Tom H. C. Anderson - Next Gen Market Research

Tom H. C. Anderson and Management Guru Eli Goldratt discuss Cause and Effect Analysis (Post 3 of 5)

We left off yesterday discussing offshoring market research and how companies may not be analyzing the market research business processes, challenges and opportunities properly. Today Eli and I discuss a bit about quantitative VS. qualitative research, and more specifically, how to analyze business issues more effectively.

EG: You’ve read ‘The Goal’, right?

TA: Right.

EG: I demonstrated it in production. By the way, not on lines, ‘The Goal’ is written about a job shop which is considered to be the most complicated production environment. I have demonstrated it in ‘It’s Not Luck’ about marketing and sales. I’ve demonstrated it in ‘Critical Chain’ on the entire field of projects, and so on and so on. Each time - yes it took several years before companies started to follow what I wrote - but then just do a search on the Internet and you will see to what extent what I was writing in the books is working one-to-one in reality.

And I’m coming back to the same issues; you are analyzing the effect, you are not analyzing the cause, and the cause is so much deeper than the effects. It’s at least five or six effect-cause-effects below the surface, and then, when you’re diving there, you will find out that at the core problem there is a conflict, and the conflict is there because of assumptions that we are making which are not real.

TA: Right. So, in other words, asking, “Why?” several times, and not being satisfied…

EG: Yes! And, by the way, do you know who was the first one to say that? Only a small person like Sir Isaac Newton. And that was the curse of physics. So this method has existed for 300 years. Why don’t we use it when we are dealing with people? Because people are illogical? No, people are very logical. Some of them are starting from causalities or from assumptions that we don’t accept, and then we call them illogical.

TA: Right. Well, I think some of us in market research are better at that than others. I think researchers like myself, who are more quantitative, get caught up a bit in the numbers, but those who do qualitative, do focus groups or in-depth one-on-one interviews are better at asking that “Why?” question again and again to get deeper, as you say.

EG: If I’m judging by psychologists, then I must tell you that’s not the case, even though they ask a lot of questions!

TA: Why is that?

EG: They are not trained in…, let’s put it this way, let me show you what I mean. You start with one effect, and you ask why. You will not get one answer. You will get several answers because, many times, for any effect there is more than one cause. And, even if there is one cause, this cause contains more than one element.

And that’s why the impression is that, if you continue to ask “why?” on each cause or each component of the cause and you continue to do it in this way, you will get more and more and more causes until you lose the picture. That’s the belief of the social sciences. The belief of the hard sciences is, “Yes, you will get this proliferation at the beginning but then, as you continue to ask why, things start to converge. And at the bottom you will find very few causes.

TA: Right. So laddering, basically.

EG: So, if you’re not starting with that conviction, when you’re not careful in checking each cause and verifying each cause - you cannot verify just by correlation, or by statistical data - there is a much better way as was proposed by Newton, which is effect-cause-effect. In other words, predicting what must be the effect if the cause is really the cause. What must the other effects be?

If you are going in this way systematically, then you will see the picture and then you will see the conflict and then you will see the wrong assumption that is underlying this conflict, and then you will get a solution! And you will say, “Oh shit! It’s common sense!”

TA: Right

EG: And that’s what I’ve done again and again in each one of my books. And when they are talking about production - you read “The Goal” - I’ve analyzed all of the job shops in the world together! This is not a small thing. When you’re looking for an example of critical chain, I’ve analyzed whole projects! And you know to what extent it’s working today. Critical chain today is becoming more and more mainstream, and almost every large company in the world is reporting astonishing results by using critical chain.

TA: So why do you think more people aren’t using the cause and effect analysis?

EG: Because you think that people are illogical and unpredictable. You really believe that people are unpredictable?

TA: No, no. We believe they are, that’s why we use predictive analytics. We’re always building models to try to predict certain behaviors.

EG: Thank you. So, if people are predictable, if people are logical - even though you might call their starting assumption illogical, which is just a pre-conceived notion of yours - then you will find out that you can use exactly the same tools.

What I’m trying to do is to try to convince people, “For heaven’s sake, why do we use this fantastic technique only for physics and chemistry and maybe biology? Why don’t we use it for human based organizations?” And in each book I’m taking another huge field and showing how easily it’s working. And it has been used in industry for a long time. Look at how much of TOC is used so successfully in health care today. The same type of results.

Have a nice weekend everyone, and stay tuned for part 4 with Eli when it really gets interesting. Eli and I discuss the ‘Recession’ (assuming there was one!), and more importantly the changes in the global economy and what it means for all of us…

@TomHCAnderson