Home Business Tips – Why Understanding the Root Cause of a Problem is Important

Understanding the customer’s problem and then offering a service that can solve that problem is very important when you are thinking about starting a business. Some entrepreneurs will stop at this level. However, if you use the “5 Whys” analysis technique, you can find the root of the problem, which can lead you to rather unique ideas and a competitive advantage over other companies.The “5 Whys” technique was created by Toyota back in the 1980s. This is how it works (example taken from Wikipedia):My car will not start. (the problem)
1. Why? The battery is dead. (first why)
2. Why? The alternator is not functioning. (second why)
3. Why? The alternator belt has broken. (third why)
4. Why? The alternator belt was well beyond useful service and has never been replaced. (fourth why)
5. Why? I have not been maintaining my car according to recommended service schedule (fifth why)Not only car manufacturers, but also small businesses and entrepreneurs can apply this technique. All you have to do is ask several customers of yours why they have the problem they need to solve? There is no need to follow the “5 Whys” technique rigidly: you may find the root of the problem after 3 or 30 questions. The point of this exercise is to find the root cause.You have the root cause. What next? Consider the following example: let’s say you are a book-keeper for small businesses in your town. If you try to find the root cause of your customers’ problem, probably you will find out that they consider book-keeping rather complicated, and they are afraid that they will make mistakes.An average business will address this problem by providing book-keeping services. However, if you choose to look at the root cause, you might have another idea. You know that book-keeping is not at all that complicated, all you need to know is several rules, a bit of a jargon and conventions. So maybe you could consider offering training for people who would prefer to learn book-keeping and do it themselves.This way your service could be different from those companies that address only the problem, not the root cause. This way, you could be unique, and have competitive advantage over other firms.