I enjoy conducting training on root cause analysis because it’s one of those areas where the production employees often "get it" before management. They are the ones that have to live with the same problem reoccurring time and time again, creating vast amounts of NCMR paperwork. However I just read of a case where a desire to immediately find the root cause may have actually created more problems.
Recall the problem reaction process:
- Problem identified and defined
- Problem contained and action taken to protect the customer
- Root cause analysis process (many steps, including the "5 Why’s")
- Solution validated with data
The financial markets in Asia have been abuzz with the story of Mizuho Financial and J-Com on Thursday. In this bizarre circumstance, at 9am a broker at Mizuho was asked to sell one share of J-Com for 610,000 yen (approximately $5,000). However the broker mistakenly typed in an order for 610,000 shares at one yen.
As reported in the weekend edition of the Wall Street Journal, this type of mistake isn’t unheard of. In this case an assistant noticed the error within two minutes, however he wasn’t authorized to change an order of that size. By 10:30am senior executives were involved, but they did not wish to publicly acknowledge the problem until 4:30pm, after the markets had closed.
The result is that the order was valid, and Mizuho is having to take a loss of approximately $233 million. Not bad for a typo.
However the line that really caught my eye was "it took Mizuho until 4:30pm to acknowledge involvement as it focused on figuring out what happened , rather than trying to stem the repercussions in the market." They were trying to do the root cause analysis before containing the problem. Mizuho shareholders must be thrilled.
Performing a true root cause analysis to identify the underlying problem is great, however the first responsibility is to protect the customer. Identify the problem and contain it, then start on the root cause. Mizuho, and some presumably unemployed brokers, have learned the hard way.