to myself in complete gibberish.
The 5 whys - business tool
It’s when my kids keep asking me Why? Why? Why? Why? Why?
I give them an answer to a question they have asked and they just ask me why? They don’t say thank you and accept my answer at face value. It can be tiresome, but it also makes me really proud and that is what makes them such a better marketer and business person than most. During my MBA program, one of the most simple, yet effective analytical tools we were given and tasked to use is the “5 Whys?” It is exactly what it says on the tin. You have a problem and ask why. But the beauty is that you don’t just stop on the first why you keep going until you hit the underlying root cause of an issue.
For example:
1. Why is our revenue down this month?
Answer: Your business founder who is also the top salesperson has spent more time in meetings with bankers than selling
2. Why has the founder been in these meetings?
Answer: Sales have increased and the business needs more cash to buy raw goods. So the owner has been meeting with the bankers.
3. Why is he spending so much time in these meetings?
Answer: Many of the banks have refused to extend the business a line of credit
4. Why have they refused this?
Answer: Because our financial reports are a mess?
5: Why are they a mess?
Answer: Because we tried to save money and do them ourselves.
So in this example, we can see that a reduction in revenue is really down to the fact that we didn’t get our financials in place properly. This simple tool allows us to drill deeper and find the cause of problems and not necessarily the symptoms.
How have you used this in your business?