Look back upon the Three Mile Island accident that flooded suburban Pennsylvania with toxic nuclear waste—and then imagine the panic of the generating plant managers that March morning in 1979. Some routine maintenance in the facility suddenly mushroomed into a runaway thermodynamic crisis; controllers watched in helpless horror as small mishaps and misunderstandings cascaded into progressively bigger problems which took days to finally resolve. The “meltdown” of the reactor’s core spawned a billion dollars of clean-up, years of health-related legal action, and ongoing political conflict about nuclear energy.
Alas, Three Mile Island now stands as one more example of a “crisis of system complexity” that you too may face someday. Maybe not near-nuclear catastrophe–but still some big, unpredictable mess of interconnected failures that will test every bit of agility and problem solving of your leadership. So argues a thought-provoking new book, Meltdown: Why Our Systems Fail and What We Can Do About It (Penguin Press, 2018). Authors Chris Clearfield and Andras Tilcsik colorfully explain why your job, like everyone else’s in today’s global economy, is becoming part of bigger networks of co-dependent systems, laden with unforeseeable risks and unimaginable outcomes. Whether you’re a banker, manufacturer, consultant, or coffee shop owner, somewhere, somehow, the linked complexity of how you work today is boiling up some nasty surprises for you. Those are probably not on your radar screen, and woe is you.
Happily, after painting the scary scenarios that await, the authors also offer some calming practical advice you can pack as a parachute. Read their pages and maybe, just maybe, you can avoid—or at least minimize–your own forthcoming descent into chaos.
Talking recently to Chris Clearfield about his book, five must-do ideas emerged that can improve the winning odds for any leader.
1. Understand why some system meltdown is probably in your future too. Today’s global economy has pushed us all to higher planes of risk. Thus Clearfield: “Everyone now has to deal with the dark side of competitive differentiation, and ‘faster, better, cheaper.’ Yes, for big companies, large extended networks—but it also happened, for example, to a small chain of bakeries which we studied. The company almost went under from complexity and co-dependent failures when, to revitalize their market, management added too many new products from too many new suppliers.”
Because we all keep pushing for higher performance, more scale and greater efficiency, innovation is proliferating, and so is the like-it-or-not imperative of interconnected technology—a witch’s brew of higher reward but also higher risk operations. Offer more consumer choice across bigger and bigger markets, and you’re spinning longer and more intricate spider web value chains, and devising speedier fulfillment processes. Look in the mirror: are you silently building more complex systems around you? And how much are you becoming part of someone else’s too? Remember the Alamo that was once Lehman Brothers.
Channeling work of sociologist Charles Perrow, Meltdown emphasizes that the increasing risk is not just complexity per se, but complexity that is now “tightly coupled”—you aren’t only dealing with more moving parts, you’re also winding them tighter and tighter. The slack time and margin of error of olden days is now lost luxury. So when one little piece goes wrong, the ripple effect of all the tight coupling can be explosively punishing—creating wave after wave of oh-my-god failures. No-slack complexity is just part of everyone’s job now.
2. Understand your vulnerability and trade-offs. “You need to start measuring things you’re probably not measuring now,” warns Clearfield. For example, you should sketch an overall picture of: the inter-linked systems that create your value; the bottlenecks across the systems; and how tightly coupled different pieces are. “Stated simply,” he elaborated, “how many things across all your ‘systems’ have to go exactly right to achieve the performance you need—and what can go wrong if they don’t? Where are the leverage points? Do you really understand all the dependencies driving the success or failure of your efforts?”
Of course, you probably don’t—not just because of the layered networked complexity you can’t see, but also because you’re always pushing harder to win– and then lose track of all the daisy-chains of risk. “Most managers willingly take on at least some complexity,” Clearfield pointed out, “to acquire a special capability—for example, a dramatically cheaper process based on a more extended supply chain, or providing greater customer transparency by being more open to stakeholders. You need to better understand the tradeoffs between capabilities and complexity that you make, consciously and unconsciously.”
3. Redesign and simplify your systems—when you can. There’s already plenty of smart thinking about simplifying organizations through process redesign, shifting mindsets, and reframing critical elements, (e.g. Ashkenas, Simply Effective; Donella Meadows, Leverage Points, etc.). The early chapters of Meltdown offer comparable advice. But Clearfield notes the limits of such strategies. “Leaders today have to go further, because we’ve reached levels of system complexity so large that no one can know or predict all the interconnections; and increasingly there’s no real opportunity to do complete redesign.” He pointed to the recent political challenge of reforming the U.S. healthcare system: “There was no way Obama could have re-architected all of our now interconnected systems of doctors, hospitals, insurance, payments, technology, etc. Even more now, fixing all the former problems that still exist and new ones that have arisen since can’t be some clean-sheet-of-paper exercise.”
4. No matter what, invest in building cultures of better decision-making and continuous learning. The real upshot of Meltdown is that the greatest strategy for leaders in today’s unpredictable connected chaos is to build more agile and intelligent organizations. That is, don’t expect to stop the rising tide of coupled complexity or simplify it away; instead, invest to keep staying ahead of it, by learning faster, watching more wisely, and making better decisions when disasters loom.
Such prescriptions are laid out persuasively by the authors, referencing both research and vivid anecdotes, which together will convince you why the best meltdown insurance ultimately comes from the people you lead and how you lead them.
To help you build a savvier culture, the authors detail several organizational practices, e.g. using more accurate (but still simple) risk-forecasting tools; learning better from the early warning signs of small failures; eliminating groupthink by fostering dissent in decision-making; developing diverse workforces (emphasizing differential cognition more than ethnic background), to create richer perspectives for managing operations and strategy.
Meltdown also offers some counter-intuitive lessons about the right blend of “insiders and outsiders,” and experts and generalists; and why a bias for action counterpointed by institutional patience creates an organization more durable for system shocks. Three-minute managers may regret the lack of one simple blueprint for all of this; but if there’s a dominant message of Meltdown, it’s that winning (or even just surviving) in the new age of hyper-complexity is not just about simplification.
5. Preparing for the next meltdown is not just about you. Chris Clearfield concluded with a poignant reflection: “There’s a humanitarian aspect to every large-scale failure and its ripple effects. In our zeal to problem solve, we can lose sight of that. The collapse of the Flint, Michigan water system, or the Deepwater Horizon oil spill catastrophe cost real lives, and affected directly or indirectly tens of thousands of people: health, employment, quality of life, for generations to come. There will be other meltdowns, for sure. We’re all operating in systems now. Leaders today have to get better in anticipating and preparing for the unseen dangers that can ultimately impact all of us.”
Originally published on Forbes.com