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

by Alexander Edsel

Overview

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

• Use Problem Framing to overcome the human bias towards thoughtless action
• Use Failure Mode & Effect Analysis (FMEA) to anticipate problems, prioritize risks,and plan corrective actions
• Use Root Cause Analysis (RCA) to identify true causes of failure in any process, product, or project
• Use an Early Warning System (EWS) to quickly recognize signs of underperformance
• Use Pre-Planned Exit Strategies and Exit Triggers to end failure and underperformance issues you can’t fix

Product Details

ISBN-13:	9780134386997
Publisher:	Pearson Education
Publication date:	10/05/2015
Sold by:	Barnes & Noble
Format:	eBook
Pages:	240
Sales rank:	784,322
File size:	7 MB
Age Range:	18 Years

About the Author

Alexander D. Edsel is the Director of the Master of Science in Marketing program for the Naveen Jindal School of Business at the University of Texas at Dallas, where he has been a faculty member for more than 12 years. In addition, he has more than 20 years of product management and marketing management experience in both B2B and B2C markets in the chemical, high-tech, and healthcare fields while at Bayer, Compaq, and WellPoint. His original work and research on failure and underperformance began in 1996 and was first published in March 2011 with an article that appeared in the Product Development Management Association’s Vision magazine. Edsel holds both MBA and JD degrees. In his spare time, he loves to read nonfiction books, spend time with his family, and explore additional failure mitigation techniques at his blog at www.breakingfailure.com.

Table of Contents

Introduction    xiv

State of Management    xvi

Applicability of These Concepts    xvii

Benefiting from the Topic    xvii

Chapter 1: Failure & Stagnation    1

Failure, Failure Everywhere    1

Underperformance    6

The Overlooked Costs of Failure: The Intangibles and

Opportunity Costs    7

The Clogged Pipeline    8

The Causes of Failure    9

Why Is Failure So Prevalent?    10

Final Thoughts on Failure    12

Chapter 2: Don’t Start Off on the Wrong Foot    15

The Action Bias    16

Frames    16

Framework Selection    18

The Domain Transfer of Failure Mode and Effect Analysis    22

Brief History of FMEA and Its Adoption by Different Disciplines    23

Objectives of the FMEA    25

Best Practices for a Successful FMEA    25

Components That Make Up a FMEA    26

Examples of Preventive Measures    36

Detection Measures    41

Chapter 3: The Business Failure Audit and the Domain Transfer of Root Cause Analysis    43

How Should One Proceed? The Domain Transfer of Root Cause Analysis    45

Differences Between an RCA and Functional Area Audits    46

The Adoption of Functional Area Audits    47

Background and Use of the Failure Audit (Root Cause Analysis)    49

NASA’s RCA Methodology    51

How to Conduct the Failure Audit: An Overview    51

Chapter 4: The Early Warning System    61

Background    62

Creating a Z-Score Metric for Other Areas of Business    64

The Option of Building a More Sophisticated EWS    66

Creating the EWS and Its Foundation, the Causal Forecast    67

Chapter 5: Blind Spots and Traps    83

Areas of Failure: Knowns and Unknowns    84

The “Known-Knowns”    85

The “Known-Unknowns”: Forecasting    130

Improving Forecasts    135

The “Unknown–Unknowns”    139

Chapter 6: The Preplanned Exit Strategy    143

The Trigger    144

What Should Never Factor into the Decision    148

Company, Product, and Market Exits    148

The “In-Between” Strategies (or Plan B)    150

Exit Strategies    158

Faster Exit Strategies    164

Epilogue: Challenges with Domain Transfers and the Next Major Domain Transfer    171

Facilitating Adoption    171

Finding the Team Leader    172

Triggers, Protocols, and Documentation    173

Incentivizing Behaviors    174

Professional Certifications    174

An Unlikely but Potential Solution    176

The Future Domain Transfer: Artificial Intelligence    176

Appendix: The Early Warning System-Details    191

Step 5: Entering Leading, Lagging, and Connectors into a Spreadsheet    191

Step 6: Calculating the Variance    194

Step 7: Calculating a Weighed Scored    194

Step 8: The Early Warning System Dashboard    195

Step 9: Troubleshooting: When the EWS Shows

Underperformance    196

Digging Deeper    197

The Return on Promotion (ROP)    199

Endnotes    203

Chapter 1, “Failure & Stagnation”    203

Chapter 2, “Don’t Start Off on the Wrong Foot”    204

Chapter 3, “The Business Failure Audit and the

Domain Transfer of Root Cause Analysis”    205

Chapter 4, “The Early Warning System”    206

Chapter 5, “Blind Spots and Traps”    206

Chapter 6, “The Preplanned Exit Strategy”    209

Epilogue    209

Index    211

 

 

Editorial Reviews

As a 15-year marketing professional responsible for many campaign and product launches, reading Breaking Failure helped bring into focus my own planning and post-campaign assessment shortcomings. The author does an excellent job introducing a framework as well as techniques any manager can use to better identify, gauge, quantify and most importantly lessen the impact of failure. Detailed infographics and examples help the reader understand the power and applicability of each of these techniques. The author also does a good job illustrating how these techniques can be incorporated across any organization. Breaking Failure is a must read for any manager looking to improve business performance and avoid recurring pitfalls.”

–Andrew Franco, Vice President of Marketing at Transamerica

“In Breaking Failure, Alexander Edsel breathes new life into an age-old question: Can businesses prevent and mitigate failure? The short answer is yes, but the strength of Edsel’s approach is the way in which he convincingly transfers the insights of fields such as engineering into the marketing arena while also demonstrating their practical use and implementation potential. Edsel presents an intuitive suite of frameworks that address management biases, identify and prioritize risks, establish mechanisms for warnings, and develop strategies to prevent and prepare for failure. Highly recommended for the marketing practitioner who is looking for an actionable, pragmatic approach to dealing with failure, an inevitable reality of doing business.”

–Yannis Kotziagkiaouridis, Global Chief Analytics Officer at Wunderman

“Author Alexander Edsel has created a rich story that removes the mystery surrounding product success and failure, offering a refreshing blend of street wisdom and classical theory to apply problem-solving techniques from other disciplines into the crazy world of marketing and product management.”

–Jeff Kavanaugh, VP and Managing Partner, Infosys Consulting

“With all the buzz in marketing today around big data and technology as the way to improve our craft, Alexander Edsel reminds us that the best opportunities for progress may come from looking outside of our discipline and applying decision making principles from other domains. Since reading Edsel’s book, I’ve changed the way I think about solving marketing problems and just as importantly have changed the way I think about staffing, giving much more weight to the need for cross disciplinary thinking in our hiring.”

–Patricia Lyle, General Manager, Meredith Xcelerated Marketing

“I’ve worked with Alex on a number of projects, and I appreciate his ability to communicate highly technical concepts to executable actions for real business professionals. This book isn’t just for CEOs and senior executives; it’s also for managers and employees looking to implement improvement processes to create real value in their businesses. As Alex points outs, the techniques do require a modest investment in time but most importantly the discipline to apply these practices on a consistent and concentrated basis to mitigate potential future failure.”

–Mike Hart, Vice President of Sales, Lennox Industries, Inc.

“Alex brings perspective on the real-world challenges that are faced by businesses today. His approach to diagnosing issues early, applying past learnings, and hopefully ending up with better outcomes will help all enterprises from small to large improve their performance.”

–Bob Nolan, Senior Vice President of Insights & Analytics, ConAgra Foods

“By identifying key areas where corporate failures typically originate from, Alexander Edsel lays out a roadmap for decision-makers to listen, assess, understand, and strategize to avoid or minimize the impact of catastrophic failures. This is an excellent, practical treatise to effect a learning, evidence-based organization where tools, process, concept-testing and empowerment replace gut feelings and unsubstantiated domain-transfer generalizations. An excellent resource that should help trigger deeper thinking.”

–Dimitris Tsioutsias, Ph.D. / SVP, Strategic Business Analytics, Targetbase-Omnicom Media Group

“At a time when everyone in business is talking about being data-driven, but very few enterprises are actually benefiting from it, Breaking Failure provides a much needed set of frameworks and methodologies to guide decision making and maximize the impact of business investments. Complex concepts are laid out clearly and can be followed easily, making them ultimately practical and applicable. And maybe most importantly, the book is relevant to multiple levels of managers and executives, as well as across organizational functions, from marketing to operations and HR.”

–Slavi Samardzija, Chief Analytics Officer, Annalect-Omnicom Media Group

“Alexander Edsel’s perspective in Breaking Failure is key for businesses to use effective problem solving tools normally used for process improvement. By using his methodology, businesses can focus on the true reasons for the occurrence and abate failures before they occur, saving time and money. A book to add to my ‘Lean Library’ collection.”

–Lisa Townsend, Business Excellence Manager, Lennox Industries

From the Publisher