THE 5 WHYS METHOD

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The 5 whys method is a useful tool for analysing the root cause of a problem or situation. In the case of a new business, it can be used to identify problems or situations that may be affecting the success of the business and find effective solutions. For example, if the start-up is experiencing a low customer conversion rate, the 5 Whys method could be applied as follows.

Why is our customer conversion rate low?

• R: Because customers do not clearly understand the value of our product or service.

Why don't customers clearly understand the value of our product or service?

• R: Because we are not adequately communicating the value proposition of our product or service.

Why are we not adequately communicating the value proposition of our product or service?

• R: Because we have not clearly identified what makes our product or service unique and valuable to customers.

Why haven't we clearly identified what makes our product or service unique and valuable to customers?

• R: Because we have not done enough market research and competitor analysis.

Why haven't we done enough market research and competitor analysis?

• R: Because we have not allocated sufficient resources (time, money, staff) to carry out these activities.

In this way, the root cause of the low customer conversion rate has been identified and it has been concluded that the company needs to allocate more resources to market research and competitor analysis to clearly identify its value proposition and communicate it properly to customers. The 5 whys method pIt can be applied to different situations and problems in a new company, always with the aim of identifying the root cause and finding effective, long-term solutions.

THE 5 WHY METHOD applied to the validation of hypotheses in a new enterprise

The 5 Whys method is a tool that can be applied to different situations, including the validation of hypotheses in a new company.

The following describes how this method can be applied to improve the validation of hypotheses:

1. Identify the hypothesis to be validated: The first thing is to identify the hypothesis you want to validate. For example, if the hypothesis is that customers will be willing to pay for a new solution being developed.
2. Formulate the initial question: The initial question is phrased as a negative statement. For example, why would customers not be willing to pay for the new solution?
3. Answer the initial question: A reasonable answer must be given to the initial question. For example, customers would not be willing to pay because they already have a similar solution that is cheaper.
4. Ask the following question: The next question builds on the previous answer. For example, why do customers prefer the cheapest solution?
5. Repeat the process: The process of formulating questions and answers should be repeated, building on the previous answer. Each time you ask a question, you go deeper to the root of the problem.

The ultimate goal is to get to the root of the problem to find a solution to validate the hypothesis. The 5 whys method can be very useful in identifying the real reasons why a hypothesis may not be working, allowing for adjustments or pivoting to improve the solution.

Benefits of the 5 Whys method

The 5 Whys method consists of asking questions in a chain of questions to delve into the root causes of a problem or situation. The aim is to identify the root causes of a problem or situation in order to solve it effectively and prevent it from happening again.

The benefits of the 5 Whys method include:

• It identifies the root causes of a problem.
• It helps to develop a deeper understanding of problems and situations.
• Encourages collaboration and teamwork to solve problems.
• It enables more informed and effective decision-making.
• It helps to avoid repeating the same problems or situations in the future.

It is very useful to ask questions which helps the mentor to get to the source of a problem (+) from its effects. Often, the entrepreneur talks to us about effects, about consequences, and the mentor is interested in knowing the origin of the problem in order to Appropriate approach to the mentoring session. 

EXAMPLE

1. ¿WHY are you worried? Because I can't pay the payroll.  
2. ¿WHY you can't pay the salaries? Because I have no money in the bank.
3. ¿WHY don't have any money in the bank? Because we don't charge customers.
4. ¿WHY you don't charge customers? Because I do not issue invoices to customers.
5. ¿WHY don't you issue invoices? Because I have the manager on leave.

ANOTHER EXAMPLE:

A diesel-powered electric generator stops working:

1. Why did the machine stop working... Apparently it burnt the lubricant and the engine seized up. 
2. Why did the lubricant burn out... Because no one warned that the oil change cycle had been completed.
3. Why didn't anyone tell me that the oil had to be changed... Because the person who was in charge of maintenance is no longer with the company.
4. Why was there no one else who knew that maintenance had to be done... Because no one else was trained to do it?
5. Why was no one trained to do it... Because everyone here has an obligation and no one takes care of everyone else's work.

This method allows us to establish that a serious breakdown of an important machine does not have its origin in technical reasons but in the functional policy of the company.

A good mentor has to remain the 60% of his time listening and asking and the 30% remaining speaking.