When It Goes Wrong – Applying The 3 RRR’s


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When It Goes Wrong - Applying The 3 RRR’s

Photo of the 2010 BP Oil disaster from space. Largest marine oil spill in history. Try applying the 3 RRR’s to this.

Stuff goes wrong… all the time! That is the nature of working with people and doing things which are difficult.

However, when something does go wrong in a business there is tendency to focus on the wrong things. And it is often at the discretion of the person whose desk the problem is on as to how it is handled.

The technique which I have found useful for addressing problems in a consistent way across a business is called the 3 RRR’s.

The 3 RRR’s stand for:

  • Result: What happened?

  • Reason: Why did it happen?

  • Reaction: How do we correct the issue? What do we need to differently to ensure a better outcome next time?

It is important to address each R.

You must have a complete picture of what has happened before you can understand why it has happened. Understanding why it has happened can often mean asking why a number of times in order to get to the deeper reason why (3 to 5 times generally gets you there in my experience). Once you understand why an issue has occurred only then can you consider what actions should be taken to correct the issue and come up with a better solution for the future.

Putting the 3 RRR’s into practice

I dug out an email from an issue which took place some time ago, but which the framework fit the task perfectly.

To summaries the issue: There was a large expense recognised in our monthly profit and loss which was incorrect. We bought some new equipment and called it an expense as opposed to an asset. The effect of this mistake meant our Board of Directors and banking partners were looking at a very different result than what had actually happened. This takes explaining and people lose confidence in your ability to report accurately.

(Yes – this is an accounting disaster. No – it’s not that exciting)

From: Jason Schulz

To: Finance Team

Subject: RRR: Capital

Decision: Capital – the lot of it. We need to amend January accounts.

Applying the three RRR’s:

Result

  • $45,000 of project capex has been incorrectly expensed as R&M.

  • Capex spend versus the approved capex has been understated.

  • This has also not been picked up in monthly review of management accounts i.e. why was R&M so high?

Reason

  • Lack of training? Who raised the Purchase Order in the first place – that is who incorrectly coded the costs.

  • Who approved the Purchase Orders?

  • Who is accountable for the cost centre expenditure?

Reaction

  • Do the attached slides from the internal financial management course need improving?

  • Do we need a mini training session for our maintenance & site managers?

  • At year end, one of our processes for tax purposes is to review all R&M and ensure it is not of a capital nature. I.e. we confirm it is tax deductible.

    • Therefore out of this for our finance team we need this to be a month end process.

Best,

Jason

In the above example, the communication of the problem was clear and concise. The problem was identified and addressed, with emotions aside, and everyone was able to be kept on the same page.

Summary

  • Whenever you run into the same problems multiple times consider creating or using a framework to respond.

  • Frameworks allow different people to conceptualise or frame ideas in the same way.

  • Problems/disasters are bound to occur in your business, consider adopting the 3 RRR framework.

  • Thomas

    Loved the post – Frameworks are crucial and make working within a team far easier. Do you have any experience in putting forward the idea of this type of framework to your team leader?

    • Jason Schulz

      Glad you enjoyed the post. From my experience it would be best to do this on a smaller issue such as the one I outlined in the post. Your team leader will be open to looking at your ‘new idea’ on a small issue rather then a larger more significant one. Start with the benefit of having this type of framework and what result it produce for the issue at hand. This will help them to value it, before you go about explaining how it works.

  • Justine

    My key takeaway: Once you understand why an issue has occurred only then can you consider what actions should be taken to correct the issue and come up with a better solution for the future.

    Always need to keep this in mind. Thanks for the tip Jason :-)

    • Louie

      I could not agree more Justine. That was the key lesson I took from this article too.

      • Jason Schulz

        You two are spot on! Thanks for reading.

  • Zoe Travis

    Accounting looks exciting… :-)
    This is very logical information yet one of those things not enough businesses/people apply. Going to try this with my development team when we run into issues.

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