Jun 16

Bad Management Week 2016 - Drifting into Failure

Yesterday, I wrote about my research that lead to the Framework for Analyzing Organizational Failure. Since I created the Framework back in 2005, I have seen it validated in a number of organizational failures. So, in 2010, I started work on expanding the paper into a book. During the course of my research, one of the leading thinkers in the field of failure analysis published a book updating many of his theories that I used in creating the Framework. The basic components of the Framework still hold but his concept of drift have led me to envisioning a Framework 2.0.

Dr. Sidney Dekker has written many influential books on failure analysis and has held several international teaching positions. His latest book, Drift into Failure (2011), is both a reflection of his past research and how complexity theory has created a need for new way of analyzing failure. His main argument is simple to understand: our organizations and technology have become increasingly complex but our understanding of why things fail don’t reflect that complexity (p. 7).

We are victims of a worldview in which we assume that people make rational choices, that every cause has a clear and direct effect, and that failures happen because a “broken component” in the system and/or an irrational decision. In our hunt for the cause of failure, we look for the “bad actor” that broke the component in the system (Dekker, 2011, p. 3).

This worldview is dangerous because it blinds us to the complexity of organizations and technologies while leading us on a chase for someone to blame. Think of Enron, the BP Gulf Disaster, and the 2008 mortgage meltdowns. The news was full of experts pointing their fingers at executives, brokers, buyers, and practices in the industry, whatever all in a quest to find the bad actor who broke the part that led to the collapse of the entire system. Once we THINK we have found the bad actor/broken part then we have fixed the problem. And then the next oil spill happens, another firm defrauds the public, or we face another financial crisis.

This is using hindsight for foresight and that never works. In examining the BP Gulf Disaster and Enron, Dr. Dekker demonstrates that the decisions made locally by actors given the knowledge that they had at the time were rational decisions. Yes, there was cutting of corners but these were such small impacts, how could they affect such a large system as BP which has thousands of employees and oil wells? As I explained in part one, these decisions can lead to latent conditions that accumulate and erode the system to the point that it takes one small accident that reverberates throughout the system triggers a chain of increasingly larger failures.

This is called the normalization of deviance and it was this very practice that led to the destruction of the Space Shuttle Challenger and the Space Shuttle Columbia. From the very first flight, there has been damage to the O-rings and there has been damage from foam strikes. Even so, NASA would just continually increase the tolerance for the damage so that they can continue to fly the shuttles.

Normalization of deviance is just one symptom of drift. According to Dr. Dekker, there are five features in drift:
1)    Uncertainties in the environment, scarcity of resources, and pressures to produce lead to organizations making decisions to sacrifice some minor safety concerns. During the BP drilling that led to the disaster, oil rig workers would do “good enough” tasks just so they can meet the tight production deadlines. Each of these shortcuts were very minor but. . .
2)    Drift occurs in small steps. A little shortcut here and a little shortcut there adds up in making the system more vulnerable to accidents.
3)    Despite the large number of interacting components and size of systems, these complex systems are very sensitive to initial conditions. This is all due to path dependency. Choosing a particular software platform gives me some advantages but I am also locked in by the limitations of that platform. Thus, the choice of which radio system to use by the New York Police Department and the New York Fire Department had a profound effect on rescue operations during 9/11.
4)    Unruly technology. Think of it this way: we know how to make aircraft that fly. But only person has actually figured out how to make a medium-size airline profitable. Our technology is just not limited to the mechanical and computational but also includes social. We cannot comprehend fully how our technologies interact with each other and the effects their interactions have.
5)    Complex systems often capture that protective structure that is supposed to keep them from failing. Again, BP Gulf Disaster provides a great example in that the government agency designed to oversee offshore oil drilling was compromised because of the lucrative practice of regulators becoming lobbyists for the very companies they were supposed to oversee.

Dr. Dekker closes his book with two warnings. One, complexity is inevitable and thus we need to learn how to manage/prevent failure in complex systems. Two, our current worldview of bad actors breaking components is blinding us to real underlying causes for failure in complex systems. In my final post in this series, I will outline a new theory on dealing

Dekker, S. (2011). Drift into failure: From hunting broken components to understanding complex systems. Burlington, VT: Ashgate Publishing Company.

Jun 16

Bad Management Week 2016 - How Organizations Fail

Back in 2005, I presented a “Framework for Analyzing Organizational Failure” after my dissertation adviser doubted that I could find a general explanation for how government organizations fail. After an extensive review of the literature and an in-depth study of four major government failures (the Oakland Development Authority, the Navy’s A-12 project, the Challenger accident, and the Columbia accident), I created this three-level model. Much of the model is based on Roberto’s (2000) analysis of a failed Everest expedition (the “Into Thin Air” expedition).

Seven years later, I find that the framework is still useful in understanding how organizations fail. In part one of this three part series, I will explain the framework. For part two, I will talk more about the effects of complexity on organization failure and how organizations will drift into failure even if they are performing their mission effectively. Part three will conclude with a strategy to avoid having the organization drift into failure.

The first concept to understand is the difference between “latent conditions” and “active failures.” Active failures are the triggers for the actual failure. For example, it was the blast of rocket exhaust through the O-ring that caused the eventual explosion and breakup of the Challenger shuttle. But, years before the accident, latent conditions such as the use of solid rocket boosters (SRB) on a manned spacecraft and the continuing acceptance of even more destructive O-ring damage from the SRBs that set the stage for the eventual failure.

Throughout the framework, you can see how each level contributes latent conditions that make the destructive impact of an active failure more probable. On level one or the “Leaders” level, the management of the organization makes decisions based on their perceptions of the organization. Because of the complexity of the organization and inherent cognitive biases, leadership decisions tend to be flawed and these latent conditions accumulate. Leaders also have a direct effect on the second level (“Teams”) if the leaders impose their ideas onto the Teams without allowing feedback from the second level.

The two major problems that lead to the creation of more latent conditions and active failures are “deindividuation” and “group think.” Deindividuation occurs when the team member no longer feels engaged with the organization and begins to emotionally and intellectually divest themselves from their work. Put a group of deindividuated employees together and you will have groupthink. Warning signals are ignored out of fear of upsetting the leaders or because the team members just don’t care anymore about what happens to the organization.

The third level is the organizational level. Imagine the assets of the organization behind a wall of defenses. The assets could be a space shuttle, the creation of a new development agency, or a successful acquisition contract. If you view an active failure as an arrow shot toward the defensive walls, then you can understand how latent conditions allow a sharp failure to penetrate all of the defenses and damage the assets. Thanks to latent conditions, holes develop in the defense walls and, if the holes line up just right, the sharp failure flies through the holes right into the assets. You can patch the walls but latent conditions still rain down from the upper two levels. Even regular maintenance can introduce new holes in the defenses.

It is organizational complexity that prevents Leaders and Teams from fully understanding the impact of their decisions and to see the accumulation of latent conditions until it proves too late. In the second posting of this series on organizational failure, we will examine how complexity causes us to misunderstand how organizations work and how organizations inevitably drift into failure.Failure Model

Jun 16

Celebrating Bad Management Day? Let's Celebrate Bad Management Week!

John Hollon's 2015 article arguing for establishing a "Bad Management Day" came at a fortuitous time. It was just a few months over ten years ago when I presented my general framework on organizational failure.  I was just finishing up my PhD coursework in public administration. I had decided to do a deep investigation of why government projects failed. From that, in March 2005, I presented my general framework.

Seven years later, I reexamined my framework to see how well it stood up with new organizational failures. I would say that the framework is still a robust explainer for organizational failure. I am planning to revisit the framework this summer to further develop it. And, develop a organizational success framework.

So, for the next five days leading up to June 25th and the 141st anniversary of Little Bighorn, I will be revisiting some of my favorite articles on organizational failure with a more hopeful article on Bad Management Day's Eve.

What you see below you is the Little Bighorn Graveyard. Here is hoping that the last casualty of that day is bad management.The-Mystery-Behind-Custers-Last-Stand-The-Battle-of-Little-Bighorn-3