Embracing Risk (yes and also problems!)

Do you expect to live to an old age, and experience no health issues throughout your life?

If you answered ‘yes’, you are one of the very luckiest among us!  For the rest of us who don’t feel quite so confident, although we may answer the question similarly, what we subsequently DO with this realization will vary widely from person to person.  Some will want to discover everything possibly wrong with their health (and some to a fault) to start preventative measures, while others will avoid doctors for any number of reasons- sensible or not.  (A family member once told me that they don’t go to the doctor because they “don’t like to hear bad news”.  What blissful oblivion!)  

All that said, the majority of us will seek prevention to the extent that we can afford it, and if it doesn’t become burdensome.

 

Our preventative efforts are often borne out of fear- no one wants to suffer an unexpected heart attack, for instance. So we go to our GP regularly, get blood drawn, have tests run, and take medications to counteract negative trends in our health.  It’s reasonable to proactively flush out health issues because we want to know if they exist, what they are, and what the root causes may be. (Bad diet? Lack of exercise? Tobacco habit? Heredity?) 

 

So if we're embracing the ‘head on’ approach to prevention in our personal lives, do we take the same approach in our businesses?  Aren’t companies also living organisms in the wider sense?

Throughout an executive career fraught with problems (‘suffering at the speed of business’ a colleague once famously told me), I’ve strived to overcome.  I’ve read countless articles and books that gave me great advice on ‘how to become a better problem solver’. Though years of practical application, however, my eyes have been opened wider, to realize that just as important as knowing ‘how’ to solve problems, is the MINDSET to move from seeing problems as signs of failure that somehow always surprise us- to seeing them as an inevitable and natural part of life and business.  It’s like hurricane season in Texas- you know it’s coming every year, so just get ready for it!

So rather than feeling annoyed or ineffective when problems occur at work, wouldn’t it be great if we could re-program our thinking to actively seek out problems as a matter of course?  Wouldn’t this- combined with great problem-solving skills, be a breakthrough combination of Mindset and Method?

Let’s briefly unpack this for a minute- Why do we resist proactively ‘embracing problems’ on the job?  

The first possible explanation is that organizations are hierarchies, and what I’ll call the ‘Philosophy of Problems’ just doesn’t work well in a hierarchy.  If problems are occurring at the CEO level, it’s doubtful that he or she will enjoy telling the staff about it.  “Hey, everyone, I just wanted to let you know I made a huge strategic mistake involving our most important customer and…”  Likewise, problems happening ‘at the front’ in daily operations are undesirable for employees to bring to light, as it happened to ‘them’ on ‘their watch’.  I may look incompetent, or careless, or replaceable, if I tell my boss about what’s plaguing me in my area of accountability.  Right?  

Another part of what’s holding us back is what I call the ‘Language of Problems’.  In my experience as a finance and risk executive, we like to use words such as ‘optimal’, ‘fit for purpose’, ‘best in class’ and ‘silent running’ in our professional lingo.  We love KPIs and KRIs. This creates an objective scale in a domain where subjectivity is often (unwisely) discounted. Even worse- it gives us a false sense of being in control over processes that are imperfect-almost by definition- as they are run largely by humans, who are de facto imperfect! (Please see my upcoming piece on ‘Metrics, and the Myth of Silent Running’ for more context.)  

I submit for your consideration as business leaders that there is no inherent conflict between recognizing that our processes and organizations are imperfect- and professing to be ‘best in class’.  What if ‘best in class’ organizations are simply those who embrace problems more readily than others?

But is the act of embracing problems an end unto itself?  No- as in so many things, it’s only the first step in a chain of necessary events. Problems make us aware of risks, and risks lead us to interventions, which in turn prevent new problems.  It’s not a vicious circle as some believe- it’s a virtual circle.

The airline industry is a great, albeit imperfect*, model of embracing problems to reduce risk. (*see Boeing’s horrific mishandling of the 737 Max issue)  In most industries, business problems lead to wasted funds, or poor product quality, or late payments, or missed deadlines. But when things go wrong in an aircraft, there is a great potential for massive loss of life and instant worldwide reputational damage.  The International Air Transport Association (IATA) highlights the danger of what are called ‘Loss of Control – Inflight (LOC-I)’ incidents as “the most significant cause of fatal accidents in commercial aviation.” These incidents occur “when an aircraft deviates from the intended flight path or an adverse flight condition places an aircraft outside the normal flight envelope, with the pilot unable to maintain control of the aircraft.”  The IATA website states that LOC-I incidents have the lowest survival ration of all accident categories, with 94% of such incidents resulting in loss of life.  

Most of the factors leading to LOC-I incidents are human related, and include human performance deficiencies, flight mode confusion, distractions and being startled, and loss of situational awareness.  With so much on the line, when pilots experience any of these issues during operations, they are required by aviation authorities to file a formal report.  The data is collected and allows aviation authorities to “assess the safety implications of each incident including previous similar incidents through technical inquiry and initiate timely corrective actions to prevent recurrence of the incident” as well as to “ensure that knowledge of the incident is disseminated so that other aviation industry members may benefit from them.”  In other words, problems are embraced, and as a result, everyone who flies benefits from the aviation incident reporting framework and fewer lives are lost. I feel safer as a passenger, knowing that such rigor exists in the cockpit.  

Few companies can ever hope to match the rigor of the aviation industry when it comes to leveraging problems to control risks and reduce the probability of future incidents.  That said, the principles and rationale for having an ‘incident management program’ are easily apparent- whether that comes in the form of a sophisticated software program, or rudimentary manual collection of data.  Who would have thought that collecting data about problems could can create competitive advantage.  It can!  

Does your company have a ‘problem embracing’ mindset that will allow it to use ‘bad outcomes’ to its advantage, while looking beyond the problems to see yet-unveiled risks?  If you don’t, here are some suggestions for starting to embrace an ‘embracing problems’ mindset in your own organization:

>   Start the conversation!  It’s a conscious and momentous decision for a company’s leadership team to promote open discussion about organizational pain points and threats.  Also called a "Speak Up" corporate culture- it takes time and effort to allow it to produce fruit.  But please beware- don’t start the discussion about embracing problems and Speaking Up- if you’re not serious about it.  Leadership credibility is all important.  You can’t encourage people to highlight problems, and then fire the first person who makes a serious error and reports it.  Your program will die on the spot.

>  Introduce regular (at least quarterly) ‘what went wrong’ sessions to run concurrent to the ‘what went well’ types of events that most companies practice.  Ask each staff member, or manager, to point out at least three things that went ‘not so great’ in their area over the latest period. Ask managers to log problems on a running basis, so that they can record key details while it’s still fresh in their minds.  When you hold such discussions in a team (or leadership team) setting, people will begin not only to empathize with their colleagues, but also to consider “could it have happened to me as well?” Choose a moderator that people trust and that can steer the conversation well.  Expect unexpectedly positive and constructive discussions to ensue!

>   Find ways to tickle out a ‘problem preemptive’ mindset in your staff, by supplementing the ‘what went wrong’ sessions with an aspect of “Even better if…” Here’s how it works:  ask employees to complete a sentence, such as: “Our products are great, but they would be Even Better If…(fill in the blank)”  Or, “Our production processes work fine, but would be Even Better If…(fill in the blank)”. You’ll be amazed at the practical truths you’ll discover through this traditional ‘feedback’ method.  

Questions for Thought

>   What kind of relationship does your company have with problems?  Do staff embrace problems as opportunities, or as career-limiting admissions?  

>   Does your firm have a ‘problem embracing’ mindset that will allow it to holistically view problems as interconnected issues that are best dealt with, head on?

>   Do you have a framework to capture and analyze problems(incidents), similar to the airline industry?  Would you like to have one?

>   Do you have a way to ‘tickle out’ the ‘Even Better If” opportunities within your company?  Would you care to give it a try?

>   Businesses are living organisms.  So when is the last time that you had a ‘GP’ give you a ‘check-up’?   AscentWorks Partners acts as a ‘business GP’, who can provide your annual corporate ‘physical’ and examine all aspects of your business operations.  We can help you identify issues (and weak signals) before they become full blown problems that negatively impact your business.  

One final note...
I speak above of what I’ve named the “Philosophy of Problems”.  This is in no way to be confused with the famous 1912 book “The Problems of Philosophy” by the British polymath and Nobel laureate Bertrand Russell; in which Russell unpacks (in as ‘accessible’ a way possible) such themes as the value and limits of philosophy, how we acquire knowledge, and even the existence and nature of matter itself.  Great insight in terms of building paradigms of how logical thought processes work.

References

Loss of Control In-Flight Accident Analysis Report, Edition 2019. Guidance Material and Best Practices. IATA.
https://www.iata.org/contentassets/b6eb2adc248c484192101edd1ed36015/loc-i_2019.pdf

 

 

For Thought

For Thought