"Business Logic
Applying a rational approach to improving business results"

(Author's Note: This issue is based on a marvelous book called, The New Rational Manager by Charles Kepner and Ben Tregoe. Unfortunately it's not that new anymore. It was first published in the 1950s and then updated in 1991. Today it's out of print. But you can order a used copy, as I did, at www.amazon.com.)

I'm a casual soccer and tennis fan. Ok, I'm a very, very casual soccer and tennis fan. Sometimes a whole year goes by and I don't watch any soccer games or tennis matches. However there is one soccer team, the Brazilian National Soccer Team, and one tennis player, Roger Federer, that I will clear my calendar to watch.

What makes them so extraordinary to watch? They are not the biggest, fastest, strongest, or tallest athletes in the world, but they are the most skillful players to watch. In soccer, there are four primary skills: receiving, dribbling, passing, and shooting. In tennis, there are four primary skills: serving, backhand ground strokes, forehand ground strokes, and volleys. Those are the same basic skills that children use when they play soccer or tennis. However, the greatest soccer players in the world and the greatest tennis player in the world apply those basic skills better than anyone else. That's why Roger Federer might be the greatest tennis player of all time, and why the Brazilians have only lost two World Cup soccer games in the past 12 years, won the tournament twice, and finished second once.

The Four Primary Rational Thinking Skills

In business, there are four primary rational thinking skills. They are clarifying, understanding, predicting, and selecting. They serve as the foundation for problem-solving, innovation, issue/opportunity assessment, decision-making, strategy development, and planning. The best managers I've ever seen perform these four basic rational thinking skills at a very, very high level.

In the most basic form, here are the key questions associated with each skill:

• Clarifying - What is the current situation? What is the desired situation in terms of objectives we must meet and objectives we want to meet?

• Understanding - Why did the current situation occur?

• Predicting - For each option you could choose from to improve your current situation, answer these three questions. Would it meet the required objectives? Which ones of the objectives you want to meet would it meet and how well would it meet them? What are the potential risks involved?

• Selecting - Of all the options available, what's the best option?

By asking these questions, you can remove a great deal of the drama and emotion from situations and move forward logically, efficiently, and effectively.

Problem Solving

To apply a rational process to problem solving, we first need a definition of a problem.

A problem is when actual performance falls below expected performance and you don't know the reason why.

For example, I weigh about 15 pounds more than I want to, but that's not a problem because I know the reason why it happened. That darn exercise and eating thing got in the way.

Say for example you have ten machines that were all performing at a certain level, and suddenly one of the machines starts performing significantly below the others.

The first step to solve the problem is to clarify the problem. Don't jump to conclusions like, "The guy who runs that machine is lazy," or, "They just don't make machines like they used to. We need to throw it out and get a new one." Simply write down what you know in answering each of these four questions:

1. What is the problem?
2. Where is the problem happening?
3. When did you first notice the problem?
4. To what extent is the problem happening?

Your answer might read: Machine #4 is performing well below all of the other machines, and this problem was first noticed yesterday.

To increase clarity of the situation, answer this question, "Where could this same problem being happening but it's not happening?" In this case, the answer is the other nine machines.

Then answer, "What is different about these situations from the one where the problem is occurring?" Make a list of anything that happened differently to the other nine machines in the past week. Your list might include things like a different service man lubricated Machine #4, a different part was placed in Machine #4 than the other machines, a temporary worker ran Machine #4 for part of one day, and so on. Simply make a list of everything that is different between Machine #4 and all of the other machines.

Go through each of these changes and ask, "Why would this change cause Machine #4 to perform below all of the others?" Make a list of all the possible reasons.

Once you've searched for understanding, begin to make your predictions. Prioritize your list of distinctions between Machine #4 and the other machines in order of the ones that you think are the main reason for the problem.

Then test each reason, doing this one at a time, to see if it was the cause of the undesired effect in Machine #4.

If you don't find the reason for the poor performance, then you will have to expand your list of possible reasons. It may end up being that the machine wore out or that the employee is lazy, but by applying logical thinking as opposed to emotional reactions you will enhance your understanding of the situation and improve your chances of finding the root cause of the problem. If you fired a person because you emotionally jumped to the wrong conclusion, then you will keep firing people and keep having machines break down. It's more cost effective to search rationally for the root cause then to keep emotionally shooting arrows in the dark.

Instead of ten machines, imagine this scenario was about 10 people, and one suddenly started performing well below expectations. Don't jump to conclusions. Apply the rational thinking skills:

1. What is the problem, where is it happening, when did you first notice it, and to what extent is the problem happening?
2. Where could the same problem be happening but it is not happening?
3. What changes or distinctions are there between where the problem is happening and where it could be happening but it is not happening?
4. For each change or distinction, why could that have caused the problem?
5. For each change or distinction you've identified, predict what would happen if you addressed it in the one place that is performing poorly.
6. Select the one thing you think is the root cause of the problem and address it in the one underperforming item.
7. If this does resolve the problem, then you're done. If it doesn't resolve the problem, identify why it didn't work and then move on to the next possible reason.

Instead of 10 people, imagine you're responsible for 10 business units. One is suddenly performing below expectations and the other nine are doing just fine. Go through the process again, make your decision, and move into action.

This same thought process can be applied to generating innovations. Innovation is the process of identifying, evaluating, and combining ways to improve performance.

Imagine one machine is performing significantly better than the other nine, one person is performing significantly better than the other nine, or one business unit is dramatically outpacing the other nine. Go through the same seven steps with a few minor changes. Don't jump to conclusions. Simply clarify the situation in great detail, work to understand why it might have happened, predict what would happen if you chose different alternatives, and select the best alternative for improving the performance of the other nine.

Here is how the same seven steps would read in order to raise the performance bar for the majority:

1. What is the exceptional performance, where is it happening, when did you first notice it, and to what extent is it happening?
2. Where could the exceptional performance be happening but it is not happening?
3. What changes or distinctions are there between where the exceptional performance is happening and where it could be happening but it is not happening?
4. For each change or distinction, why could that have caused the exceptional performance?
5. For each change or distinction you've identified, predict what would happen if you addressed it in the other nine items.
6. Select the one thing you think is the root cause of the exceptional performance and implement it in the other nine items.
7. If this does enhance the performance of the other nine items, then you're done. If it doesn't improve the performance of the majority, identify why it didn't work and then move on to the next possible reason.

Just as great soccer and tennis players hone their fundamental skills until they are mastered, I encourage you to continually hone your rational thinking skills in the areas of clarifying, understanding, predicting, and selecting. You can practice these skills in situations at home or in community groups or associations you are in. You can then apply these skills in work situations in any industry.

Business Acceleration Group Exercise

Take a real life situation at work where one item is suddenly performing far below or far above the rest of the items in that category and apply these rational thinking skills to that situation. Skills can only be developed through practical application, not through theoretical conversations. Take care and have a great month!

Dan Coughlin

Accelerate Update This section is always current to the current month

I suppose every book changes an author's life to a certain degree. My first book, which was self-published in 1995, was called Inside Out: A Catalyst for Conscious Living. It's out of print now for a number of good reasons. The layout, which yours truly did, looks like something a first grader could do today. And the ideas are very theoretical, which doesn't fit my approach anymore. However, I read the book a few months ago, and I was pleased by how clearly I had explained my early thoughts on improving performance.

My second book, Corporate Catalysts: How to Make Your Company More Successful, Whatever Your Title, Income, or Authority was published in 2005 by Career Press. That book was a step forward in clarifying my ideas on improving performance and understanding how to write a whole book. It's one thing to dream about getting a book contract and another thing to write a 70,000 word manuscript.

My third book, ACCELERATE: 20 Practical Lessons to Boost Momentum, which was published in May 2007 by Kaplan Publishing, has changed my business dramatically. Up until that book was published, I mostly did projects for four companies: McDonald's, Marriott, GSD&M, and Toyota. In the past 12 months, I've worked with business owners, executives, and managers within dozens of small, medium, and massive organizations in more than 20 industries ranging from boats to banks to software to financial services to trucking to lighting to home healthcare to hospitals to optometrists. It's been an exciting adventure.

If you want to see my speaking calendar for 2008, which we'll try to update every two weeks, please click here.

Currently, I have 66 speeches scheduled for 2008. If you would like for me to speak at one of your events in 2008 or 2009, feel free to contact me at dan@thecoughlincompany.com and I will be glad to see if we can make it work.

If you want to see my speaking topics and a video of footage from some of my keynote speeches, please click here.

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