Distinguishing Cause from Effect

The most common problem is failing to distinguish cause from effect. As I said earlier, a set of actions is taken only to achieve a specific effect. But in a long process with many steps, there will be many levels of cause and effect. To illustrate, look at this list of steps that a consultant proposed to help a company improve its productivity:

The following steps would be undertaken in Phase I

1. Interview key management and supervisory personnel

2. Trace and document transactions and work flow

3. Identify all critical functions

4. Analyze organizational structure

5. Understand services and performance measures

6. Assess performance levels of business functions

7. Identify problems and causes

8. Identify and justify potential opportunity areas for productivity improvement

First of all, there are too many points in the grouping for the process to be grasped easily. Remember the Magic Number Seven.

(Actually, I recommend limiting your groupings to no more than four or five points. The likelihood is remote that, in a grouping larger than five, some of the ideas would not be more closely related. You obscure some of your thinking if you do not point out that relationship. For example, to note that of the Ten Commandments some are "sins against God" and some are “Sins against man" communicates an insight missed by simply displaying a standard list of the Ten.)

In addition, while the eight steps listed above would indeed be taken in the order shown, they are not all on the same level of abstraction. Some of the steps are taken to create the end products stated in other steps, so that they imply mini-processes, with clear beginnings and endings, within the overall process. Not to distinguish these mini-processes obscures what the author is in fact saying he will do. What he really means to say is something like this:

In Phase I we will identify potential opportunities to improve your productivity

1. Determine the critical functions of the business (3)

- Interview key personnel (1)

- Trace and document transactions and work flow (2)

2. Identify weaknesses in performing those functions (7)

- Specify the organization structure (4)

- Determine services and performance measures (5)

- Assess performance levels (6)

3. Recommend practical ways to change (8)

Now he can check whether the steps included are appropriate, and whether be bas omitted any. For example, are these three steps the only steps one needs to carry out to identify potential opportunities for productivity improvement? If I interview key personnel and trace and document transactions and work flow, is that sufficient for me to determine the critical functions of the business?

The trick to avoiding cause-effect mistakes is to visualize yourself actually taking the action you are writing about in each case, and state what you will have in your hand at the end of the action. You can then judge whether you must take one particular action before you can take the next, or whether you must take it in order to achieve the next.

Visualizing yourself taking the action is a great time saver in making rapid judgments about whether your grouping says what you meant it to say. Take this list for example:

Strategic planning involves the recognition of a timing cycle

I. Perception of need

2. Development of strategy for creating responsive product/service

3. Implementation

4. Market acceptance and high growth

5. Slower growth, the onset of maturity

6. High cash generation

7. Decline/decay

The first step in looking at it critically is to see whether you understand the process being described. Put yourself in the doer's place, and imagine yourself taking the action: "First I perceive the need, then I develop a strategy, then I implement the strategy then I ... " Oops, here is a problem.

What the author appears to have done is to group three actions the company takes and four things that result. If you look at the results for a moment, you can see that they reflect the normal product life cycle curve in which you get:

Thus he must mean his fourth step to be something like 'Assess the market's reaction," with these points as the path of that reaction. (We do have one point left over: high cash generation. This, however is normally a characteristic of the onset of maturity, so does not belong in the list at all). The list would now read like this:

Strategic planning involves the recognition of a cycle

1. Perception of need

2. Development of a strategy for creating responsive product/service

3. Implementation of the strategy

4. Assessment of market reaction

5. Change of strategy to match the reaction