Don’t confuse the symptom with the cause. Identifying the real cause of a situation is useless without knowing and understanding what drives the cause. Without this knowledge, any projections and calculations you make will be useless. That is the centrepiece of the latest tip from Mario Pretorius. Like any decent lawyer, he says, you will need to ask the questions to which you already know the answers.GK
Many of us are familiar with the ‘herringbone’ method of finding the real cause of a situation. I have not seen this in use, ever, but there may be wise CEO’s who use this and come to real, intelligent conclusions.
Verify which is ’cause’ and which is ‘effect’.
A distinction must always be made between what seems to be the cause and what really drives that cause. Without an understanding of primary causes, your calculations and projections will be off.
Why do your debtor collections peak close to the 25th of every month? Is that when creditors pay or is that when debtor gets insistent on payment and unnecessarily raise the stakes?
Why does a competitor lower his prices? Is it because he is gunning for market share or is he in an overstock/undercash situation?
Why do you have difficulty in getting good salespeople? Is it true what your Sales Director says, that you pay too little or is it his reputation in the market that keeps away the high fliers?
It is difficult and treacherous to find the true answers – and these may change at a moment’s notice too. Still it is imperative that you challenge the cliques and ‘established wisdoms’ that masquerade as easy excuses for a broken system.
Don’t confuse the symptom with the cause. Don’t blame Rasputin, without the weak-willed Czar; the Romanovs might still have been around. Any parasite could grow in a good opportunity.
Often the effect mislabelled as causes – a bit of your trained mind should disperse this; but you will have to ask the question of which, like any decent lawyer, you already know the answers of.
‘We can’t get finance because our net assets are too low’ Well that is not a cause, it is the effect of not getting debtors days down to 15, at which point we do not need the finance. The real cause may be the inability of your debtors people to influence the margins at which your offerings are sold and consequently have no room for settlement discounts ate initial payment time.
This tip is an extract from the manuscript of “The Unconventional CEO: Common sense outside of conventional Management thinking” (by Mario Pretorius).
