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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.

References:
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.

8
Nov 12

How Organizations Fail (Part One): The Framework for Analyzing Organizational Failure

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.

(Click here for a larger JPEG.)

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.

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

Further Reading:
Government Failure White Paper (PDF) - http://billbrantley.com/pdfdocs/billbrantleykam5bdepth.pdf
A Proposed Framework for Analyzing Organizational Failure (PDF) - http://billbrantley.com/pdfdocs/FrameworkOrgFailure.pdf