When the minority report of the group monitoring NASA’s progress in making the space shuttle fleet safer after the loss of the Columbia said in August 2005 that NASA “must break [the] cycle of smugness substituting for knowledge,” it put its finger on a challenge that afflicts all successful organizations: how to avoid the complacency that inevitably accompanies success and how to use knowledge to reduce the risks that complacency brings with it. (footnote 1) Whether or not NASA itself suffers from smugness—the majority of the monitoring group didn't address the question—the issue of complacency is endemic in all large organizations. Various strategies have been used by organizations wishing to retain their edge. This article reviews the strengths and weaknesses of different approaches, including several for dealing with situations where knowledge is no help.
Root Causes of Organizational Complacency
The first step in dealing with the problem is to recognize how deep-rooted and intractable it is. Many common assumptions and behaviors promote complacency. These are the most important:
Strategies for Dealing with Complacency
Because the root causes of organizational complacency lie deep in the human psyche, there is no known cure. Various organizational strategies for reducing the impact of complacency have been adopted, including changing the organizational structure, adjusting the discourse, enhancing organizational values, getting ready for the unexpected, and aiming for radical innovation. The different approaches have varying strengths and weaknesses.
Changing the Organizational Structure
One set of strategies concerns adjusting the organizational structure, forcing attention on important issues that are often ignored.
Structural solutions are attractive because, apart from communities of practice, they can be implemented by managerial fiat. They generate explicit and consistent approaches to knowledge issues and create clear accountabilities. None of the structural solutions is guaranteed to work, however, because the results depend on the quality of the discourse taking place within the various structures.
Upgrading the Quality of the Discourse
Explicit efforts can be made to upgrade the quality of the discourse that takes place within organizational structures.
Efforts to upgrade the flow of professional dialogue comprise an array of tools and techniques, none of which is “the solution,” but all of which can make a contribution. The tools are flexible and generally low cost. They are, however, hard to institutionalize. Moreover, these approaches will lack robustness unless supported by strong organizational values.
Establishing and Disseminating Organizational Values
Organizations need to prepare for unanticipated risks. After all known risks have been planned for and the right structures, discourses, and values put in place, they need to be prepared for issues that haven't been anticipated.
Neither structural approaches nor steps to enhance dialogue are likely to be effective unless they are aligned with organizational values. An organization may declare that innovation or safety is a top priority, but if the actions of the top management show that its real priority is meeting short-term production goals, then its declarations will have little impact.
Values are usually established in situations where leaders have to deal with adversity. For instance, General Electric has a detailed set of policies specifying what is meant by unyielding integrity and backs them up with energetic managerial action. In 1991, for instance, when a single GE employee was found to have been involved in bribery related to the sale of airplane engines to Israel, GE swiftly disciplined twenty-one otherwise- excellent executives, including several top managers, whose only flaw was that they had not been watchful enough to detect and prevent the fraud. This GE story of principles and actions sends a clear signal about the value of integrity. Repeating the story helps establish integrity as a core value of the company. (footnote 13)
Establishing and disseminating organizational values is a powerful way of inculcating a capability to deal with difficult issues throughout the organization. However, some values may no longer be relevant when the totally unexpected happens.
Preparing for the Unexpected
Organizations need to prepare for unanticipated risks. After all known risks have been planned for and the right structures, discourses, and values put in place, they need to be prepared for issues that haven’t been anticipated. Because knowledge of such events is by definition lacking, specific plans cannot be formulated, but steps can be taken to enhance the capability to deal with the unexpected.
A capacity to improvise can generate flexibility and creativity, leading to efficient solutions to seemingly insoluble problems, even where advance knowledge is not available. Too much reliance on improvisation, however, can encourage ad hoc approaches to risks that should have been predicted and prepared for. And it is little help when the overall mission of the organization is in question.
Management often involves trying doing “more of the same” but doing it better, more quickly, and more economically. Innovation is about doing something completely different. In a sense, innovation is the opposite of management and requires dissimilar techniques.(footnote 17)
Thus much of the activity that currently goes by the name of innovation hardly warrants the term. Henry Ford once said that if he had asked clients what they wanted, they would have said “faster horses.” Much so-called innovation in organizations is about searching for “faster horses,” that is, tame, incremental improvements that don’t fundamentally change the situation, when what is really needed is something radically different— a car.
When organizations face fundamental challenges to their mission as a result of shifts in the external environment, they may need to innovate radically in order to survive. Digital Equipment Corporation had great strengths in minicomputers and kept making marginal improvements to them but was unable to adjust to a fundamental shift in the external environment—the advent of the PC. It did not survive. By contrast, Nokia began life as a collection of firms specializing in foresting, rubber, and cable manufacture; it successfully transformed itself to become a global giant in mobile phones.
Public sector organizations face similar challenges when the external environment changes or when the consensus supporting the mission unravels. They may not die abruptly like private sector firms if they fail to adjust to the new situation and transform themselves, but they will slowly decline into irrelevance.
When it comes to transformational innovation, knowledge is often the problem, not the solution. All available knowledge concerns the past and typically indicates that radical new strategies will fail, because there is no market, or existing organizational capability, or tested technology, or all of the above. Transformational innovation concerns the future about which there is no reliable knowledge. When the future is very different from the past, courage, imagination, and smarts become at least as important as knowledge.
For organizations that are in synch with their environments, transformational innovation is a matter of choice. Where the external environment has shifted significantly, transformational innovation becomes a necessity. In such cases, complacency is not an option, but neither is knowledge. Private sector organizations may face the necessity of generating a new market with radically different products, services, clients, or business models. Public sector organizations may need to face the stark reality that unless they can forge a new consensus with stakeholders, transformational innovation will be a requirement of survival.
Attacking Complacency on All Fronts
In any large organization, the struggle against complacency is an unending battle. All avenues reviewed in this article need to be exploited, including structural approaches to enhancing the sharing of knowledge, steps to enhance the quality of the dialogue that takes place within those structures, strenuous efforts to establish and transmit appropriate organizational values, explicitly preparing for the unexpected, and creating a capability to undertake transformational innovation. Organizations cannot entirely eliminate risk or complacency, but serious and thoughtful efforts to counter complacency can help bring dangers to light and reduce the likelihood of failure.
4. Psychology & Behavioral Finance, http://www.investorhome.com/psych.htm (accessed September 4, 2005).
11. G. Klein, The Power of Intuition: How to Use Gut Feelings to Make Better Decisions at Work (New York: Doubleday, 2003): 36; J.S. Armstrong, “Forecasting in Conflicts Your Opponent Will Do,” University of Pennsylvania, 2002, http://www.upenn.edu/researchatpenn/article.php?141&bus.
14. J. Arquilla and D. Ronfeldt, Swarming and the Future of Conflict, Rand Corporation, 2005, http://www.rand.org/publications/DB/DB311/
15. D. Watts, “Untapped Networks,” MIT Technology Review, March 7, 2003, http://www.technologyreview.com/read_article.aspx?id=13117&ch=infotech
16. N. Boyce, Why Louisiana Communication Networks Failed, National Public Radio, http://www.npr.org/templates/story/story.php?storyId=4829404.
Stephen Denning is the author of The Leader’s Guide to Storytelling (Jossey-Bass, 2005). Formerly the Program Director, Knowledge Management, at the World Bank, he advises organizations on knowledge management and organizational storytelling. http://www.stevedenning.com
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