The 5 Whys of Problem Solving in Finance

problem solving in finance

Many Finance professionals are faced with the daily task of solving problems. Whether they come from IT Services, the Business Intelligence team, or even the next cube over, we can never seem to fix enough.

The first, and most important step in solving problems is to identify them, otherwise known as Root Cause Analysis. The “5 Whys” methodology is far and away one of the most efficient methods for honing in on and conceptualizing the root cause of any dilemma you might come across.

This technique requires five iterations of asking “why” to probe continuously deeper into the root cause of an event. (“Why 5?” you might ask? It was found through years of experimentation at Toyota to be the usual number of whys it takes to get oneself to the crux of the issue.) 1

problem solving in finance

The best way to understand the “5 Whys” methodology is through an example. As many of us are well aware, finance departments are plagued with an inability to submit their budgets on time. When managers ask themselves why this happens, the first answer tends to be “well, we’re not working fast enough” or “we don’t have enough resources.” When a follow-up “why” is asked, there is often some flustered arm-flapping and muttering. The reason the root-cause analysis stops early is because people inherently focus on what they can see and touch. The key, however, is to focus on “why did the process fail” and not on “why did my people fail.”

When we focus on the process, we begin to dig into the infrastructure of our tools and methodologies. I was brought onto a client project to build a financial planning model. When building the organization dimension, I was given a temporary file containing a hierarchy that could change at any given moment; the source database holding the hierarchy was going through a complete revamp while I was building the model that relies on it.

So I started the following question and answer thread:

Q1: Why are we running the source database upgrade now?

A1: This was the earliest the database upgrade could start.

Q2: Why are we running these upgrades in tandem?

A2: There was not enough communication between internal projects and consulting groups.

Q3: Why the breakdown of communication?

A3: There is no process in place.

Q4: Why is there no process?

A4: We have never run an upgrade this large before and do not have experience with it.

Q5: Why do you not have experience with it?

A5: Ah, well…therein lies the root cause of the issue; we should have brought in someone with experience and process knowledge.

In this scenario, we ended up having to take special care to avoid going over budget or losing out on key functionality. However, if a better process for coordinating the two upgrades had been in place, the extra time and effort put into keeping the project on task could have been put toward adding extra functionality.

Upgrading infrastructure, such as tools and processes, and bringing in experience and education keeps us at the top of our game and allows us to work in unison instead of at odds. Next time you are looking at improving your business, consider looking at workflow, methodology, training, and technology options as key areas of improvement. But, never forget to ask yourself “why?”


Ohno, Taiichi. Toyota Production System: beyond Large-Scale Production. Productivity Press, 1988.

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