How to Avoid Catastrophe What are near misses? Near misses are often unremarkable small failures that permeate day to day busines
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How to Avoid Catastrophe
What are near misses?
Near misses are often unremarkable small failures that permeate day to day business but cause no “apparent” harm.
People are hard wired to misinterpret or ignore the warnings embedded in these failures, and so they often go unexamined.
If conditions were to shift these near misses could erupt into chaos and crisis.
When disaster happens numerous poor decisions and dangerous conditions have contributed to it
With near misses we overlook the warning signs. With each near miss, rather than raise alarms and prompt action, we move on along the process because nothing happened
We accept the fact that nothing wrong happened as a good indicator that we are making the correct decision
Multiple near misses normally proceed every disaster and business crisis.
Most of the misses are ignored or misread. Our cognitive biases conspire to blind us to these near misses.
Two particular cognitive biases cloud our judgment.
1. Normalization of deviance – the tendency overtime to accept anomalies as normal, particularly risky ones,.
Things we become too comfortable with become normalized.
Therefore, what should be dangerous could be perceived in our minds as being safe because no dangerous event has ever occurred.
2. Outcome bias – tendency to focus on the results more than on the often unseen complex processes
Near misses should be instructive failures where leaders can apply their lessons to improve and ward off catastrophe
However, ….
….when people observe successful outcomes, and do not recognize and learning from near misses, it is simply not a matter of not paying attention
Roots of crisis
When people observe a successful outcome, their natural tendency is to assume the process that led to success was fundamentally sound…. even when it was not
Organizational disasters rarely have a single cause
They are initiated by unexpected, seemingly unimportant small latent/human errors of:
technical failures
bad business decisions.
These latent errors or human errors align with enabling conditions to produce a significant failure.
Enabling Conditions are factors in the environment that contribute to an event happening.
Latent errors often exist for long periods of time before they combine with enabling conditions to produce a significant failure.
Whether an enabling condition transforms a near miss into a crisis normally depends on chance.
Thus, it makes little sense to try to predict or control enabling conditions.
Instead, companies should focus on identifying and fixing human errors before circumstances allow them to create a crisis.
Because latent errors are normalized by bias, near misses become increasingly acceptable. Further, deviances caused by the near misses are also normalized.
Remember: These latent errors underlying a crisis exist long before the crisis happens.
These deviances are cognitively ignored because of our outcome bias. The latent errors only become apparent when a crisis gains momentum.
When coupled with the right enabling conditions the crisis will erupt. Only when enabling conditions occur, the latent error will trigger a crisis.
Recognizing and preventing near misses
Research suggests there are seven strategies that can help organization recognize near misses and root out the latent errors behind them.
Heed high pressure
The greater the pressure to meet performance goals, the more likely people are to discount near miss signals or misread them.
A classic case of normalization of deviance is exacerbated by political pressure.
Pressure can create an atmosphere that increasingly accepts less than expected performance.
Research shows that when people make decisions under pressure, they tend to rely on heuristics, or rules of thumb.
Thus, they are more easily influenced by biases in high pressure work environments.
People who are more easily swayed by outcome bias are:
more likely to normalize deviance
more apt to believe that the decisions are sound.
2. Learn from deviation
Research shows that decision makers clearly understand the statistical risk represented by deviation, but become increasingly less concerned about it.
It is important that leaders seek out operational deviations from the norm/specific rules and examine whether their reasons for accepting or tolerating the associated risk has merit.
The question to ask is whether we have always been comfortable with this level of risk? Has our policy toward this risk changed overtime?
3. Uncover root causes
When leaders identify deviations, their reflex is to correct the symptom rather than its cause.
Leaders are to create an intentional model to report near misses.
Leaders should be encouraged to report mistakes and near misses so the lessons can be teased out and applied.
4. Demand accountability
Even when people are aware of near misses, they tend to downgrade their importance. OneNote be comfortable is to hold leaders responsible for and to justify their assessments of near misses.
5. Consider worst case scenarios
People tend not to think through the possible negative consequences of near misses unless they're expressly advised to do so.
Research shows that examining events closely helps people distinguish between near misses and successes.
Research also suggests people will often adjust their decision-making accordingly.
6. Evaluate projects at every stage
When things go badly, managers conduct post-mortems to determined causes and prevent recurrences.
…….Research suggests this is too late.
When things go well, however, few managers do a formal review of the success.
Because near misses can look like successes, they often escape review.
Reward owning
Observing and intending to near misses requires people to be motivated to expose near misses.
In many organizations, employees have good reason to keep quiet about failures.
When critically examining projects while they are under way, leaders can avoid bias and more likely to see near misses.
A technique called pause-and-learn process typically uncovers near misses that have gone undetected in the past.
Conclusion
Two forces conspire to make learning from near misses difficult:
cognitive bias, and
outcome bias.
When leaders do not recognize these biases, leaders tend not to grasp their significance.
Organizations often fail to expose and correct latent errors even when the cost of doing so is small.
They miss the opportunity to improve and learn from these small mistakes.
,
The Hidden Traps in Decision Making
Making decision is the most important job of any leader. It is tough and risky.
Bad decisions can damage a business and a career, sometimes irreparably.
So where do bad decisions come from?
They can be traced back to the way the decision were made:
the alternatives were not clearly defined,
the right information was not collected,
the costs and benefits were not accurately weighed.
Research shows that we use unconscious routines to cope with the complexity inherent in most decisions.
The routines are know as Heuristics – an approach that uses practical methods that are not necessarily guaranteed to end in optimal results.
The process may not be logical, rational…but sufficient to reach a goal. Heuristic people who act on instinct default to mental short-cuts.
These short-cuts are influenced by:
bias,
misconceptions,
irrational ideas.
These are psychological traps – organized flaws – that cause distortion.
Mental short-cuts help us make continuous stream of distance judgements required to navigate problems.
The fuzzier and far away a problem seems to us in our mind, the easier it is for us to rely on heuristics.
Because the heuristic person put issues out into the peripheral, they tend not to see the imminent dangers.
Heuristics trick our minds into thinking that things are more distant than what they really are.
Heuristics is hard-wired into our brains making us make decisions on these “distant” issues on irrational thinking, biases, and other sensory misconceptions.
These psychological traps can undermine everything to where we fall into traps.
We will examine the psychological traps that are likely to undermine business decisions.
The Anchoring Trap
When considering a decision, the mind gives disproportionate weight to the first information it receives.
This means that the first bit of information/sound your brain receives influences your mind to any other second question. You become trapped by what you first hear.
This can come in the form of:
a comment,
an accent,
a person’s skin colour, or
a person’s clothing.
This trap places too much weight on past experiences/stimuli as being a reliable and relevant way to judge or assess current and new information.
What can we do about it?
These anchors are unavoidable therefore cognitive mechanisms need to be set in place to challenge this trap, thus reducing their impact:
Purposefully view problems from different perspectives.
Think before allowing yourself to be anchored by others.
Be open-minded and seek information and opinions from several people
It is important that you do not end up anchoring others.
If you reveal too much of your own, especially if you are a leader, preconceptions, they may end up anchoring others.
The Status-Quo Trap
We all like to believe that we make decisions rationally and objectively. However, we all carry biases and those biases influence the choices we make.
Strong biases perpetuate deciding based on the status quo.
Making decisions on status quo is comfortable because you may be avoiding taking action that would upset what others have come to accept as normal.
Staying within the status quo does not challenge us, does not increase our responsibility, and does not open ourselves up to unwanted criticism. Sticking with the status quo is psychologically less risky.
Research shows that the more responsibility you have to make decision, one tends to choose to stick with the status quo.
When there are alternative, the status quo will be more likely chosen.
The status quo does not require any additional effort.
What can you do about it? – Again, a set of cognitive mechanisms:
Continually remind yourself of your objective. Examine how you would be serving your objective if you stuck with the status quo.
Never think of the status quo as an alternative. Doing nothing is ever a solution.
Avoid exaggerating the effectsresults of moving away from the status quo.
When evaluating alternatives focus on the future potential rather than on past/historical results.
If you have several alternative, don’t default to the status quo because of the heightened effort and responsibility.
The Sunk-Cost Trap
Another bias is that once time, effort and money has been invested into a decision, you are stuck with the decision because of the sunk-costs and efforts.
The belief is that the past is irrecoverable.
We know that sunk costs are irrecoverable to the present
but
we project this same thought to the future leading us to make inappropriate decisions
Either people are unwilling to admit error or it is easier just to continue on.
Sometimes a corporate culture reinforces the sunk-cost trap.
If there are real or perceived penalties for making a past bad decision research shows that managers will be motivated to let failed projects drag on.
What can we do about it?
Seek out people who were not part of the original decision. They can remain objective because they have no past invested history associated with the decision.
Be aware of the influence of sunk-cost biases made by subordinates.
Don’t cultivate a failure-fearing culture that leads employees to perpetuate their mistake.
The Confirming-Evidence Trap
This bias leads us to seek out information that supports our existing instinct or point of view while avoiding information that contradicts it.
The confirming-evidence bias affects:
where we go to collect evidence but also
how we interpret the evidence
leading us to give too much weight to supporting information and too little to conflicting information.
When confronted with information with balanced argument we have a tendency to:
select, and
support …..
……that information to which we hold strong opinions.
The information that seems to contradict our thinking is dismissed without careful consideration to the facts.
We will become much more engaged with the things that confirm our existing likes and biases.
What do we do about it?
Check to see if we are examining all evidence with equal rigor
Check your motives
When seeking advice don’t ask leading questions that invite confirming evidence.
The Framing Trap
The way we choose to frame a problem or a question influences the choices we ultimately make.
We tend to frame things the way we want to see things or by the status quo.
You can frame a question with a negative or a positive spin – i.e. is the glass half empty or half full.
By using negative speak you can direct people to take the half empty approach.
Another example is framing with different reference points:
if you invest 100K you have a 50% chance of making a million dollars selling sheep. Or you have a 50% chance of loosing 100K trying to make a million dollars selling sheep.
Research shows that different reactions result from the different reference points presented by two different frames.
Eg. 50% of the people found this show so exciting. 50% of the people found the show to be super boring.
What can you do about it?
Don’t automatically accept the initial frame
Pose issues and problems in a neutral manner – including both gain and loss
Examine the way others have framed things before you accept information
Estimating and Forecast Trap
Making estimates and forecasts based on fairly certain information may be ok.
Estimating and forecasting where there is uncertainty is another matter.
Feed back is rarely given as to accuracy. Our minds find it very difficult to become calibrated for making decisions in the face of uncertainty.
When confronted with uncertainty we allow our minds to become clouded and the potential results to be distorted. This distortion does not allow us to assess probabilities.
This is an uncertainty trap.
There are three uncertainty traps:
1. The overconfidence trap – we are actually overconfident about the accuracy thus leading to errors in judgement.
Those who are overconfident about the accuracy within uncertainty, actually set a very very narrow range of possibilities. Their scope is very narrow.
2. The prudent trap – people are extremely cautious in uncertainty in order to stay on the safe side. This safe side could be real or perceived. Research shows that over cautiousness is encoded in formal decision-making.
This approach is so ingrained that even when worst case scenarios are infinitesimally possible of happening, the formal process remains overly cautious.
The past can overly influence us because of dramatic past events.
These dramatic events can distort our thinking and cause us to see or believe in a higher probability of something going wrong…..
…. even if there are no strong indicators.
What can we do about it?
to reduce overconfidence with estimates and forecasts make sure that you evaluate an outcome by looking at the extreme possibilities.
Minimize the distortions from recallability by cognitively not allowing past experiences cloud your ability to rationally think through the issue.
,
What you don't know about making decisions – Garvin and Roberto
Leaders are made or broken by the quality of their decisions.
The reason:
most businesspeople treat decision-making as an event
Making a decision that way is to overlook the larger social and organizational context.
It's a process that unfolds over weeks, months, or even years.
Decisions as Process: Inquiry versus Advocacy
Not all decision-making process is are equally effective.
Two broad approaches:
Inquiry
Advocacy.
Inquiry
Inquiry is a very open process. It’s all about:
alternatives
exchange of ideas
tested solutions
Inquiry considers options and works together. Goal is:
not to persuade
agreement on the best course of action
share information and
draw their own conclusions
With Inquiry
Encourages critical thinking and debate.
Participants feel comfortable raising alternative solutions.
People question assumptions.
Disagreements revolve around ideas and interpretations rather than entrenched positions.
The implicit assumption:
A solution will emerge from:
a test of strength among competing ideas… not duelling positions.
Advocacy
immersed in discussion and debate,
select a course of action on what they believe is the best available evidence
Not on new ideas and interpretations
Advocacy perspective…..participants
passionate about their preferred solutions
stand firm in the face of disagreement.
Passion:
Hard to remain objective
limits ability to pay attention to opposing arguments
Goal
make a compelling case,
not convey a balanced view.
Disagreements are:
fractious
antagonistic.
Personalities and egos come into play.
The implicit assumption – a superior solution will emerge from a test of strength.
This approach:
suppresses innovation
encourages participants to go alone with a dominant view
avoids conflict
CONFLICT
Constructive conflict
Critical thinking and rigorous debate lead to conflict.
Conflict:
not always means negative
brings issues into focus.
Conflict comes in two forms:
cognitive (intentional)
affective (emotion)
Cognitive conflict – disagreements of ideas and assumptions on best way to proceed
This conflict is crucial to effective inquiry
Challenging underlying assumptions:
flags real weaknesses
introduces new ideas.
Affective conflict is emotional.
Involves personal friction
clashing personalities
Diminishes willingness to cooperate.
The challenge for leaders
increase cognitive conflict
keep affective conflict at a minimum.
Meaning……..
keep emotional conflict at minimum
personal friction diminishes relationships.
HOW?
establish norms or rules
make vigorous debate the rule
…………..not the exception.
structure the conversation so the process fosters debate
Example: Point counter Point
One group is asked to develop a proposal
A second group generates alternative recommendations.
The groups exchange proposals and discuss the various options until there is agreement.
Intellectual Watchdog
One group is asked to develop a proposal
A second group critiques the proposal of the first and sends back for revision.
Cycle is repeated until proposal meets the standard of the second group.
But even if you’ve structured the process toward encouraging cognitive conflict, there's always the risk that it will become personal.
How to structure?
First
pay attention to how issues are framed
the language used
Set ground rules about language
avoid words and behaviours that trigger defensiveness.
Second
help people step back from pre established positions
breaking up natural coalitions
assign people to tasks on some basis rather than traditional loyalties
Alternative alliance partners for people with differing interests to work with one another.
Third,
shift individuals out of well grooved patterns, or vested interests or highest. Ask groups to research and argue positions they ordinarily do not endorse.
Finally, ask participants locked in debate to revisit key facts and assumptions. Gather more information. People become so focused on differences that they end up reaching a stalemate. Ask people to examine underlying pre-assumptions.
13
Consideration
Once a decision's been made and alternatives dismissed, some people will have to surrender the solution they preferred.
At times those who are overruled grudgingly accept different outcomes.
The critical factor appears to be the perception of fairness – procedural justice. People participating in the process must believe that their views are considered and that they had an opportunity to influence the final decision.
If so, participants believe process was fair and they will be more willing to commit themselves, even if their views did not prevail.
All opinions cannot prevail, but all opinions have value in shaping the right answer.
Voice without consideration is damaging. That leads to resentment and frustration rather than to acceptance. People need to believe that they were heard and considered. Thus, the decision-making process will be seen as a sham.
Leaders can demonstrate consideration through-out the decision-making process. At the outset, they need to convey openess to new ideas and a willingness to accept views that differ from their own.
They should avoid disclosing their personal preferences early in the process.
Leaders must take care to show they are actively listening and are being attentive.
How?
ask questions,
probe for deeper explanations,
echo comments, and
show patience.
After a leader makes a final choice, they should explain their logic. They must describe the rationale for their decision, detailing the criteria they used.
Most importantly, they need to convey how each participant's arguments affected the final decision.
Closure
Knowing when to end deliberations is tricky. All too often decision-making rushes to a conclusion.
Decision making can drag on endlessly where a decision is made too late. Making a decision too early is just as damaging is deciding too late period.
Deciding too early
Sometimes people's desire to be team players overrides their willingness to engage in critical thinking and thoughtful analysis.
Where a group readily accepts the first possible option is known as “group think”.
The danger of group think suppresses the full range of options to be considered but also unstated objections will come to the surface at some critical moment.
First line of defense against group think – leaders need to learn to recognise latent discontent (existing but not yet developed or manifest; hidden or concealed). Leaders need to bring people back into the discussion
HOW?
This may be done by approaching dissenters one by one an encouraging them to speak up.
Second – another way to avoid early closure, cultivate minority views either through norms or rules. Minority views broaden and deepen debate as they stretch a group’s thinking.
Deciding too late
At times, a team hits the wall. Without a mechanism for breaking the deadlock, discussions become an endless loop.
At other times, people bend over backward to ensure even-handed participation. Striving for fairness, participants insist on hearing every view and resolving every question before reaching a conclusion.
This demand for certainty results and usually in an endless loop, replaying the same alternatives, objections and requests.
What do leaders need to do?
At this point it's the leader's job to call the question and announce a decision.
The message here is that leaders need to become more comfortable with ambiguity and be willing to make quicker decisions in the absence of complete, unequivocal data or support.
CONCLUSION
A Litmus Test
Successful outcomes can be evaluated only after the fact. Is there anyway to find out earlier whether you are on the right track.
Researchers suggest there is. Research shows that there are a set of traits that are closely linked with superior outcomes.
Multiple alternatives
When groups consider many alternatives, they engage in more thoughtful analysis and usually avoid settling too quickly on obvious answers.
Assumption testing
Facts come in two varieties:
those that have been carefully tested and
those that have been merely asserted or assumed.
Effective decision-making groups do not confuse the two. These groups step back from their arguments and try to confirm their assumptions by examining them critically.
You may still find they are lacking hard evidence, but at least people will know they are venturing into uncertainty if you have critically examined your facts.
Well defined criteria
Without clear goals, competing arguments become difficult judge.
Fuzzy thinking – long delays are the likely result.
To avoid this problem specific goals up front and repeatedly during the decision-making process.
Although these goals can be complex, quantitative and qualitative, at the fore.
4. Dissent and debate
there are two ways to measure the health of a debate:
the kinds of questions being asked and
the level of listening.
Some questions open up discussion; others narrow it and end deliberations.
The level of listening is an equally important indicator of a healthy decision-making process. Poor listening produces:
flawed analysis
personal friction.
Participants routinely interrupting one another before considering all the facts and information, affective conflict is likely to materialise.
Group harmony disappears in the absence of active listening.
5. Perceived fairness
A real time measure of perceived fairness is level of participation.
Often, a reduction in participation is an early warning of problems. Some members of the group are already showing their displeasure.
Keeping people involved in the process is the most crucial factor in making a decision, and making it stick.
It requires the strength to promote conflict while accepting the:
ambiguity,
wisdom to know when to bring conversations to a close,
patience to help others understand the reasoning behind your choice, and
ability to embrace both the divergence that may characterise early discussions and the unity needed for effective implementation period
,
Conquering a Culture of Indecision
Imagine….. presenting a project and waiting for everyone else to open the discussion:
No one wants to comment.
There is a loud silence in the room.
The comments are all positive.
Remarks are finally made but judging from their remarks, it appears that everyone in the room supports the project. The project ends….but has it resolved anything
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