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  5. 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

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, 1st edition

  • Alexander Edsel

Published by Pearson FT Press (October 12th 2015) - Copyright © 2016

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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

ISBN-13: 9780134386362

Includes: Hardcover
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$44.99

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Overview

Despite advances in technology, theory, data analytics, and strategic planning techniques, business failure and underperformance continue unabated. By recent estimate, products have a failure rate of 42%, and 84% of marketing programs fail to generate positive ROI. Why? Is it incompetence? Overconfidence? Bad timing? Global competition? Sometimes… but rarely. These factors simply don’t explain why smart, well-educated and seasoned professionals and companies fail at such high rates. Breaking Failure offers simple, risk-free, low-cost ways to break cycles of failure and underperformance by adapting three well-proven techniques from disciplines outside business. Building on techniques proven in manufacturing and space exploration, you’ll learn how to use Root Cause Analysis (RCA) to uncover the root cause of problems, so you can solve them and once and for all. Next, utilizing well-proven Failure Mode and Effects Analysis (FMEA) techniques, you’ll learn how to anticipate potential failure points before you introduce your product, implement your strategy, or launch your next marketing campaign. Third, you’ll learn how to use an Early Warning System (EWS) to identify “driver” variables in your business, gaining timely and actionable insights without the intense complexity of conventional predictive modeling. These techniques aren’t new or trendy: they’ve proven themselves over decades in some of the world’s highest-stakes, most mission-critical environments. If you want to prevent business failure and underperformance, they will work for you, too.

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&

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