In this unit, you'll delve into the essential skill of root cause analysis, a critical component in resolving product issues effectively. Mastering this skill will enable you to identify and address underlying problems, ensuring your product's success and longevity.

The first step in root cause analysis is to break down the problem by segment. Instead of analyzing data at a high level, segmenting the problem allows you to identify patterns and pinpoint where the issue is most significant.

Rather than assuming a broad cause, segment the data by:

• User demographics (age, location, experience level)
• Device type (iOS vs. Android)
• User behavior (lesson completion rates, app engagement trends)
• Acquisition channel (paid ads vs. organic users)

By identifying the specific segment where the drop is most significant, you can hypothesize potential causes more effectively.

Once you've identified the segment where the problem exists, the next step is to evaluate potential causes from both internal and external perspectives. A structured approach to hypothesis evaluation helps rule out incorrect assumptions and pinpoint the most likely root cause.

Two Key Categories of Hypotheses

1. Internal Factors (Product & Operations)

   • Technical issues (e.g., app crashes, slow load times)
   • Recent product updates (e.g., new feature changes)
   • Pricing or policy changes (e.g., increased subscription cost)
   • User experience challenges (e.g., onboarding difficulty)

2. External Factors (Market & Competition)

   • Industry trends (e.g., shifting customer preferences)
   • Competitor actions (e.g., a rival app launching a better free tier)
   • Economic factors (e.g., downturn reducing discretionary spending)
   • Media and public perception (e.g., privacy concerns affecting adoption)

A smart home device company notices a decline in feature usage and investigates both internal and external factors. Internally, they check if a recent firmware update introduced performance issues, making the device slower or less reliable. Externally, they examine whether rising privacy concerns, fueled by recent media coverage, are discouraging users from enabling voice-activated features. To validate these hypotheses, they analyze engagement metrics, review customer support tickets, and survey users to determine whether technical issues or trust concerns are driving the decline.

By exploring both internal and external factors, product teams and PM candidates can ensure they address the true root cause rather than just treating surface-level symptoms, leading to more effective and lasting solutions.

After evaluating hypotheses, summarize what you suspect the root cause or root causes to be and assess the next steps. This involves analyzing data critically and considering the impact of external perceptions. Develop a strategic plan to address customer concerns and restore growth. Present a clear, data-driven analysis and outline recommendations to resolve the problem effectively. By mastering these steps, you'll be equipped to tackle complex product challenges with confidence.

• Jake: We've evaluated the data and it seems the root cause of the drop in user retention is linked to the recent app update that introduced some technical issues.
• Natalie: Agreed. The update seems to have caused longer load times, which is frustrating users.
• Jake: Let's prioritize fixing these technical issues and communicate the improvements to our users.
• Natalie: We should also consider offering a temporary incentive to affected users to regain their trust.
• Jake: Good idea. I'll draft a strategic plan to address these concerns and outline our next steps.
• Natalie: Perfect. Once we have a clear plan, we can present our findings and recommendations to the team.

In this dialogue, Jake and Natalie demonstrate how to summarize the root cause and assess the next steps by analyzing data and developing a strategic plan. This approach ensures they address the true root cause and effectively communicate their plan to resolve the issue.

In the upcoming role-play session, you'll have the opportunity to apply these concepts in a realistic scenario, enhancing your ability to conduct root cause analysis effectively.

Time to put on your detective hat! You're diving into prep for NovaTech's Product Execution round, and while Root Cause Analysis questions have felt intimidating in the past, you’re now equipped with new tools for a more structured approach. You'll investigate a metric drop at ArtQuest by using segmentation and exploring possible internal and external factors—then test your skills in a mock interview with fellow NovaTech applicant Jake.