“The industry got more competitive.”
That sentence has ended a thousand annual reviews, and it has never once produced a strategy. It feels like an answer. It’s actually a place to stop asking.
A fund manager I know refused to stop there. Revenue was down; “more competitive, with lower fees” was the easy diagnosis, and the easy prescription would have been cutting fees. Instead he kept asking why. Why more competitive? Money was flowing into ETFs and other structured products. Why did that hurt us specifically? Investors were clamoring for liquidity, and that changed what they bought. Several whys deep, the real problem wasn’t price at all, and the response became product focus, liquidity analysis, and automation instead of a margin-destroying fee war.
That’s the whole method, borrowed from the Toyota production line: the root cause of a problem usually lives within five whys. Most leadership teams stop at one.
Why teams stop early
Because the fifth why is uncomfortable. The first why blames the market. The fifth why usually names a decision somebody in the room made, or avoided. “Why did we lose the account” is easy until the honest chain ends at “because we never assigned an owner and I didn’t want the conflict of picking one.”
Get comfortable with the uncomfortable. The discomfort is the signal you’re getting close. It is also, not coincidentally, the exact moment a team goes quiet, agrees with you, and then drifts in the hallway.
Installing it in your planning cycle
Before your next planning session, take the three results that most disappointed you this year and run each one five levels down, in writing:
- Ban generalities. “Execution was weak” is not a why. WHO didn’t do WHAT by WHEN, and why not?
- Follow the chain even when it points at the head of the table. Especially then.
- Stop when you hit something you can actually change. That’s the difference between a root cause and an excuse: one is actionable.
From specificity comes clarity. From clarity comes accountability. And accountability with named owners, the kind that lives on an accountability chart rather than in somebody’s memory, is what makes next year’s plan different from last year’s.
The plans that die by March skipped this step. They planned forward from wishes instead of backward from whys. If you want the exam that comes before the planning, that’s the yearly business physical.