Wednesday, June 3, 2009

How the Mighty Fall

Stage 3: Denial of Risk and Peril

We just didn’t have enough conclusive data to convince anyone.
NASA O-Ring Task Force following the Challenger disaster
As organizations begin to move into Stage 3, we begin to see the cumulative effects of the previous stages. Stage 1 hubris leads to Stage 2 overreaching, which sets the organization up for Stage 3, Denial of Risk and Peril.

The greatest danger comes not in ignoring clear and unassailable facts, but in misinterpreting ambiguous data in situations when you face severe or catastrophic consequences if the ambiguity resolves itself in a way that’s not in your favor.

When facing irreversible decisions that have significant, negative consequences if they go awry – what you might call “launch decisions” – the case for launch should require a preponderance of empirical evidence that it’s safe to do so.

One common behavior of late Stage 3 is when those in power blame other people or external factors – or otherwise explain away the data – rather than confront the frightening reality that the enterprise may be in serious trouble.

A final manifestation of denial deserves special attention: obsessive reorganization. Reorganizations and restructurings can create a false sense that you’re actually doing something productive. Organizations are in the process of reorganizing themselves all the time: that’s the nature of growth. But when you begin to respond to data and warning signs with reorganization as a primary strategy, you may well be in denial.

Markers for Stage 3
  • Amplify the positive, discount the negative
  • Big bets and bold goals without empirical validation
  • Incurring huge downside risk abased on ambiguous data
  • Erosion of healthy team dynamics
  • Externalizing blame
  • Obsessive reorganizations
  • Imperious detachment

Audacious goals stimulate progress, but big bets without empirical validation, or that fly in the face of mounting evidence, can bring organizations down, unless they are blessed with unusual luck. And luck is not a reliable strategy.

Questions for ChurchWorld

  • What’s the upside, if events turn out well?
  • What’s the downside, if events go very badly?
  • Can you live with the downside? Truly?

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