Cause and effect - what if you can't find the cause?

Fortunately, vicious circles can still be broken.

by Alastair Dryburgh
Last Updated: 17 Sep 2014

We think a lot about cause and effect; it's a basic principle of business life. We agree that proper problem-solving starts with identifying the root cause. But what if you can't identify cause or effect? What if there is no root cause?

This alarming situation is surprisingly common. Let's start with a famous historic example: the Cold War arms race. The US invested huge amounts in the development of new nuclear weapons. Why? 'Because the USSR is increasing its arsenal and we need to maintain our position relative to it.' But the Russians used the same logic to justify their own correspondingly large arms expenditure.

Both these explanations make perfect sense on their own, but combined they create a horrific situation. It's a vicious circle: you can't identify which is 'cause' and which is 'effect'. The obvious solutions will simply make matters worse.

It applies equally in business: 'We are cutting costs because profits are falling.' Plausible, but you may just as well say: 'Profits are falling because we are cutting costs.' Cost-cutting damages quality or service, leading to lower sales and profits, leading to further cuts. Repeat to extinction.

Fortunately, vicious circles can be broken. Firstly, look out for them. Any time you choose a course of action, look for ways in which that action might have the opposite effect to the one you're hoping for.

Once you have identified a vicious circle, stop making it worse. Then look for ways to turn it into a virtuous one. Instead of cost-cutting, imagine a virtuous circle in which investment in quality raises profits, which create more funds for more investment in even better quality.

The arms race came close to blowing up the entire world. You could start a vicious circle that could blow up your business. Don't.

- Alastair Dryburgh is chief contrarian at Akenhurst Consultants. Subscribe to his newsletter at www.akenhurst.com and he will give you more on how to spot vicious circles and how to turn them virtuous.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Could coronavirus lead to gender equality?

Opinion: Enforced home-working and home-schooling could change the lives of working women, and the business...

Mike Ashley: Does it matter if the public hates you right now?

The Sports Direct founder’s response to the COVID-19 pandemic has drawn criticism, but in the...

4 films to keep you sane during the coronavirus lockdown

Cirrus CEO Simon Hayward shares some choices to put things in perspective.

Pandemic ends public love affair with Richard Branson et al

Opinion: The larger-than-life corporate mavericks who rose to prominence in the 80s and 90s suddenly...

The Squiggly Career: How to be a chief strengths spotter

When leading remotely, it's more important than ever to make sure your people spend their...

"Blind CVs don't improve your access to talent"

Opinion: If you want to hire socially mobile go-getters, you need to know the context...