by Pawel Motyl
After this, a member of The GREENS board sent an emotional letter to all employees, stating that they were deeply convinced their strategy was the right one and the company should focus on replacing the failed product with a range of new solutions as soon as possible, adding that there was no point in debating the failed venture. The person responsible no longer worked at the company, and so the problem had been resolved.
Less than a year later, it turned out that the problem hadn’t actually been solved at all. A new version of the product hit the shelves, developed by a new group, led by a new manager. Within two months it became clear that the nightmare was recurring. Angry customers were contacting the company about faults appearing several weeks after purchase. Fortunately, this time, The GREENS board displayed more curiosity and, instead of firing another manager and half the design team, they carried out an RCA. It transpired that the cause of the problems was that two years earlier, there had been a change in the IT system used by the HR department. When the new system was implemented, some of the data on technical training completed by employees had been lost. For this reason, no one realized that four people in one of the analytics teams hadn’t been trained in the changes made to a different computer system. These alterations, while seemingly small, were significant enough to require the analysts to make minor changes in the way they entered the data to be analyzed. The result was disaster: the analysts, acting in good faith and blissfully unaware of the changes, created key reports for the development of new products which were faulty. Based on the bad data, programs were created for the new devices that were never going to work as intended. The extended operation tests carried out prior to the product launch were too short to identify the faults in the program, which only emerged once the customers had been using the equipment for several weeks.
An obvious trap in the inquiry mode and RCA methods lies in finding a happy medium between the thoroughness and depth of the analysis and the time available—and time is always the most precious resource in business. We’d all like to have the time to calmly analyze something from all sides, go through all the data, and grill all the experts. Unfortunately, we have schedules, timetables, meetings, and deadlines. We often have to choose the lesser of two evils, as any decision can often be seen as better than no decision at all.
Time will always be a key factor when seeking a competitive advantage, so it’s a problem that will never go away. The sooner we launch our product, the better our chances of beating our rivals and cornering the market. The faster we decide, the more agile and flexible we are as an organization. The more agile we are, the better our chances in the world of black swans. We must therefore find a compromise option to keep the decision wolf from the door and the business lamb safe and sound.
The good news is, there is a range of things we can do to achieve this. One option is to accelerate and improve the decision-making process for standard decisions that don’t entail major risks to the business. The more we automate and delegate down the management ladder, the more time we have to look into things that demand an inquiry mode. Our second option is to free up time by shooting down “Concordes,” eliminating projects that are doomed to fail and that only continue because of the accumulated momentum and because we’re in a sunk costs trap. A third method is to set up a rapid response team, which in a black swan situation will be prepared and primed in terms of at least certain actions and procedures in order to act quickly and save time. A fourth method is something I call “decision salami.” In negotiations, the salami tactic involves gaining ground incrementally, so as to not arouse your opponent’s suspicions. You gradually gain small concessions and your stunned opponent sees too late that they have swallowed your proposal whole. Decision salami works in much the same way: we win time by making small moves all while securing the key issues. An example of that approach is the sea blockade of Cuba by JFK. It bought time for further analysis, and simultaneously stopped the warheads being placed on the island, which would have irreversibly changed the balance of power. Likewise, when Eurocontrol decided to close the skies after the eruption of the volcano in Iceland, it bought itself sufficient time to conduct an inquiry approach, while eradicating the chances of an aviation catastrophe. However, in this case, the time wasn’t well used, as the experts at Eurocontrol chose instead to go into advocacy mode.
So, the decision salami should be guided by two factors: winning extra time and simultaneously securing the fundamental issues. From the perspective of effective decision-making in a world of black swans, every organization should identify critical processes: the people, resources, or tasks that are crucial to the effectiveness of the entire organization. In short, it’s about identifying those issues that will destroy us, not make us stronger, if they go wrong. Once we know what they are, we have to create a set of decisions that will secure the short-term future of the organization and give us additional time to research the black swan. If such an approach is accompanied by the decision-making Kaizen described earlier, based on an intelligent, thorough RCA, we have a chance of creating a winning organization that is permanently focused on continuous improvement in terms of both the attitude and the behavior of individual employees.
This won’t happen, though, if the organization lacks authentic leaders, people whose fundamental role in shaping effective decision-making we shall discuss in detail later. In the case of improvements based on RCAs, authentic leaders play a major role in moderating discussions, ensuring that they don’t become another battleground for power and influence in the company. An old corporate truism states that nothing improves your chances of promotion like a colleague’s failure. But if a group is led by an authentic leader, and not just your typical nominal manager, the chances that the problem, and not one of the employees, will be attacked is much greater. This doesn’t imply that using an RCA means we shouldn’t draw negative conclusions about people who commit cardinal errors; it’s important, though, that the analysis doesn’t turn into a witch hunt looking for guilty parties.
It’s also worth bearing in mind that the basic problem that arises when we’re managing innovative processes in the real world doesn’t concern creation, it concerns implementation. It’s easy to generate hundreds of innovative ideas; the problems begin when we start putting them into practice. Sometimes, the problems get blown out of proportion and brilliant ideas get shelved because the decision-makers conclude they just won’t work. For example, look at the Palo Alto Research Center (PARC), set up in 1970 by Xerox. PARC’s job was to constantly seek out technological innovations that could form the basis of new products for Xerox (then famous for their photocopiers) to sell. The PARC team performed their tasks excellently, creating such concepts and prototypes as the computer mouse, local area networks, email servers, graphical user interfaces, and the WYSIWYG word processor. The management of Xerox was regularly informed about each of these breakthrough inventions developed by the engineers, and each time they concluded that the market wouldn’t like it, or it couldn’t be monetized. Idea after idea was shelved and left to gather dust. This happened with the Xerox Alto, a personal computer with a graphical user interface and QWERTY keyboard. In 1979, PARC was visited by a man whose vision and imagination were far greater than those of the board of Xerox at the time. That man was Steve Jobs, and he was looking for inspiration for Lisa, the personal computer Apple was working on at the time. Jobs loved the engineers’ ideas, so he bought some of them—he also copied some, which many criticized him for—and poached several employees. One way or another, the ideas developed by PARC were used in the personal computer that Apple launched in 1984—and that proved to be an enormous success. The Xerox board must have gasped in amazement. They had had the winning lottery ticket and somehow had never managed to cash it in. (Another PARC breakthrough was the XEROX 8010 STAR, an innovative combination of local networks and email that was essentially the first mass email server. It also never got approval from the bigwigs at Xerox.)
Lack of innovation in such a competitive area can mean only one thing: problems on the horizon. By the end of the 1990s, Xerox was suffering serious losses and fighting for survival. The mission to sort out the company was accepted by Anne Mulcahy, who in 2002 made PARC independent of the structures in Xerox, enabling the unit to look for other customers. Today, although a significant proportion of PARC’s revenue comes from Xerox, the center also works for Samsung, Fujitsu, and NEC, to name but three.
So, innovation dies not at the creation stage, but during implementation. It’s the same with RCAs: even if we reach profound, justified, precise conclusions, in many cases they don’t lead to concrete changes in the functioning of a team or company (in the next chapter, we shall encounter just such a tale of decision-making inertia at NASA). Authentic leaders, then, are also responsible for ensuring that the root causes of problems are eliminated, and that new solutions have been thoroughly tested before becoming standard. Their task is not only to initiate intelligent discussion, but also to oversee the process of implementing change.
The role of leaders in improving the decision-making infrastructure, though, goes beyond the actual analysis of failures and successes, or introducing improvements; we shall explore this in more detail in Chapter 7.
Before that, though, we have to face a business hurricane.
RCA in Decision-Making: A Step-by-Step Guide
Prepare a robust “opening account”: Identify the problem and the effectiveness criteria that failed (why did they fail? which factors were crucial?), draw up a list of personnel, and gather all the available data about the project. Try to be as objective as possible. Present the resulting report to two or three people with whom you frequently disagree and ask for their opinions. Is the report neutral or tendentious?
Select the people for the RCA team: Don’t use only people who were involved in the failed undertaking; bring in people whose experience will allow them to compare the project with earlier ones. Aim for variety: alongside experienced people, include more recent employees, as they may see faults that you’ve become blind to (the monkey and banana syndrome). Engage people with different roles and from different departments in the company. If you can justify it, and it’s possible, look outside the organization—it’s often customers, suppliers, or partners who can see the broader picture.
Set out the rules for conducting an RCA to the team (e.g., brainstorming, 5 Whys) and set a timeline for the work. Ask if the team thinks anyone else should be included in the team.
Present the opening account, emphasizing the starting point for the analysis. Allow for a discussion examining the account.
Divide the RCA team into subgroups (ideally four to eight people). Try to choose members so that each team contains people who don’t work together daily. The greater the variety, the greater the chances that the discussion will be thorough. Allow the subgroups to conduct the analysis independently. Don’t rule out areas, don’t appoint group leaders, don’t suggest how they should work.
Once the work in subgroups has been completed, bring together the whole team and carry out a chronological analysis, or use reverse chronology (starting from the failure and working backward) if that’s more appropriate. The subgroups then present their opinions about the causes of the mistakes. Moderate the debate, making an effort to engage and involve less active participants. Express your opinions, but be careful not to impose them, especially if your direct subordinates are part of the RCA team.
After you’ve written down the results of the analysis, end the meeting. Leave all the materials and notes from the meeting behind. Bring the group together the next day and return to the room where the results are. Look at them again, individually, with fresh eyes. Take into account any remarks made by the team following this review. Make sure the final “Why?” really is final.
Bring the results together in a “closing account.” Present that to someone who didn’t participate in the work of the RCA team. Ask them to assess the clarity of the material and the justification of the causes and effects—is it all clearly documented, credible, and convincing?
Set out the priorities for change, looking first for simple improvements that can be implemented relatively quickly and cheaply. In each process of change, quick wins are important, as they further motivate people to act. Also define the changes needed in the medium and longer terms. Make someone responsible for each initiative and don’t forget to set deadlines, milestones, or indicators. An RCA mustn’t end with diagnosing the problem, it must constitute a starting point for further action.
Thank the RCA team for its energy and engagement.
6
Something in the Air
Think back to the controversial experiment with the monkeys and the bananas. The animals gradually learned a certain behavior, and the group accepted not climbing the ladder to reach the bananas as the norm. Like it or not, we’re no different from those monkeys. We yield to pressure, overt or otherwise, from our cultural environment, which forces us to conform to the behavioral norms and standards of the group. This process is frequently unconscious, and over time, like the monkeys, we stop wondering about the reasons behind our actions. When we apply the banana experiment to entire countries, we call such emergent behavior national culture; in the case of individual businesses, the phenomenon of groups of employees adopting similar behaviors is called organizational culture.
Culture is the set of norms and beliefs that are shared by a specific group of people and that affect their attitudes and behavior, although they may be oblivious to its influence. Culture is, in short, the way in which we behave. In many cases, the principles of behavior that govern us are so deeply ingrained that we don’t even realize they exist; stereotypes emerge in a similar manner, as they’re instilled in us throughout our lives by the representativeness heuristic. It’s no accident that Geert Hofstede described culture as “the collective programming of the mind” that creates the discrete set of values, attitudes, and behaviors typical of a given set of people. Linda Smircich, of the University of Massachusetts Amherst, called culture “social glue,” a set of attitudes and unwritten rules that contribute to a feeling of belonging within a particular group. From this perspective, an organization’s culture becomes an identifying trait that enables its members to feel like they’re playing on the same team, one that stands out from the rest.
Every social group creates a specific culture, even if it’s not a conscious, managed process. Culture, then, is a little like air. We can’t see it (though it certainly exists) and we easily forget its importance—until there’s a hurricane. At which point, this invisible force shows its destructive side. In business, this kind of hurricane might take the form of a merger of two companies that leads to a culture clash between two groups with totally different social glues. In those situations, the formerly inconspicuous cultures collide, generate conflicts, and create a significant problem. Just think about the problems that followed the merger of the German company Daimler with the US firm Chrysler. Failure to carry out a cultural due diligence prior to the merger led to a hurricane, with a clash not just between organizational cultures, but between national ones, too. The behavior of the two groups that came into conflict with each other was a result not only of conscious adherence to rules and procedures (which would have been relatively easy to resolve), but above all, from deep-rooted, partially unconscious convictions about how (not) to behave.
Intercultural differences can also lead to a multitude of tragicomic incidents, from the trivial to the spectacular.
A very good friend of mine is extremely well-traveled. He is passionate about discovering and exploring new places. Organized trips are not for him; he’s only happy when he takes his seat in a local restaurant that has never seen a tourist before. It’s an approach that once went badly wrong. It all began in the Laranjeiras district of Rio de Janeiro, which he was visiting for the first time. While my friend
was eating supper in one of the local restaurants, the waiter asked how he was enjoying his meal. As his mouth was full, my friend decided to answer the question with a classic European and North American A-OK gesture, raising his hand and forming his index finger and thumb into an O shape to explain that everything was splendid. Unhappily for him, the Brazilian waiter, it later turned out, had only been working four days and this was his first experience of a foreign customer. From my friend’s point of view, it could have been worse. On the plus side, the waiter didn’t actually kill him, and the traumatized owner didn’t charge him for his meal. On the downside, though, his khakis and light blue shirt were unequivocally ruined by the dark gravy of the feijoada tipped over him. My friend had been blissfully unaware that the gesture, regarded so positively in Europe and the USA, has an unpleasant, even insulting connotation in Brazil and so enraged the waiter.
The influence of cultural differences in decision-making can result in way more than the odd conflict or amusing anecdote. Social psychologist Professor Geert Hofstede, the guru of cultural anthropology and the true precursor of its business application, is best known for his breakthrough research, which dates back to 1975, in this area. That year, Hofstede, fascinated by organizational culture, spent time observing IBM, which was regarded at the time as monolithic in terms of its working environment. Wherever it set up a new division, the rules of behavior and company values developed over decades by the legendary Thomas Watson, one of the company’s first directors, were inculcated in the employees. During their observations of the IBM employees, Hofstede and his team noticed the clear influence of national cultures, in addition to the carefully cultivated corporate one, on their behavior and attitudes. At this point, the research turned into a breakthrough work in the field of cultural anthropology, eventually forming the foundation for a whole raft of social, political, educational, and business applications.
