The ECI Fellows are currently meeting to discuss root cause analysis (RCA) and how to apply it in the E&C function. Here are some of my notes from Day 1.
- The first question on the most recent FCPA guidelines that the DOJ issued to help its US Attorneys determine if an organization should be prosecuted is whether a RCA was conducted.
- Many organizations do not conduct RCA because they suffer from 4 common learning biases:
- Success bias: We prefer success over failure. When we fail, we don’t want to spend time on our failure.
- Action bias: We prefer to do rather than reflect. We are too busy to learn.
- Fitting-in bias: When we join an organization, we believe it’s best if we just fit in, so we don’t challenge how things are done.
- Expert bias: Rather than learn how best to do the work from those at the front lines, we tend to run to senior executives in the ivory tower or to external consultants.
To learn how to overcome these biases, see this HBR article from our presenter.
- Effective RCA usually requires an executive champion in the organization.
- 69% of legal violations resulting in public settlements between 2011 and 2013 can be attributed to cultural issues in the organization. Yet, most RCAs do not look at the cultural or behavioral aspects of the violations.
- When defining your problem statement before the RCA exercise, make sure it follows the MECE principle: Mutually Exclusive, Collectively Exhaustive.