STREET SMARTS

Problems, Problems

Problems, problems. Every business owner has them. The key question is this: Are you just stopping the bleeding, or are you dealing with the root causes?

Norm Brodsky is a veteran entrepreneur.

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If you run a business, you don't need me to tell you that you have problems. They come with the territory. You deal with them every day. No matter how hard you try, you'll never get rid of them, and that isn't all bad. Problems can be great teachers--provided you're willing to learn.

A few months ago, my wife, Elaine, and I were in Dallas for a conference and we decided to go out to dinner at a fancy seafood restaurant near our hotel. The place was crowded, and we had no reservation, but the maitre d' said he thought he could seat us in 20 minutes or so. While we waited at the bar, Elaine ordered a shrimp cocktail. Before it was served, the maitre d' came over to tell us he had a table available in the balcony overlooking the main dining room.

"I just ordered a shrimp cocktail," Elaine said.

"No problem," said the maitre d'. "I'll have someone bring it to your table."

The shrimp cocktail arrived right after we did. Elaine tasted the sauce and found it too spicy. Intending to dilute it a bit, she reached for a bottle of ketchup on the table. As she turned the cap on the bottle, there was a loud pop, and ketchup came shooting out, covering her sweater, her blouse, her skirt, her whole arm.

Elaine sat there stunned, drowning in ketchup. Our waitress came running over. "Oh, I'm so sorry," she said, handing us napkins. "Let me help you." She worked feverishly to clean up the mess. "If you bring me your clothes tomorrow, I'll have them cleaned for you," she said.

The manager showed up a moment later and also offered his apologies. He wiped ketchup off a chair and sat down with us. "I'm terribly sorry about this," he said and gave me his card. "Just send the cleaning bill to me. I'll make sure it's taken care of."

Both Elaine and I were suitably impressed. Every business, including ours, has its share of accidental, unavoidable, nightmarish customer screwups. If we're the customers involved, we mainly want people to act as though they're sincerely sorry and to do what they can to repair the damage. We would have been quite satisfied if the manager had left it at that. But as he stood up to leave, he said, "In a way, you were lucky."

"What do you mean?" Elaine asked.

"The last time this happened, the person got ketchup all over her hair. We had to send her to the beauty parlor. At least you just have it on your clothes."

"You mean this has happened before?" I asked.

"Oh, yeah," the manager said. "It happens fairly often. This part of the restaurant can get extremely hot during the day. We ask the waitresses to loosen the caps of the ketchup bottles, so the pressure doesn't build up inside, but sometimes they forget, and the bottle explodes when the guest goes to open it." With that, he excused himself and walked away.

When you're deluged with problems, there's a tendency to focus on the crisis at hand--and then move on.

Elaine and I didn't know whether to be outraged or to burst out laughing. We were dumbfounded. I could think of all kinds of ways to make sure customers don't have to endure ketchup bombs: Take the ketchup downstairs every evening; buy a small refrigerator for the balcony and keep the bottles there during the day; put the ketchup in vented containers; serve ketchup only when the customer asks for it. Instead the restaurant had come up with a solution that solved nothing. The bottles kept exploding; the ketchup kept flying; the staff kept cleaning up and apologizing; and the victims kept telling everyone they met about their experience, thereby turning what should have been a one-time embarrassment into an ongoing public relations problem. That's what can happen when you don't learn from your mistakes.

The ketchup case is an extreme example, but the phenomenon is by no means uncommon. When you're deluged with problems, there's a natural tendency to focus on the crisis at hand, deal with it, and then move on to whatever else is demanding your attention. I know a couple, for example, who had a company that made women's clothing. In order to ensure that they always had enough stock on hand to meet the demand, they would habitually produce more clothing than they needed. Inevitably, they'd wind up with a ton of excess inventory, which they would then sell off at a loss. That was easier and quicker than dealing with the underlying problem, their inability to forecast accurately, and so they kept doing it, year after year--until they went out of business.

The fact is that if you don't eliminate the root cause of a problem, it only goes away temporarily. For that reason, I've tried to introduce a certain discipline in my company by constantly reminding people that there are two steps involved in fixing problems. First, you have to stop the bleeding--that is, deal with the consequences and minimize the damage. Then you have to figure out why it happened and make sure that it doesn't happen again.

I'll give you an example from the early days of my records storage business. We were getting lots of boxes at the time. To keep track of them, we put in a bar-coding system that allowed us to identify each box and pinpoint its location. That way, it didn't matter where we stored the boxes. We could always find them when we had to.

Before too long, however, I began getting phone calls from customers complaining that we'd lost some of their boxes. At first, I was skeptical. I believed our system was foolproof. To me, it seemed less likely that we'd lost the boxes than that the customers had made a mistake in their record-keeping. But when we found some of the missing boxes in our warehouse, I knew we had a problem, and so we moved into our two-step problem-solving mode.

First, I put together a team to search for the missing boxes. We had to go through the entire warehouse and scan the boxes in each location, then compare the list to the one in our computer. Fortunately, we had few enough boxes at that time for the task to be manageable. A couple of years later, it would have been much more difficult.

We did in fact find the boxes, and I suppose we could have stopped then and there and hoped it wouldn't happen again. But that wouldn't have gotten to the root of the problem. So I ordered that no new boxes be put away until we figured out what was going on, and I created another team to find the cause and come up with a solution.

It didn't take long. In reviewing our procedures for tracking boxes, I realized we'd made a basic mistake: We had failed to take into account the inevitability of human error. We had no system for double-checking our work. A driver would pick up boxes from a customer and deliver them to our warehouse, where they would be put directly on the shelves. At no point did we stop to count the boxes and make sure the number we unloaded from the truck matched the number we'd received from the customer or that the number we put away matched the number we'd unloaded.

Clearly we needed to add a step to our box-storing routine. We decided that in the future, when a truck returned from a pickup, we would put all the boxes in a temporary holding area marked by a cone. We would scan the bar codes on the boxes in the cone, as we called it, and download the information into our computer. Then we would move the boxes to a permanent location and scan the bar codes again. When we downloaded the list of boxes in the permanent location, the computer would compare it to the list of boxes in the cone. If the two lists didn't match, we would know right away that we'd made a mistake, and we could attempt to fix it immediately.

With the new system, we put the problem of the missing boxes behind us. We eventually added another safeguard by purchasing equipment that allowed our drivers to scan the bar codes at a customer's location. As a result, we now have checks between the customer and the truck, between the truck and the cone area, and between the cone and the shelving. Yes, it's still theoretically possible that a box might get lost, but it hasn't happened in years.

The point is that you don't really solve a problem unless you attack the cause as well as the symptoms. As obvious as that may seem, most people tend to lose sight of it in the press of everyday business demands. How can you make sure that you keep it in mind? My advice is to get yourself and your people into the habit of asking, "Why did this problem arise in the first place?"

And one other thing: The next time you find yourself in a fancy seafood restaurant in Dallas, be careful when you open the ketchup.

Norm Brodsky (brodsky13@aol.com) is a veteran entrepreneur whose six businesses include a three-time Inc. 500 company. His co-author is editor-at-large Bo Burlingham.

Last updated: Feb 1, 2004

NORM BRODSKY | Columnist

Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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