'Root Cause Analysis' and Business Dullness

[Peter Frampton]

When I was at the American Society of Training & Development (ASTD) International Conference this summer I attended a very interesting talk about analysing the root cause of things that happen. It's a common sense field of enquiry, one that we consciously or unconsciously engage every day when we work out why things happen. But it was a very useful reminder to look further back for more fundamental causes of what we observe. The title Root Cause Analysis was new to me but one that I appreciate. It serves as a reminder to me not to jump to superficial conclusions about things I see happening.

Malcolm Gladwell writes about this in his book Outliers. He looks at the terrible safely record of Korean Airlines and examines a spate of accidents that resulted in many deaths. When analysing a plane crash it is easy to attribute the crashes to e.g. bad weather, the vague 'technical failures', and communication breakdowns. What Gladwell tells us is that there was a much more fundamental cause of the Korean Airlines crashes. Specifically, it turns out that a trait of too much respect and deference in the Korean culture meant that co-pilots wouldn't speak up to question and check the captains of the planes in dangerous situations. The black boxes revealed after the crashes that the co-pilots had identified the approaching mountains etc, but didn't raise their concerns clearly enough. Culture was a much more fundamental cause of the accidents than the immediate issues of weather etc.

The airline addressed the fundamental issue with changes like requiring the captain and the co-pilots to address each other by their first names. With this and other changes to the fundamental causes of the accidents, the Korean airlines safety record is now exemplary.

So how does this relate to "Business Dullness"?

I've coined that term as it seems to be the opposite of Business Acumen, which is what Color Accounting trainers ultimately teach. (The word 'acumen' comes from the Latin word 'sharp'.) Most of our students attend our trainings because they want to understand business better, rather than become accountants. They want to develop their business acumen. So it makes sense for us to ask ourselves what the cause of their lack of business acumen is that has them need business acumen education.

On the surface, we see that students need to understand the key drivers of business, such as profit margin, the velocity with which inventory is sold, and how many assets are used to generate the profit. Those are the important surface issues. But not understanding those concepts is not the root cause of 'business dullness'. Accounting illiteracy is.

The reason Colour Accounting Trainers achieve better business acumen learning outcomes is that they address the fundamental issue of accounting literacy. To be able to understand profit margin you need to truly understand what profit is, and before that, what revenue and expenses are. And a lot of people don't. And a lot of business acumen trainers gloss over the fact that people don't.

Lack of accounting literacy is a root cause of a lack of business acumen. Or put differently, accounting illiteracy is a root cause of business dullness.

Many trainers or students are tempted to skip a study of the fundamentals and go right to the fancy business acumen stuff. Impatience would have us believe that we can save time by doing so. But in Color Accounting business acumen workshops we repeatedly see that an up front investment of time in accounting literacy training ultimately accelerates rather than slows down peoples development of business acumen. And a solid platform of understanding that accounting literacy provides improves the quality and rigor of the students' business acumen.

So, here's to the profound rather than superficial business acumen that Color Accounting enables. And to Color Accounting Trainers standing by our conviction that we will address the fundamental issues that cost people their freedom to do great business.