Brayden King of orgtheory.net recaps a conference he attended this weekend on organizational dynamics in the financial crisis:
The papers were very diverse, but one idea came up in several papers. The idea was that the crisis was a kind of normal accident that was made possible by the organizational structure of the financial system. As Charles Perrow theorized, accidents can be thought of as the product of organizational systems that are highly complex and tightly coupled. Decision-makers have a hard time figuring out how the system works as a whole due to its complexity, but when one part of the system breaks down, for whatever reason, the entire system is vulnerable to collapse due to the interdependence of the different parts.
Normal accidents is a favorite theoretical foundation for explaining such debacles as space shuttle disasters and nuclear accidents. Scott Sagan’s Limits of Safety is a particularly useful application of the theory, holding normal accidents against the idea of high reliability organizations to examine why there have been no catastrophic nuclear accidents (clearest indication that normal accidents might make sense: there have been a hell of a lot of near misses).
I wish I had attended the conference. Drawing on Sagan a little more, I suspect that normal accidents in a financial system might very well provoke even greater efforts toward high reliability organizations, which would in turn eventually suffer normal accidents. I would also have enjoyed hearing King’s take on the topic–his work never fails to challenge and stimulate.
Categories: Current Events · Decision-making · bureaucracy
Tagged: Brayden King, Charles Perrow, financial crisis, normal accidents, nuclear accident, orgtheory.net, Scott Sagan, space shuttle
The Washington Post asks some important questions about electronic medical records:
…bipartisan enthusiasm has obscured questions about the effectiveness of health IT products, critics say. Interviews with more than two dozen doctors, academics, patients and computer programmers suggest that computer systems can increase errors, add hours to doctors’ workloads and compromise patient care.
“Health IT can be beneficial, but many current systems are clunky, counterintuitive and in some cases dangerous,” said Ross Koppel, a sociologist at the University of Pennsylvania School of Medicine who published a key study on electronic medical records in 2005.
Under the stimulus program, hospitals and physicians can claim millions of dollars for IT purchases, and will be penalized if they do not go digital by 2015. Obama has said the changes will save billions in health-care costs and will minimize medication errors.
But health IT’s effectiveness is unclear. Researchers at the University of Minnesota found in March that electronic records prevented only two infections a year. A 2005 report in the journal Pediatrics found that deaths at the children’s hospital at the University of Pittsburgh Medical Center more than doubled in the five months after a computerized order-entry system went online. UPMC said the study had not found that technology caused the rise in mortality and maintained that medication errors were down 60 percent since computers were introduced in 2002.
I’ve written a great deal about success and failure rates in IT in addition to teaching courses specifically tailored to improving the likelihood that technology might deliver on its intended outcomes. What such discussions often miss is the notion of the stealth failure: systems implemented on time, on budget, and according to requirements that nevertheless complicate the processes they automate, costing user time and errors and spawning workarounds that may or may not address the reasons for developing the systems. In the aggregate, these stealth failures can bear a heavy cost, but they are almost never considered in the aggregate. Electronic medical records have a strong potential for becoming stealth failures, exacting a heavy toll not only in financial costs, but in quality and length of life.
Of course, these outcomes are not inevitable. Careful attention to use cases, outcome-based requirements, and relationships between interdependent purposes go a long way toward catching and addressing the elements of stealth failures. Unfortunately, political processes tend to undermine the communications and clarity necessary to realize better outcomes.
Categories: Current Events · Decision-making · bureaucracy
Tagged: bipartisan, electronic medical records, health care, stealth failure
Leslie Hinkson delves into the patterns of putative bureaucratic failures:
After the public outrage comes the creation of a task force to investigate these agencies, the public firings of a few officials, and the report that points to a lack of coordination among the various governmental agencies and employees responsible for tracking these families. I haven’t conducted the analysis as yet but I’ll bet my mint condition X-Men #1 that in every one of these public cases that lack of coordination and communication across job titles and across agencies are given as primary factors for the “failure” of these systems to protect these children until it is too late.
That sounds like the pattern to me. Hinkson concludes with two of the questions that have driven this blog for five years:
The first is why do some bureaucracies more closely resemble this organizational type than others? That is, is there a specific historical trajectory an organization follows to take it down this path? Second, if we can assume that I am correct in my observations regarding the lack of coordination and communication in these cases, what can be done about it? If we can assume away any ‘friction” such as costs, is there a way to institute organizational change such that these problems might actually be resolved?
Change usually fails to gain traction until there is a crisis, at which point the change is arriving too late. Perhaps there is something to managing crisis such that the event that catalyzes change is less severe than some of the more prominent bureaucratic disasters. There is also an element of competition among bureaucracies–how does one create profound change at one but not another? All important and timely questions.
Categories: Current Events · bureaucracy
Tagged: change, crisis, Hinkson, orgthe, orgtheory.net
Tyler Cowen addresses the useful and timely question, “what are some examples of successful government bureaucracies?”:
Wars aside, here is a short and very incomplete list: the NIH, the Manhattan Project, U.C. Berkeley, the University of Michigan, Fairfax County, the World Trade Organization, the urban planners of postwar Germany, some of the Victorian public works and public health commissions, most of what goes on in Singapore, anywhere that J.S. Bach worked.
The European Union has been very good for eastern Europe. I’ll leave aside the health care issue because we’ve debated that plenty already. The real question is what all these examples have in common.
I would add–as one commenter did–the Tennessee Valley Authority. For commonality, I would throw out that most of these (if not all) have some sort of urgency about their objectives. That point’s debatable, but what isn’t all that debatable is that bureaucracies without urgency and big missions tend to be cumbersome.
Categories: Current Events · bureaucracy · leadership
Tagged: bureaucracy, Fairfax County, leadership, Manhattan Project, the World Trade Organization, U.C. Berkeley, University of Michigan
Forbes has an interesting story about the mix of high tech and old school at Gist:
The relationship management service scours some 60,000 news sources, 20 million blogs and 600,000 Twitter handles and matches up the information they find to a contact list generated from a user’s e-mail correspondence. The result is that Gist is an advanced Web communication tool that helps you keep tabs on the people and companies that matter most. Some of the company’s success, however, comes from one the Web’s most primitive of communication tools: online forms.
Soliciting customer feedback has been a driving ethos behind Gist. What started out as PowerPoint product pitches evolved into weekly “friends of Gist” meetings, which eventually grew into conference calls for those who couldn’t make it to Seattle. Those meetings became standardized, and from them came the survey.
I have been using Gist for a few weeks now and am mightily impressed. The tool, though simple to use, is powerful and growing. Check it out.
Categories: Current Events
Tagged: Forbes, Gist, old school
A quick look at privatization news from France:
PARIS, Oct 7 (Reuters) – France Telecom (FTE.PA) on Wednesday began a second day of negotiations with unions on ways to reduce workplace stress blamed by labour leaders for a spate of suicides at Europe’s third biggest telecoms company.
The talks, which are expected to continue for several weeks, are part of France Telecom’s effort to calm the political firestorm surrounding the deaths of 24 workers in the past 18 months.
As sporadic strikes continued at sites across France, Labour unions said management was more conciliatory on the first day of talks, although points of contention remained, such as performance reviews and controls on call centre workers.
…The government, which is France Telecom’s biggest shareholder with 27 percent of shares, has also been closely involved in trying to manage the fallout from the suicides.
To better understand workers’ concerns, “all employees will receive a questionnaire on stress in the workplace” on October 19, said Lombard.
Christian Mathorel, a CGT union representative, was not convinced that management would deliver on its pledges. CGT wants the company to stop monitoring employees’ calls, measuring individual performance and giving managers headcount reduction targets.
“We think the employees are still in danger,” he said. “If we don’t address the fundamental causes behind these dramatic incidents, we will be negotiating in fear of new suicides.”
As one with experience in both managing European employees and working in various roles in call centers, this is an interesting development. 24 suicides in a year and a half at one company’s call center is alarming. Yet, monitoring calls, measuring performance, and reducing headcount are accepted practices in call centers from Memphis to Mumbai; what caused such a reaction at France Telecom?
My guess: a change program executed with insufficient employee engagement and up-front data gathering, analysis, and diagnosis. That’s only a guess, and I’m certain no one could have predicted suicides–it would take a real tyrant to go ahead with that knowledge–but this situation smacks of front-end ignorance of points of resistance. Did this have to happen? Probably not.
By the way, good luck with that questionnaire.
Categories: Current Events · Studying organizations · Unintended Consequences · leadership
Tagged: France Telecom, suicide, workplace stress
There’s a lot going on off-line right now, including building a business. That’s going very well. I’ll be back to it soon enough. In the meantime, check out www.josephlogan.com. Getting good traction among those who are developing ideas into businesses.
Ciao.
Categories: Current Events
Bob Sutton on dumb but widely used American management practices:
1. Dangerous Complexity. The assumption that when we can’t understand an expert, they must be both smart and right. This is certainly part of the Wall Street story — for years the financial wizards and economists have conveyed to the rest of us that we are far too dumb to ever understand what they are doing. An interesting contrast, by the way, is JP Morgan CEO Jamie Dimon. If you read Fools Gold, you will see that one reason that JP Morgan avoided the worst of the collapse was that Dimon believed that, if you were investing in something you couldn’t understand, you should get out. Clearly, most companies did not follow and are not following P&G ’s A.G. Lafley’s advice to keep things “Sesame Street Simple.”
2. Dysfunctional Internal Competition. This is a big theme in The Knowing-Doing Gap and Morten’s Hansen’s masterpiece Collaboration. If you dig into the problems in the banks and a lot of other companies, they actually punish people who help others succeed, both via the reward systems and who gets the most prestige. This seems to persist even though the evidence against such assumptions and systems are so clear.
3. Breaking-up Teams Constantly. American companies often seem to love moving people around constantly, breaking-up teams, giving people new experiences, and so on. Certainly, there is a time for fresh blood, but if you read J. Richard Hackman’s Leading Teams you will see that the weight of the evidence is that breaking up teams less often rather than more often is linked to all sorts of effectiveness indicators. Also, see this post about the Miracle on the Hudson where I discuss this literature.
Nothing to add.
Categories: Current Events · Studying organizations
Tagged: Bob Sutton, complexity, dysfunction, Knowing-Doing Gap, management, teams
Tyler Cowen has a lengthy and well-reasoned post on the Baucus health care proposal:
1. CBO scoring is a very useful institution, for purposes of fiscal discipline, but you shouldn’t confuse it with true cost estimates. Often a negative CBO score isn’t as bad as it sounds and a positive CBO score isn’t as good as it sounds. The deadweight cost of taxation matters, and we should fear future government insolvency, but at the margin a revenue transfer is simply that — a revenue transfer and not a social cost per se.
…
2. The main benefit of the bill is greater financial security, vis-a-vis health care expenditures, for many U.S. households. This doesn’t show up as a benefit in standard estimates of gross revenue flows.
3. The bill will, over time, create a economic and political dynamic that turns health insurance companies into regulated public utilities. You might think this is good or bad, but its one of the most important changes.
4. I fear what else might end up jammed into the required insurance policy. The political dynamic here has not been thought through very well and this will be important for the long-run fiscal impact.
…
6. The Baucus bill, and some of its cousins, is a bit like cap and trade in the sense that it postpones a lot of the expenditure-cutting pain into the future. If Obama — a relatively popular President with a Democratic Congress — can’t do it now why should we think we will find fiscal discipline in the future? With revisions this problem is likely to become worse. The proposed pilot programs for cutting costs I view as postponements of tough decisions, not impressive starts on the problem which will be pursued scientifically.
Much much more there. Cowen tends to think rigorously about this (and most) issues, and I tend to trust his instincts.
Categories: Current Events · bureaucracy
Tagged: Baucus, cap and trade, health care reform, Marginal Revolution, Tyler Cowen
My intention was to start the deep dive on change dynamics in health care today, but my own health is suffering (lingering flu). I’ll get back to it tomorrow if all goes well, and I offer this as something to think about until then:
As the White House and Congress continue debating how best to provide coverage to tens of millions of Americans currently without health insurance, a new study (PDF) is meant to offer a stark reminder of why lawmakers should continue to try. Researchers from Harvard Medical School say the lack of coverage can be tied to about 45,000 deaths a year in the United States — a toll that is greater than the number of people who die each year from kidney disease.
“If you extend coverage, you can save lives,” said Dr. Steffie Woolhandler, a professor of medicine at Harvard who is one of the study’s authors. The research is being published in the December issue of the American Journal of Health and was posted online Thursday.
The Harvard study found that people without health insurance had a 40 percent higher risk of death than those with private health insurance — as a result of being unable to obtain necessary medical care. The risk appears to have increased since 1993, when a similar study found the risk of death was 25 percent greater for the uninsured.
That’s why I’d rather try to understand this than debate it.
Categories: Current Events · bureaucracy
Tagged: death, Harvard, health care reform, insurance
