The reason this third law of Peter Senge’s “The Fifth Discipline” is true is because of compensating feedback from the system. If your intervention is at the symptom level, you might be able to eliminate or improve the symptom in the short term, but watch out. Unless you address the root cause of the symptom, you are likely to see an even uglier version of it again.
For example, if your business is struggling to turn a profit because of declining revenues, you can fix that by cutting back on line items (e.g. lay people off, reduce pay, use cheaper raw materials). You might be able to maintain a steady bottom line in the face of evaporating revenues, but the actions you take to cut costs can hurt your growth in the long run. Shoddy products get shipped, customers get worse service, your facilities are not maintained properly and become unimpressive – all of these will hurt your top line, necessitating more and more short-sighted intervention on line items.
Your problem is more about revenue than about costs, and unless you change your assumptions about how to drive revenue growth in your business, you will be chasing an increasingly elusive bottom line.
Symptom thinking is a hard task master. It is very skilled at hiding its lessons from those unable and unwilling to learn. And we are very skilled at hiding our learning disability from ourselves and others.
Resist the temptation to apply any solution until you thoroughly understand the root causes of the problem you face. Master the causes of your problems or become constrained by the symptoms.
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I worked for a hospital in Denver that was being managed by a for profit company (the hospital was non-profit). The for profit company (okay, I’ll name drop, HCA) laid off people every three months. The only rationale I could figure out was to ’show’ the Board of Directors that they were doing something…and the BoD seemed to buy it. The fact was that after you figured in the cost of paying out vacation and sick pay, severance pay, and unemployment insurance, etc. It took six months or more to see any net gain to the layoff action. It was there I learned that taking action for action sake does not a good business person make.
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Bret L. Simmons Reply:
March 22nd, 2010 at 7:16 am
Great example! And don’t forget these were highly paid people, leaders that we would call “smart” folks. Smart is as smart does. Thanks, Paul! Bret
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