http://apollo-as.com/rss 2010-03-10T11:18:44+00:00 Zend_Feed http://apollo-as.com/blog?blogEntryId=25 <![CDATA[Solving Supply Chain Problems Proactively]]> 2010-02-18T05:49:35+00:00 Cory Boisoneau (Excerpted from our article published in Industrial Engineer, February 2010)

Managing the problems associated with the global supply chain of major products these days requires a flexible, adaptable, and consistent approach.

One need look no further than the latest commercial aircraft designed by Boeing to see just how far a company is willing to go to realize the numerous and enormous benefits of a decentralized, extended global supply chain.  Expertise and specialization is focused directly on individual components.  Profit and loss responsibility is concentrated into smaller, more manageable (and thereby accountable) business units.  Risk is diversified across multiple "baskets" of suppliers.  The benefits of local markets (such as cheaper labor and the proximity to raw materials) can be exploited.  The list goes on.

But Boeing's strategy also shows some of the inherent risks and unfortunate consequences associated with managing such a supply chain.  Unfortunately, it is one thing to map out all the potential benefits of a diversified global supply chain, yet quite another for the company and its managers to actually make it out alive given the risks involved.

While the new 787 by Boeing may be one of the most ambitious attempts at wringing benefits from an extended global supply chain, we can find other examples of all sizes, shapes, and flavors.  Globalization is just another way to say "global supply chain."  Like it or not, it is here to stay.

Companies that learn to manage the risks of a global supply chain can expect to reap, at the very least, the reward of survival.  But those that learn to proactively manage the problems encountered in such a diverse system can expect to rule their sectors.  The key component to proactive problem solving is a robust Solution Management System (SMS) built on a solid, adaptable root cause analysis program.

To proactively minimize the risk of future failures by learning from failures in the supply chain, read the rest of our article published in the February issue of Industrial Engineer magazine.

 

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http://apollo-as.com/blog?blogEntryId=24 <![CDATA[Is "More Training" the Solution to Human Error?]]> 2010-02-18T16:26:18+00:00 Cory Boisoneau ROOT CAUSE ANALYSIS SOLVES PROBLEMS AND MAKES TRAINING PROGRAMS MORE EFFECTIVE.
(Excerpted from our article in Plant Engineering, February 2010)

When something goes wrong in your organization, is human error often the identified cause?  Is "more (task-related) training" for the people involved often the designated solution?  As a result, have employees in your organization reluctantly endured many kinds of training - often referred to as "flavor of the month"?  And do the problems you are trying to prevent continue to occur?  Given limited resources, are you getting the most out of those resources?

Organizations have an opportunity to look more closely at the results they are trying achieve, and evaluate what actions will help achieve those results.

Consider all the time and energy it takes to provide training - from the people who initiate and drive it, to the people who plan it, to the people who deliver it, to the people who partake in it, not to mention the work that is not getting done while those people are away from their jobs, or the temps that must be hired to fill in - it is a huge commitment and investment.  Especially in the current economic climate, when everyone needs to be very careful with the way they invest their resources - time, people and money - it is all the more important to carefully focus training and make sure there's payback on the investment.

Training in an effective root cause analysis methodology and careful program implementation can resolve these issues and help accomplish training goals.  For best practices, go to our article published as the cover story in the February 2010 issue of Plant Engineering.

Link to cover and contents:

http://www.plantengineering.com/archive/2010/20100201.php

Link directly to article text:

http://www.plantengineering.com/article/447578-Is_more_training_the_solution_to_human_error_.php

 

 

 

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http://apollo-as.com/blog?blogEntryId=22 <![CDATA[Want to Grab Execs’ Attention? Solve Costly System-wide Problems]]> 2009-12-23T23:03:43+00:00 Cory Boisoneau
  • Wouldn't it be nice if your leaders would more overtly and/or actively support corrective action and root cause analysis to help you get everyone on board?
  • Do you write it off as impossible because there's too much competition for their time, and they're already stretched too thin?
  • Is there any way to spark their interest?
  • One thing is for certain, you must compete for executives' attention.  A compelling case that stands out from the many other initiatives is necessary.

    Executives often don't pay attention to root cause analysis programs.  Why?  It's not because they don't care.  Rather,  they don't understand the lost value that an effective RCA program could easily scoop up.  Leaders these days are simply swamped with significant problems and little time is available for them to dig in and understand what is going on, or at least that is the perception.

    The reality is that if they can invest one or two hours of time and help you solve just one system-wide problem, they can not only endorse your efforts, they can help save significant money and demonstrate a proactive change that will improve the work processes or system.  You need to set the stage before this can happen.  So, where do you begin?

    First, let's understand the systemic causes that enable system-wide problems.  Systemic problems are pervasive throughout all work processes in the entire organization, including reliability, manufacturing, EH&S and supply chain.  Systemic problems have considerable negative impact on overall performance and competitiveness - they generate many of the causes (problems) you have been working hard to eliminate.  Left unchecked, systemic problems will always generate new problems.

    • The first step to identifying systemic causes is to build a library of thorough and sound RCA reports.
    • After you have some RCAs to draw from, create a new file with a higher level starting point than most RCAs. For example: "20% more quality defects than desired," "exceeding recordable injury goal," "10% over budget," "Excessive customer complaints." Import in all existing RCAs related to, or that contribute to the new RCA.
    • Organize this new, larger chart and look for common causes. Pareto the top three common causes...they will be there.
    • When you communicate to executives that you've uncovered common causes in multiple reports, you can estimate what the resulting, aggregate problems are costing...AND the potential risks this presents for the future. NOW you'll have executives' attention.
    • This is an opportunity to solicit executive input. Engage them to discuss the common causes. Take each of the three common causes and ask "why". This will start to drive toward systemic causes that are causing problems all over the organization. I think you'll find that not only will the leaders enjoy utilizing their previous functional backgrounds (which often feel underutilized once they get to management), you'll benefit from their big-picture view of how the company's many functions and systems interact. They'll probably find it fun, and feel it's a valuable use of their time because of the potential ROI. This is a way to get them to show their support for your RCA efforts and program....they will talk/boast to other leaders about the systemic problems being eliminated in their area because you, indirectly, caused them to take ownership of the RCA results.
    • Together you'll pinpoint what solution(s) can be implemented, AND how much will be saved after the common cause is eliminated.

    Question: How have you successfully eliminated systemic causes?

    Question: What kind of ROI have you helped your organization to achieve?

    Question: How have you involved executives?  Suppliers?  Customers?  And how has that impacted leadership support of your program?

    Share your experiences and best practices.  We're building an online community to support professional development and continuous improvement.

    Posted 11 December 2009 by Chris Eckert, Apollo President

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    http://apollo-as.com/blog?blogEntryId=21 <![CDATA[IT problem management: When does an interruption in IT service deserve formal investigation?]]> 2009-12-23T22:48:29+00:00 Cory Boisoneau When I recently presented at the itSMF Fusion conference about our work with Boeing, and at the ProjectWorld / Business Analyst World conference with Bell Canada, I was often asked by IT professionals, "How do we differentiate between an "incident" and a "problem"[1] that requires a formal root cause analysis?"

    Many emerging ITIL programs either don't have a formal root cause tool in place or take an ad hoc approach to identifying problems.  Either way, most don't know how to separate incidents from problems in order to right-size the investigation response, so that time and money is not spent needlessly.

    It is most important to ensure that your root cause analyses are focused on the events that have -- or could have -- the greatest impact on the most important functions of your organization.  That way, your RCA effort is aligned with the organization's business goals.  To differentiate between incidents and problems -- or incidents and major incidents -- draw a line in the sand where the cost of the unwanted event outweighs the cost of a formal investigation.  Set threshold criteria that specifically outline the kind of response that is appropriate for different scenarios, make it easy for anyone including help desk staff to make the decision, and remember to clearly outline the rationale to justify your criteria.

    One way to create threshold criteria that define what Problem Managers should formally investigate would be to set up a table.

    • In column 1, list business goals, targets, key performance indicators and objectives. These can be set up at all levels of the organization including corporate, business unit and project.
    • In column 2, list how IT supports these goals or targets, such as services provided.
    • In column 3, list how an IT-related event could compromise that goal or target. Specify the magnitude and direction of an event, such as "unplanned server outage more than one hour in duration during business hours." This third column essentially becomes the threshold criteria used to separate incidents from problems.

    Engage people in the organization to help you define what level of service interruption or deviation could compromise the various business goals.  Be aware that each person's definition of what constitutes a problem or major incident will be different.

    Another way to approach problem threshold criteria, especially in larger organizations, would be to:

    • Look at your service license agreement (SLA) and identify all the IT performance outputs - all the "IT will do X" statements.
    • Outline "when X does not happen, then Y will happen." Determine what kind of response is appropriate when Y happens.

    In order to do this successfully, you may need to more specifically define the general terms that are contained in many service agreements.   For example:

    • "Significant number of people affected." How many people?
    • "Percentage of total tasks that can no longer be performed by individuals." What percentage? What tasks?
    • "Significant impact on the delivery of customer product." What is a significant impact? One day late?
    • "Significant risk to safety, law, rule, or policy compliance." How do you define significant risk? One un-licensed copy of a software program on a single desktop?

    How does your organization decide when to perform a root cause analysis?

    Question:  What threshold criteria do you have in place?

    Question:  What best practices did you follow to you create them?

    Question:  Who leads the effort?  What role to systems and business analysts play?

    Share your experiences and best practices.  We're building an online community to support professional development and continuous improvement.

    Posted by Mark Hall | Canada Account Manager, Instructor, & Investigator | 12/2/2009


    [1] Within the incident management process, an incident is defined as an event that interrupts or reduces the Quality of Service. An incident may affect a single employee (i.e., user) but it does not affect the overall business in a significant way. Within the problem management process, a problem is defined as a series of incidents that adversely affects the business because it affects a group of employees.

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    http://apollo-as.com/blog?blogEntryId=20 <![CDATA[Feel expendable to upper management? Improve the corporate quality culture.]]> 2009-12-23T22:46:06+00:00 Cory Boisoneau Question:  Do employees hesitate or refuse to participate in a root cause analysis (RCA) team, or  provide subject-matter expertise, because they don't feel it's an approved activity?  Or, do they fear repercussions for taking time away from their regular job responsibilities and deadlines?

    Question:  When you present the results of a root cause analysis, do decision makers question the conclusions, thinking they know better?

    Question:  Are you denied budget for solution implementation?

    These symptoms may indicate lack of management support.

    Before you can change corporate culture, you need to know:

    • What it is? The predominant attitudes and behaviors in an organization.
    • What you want to eliminate. What's detrimental?
    • What you want to add. What's a positive influence?

    Eliminate the bad, reinforce the good.  Sounds simple enough.  But we all know it can be political, complicated and tricky.

    Put yourself in the executive's shoes.  Play to their perspective and needs.

    • They're focused on what's in it for their department or function. Achieve results that make them look effective and successful. Eliminate problems that are costing them money and wasting their resources.
    • The bottom line is king. Demonstrate cost-avoidance, revenue generation and return on investment.
    • They think at a high, business-goals level. Understand their business goals. Demonstrate how your work is directly helping meet those goals. Call in other internal experts to help you gather and position the data.
    • They'll embrace the Quality Management System (QMS) and RCA only if the results merit. Speak their language. Present results, not process!!

    Question:  How is the level of management support in your organization affecting your job?

    Question:  What attitudes and behaviors do you need to eliminate or reinforce?

    Question:  How have you improved the corporate quality culture?

    Share your experiences and best practices.  We're building an online community to support professional development and continuous improvement.

    I look forward to hearing from you,

     

    John Stiller | November 17 2009

     

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    http://apollo-as.com/blog?blogEntryId=19 <![CDATA[Risk, Vampires, and the Politics of Perestroika]]> 2009-12-01T16:19:47+00:00 Cory Boisoneau Okay, it's Halloween and so I'm going to try and write a spooky story about risk and disciplinary action in the work place.  Gather the kids, light some candles, and get your hot chocolate and marshmallows...

    It was a dark and stormy night, and all the vampires were just getting to work.  As they gathered around the blood cooler drinking their cups of red 'go-juice', the conversation was dominated by the subject of a chilling event that happened a few nights prior.  Apparently, Vlad (not his real name) sprained his ankle while jumping down off a flat bed truck trailer.  He had climbed up onto the trailer to replace a tarp that had been ripped sometime during previous usage.  He threw the ripped tarp onto the ground below.  Then, instead of climbing carefully down the permanent access ladder at the back of the truck, he sat down on the edge and gently pushed himself off.  He landed on the discarded tarp, which slipped under his foot.  He then twisted his ankle.  Ouch!  The witch doctor concluded he had a badly sprained ankle, which forced the safety manager to reset the lost-time accident counter to zero.

    During the interview, Vlad offered the following:

    "Well, that turned out to be a stupid mistake.  I did this work as a human for five years as a contractor in Moldova before my abrupt introduction to the realm of the undead.  You think vampires are thick in Transylvania?  Well, after Gorbachev took the lid off the Eastern Block, they fanned out all over the place.  Just like Bald Eagles - you used to go your whole life without seeing them... now they're competing for road kill with the crows.  Hmmm, speaking of road kill, is it lunch time yet?  Anyway, now I've been doing the same kind of work - albeit on the night shift - for the past fifteen years.  But my undead bones must be getting weak.  I've never been hurt before.  I thought that I was being careful by sitting down first before jumping off the trailer.  If only I hadn't landed on that tarp, I wouldn't have slipped and we wouldn't be here."

    Management wasn't buying it.  They knew that Vlad had been trained recently in best safety practices because they pulled the training roster.  Right there, between Keith Richards and Joan Rivers (two longtime members of the undead) was Vlad's scrawled signature.  He should have known that that his actions of jumping off the trailer weren't acceptable.

    The rules were very clear.  If an employee violates a safety procedure, they are to be bolted into their coffin for two days with a sunlamp and a bag of beef jerky.  That's what the conversation at the blood cooler was all about.  Sure, Vlad may have violated a rule.  But did he really deserve to be punished in such a way?  The punishment wasn't perceived as just by the other vampires onsite because Vlad had a reputation for being safe.  He had never been hurt before.  And, everyone took shortcuts from time to time.  The supervisors seemed to be more interested in meeting their demonic production targets than making sure that every little safety rule was followed.  If Vlad hadn't been hurt, no one would have cared.

    Now I know what you're thinking.  If you've got enough vampires to work the night shift, and you're worried about a sprained ankle, your priorities could use some fine-tuning.  Agreed, but since I'm already invested in the metaphor now we've got to stick it out...

    Recently, Cory Boisoneau and I attended the National Safety Congress conference in Orlando, Florida.  I had the opportunity (thanks to Hilda Koskiewicz of NSC) to host a professional development session titled "Does Disciplinary Action Increase the Risk of Human Error?".  This was a panel discussion where I gave a presentation and then we opened up a dialogue with the panel members and the audience about the topic.  I was very fortunate to have Beth Lay, Manager of Risk Management and Loss Control and Mark Thomasson, Six Sigma Master Black Belt, both of Siemens Energy, as panel members.  Also, thanks to the attendees who contributed great stuff to the conversation.

    My take on this, as you can see from my previous blog on this subject, as well as my recent article in the October 2009 issue of Occupational Health and Safety, is that systemic risk can be found in conditional causes of events and non-systemic risk can be found in the action causes of events.  Most investigations focus on action causes, and therefore only on the non-systemic risk elements in an event.  However, as we stress in our root cause analysis courses, the best solutions are often found in controlling conditional causes.  This is because controlling conditions reduces the systemic risk of recurrence to which all employees are subject... not just the single actions of any one employee.

    Disciplinary action is intended to control action causes of an event.  It attempts to control worker's choices by providing a disincentive to acting outside the established rules.  However, my experience has shown me that disciplinary action is often ineffective in reducing risk.  This experience is apparently mirrored by many others.  In James Reason's latest book
    "The Human Contribution: Unsafe Acts, Accidents, and Heroic Recoveries" page 74 discusses the concept of blame (the act of attributing to which occurs immediately before handing down disciplinary action) in the context of what he calls "the fundamental attribution error", which occurs when we assume that an error is caused by some character flaw, rather than the fact that they made choices based upon past experiences along with information available at the time of the incident.  In other words, the conditions at the time of the event were eminently important to the decisions made by the blamed (and subsequently disciplined) individual.

    Disciplinary action often not only fails to reduce risk of future recurrence, it also can actually increase the risk of future errors.  When discipline is applied programmatically (as in Vlad's case above - the supervisors were 'forced' into discipline by their own rules) regardless of conditions at the time of the incident, the action will be perceived as unjust by both the person experiencing it and that person's peers.  This is a nightmare (remember, it's Halloween) scenario for an investigator of future incidents because when the time comes to understand the causes, no one's talking.  No one saw anything.  No one knows what happened.  That's spooky stuff.

    This was the point I attempted to make in my presentation.  But I learned that I needed to account better for times when punitive disciplinary action actually does help to reduce risk... primarily when dealing with cardinal rule violations, such as horseplay, drinking, drugs, etc.  Beth Lay of Siemens shared a great decision tree based on the work of James Reason that they created in order to help recognize the difference between an error that resides primarily with the employee or with management systems.  I am convinced that this is the right way to go.  An organization needs guidance to know how to act, and in the future we at Apollo will work to develop our own guidelines to help decide when disciplinary action will be effective without actually adding to systemic risk.

    A great article on this subject by Kevin Sharpe of Science and Spirit Magazine can be found here for those interested in reading more.

    Have a happy Halloween!  Be safe!  Or be boring like me...I think I'll spend this year on the couch watching baseball.

    Brian Hughes

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    http://apollo-as.com/blog?blogEntryId=18 <![CDATA[OK, now what? Best practices in RCA facilitation]]> 2009-09-28T15:25:36+00:00 Cory Boisoneau Scenario: You've just had a major incident.  You need answers and you needed them yesterday.  Who do you put on this?

    These are typical thoughts when developing a team to investigate a problem.  Who should be on the team?  In today's environment, most employees perform many tasks and are responsible for various activities, or in other words wear multiple "hats" - so how will they react to being assigned yet another task?

    RCA investigations are often eye opening, and when performed correctly very effective at preventing problem recurrence.  Most RCA team members take great pride in participating in an analysis, and value the company's decision to include them on such a pressing issue.  Putting together an effective team is crucial to the success or failure of an RCA analysis.

    There are usually 2 basic roles in an investigation; a facilitator and a participant.  Here's a look at what these are and the differences between them:

    Facilitator - This is the person leading the group.  Ideally this individual is knowledgeable of the incident, but would not be considered the "expert" on the issue.  However, the facilitator should be proficient in the RCA method being applied to the analysis.  Having an education on the corporate process involved in the incident is extremely helpful, but often not a requirement. Managing a team is the responsibility of the facilitator, and the rest of the team looks to the facilitator for direction and guidance on what to do in the investigation.

     

    Participant - A participant is an individual selected to be actively involved in the investigation.  An effective team is generally made up 4-6 participants with different roles.  Industry or corporate experts are usually involved, and offer information on the process and equipment involved in incidents.  Other participants include individuals with direct knowledge of what happened and outside personnel with no direct knowledge of the incident or process.

    You might ask "why have someone in the room with no expertise or knowledge of the problem?".  It is important to have someone that has no vested interest in the causes or solutions, other than self-preservation (i.e. employment).  You need someone to ask what experts might say are "dumb" or "ignorant" questions, because those questions are valuable when conducting an analysis.  Thoroughly identifying the causes of an incident include those simple causes that experts might not even consider as they might have already dismissed those as contributing causes.  As the old saying goes "there are no dumb questions" is true when applying those questions to an RCA analysis.

    Another attribute of an effective RCA team is the diversity of the group.  We've briefly discussed the roles of the investigation team and what value they bring to the investigation, but having a diverse group both in education and background also helps contribute to an effective team.  You never want a team made up of similar educations and backgrounds because these similarities could contribute to the old "group think" mentality.

    I suppose what I'm trying to say is: mix it up.  Expertise is great, but creativity in a group can be just as valuable.

    What are your thoughts?  Have you had any successful RCA teams? What were some of the attributes of the team you found intriguing and worth mentioning?

    Marcus McCoy - Apollo Account Manager/Investigator

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    http://apollo-as.com/blog?blogEntryId=17 <![CDATA[10 Simple Tips for Building a Strong Argument into Your Next Root Cause Analysis]]> 2009-08-20T17:28:52+00:00 Cory Boisoneau Your initial Apollo training provided you with the skills needed to break down problems into their most basic elements called "causes".  Most importantly, the training showed you how to find the best ways to prevent defined problems from recurring. Part of this problem solving skill set includes an understanding of how to use the Cause and Effect Principle. The Cause and Effect Principle is unique to the Apollo RCA method. It is made up of four characteristics which help analysts understand how causes relate to each other so that it is easier to determine which causes were involved and which ones were not.

    Fundamentally, the Apollo RCA method is a collection of critical thinking principles designed to help you create a strong argument that explains why a problem occurred and shows the logical connection between solutions and the actual causes of a problem.  In an Apollo RCA the logic of your analysis is visually depicted via the Realitychart. The Realitychart also becomes the platform from which effective solutions are identified and the place where the logical connections between causes and effective solutions are evident.  Without a solid Realitychart, a problem solvers' ability to identify solution options and to select the most effective solutions is diminished.

    The principles of logical thinking teach us that an argument is valid when the conclusion logically flows from the premises AND there are no other circumstances that would invalidate the argument. A sound argument is a valid argument when the premises are true. Try thinking of your next RCA as an exercise in constructing a logical argument and bringing clarity to an otherwise complex scenario as your primary job.  With that in mind, here are some tips to help you build an inductively strong argument into your next Apollo RCA:

    1.     Think of your entire analysis as an argument with the primary effect being your main conclusion and the causes as the premises which support that conclusion.

    2.     Be sure that the primary effect logically flows from the causes you have identified. Use Baby Steps (i.e., inserting causes between causes) to improve the logical flow of your analysis.

    3.     Be sure your analysis will resonate with your colleagues. If you have to, run it by them - they will point out areas that do not make sense.

    4.     Be sure that all the causes are true.  Use robust forms of evidence to validate each cause. Use more than one piece of evidence to increase the certainty for any causes you feel require a greater level of validation.

    5.     Avoid vague or ambiguous wording when describing causes such as: inadequate, poor, lack of, or failed. Be specific what those terms mean but don't get too wordy (Extra Hint: use the new "Notes" or "Reference" feature in RealityCharting® version 4.0 to clarify your terms).

    6.     Add any additional causes to your analysis that strengthen your argument. Try to anticipate any counter arguments or "Yes, but what about..." scenarios and address them by adding additional causes.

    7.     Try focusing on the logic of what your Realitychart is saying, not on labeling the actions and conditions. Label your actions and conditions after you are confident the analysis is sound.

    8.     Spend enough time on the analysis so that it describes your problem adequately enough for you to see a number of different solution opportunities.

    9.     Ensure your final solutions are specific and detailed enough that they can be easily implemented by a third person by avoiding vague or ambiguous wording.

    10.  Follow the four steps of the Apollo method but remember that the "ends" - creating a logical analysis, is more important than the "means" - i.e., how you get there.

     

    What specific tips or hints do you have that have helped you to improve the strength of your analysis or success of your solutions?

     

    Regards,

    Mark Hall

    Apollo RCA Instructor

     

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    http://apollo-as.com/blog?blogEntryId=16 <![CDATA[Risky Business with Brian Hughes]]> 2009-08-24T18:46:16+00:00 Cory Boisoneau To discuss risk is risky in itself.  Risk means different things to different people.  In my experience as a root cause analysis investigator and instructor, discussion of risk generally is limited to only the negative possibilities.  For instance, we discuss the risk that someone could have been in the vicinity of an explosion or the risk that a quality escape will lead to a cancelled contract.  Risk in this context represents an attempt to calculate the chance that something bad will occur.  We do this by looking at the probability that an event will occur along with the potential severity of the event.  Usually there is a curve associated with this relationship between probability and severity – there is a lower likelihood of a catastrophic event occurring versus an event that is still characterized as undesirable, yet not quite catastrophic.

    Risk analysis is interesting to me because it attempts to understand a range of possible outcomes through their probability and severity.  It’s the study of what is most likely to occur based upon what’s already happened.  But what interests me about it the most is the fact that we can calculate the likelihood of an event occurring… but with all the complex modeling available to us, the future remains a black curtain that only reveals itself in the present moment.

    I studied Finance in college.  Sure, I’ll admit to experiencing a little “Engineering envy” at times. Who wouldn’t want to design aerospace components or chemical processes?  Luckily for me, there is some crossover – at it’s heart, Financial engineering requires that different sources of financing be identified, their relative costs compared, and how combinations of financing options combine to most closely meet the capital requirements of an individual or firm.  But pricing various financial instruments (a necessary step in comparing costs) involves assessing their relative risks.

    So what? you say.  What does this have to do with the kinds of risks we experience in quality, reliability, safety, or other disciplines?  Read on…

    Financial experts consider risk a little differently than most Engineers.  While engineering risk generally looks only at the chance that something negative will occur, financial risk looks at the chance that something will be different from expected – positive or negative.  Daytraders don’t care about the underlying value of any individual financial instrument – they only care about volatility.  If an asset price is predictably volatile, they have a good chance at making money on price swings.  While you and I wouldn’t want this asset anywhere near our retirement fund as a standalone investment, the daytrader wants to try to buy it in the dip in the morning, and sell it a few hours later in an upswing.  They are in and out, so even though their exposure is 100%, it’s only for a short amount of time.  Volatility is something that is rarely addressed in assessing engineering risk.  It’s here that we’re missing an important opportunity.

    Financial risk is assessed via two components:  Systematic and Unsystematic risk.  The total risk of any asset is a combination of these two components.  

    Systematic risk is the background risk to which all players in a given industry are subject.  For instance, all financial institutions are subject to the same level of Systematic risk.  Hence, they are all in trouble right now… because very few of them properly assessed the changes in the levels of Systematic risk to which they were exposed.  These changes included loaning money to risky individuals, transfer of risk through credit default swaps, creating mortgage backed securities from loan pools, etc ad nauseam (by the way a super article on this whole crazy mess can be found here). 

    The point is that since they were all subject to this systematic risk, they were all essentially skiing on the same unstable slope.  All it took was one action to set the whole thing in motion.  Some got buried by the avalanche… some managed to swim on top of it.  All of us are paying a huge price though.

    Unsystematic risk is the individual risk of a firm in any given industry.  For instance, you could argue (successfully) that the reason Chase, Bank of America, and Wells Fargo are still around is because they carried less unsystematic risk than Wachovia, Washington Mutual, and Lehman Brothers.  The same is true in any industry.  Comparing Boeing Integrated Defense Systems with Northrop Grumman, Lockheed Martin, and Raytheon would require assessing the Systematic risk of the defense industry, using it as a baseline, and then assessing the unsystematic risk for each individual.  It’s the Unsystematic risk that sets them apart.

    Okay – finally to the point…

    When we build an Apollo Cause and Effect Chart, we can see both these risks in the form of Action causes and Conditional causes.  Many Actions (certainly not all) are associated with people.  As such, people represent the Unsystematic risk component.  Conditions are generally associated with the environment… the factory, the equipment, the part, the product, etc.  Since the environment remains relatively consistent – all individuals interact with the same basic environment – conditions usually represent the Systematic risk component.  Putting the two together provides an assessment of total risk.

    In our financial markets, the government’s role is to regulate the Systematic risk.  Sometimes they are good at this – sometimes not.  But when they are successful, they have an impact on all they players.  When we conduct a root cause analysis, we want to help reduce the risk to everyone – not just a single individual.  The only way to do this is to identify the Systematic risk components (conditional causes) and attack them.  Doing this reduces the baseline level risk for everyone.

    At 1,000 words, I’ve blown our blog word limit by about 500.  (Sorry Cory!)  The bottom line – risk is volatility… eliminate the conditional causes of volatility and you will minimize the risk in the system.

    Brian Hughes | Vice President

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    http://apollo-as.com/blog?blogEntryId=15 <![CDATA[Lean Six Sigma and Root Cause Analysis?]]> 2009-05-28T16:46:17+00:00 Cory Boisoneau Apollo Vice President Brian Hughes and I recently attended the American Society for Quality's 2009 World Conference on Quality and Improvement in Minneapolis.  While hosting the Apollo booth, we had many conversations with fellow conference attendees.  One subject that seemed to keep coming up was the fact that the majority of Lean and Six Sigma initiatives are inherently lacking in the Root Cause Analysis aspect of their improvement programs.  Many admitted to be still using the 5-Why's or the Fishbone techniques.  Almost all admitted that these techniques are inadequate at best, and even irresponsible in many cases.  Most folks agreed that their programs, as well as their entire organizations would benefit from a more advanced RCA methodology.

    If it is common knowledge (as it would seem from talking to folks at the ASQ conference) that organizations need a more robust RCA process to prevent problem recurrence and help realize their potential, then why don't more organizations take the initiative to implement a powerful RCA program?  What are the barriers to this, and how can they be overcome?  I would be interested in hearing your perspective, whether you have already overcome these barriers to implement a successful RCA program, or if you are just beginning the process.

    I look forward to your feedback!

    Posted by: Cory Boisoneau | May 28 2009

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    http://apollo-as.com/blog?blogEntryId=14 <![CDATA[Thinking Ahead - Will the future labor force be more prone to committing errors?]]> 2009-05-04T17:53:24+00:00 Cory Boisoneau Thinking ahead--Will the future labor force be more prone to committing errors?

    Over the years, we have had the opportunity to work with many outstanding organizations; we continue to be impressed by the performance and improvement efforts many displayed to retain their industry-leading positions.  Occasionally though, undesirable events still occur in these organizations.  When RCA's are conducted, inevitably, one or more of the causal paths uncover mistakes or oversights made by people. While efforts such as "error-proofing" or "engineering out" deliver great reductions in "human mistake" type causes, this alone won't prevent all mistakes.  Even though "training" can be over-used and is often an ineffective solution, in general, it does remain one of most important organizational weapons to combat errors to avoid future failures.  High-performing organizations always have outstanding training systems, however changes may be needed to adapt to a new and growing problem.

    We are entering a new era in workforce experience and availability of skills.  As the front end of the 'baby boomer" generation retires, manpower shortages in many professions and trades are already occurring.  In the last economic expansion, we began to see shortages of skilled trades, health care professionals, and engineers, among others. While the current recession has masked this problem, the problem will again show itself, most likely to an even greater extent, once the economy recovers.  As vast numbers of highly talented and skilled employees leave the workforce, I found myself wondering 'how are forward-thinking leaders preparing themselves for this transition?'  If not managed well, it's likely we will see a great rise in failures, injuries and unplanned events as compared to current levels.  If this does occur, one of the causes will likely be due to incoming employees not having access to or receiving mentoring from experienced employees, as has been the standard protocol in training programs for many organizations for many years. I see this as a major opportunity for many leaders to be "proactive" and prevent a wave of problems in the future.

    • How do you, or can you, justify preparing for the future at the current time?
    • If you have already begun experiencing shortages of skilled employees, what are some "do's" and "don'ts" you can offer others who may soon face the same problem?
    • Do you see your organization being affected by a shortage of skilled employees in the future?

    o    If so, are your training and mentoring systems robust enough to handle the transition?  
    o    What steps are you putting in place to address the shortage?

    I would be interested in hearing your thoughts and experiences.

    By Chris Eckert, 5/1/2009

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    http://apollo-as.com/blog?blogEntryId=13 <![CDATA[Culture vs. Behavior]]> 2009-04-20T15:42:30+00:00 Cory Boisoneau I recently was introduced to a new perspective on Culture, and since the day I first heard it I’ve been running it through different scenarios.  So far, I’m really getting a lot of mileage out of it.  

    Here’s how it came up…

    I was sitting in a meeting during an Artemis consulting project a few weeks ago.  The problem is confidential, but one focus (not surprisingly) was “people are making too many mistakes… how can we get our people to do a better job”.  Also attending the meeting were experts from this company’s Organizational Effectiveness unit.  They had been invited to attend to provide advice on how to change the Culture of the factory to help eliminate errors.  When the subject of Culture came up, one of the experts (I’d love to give credit, and if I get a release I will) made a comment, which was something like this:

    “When we say ‘Culture’, we really mean ‘Behavior’.  When we say we want the Culture to change, this sounds fluffy and inconclusive.  But when we say we want the Behavior in the factory to change, it brings it back down to Earth in a way that is easier for us to grasp.”

    The exact quote isn’t as important as exploring the implications it raises.  At Apollo, the subject of human behavior often comes up.  In fact, I’m giving several presentations this year specifically about how risk is a combination of human behavior and the work environment, so the topic was timely.  We find that many of our clients are focused on the behaviors of their employees, often to the exclusion of the conditional environment in which the behaviors take place.  At Apollo, we like solutions that control behaviors by controlling the environment.  If you’ve been to one of our classes, you’ve heard us encourage students to identify and control conditional causes.  We won’t exclude action causes as opportunities for solutions… it’s just that the conditional causes often present opportunities to reduce systemic risks of problem recurrence.  Action cause solutions are usually less sustainable.  Contact me if you want to discuss this concept further.

    So when I heard this expert discuss ‘Behavior’ as a synonym for ‘Culture’, it got my attention.  I started replacing the words in common phrases, such as:

    Original Phrase New Phrase
    “Management Culture”
    becomes.. “Management Behavior”
    “Problem-Solving Culture”
    becomes.. “Problem-Solving Behavior”
    “Culture that encourages risk-taking” becomes.. “Behavior that encourages risk-taking”
    “Culture that places the highest value on production” becomes.. “Behavior that places the highest value on production”

     

    You get the picture right away.  It even works outside of the workplace.  I guess I always knew this intuitively, but it’s never been directly on the surface the way it is now.  A culture is really defined by the behaviors of the members of that culture.  

    So why did this make an impact on me?  I’m a sucker for specifics.  I don’t have a lot of value for categorical phrases, such as ‘inadequate maintenance’ or ‘wrong procedure’ because phrases like this don’t provide me with the specifics I need to put an effective solution in place.  I always have to ask a follow up question, such as: “Why was the maintenance inadequate?”  The same is true with a word like ‘Culture’.  What can I do with a word like ‘Culture’?  What can my clients do with a when I tell them they would be better off by developing a ‘Problem-Solving Culture’?

    The value for me is the fact that the word ‘Behavior’ quickly gets me to specifics.  What behaviors do I want to change?  What conditional causes allow and encourage these behaviors?  What corrective actions can we recommend to change the conditional environment in a way that encourages the behaviors we want to see?  

    Maybe I’m making too much of this – but I’ve incorporated this new way of thinking about culture into my investigations and classes and the feedback has been very positive.  Give it some thought and let me know what you think…

    Brian Hughes, 4/17/09

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    http://apollo-as.com/blog?blogEntryId=12 <![CDATA[RCA For Positive Events?]]> 2009-10-30T22:06:39+00:00 Cory Boisoneau I've always been intrigued by the negative connotation that "Root Cause Analysis" usually exhibits when conversation arises about the use of RCA.  Most novice problem solvers always think RCA is for negative events that happen. While RCA and other problem solving techniques do provide solutions to causes of negative events, RCA can be used conversely to communicate and share best practices across organizations.  If a business sees that a particular business unit, site, or division is excelling at a particular reliability, quality, safety, or IT initiative conducting a RCA can be very valuable.  Doing a RCA on a successful event can be very effective in sharing what was done to reach a particular goal or how the event exceeded expectations.  Those results can then be communicated to other sites.

    Imagine being able to look up an analysis on a successful turnaround, startup, IT software implementation, etc... and being able to leverage the causes of that successful event.  This helps increase efficiency in planning, scheduling, and operation of special events.

    In many organizations I notice a particular site or business level "loyalty" that can be detrimental to the overall company's goals and objectives.  Internal competition is typically good and often valued, but when successes aren't shared due to this competition, diminishing returns of the competition begin to outweigh the advantages.  Competition is good, but sharing knowledge is just as important.

    I'm interested in your thoughts on the subject.

    Regards,

    Marcus McCoy | Account Manager, Apollo RCA

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    http://apollo-as.com/blog?blogEntryId=11 <![CDATA[Can Digital Security Problems Be Solved Using Representative Industry Trend Data?]]> 2009-03-13T16:57:52+00:00 Cory Boisoneau I recently received a new credit card in the mail with a letter stating - "we believe the security of your old card may have been compromised".  My new card contains a computer chip for added security so when used at a new "security chip enabled" checkout terminal the card is apparently more secure. In fact, when the computer chip is digitally verified by the checkout computer I don't even have to sign the credit card slip anymore. For online purchases I need to use a new PIN number to verify my card at the time of purchase.  So this got me thinking - are the new security features effective solutions? Well...I don't know. What caused my personal information to be compromised in the first place? I don't know.  Am I any better protected than before?


    According to the Privacy Rights Clearinghouse there has been 255 million security record breaches involving sensitive personal information in the U.S. since 2005.  26 million personal medical records were breached from the U.S. Department of Veterans Affairs in 2006. In 2005, CardSystems suffered the breach of 40 million credit card holder's personal account information and in January 2007 TJ Stores (TJX) suffered the breach of over 46 million credit and debit card holders account information. The TJX incident alone impacted 100 million accounts to the tune of $94 million dollars.  It has been estimated that the exposure of 46,000 records of sensitive personal information costs an organization on average - $76 million.


    So what is being done to protect the public? There is a dizzying array of reports on the topic - each offering various solutions to safeguard sensitive data. There seems to be a reliance on the statistical analyses of industry trends to drive solutions much like a Pareto Analysis. Information from actual data security breaches have been categorized by business sector, type of data breached, proportion attributed to malicious acts, theft, hacking, careless/untrained employee so on and so on. Solutions are then recommended based on the trend data exhibiting the highest percentages or greatest threats.


    Is implementing solutions based on industry trends a proactive way to solve the problem of data security breaches or for that fact any problem?  Well....maybe. It depends on how you use the knowledge. If you simply use recommended solutions without understanding what the actual causes of your own internal problems are you are certainly taking a chance that the borrowed solutions may not be addressing the causes of your own problems. In other words if the solutions are ineffective you remain vulnerable to the consequences of another breach.  When you blindly accept solutions from external sources, the risk to you comes from assuming that 1) the borrowed solution ideas are controlling known causes of other problems, and 2) your problems are caused by the same things experience by others.  Solutions generated from data categories used in trending are less likely to be effective than solutions that that are controlling specifically defined individual causes.


    However, industry trend data can be useful if you use it in conjunction with your own RCAs to direct the search for causes within your own system boundaries.  Industry trend data can also help an RCA team decide if it has been diligent enough in the depth of its analysis. When conducting a multiple event analysis (i.e., an analysis of multiple RCAs used to identify common causes among multiple mutually exclusive problems) industry trends can help bring focus to the areas in which common causes might be found.


    What are your thoughts - is implementing solutions based on industry trends a proactive way to solve existing problems?


    Sincerely,


    Mark Hall, Account Manager
    Apollo Associated Services

    Note: The organizations referred to in this article are not clients of Apollo Associated Services, LLC.

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    http://apollo-as.com/blog?blogEntryId=10 <![CDATA[Peanut Products Recall – What does it help us learn?]]> 2009-03-05T19:12:49+00:00 Cory Boisoneau The recent recall of peanut butter and products containing peanuts offers a good opportunity to discuss how a major product quality problem at one supplier can have an impact on an entire industry.  It’s not enough for a single company to do a good job at product quality… the entire industry has to do a good job in order to remain credible in the eyes of the public.  There are also broader lessons here for companies in any industry.

    In this case, the contamination leads back to a single supplier, the Peanut Corporation of America (PCA).  The FDA has determined that tainted products from this plant were shipped to more than 100 consignee firms, which then use them as ingredients in hundreds of different products offered to the general public (http://www.fda.gov/oc/opacom/hottopics/Salmonellatyph.html).  On their website, the FDA describes how PCA shipped products even after samples tested positive for salmonella contamination.  The FDA is careful to caution that their investigation is ongoing.

    PCA has now filed for Chapter 7 bankruptcy protection (http://www.lawyersandsettlements.com/articles/11905/peanut-butter-bankrupt.html).  

    Eight people died and thousands were made ill.  That speaks for itself.  But the economic damage is tremendous.  This impact is not limited to PCA – but extends to the entire industry.  Peanut butter sales are down by an estimated 25% across the board (http://www.nytimes.com/2009/02/07/business/07peanut.html?hp).

    Even though the PCA recall affects only a small percentage of total peanut products sold in the USA, it caused a massive negative reaction from the public. Shoppers are simply shunning products that contain peanuts.  National brands have run advertisements simply to tell the world that their products are safe. The timing couldn’t be worse.  In this weakening economy, products like peanut butter are staples that shoppers typically stock up on.

    A major area of focus for Apollo training and Artemis investigations relates to supplier quality.  Typically, the primary areas of interest in any supplier quality escape are:

    1.    Why did the problem happen?
    2.    Why wasn’t the problem discovered before delivering the product?  This question applies to PCA, regulators, and customers.

    What can we learn from this?

    Analyze Near Miss Events:
    Companies who work to develop a problem-solving culture learn that errors and near misses are great opportunities to identify systemic weaknesses.  As with most undesirable events, many causes of this problem existed before the event occurred.  Usually in cases like this, employees are aware of risks before they become reality.  Employees should be empowered to report near-misses without fear.  Problems that go unreported are opportunities missed.  PCA clearly did not have this kind of support structure in place (http://www.nytimes.com/2009/02/09/us/09peanuts.html?scp=1&sq=&st=nyt).

    Develop a Problem-Solving Culture:
    It is not enough to simply report problems… action needs to be taken.  Employees need to be empowered to investigate and analyze the causes of undesirable events.  Training helps, but just as important is the internal infrastructure that supports a problem-solving culture.  What triggers a formal root cause analysis?  Who performs the RCA?  Who participates in the investigation?  Who completes action items?  Who allocates resources?

    Implement Solutions:
    A scenario that causes extreme frustration is when effective solutions are generated during a past analysis, yet not implemented before another incident occurs.  New priorities come into play.  We feel better about letting previous action items slide as time passes and no new event occurs.  Solutions need to be validated and verified in a timely manner.

    Look for Systemic Causes:
    The best investigators identify systemic causes.  Systemic causes are woven into an organization’s infrastructure, and as such often remain hidden.  However, because of their durable nature, they often play a role in past problems.  Left unchecked, they will contribute to future events as well.  The removal of systemic causes provides the best chance at reducing risk.

    The lessons learned in this case are fundamentals that are applicable to any industry.

    Any thoughts? Notice how I didn’t mention anything about disciplinary action – what role does disciplinary action play – either directed towards an individual, or levied against an organization by a regulatory agency?  Also, I didn’t talk about what consignees who use PCA products can do to help ensure they are getting safe raw materials.

    Brian Hughes, Vice President - Apollo Associated Services - Posted 18 February 2009

    *Note: Peanut Corporation of America is not a client of Apollo Associated Services, LLC or Artemis Investigations LLC.

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    http://apollo-as.com/blog?blogEntryId=9 <![CDATA[Root Cause Analysis or Risk Assessment?]]> 2009-02-06T22:58:14+00:00 Cory Boisoneau Brian Hughes, Dennis Rygaard and I recently co-authored an article titled: "Strengthening Risk Management by Integrating Root Cause Analysis" which was just published in the February edition of the American Society of Safety Engineer’s Professional Safety Journal.  Read the article here.

    Risk Cartoon

    As the cartoon created by Sid Harris depicts, risk assessment (RA) is about quantifying and describing a hazard which is perceived to have the potential ability to cause harm to those exposed to it should the hazard be released.  Risk management is the actions taken to eliminate or mitigate harmful consequences associated with that risk.

    In the paper we describe how root cause analysis (RCA) can benefit the overall risk management process by helping define and quantify risk, understand the causes of risk, and identify effective risk management actions.

    One of our premises for this paper is that risk assessment focuses on anticipating events and RCA focuses on reacting to them. Because of this attitude RCA and risk assessment are separate programs led by people from different disciplines with separate training and different tool kits.  

    It is our belief that RCA is fundamentally designed to minimize or eliminate risk by reactively and proactively solving problems and removing causes that contribute to risk.  

    What are your thoughts?

    1)    Are Risk Assessment and RCA separate entities in your organization?
    2)    Do you think RCA can be leveraged to help improve the overall Risk Management process in  your organization?
    3)    What barriers would have to be removed to more effectively integrate RCA and Risk Management functions?

    Or -

    Do you think RCA, used proactively on identified hazards, could simply replace the effort duplicated by the risk assessment / risk management process and one could simply rely on hazard analysis and RCA to management risk?

    Sincerely,

    Mark Hall

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    http://apollo-as.com/blog?blogEntryId=8 <![CDATA[How Are You Using RCA To Cut Costs?]]> 2009-02-03T16:17:45+00:00 Cory Boisoneau What are the ways you have been using RCA to cut costs and how much have you saved?

    As you implement your RCA program, what barriers have you encountered?  How have you dealt with these?

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    http://apollo-as.com/blog?blogEntryId=7 <![CDATA[Root Cause Analysis Blog: Will you come out of the financial crisis on top? ]]> 2009-01-19T19:10:29+00:00 Cory Boisoneau 30 October 2008 - This space will be used to talk about the impact the current financial crisis is having on the choices organizations will make in the next few months.

    Because of the financial crisis, one could make the argument that it's a time for retrenchment  - keep short term costs as low as possible by focusing on short term priorities.  Don't worry about preventive maintenance except on the most critical assets.  Halt process improvement efforts that aren't expected to yield immediate results.  Put off training, at least for now, until a time when the outlook is decidedly better.

    Of course, the argument could also be made that there is no better time to maintain focus on what Stephen Covey calls Quadrant 2 activities... those efforts (like root cause analysis) that are important, but not yet urgent.  If an organization loses focus on these types of activities, it will only be a matter of time before they start spending an exorbitant amount of energy fighting fires.

    Two years ago, I was in pursuit of what would likely have been a very prominent client.  While they would have likely been a medium-level client in terms of revenue, their brand is famous and would have been a great addition to our client list.  They decided to forgo any investment in RCA training because, and this is a direct quote from the manager working with me: "We just make too much money - the savings really isn't that exciting."  Today things are very different for them -  and I can't help thinking about how much better off they would be had they made a long-term commitment to improvement.

    If anything is certain, it's that things are going to change.  This financial crisis wasn't always with us - and it won't continue indefinitely either.  It's our opinion that companies should maintain their commitment to root cause analysis - both training and investigation.  Those that do so will certainly be in a more favorable position once things do turn around - and may have RCA at least partially to thank for helping them maintain their leadership position.

    What do you think?

    Author: Brian Hughes, Apollo Vice President

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