Nov 12

How Organizations Could Be More Successful – (Part Three of How Organizations Fail)

To understand how organizations can succeed, let’s briefly recap the lessons from the first two parts of this series on organizational failure.

Part One – Framework for Analyzing Organizational Failure
1)    Every decision has unintended consequences for the future – latent conditions.
2)    Leaders often make decisions without a thorough analysis of the effects of their decisions.
3)    Employees in a failing organization do not feel empowered to question decisions and they are not engaged in their work. Thus, their actions contribute more latent conditions.
4)    Organizations (metaphorically) erect a set of safety shields around their assets to prevent accidents from harming the assets. The latent conditions accumulate and erode these barriers so that an accident can penetrate the holes in the barriers and damage the organization’s assets.

Part Two – Failure Drift
1)    Modern organizations are complex in that they are composed of many components that interact in a great variety of ways. A full understanding of how a modern organization works is often impossible for people to achieve.
2)    Our current linear perspective of failure as a search for the broken component in the system and the bad actor that damaged the component is inadequate to understanding how complex systems fail.
3)    Organizations drift into failure because of decisions that emphasize production over safety; the effects of these decisions accumulate and cause the drift into failure; complex systems are very dependent on initial conditions and decisions; unruly technology; and protective processes that are supposed to keep organizations from failing end up being captured by the organization.

With these lessons in mind, I have developed a set of ideas for building a framework for organizational success. These are in no particular order and I am still working on how these ideas relate to each other.

1)    Harness the Power of Failure – This idea is influenced by Tim Hartford and Eric Ries where both advocate an approach of constant innovation, performing small-scale pilots of these ideas, and measuring the performance of these ideas. Hartford argues that this model of innovation is essentially evolution while Ries calls this model the Build-Measure-Learn process for creating successful start-ups. The key point here is that if failure is inevitable in complex organizations then redirect failure toward a controllable, teachable event.
2)    Action Learning – To successfully learn from failure, there needs to be a structured method for interpreting experiences and drawing valid conclusions from the experiences. Ries refers to this as validated learning but the basic concepts are the same. A person or group not only examines a problem but also reflects on their own learning while solving the problem. The key here is immediate feedback that helps us to understand the effects of our decision in a measurable manner so that we can make effective changes.
3)    OODA Loops – Much of the reason for failure is that we don’t immediately see the effects of our decisions or actions. Feedback is vital to avoiding failure as numerous scholars have demonstrated (McGonigal in games and Ries in the “Build-Measure-Learn” process for startups). All of these feedback models owe much to Boyd’s Observe-Orient- Decide-Act (OODA) Loop.
4)    Diversity and Collaboration – According to Dekker, the best way to counteract the effects of failure drift is to not impose linear processes on a complex organization. He advocates a diversity of perspectives and actions so that the organization has a wider range of possible solutions to manage the threat of failure. Diversity also prevents the groupthink of teams and challenges leaders to consider the consequences of their decisions from multiple perspectives. Collaboration is the key to increasing diversity because it helps us to explore different perspectives and different ideas.
5)    Process Intelligence and Agile Project Management – Processes are how we do work in organizations so it stands to reason that being better able to measure and monitor processes will help by giving valuable feedback and alerting us to effects of latent conditions. We create processes through projects so it is also reasonable that if we improve the way we manage projects, we will create better processes. Agile project management methods allow us to rapidly create processes and more effectively implement the new processes. I personally advocate the use of the Adaptive Project Framework but other agile project management methods are just as good in dealing with change and constant innovation.

Befitting a theory that attempts to explain a complex system, I am hopeful that a success framework will emerge from the interactions of the five ideas that I list. Government of the future is only going to become increasingly more complex and so will the problems that have to be managed. We need new perspectives and new ways of thinking to help us successfully meet those challenges.

Disclaimer: All opinions are mine and do not reflect the opinions or views of my employers or any organizations I belong to and should not be construed as such.

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

Hartford, T. (2011). Adapt: Why Success Always Starts with Failure. Farrar, Straus and Giroux.

McGonigal, J. (2011). Reality is broken: Why games make us better and how they can change the world. Penquin Press.

Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses. Crown Business.

Nov 12

How Organizations Fail (Part Two) – Drifting into Failure

In part one of this series, 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 with failure in complex systems.

Disclaimer: All opinions are mine and do not reflect the views or opinions of my employers or any organizations I belong to and should not be construed as such.

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