Humans are funny. One might assume that the big prize of increased profits and safer, more environmentally responsible operations would motivate enterprises to adopt the practices of high-reliability organizations. That, however, is rarely the case. It turns out that threats and crises are more compelling.
In short, a crisis creates the organizational sense of urgency to act. Manufacturing the perception of a crisis can work, but it must be done very carefully. Could that approach move your organization to adopt high-reliability practices? Let’s consider the commercial aviation industry.
The Aviation Industry: A Case Study in High Reliability
Statistically, you would have to fly every day for more than 25,000 years, on average, to die in the crash of a U.S. commercial airliner.
This is despite the immense electromechanical complexity of commercial aircraft and the even more complex process of getting and keeping one up in the air, flying around with more than 10,000 others each day (before COVID), all while dealing with weather, multiple air-traffic-control hand-offs, etc.
Statistically, you would have to fly every day for more than 25,000 years, on average, to die in the crash of a U.S. commercial airliner.
How can such complex machines execute such complex processes with such high degrees of reliability? The answer is simple: It’s not optional. Crashes are bad for business. Reliability isn’t a choice for commercial airlines; it’s mandatory.
One study discovered that every death associated with a commercial airline crash produced 138.2 front-page articles, just in The New York Times. That type of press can virtually destroy a brand.
A case in point was Trans World Airlines (TWA), once a market leader in the commercial aviation sector. While this carrier had been struggling financially, the crash of Paris-bound TWA Flight 800 on July 17, 1996, which killed all 230 aboard, dealt a devastating blow to the company’s recovery attempts. (TWA was acquired by American Airlines in 2001.)
Understanding Risk Psychology and Organizational Change
Why is the crisis more motivating than aspiration? As behavioral economists Daniel Kahneman and Amos Tversky noted in their work on “Prospect Theory,” threats evoke a different response than opportunities do whenever people are making decisions in uncertainty. They suggested that a decision-maker’s frame of mind influences how much risk they will assume.
The formula for determining a decision’s utility (or expected value) is straightforward: magnitude times likelihood. Imagine you’re presented with two options: The first offers a 100% chance to receive $100; the second provides a 10% chance to receive $1,000. From a strict economic-utility perspective, both options are worth $100. So, which of the two would most people choose? It depends upon one’s frame of mind.
If a person is economically comfortable, there’s a good chance they opt for the $100-sure thing. There is not much motivation to take a risk. However, a crisis exists if one is on the verge of foreclosure and needs $900 to avoid it. The $100 won’t avert foreclosure. Thus, the likelihood of opting for a chance at $1,000 increases despite a low probability of success.
Change-management guru John Kotter has written extensively about creating a sense of urgency to motivate organizations to change. Kotter believes a sense of urgency is necessary for creating lasting change.
Transformation to a high-reliability organization requires change and assumption of risk. Inventing the perception of a crisis may help achieve the sense of urgency to take the risk, challenge the status quo, and move out of one’s comfort zone.
But proceed cautiously: We want to challenge the status quo to increase operational reliability, not become riverboat gamblers by assuming operational risk. Riverboat gambling is not the goal of high-reliability organizations.
Initially published in The RAM Review.
Drew Troyer is a seasoned expert with over 30 years of experience in sustainable manufacturing, physical asset management, energy management, and reliability engineering. He has a proven track record of helping companies in the mining, resource, process, and manufacturing industries optimize their operations to be more sustainable, reliable, and profitable. Drew is a thought leader and a prolific author, with over 350 published works and extensive experience as a keynote speaker at global conferences. He is also a Certified Reliability Engineer (CRE) and Certified Energy Manager (CEM), holding advanced degrees in business administration and environmental sustainability.
