Root Cause Analysis Techniques Series - Global overview using Pareto Charts

Introduction

Welcome to the fourth article in our Root Cause Analysis Techniques series. The series contains five articles:

1. RCA and the Change Analysis and Event Analysis
2. The power of the 5 Whys
3. Navigating to the Root with Fishbone Diagrams
4. Global overview using Pareto Charts
5. Mastering Improvement with DMAIC

In this article, we will discuss the Pareto Charts.??

In any industry, we need to prioritize our actions and focus our efforts on the most important tasks. Pareto Charts is a tool that helps us find our biggest problems.??

Just like in our previous adventures, where we explored Change Analysis and Event Analysis, played with the "5 Whys," and used the Fishbone Diagram, I am on a mission to teach you how to get to the root of various issues, adding my real-life experience on Root Cause Analysis techniques. So, let's continue our journey and find out how Pareto Charts can help us make sense of complex problems and focus on what truly needs fixing.

What is a Pareto Chart?

The Pareto Chart is a visual representation of data that helps prioritize and focus on the most significant factors contributing to a problem. Named after Italian economist Vilfredo Pareto, this tool is based on the Pareto Principle, also known as the 80/20 rule. It states that roughly 80% of the effects come from 20% of the causes.

For example:

• 20% of clothes are worn 80% of the time
• 80% of company revenue comes from 20% of the company's product
• 20% of workers do 80% of the work

Based on this logic, we will try to find the problems causing "80%" of the damage and put "20%" of our effort into fixing them.

How to Implement a Pareto Chart

Creating a Pareto Chart involves the following steps:

1. Data Collection: Collect relevant data on the issues you want to analyze. Ensure that your data is accurate and reliable to get meaningful results.

2. Data Categorization: Categorize the issues into specific groups or categories.

3. Data Quantification: Measure the frequency or impact of each category.

4. Chart Creation: Plot the categories on the x-axis and their frequency or impact on the y-axis.

5. Prioritization: Sort the categories in descending order to highlight the most critical ones.

6. Analysis: Identify and focus on the top categories to address the most significant issues.

When to Use a Pareto Chart

Pareto Charts are most effective when you have a list of issues or causes and want to identify the ones with the greatest impact. They are particularly useful in quality control, process improvement, and incident analysis.

We can look at an example of a hotel that felt they were getting a lot of complaints from their guests. Their managers wanted to enhance their service but wanted to ensure they were investing improvement efforts in the right place, so they collected feedback from their guests and came up with the following diagram, showing that they should start improving their registration service efficiency and food quality first.

The 80% Pareto mark shows that three problematic categories cause 80% of all the issues. Improving these three areas will solve most of their problems and gain more happy customers.

Benefits and Advantages

Pareto Charts offer several advantages:

Focus on the Vital Few: They enable you to concentrate on the key issues that lead to most problems.

Visual Clarity: The visual nature of Pareto Charts makes it easy to grasp the situation at a glance.

Data-Driven Decisions: They help you make informed decisions based on data, not assumptions, as seen in the hotel example.

My Experience

In my work as an Incident Management Director, I have used the Pareto Charts technique to have a broad overview of incident causes to identify and focus on broad areas of improvement.

One of the basic steps we performed that led us toward continuous improvement was a root cause analysis process for every incident. We learned a lot about preventive measures, which reduced the number of incidents, their duration, and their effect. Still, it proved to be very effective to look at the big picture from time to time and identify the main recurrent causes. It helped focus our efforts on resolving their cause, which significantly reduced defects and increased productivity.

An example of such an effort, which reduced the number of incidents by 60%, was a yearly analysis I did looking at categories of incident causes. This analysis showed me that production deployments were the number one cause of incidents.

After I learned that we had a problem with our deployments, I drilled down some more, looking at incidents caused by a production deployment, and found that the problem in most of them was the miscommunication of the changes.

When a certain group or team performed a production deployment, they would send an email before the change with the details they saw fit to the people they thought would be relevant to this change. The reality was that in most cases, the emails lacked vital information, the recipient list was too short, and important stakeholders were missing.

After revealing the cause for so many incidents using the Pareto Chart, I thought about a solution. Using many automation abilities in JIRA, I have created a new process that focuses on enhancing production change communication. Communication was now more efficient, with all the relevant information and notification emails sent to every relevant stakeholder based on the product on which the change was performed.

You can find more technical information about the new process, with detailed instructions on how to set it up, in the following article: How did we reduce the number of production incidents by 60%?

Do you have experience with Pareto Charts? Do you have recurrent problems? Do you want my feedback? Please share them in a comment.

Conclusion

Pareto Charts are an essential tool in the realm of Root Cause Analysis. Focusing your efforts on the most influential problems can improve your problem-solving process and achieve substantial results with small effort. Mastering the art of Pareto Charts can make a significant difference in your journey toward continuous improvement.

Next Steps

After going over the Change Analysis and Event Analysis, "5 Whys," the Fishbone Diagram, and now the Pareto Chart techniques, the next and closing article in the series will be the DMAIC technique that gives you a structured approach to solving problems that you come across.

Closing Thoughts

Thank you for joining while we explored the Pareto Chart, helping us to focus our improvement efforts on the biggest pains first. As I did in this article, I'll keep giving you valuable guidelines based on my real-life experience.

Please feel free to contact me for any further discussion or leave a comment with your thoughts or experience about the Pareto Chart technique or the RCA process.

Feel free to reach out if you want me to help you pick the most effective technique for your organization or if you think your team should be trained in Incident Management and the RCA techniques. I can help.

Dani Tweig