Predictable Surprises :

The Disasters You Should Have Seen Coming

• A condition in which an information resource is unavailable, as a result of a natural or man-made occurrence, that is of sufficient duration to cause significant disruption in the accomplishment of agency program objectives, as determined by agency management.

Disaster

Predictable Disasters• Disasters that can happen

in the future

• These disasters should be identified and analyzed

• Many disasters that should have been identified are ignored

• If they befall on a company they bring about great damage

• This damage is preventable and thus should be prevented

Predictable Disasters Cont…• The signs of an impending

crisis often lie around us ,yet we still don’t see them

• Despite robust planning processes, even the best run companies are frequently caught unaware by disastrous events that should have been anticipated and prepared for

• Fortunately ,there are ways to spot danger before it’s too late

The R.P.M

• Recognition Prioritization Mobilization

• If a damaging event happens that was foreseeable and preventable , no excuses should be brooked

• The difference between a true surprise and one that should have been predicted is the RPM process

RPM

• Recognizing the threat

• Some disasters cant be foreseen

• The one’s that should be foreseen should be spotted by the management

• If the disaster still takes place then the management is not to be blamed

RPM Cont…• The ways to determine the failure of recognition

• Leader marshaled resources to scan the environment for emerging threat

• It should be asserted whether a reasonable job was done in interpreting and analyzing the data that was collected

• If not then the leader should be held responsible

RPM

• Making the threat a priority in the organization

• Predictable surprises also occur when a threat is recognized but not given priority

• A leader performs careful cost benefit analysis and gives priority to those threats that represent the highest costs

RPM

• To actually mobilize the resources required to prevent a disaster

• Failure to mobilize occurs when leaders recognize and give adequate priority to a looming problem but fail to respond effectively

Failure of Recognition In Real Life

• The year 2001 the general electrics company failed in recognizing a future disaster

• European Commission regulators refused to approve GE’s $42 billion acquisition of Honeywell

Failure of Prioritization In Real Life

• Monsanto fell into this trap in the late 1999

• CEO Robert Shapiro failed to win public acceptance of genetically modified foods in Europe

• They did not realize and give importance to the impact of the mad cow disease and other such diseases

Failure of Mobilization In Real Life

• In the

• The SEC tried to reform the U.S accounting system well before the collapse of Enron and WorldCom

• The five big accounting firms lobbied Congress to block new regulations to reform the accounting systems

Getting Into A Disaster • Sometimes leaders actually

set themselves up for predictable surprises

• In 1998 39 pharmaceutical companies got together to sue the South African government

• The government was sued over its attempt to reduce the cost of HIV drugs

• The companies got a global response against their actions

Why We’re Vulnerable

• Different factors could be reasons to our vulnerability

» Psychological

» Organizational

» Political

Psychological Vulnerabilities

• The human mind is a notoriously imperfect instrument

• Cognitive Biases• Things are better than they really are• Select evidence that supports our

preconceptions• Pay little heed what other people are doing• Humans are creatures of the present• Pay less attention to problems that you haven't

faced yourself

Organizational Vulnerabilities

• Complex business structures can make it difficult to anticipate predictable surprises

• Companies are usually divided into:

• Organizational Silos

• Information can be fragmented• Responsibility is dispersed

Political Vulnerabilities

• Predictable surprises can emerge out of systemic flaws in decision-making processes

• Imbalances of power may lead executives to overvalue the interests of one group while slighting those of other equally important groups

• Vested interests can slow or block action intended to resolve a growing problem

• Companies are all too often oblivious to dynamics of government systems

Shell & Greenpeace• April 29th ,1995, WAS

NOT A GOOD DAY for royal Dutch/Shell.

• Greenpeace activists launched an attack on the company in retaliation to Shell’s decision to sink an oil-storage platform

• This soon became a global issue and Shell was brought into battle grounds

Shell & Greenpeace

• If we go into the depths of the story and analyze why this disaster wasn't predicted earlier???

– The Psychological aspects

– The Organizational aspects

– The Political aspects

The Psychological aspects

• We see the world as we like it to be• The people a shell had an unshakable

biased• They believed they could not be wrong,

and thought with that in their minds• Being an engineering firm there thinking

process was mechanical• They were not ready to counter emotional

arguments

Organizational Aspects

• Organizational parochialism was clearly evident within shell

• The companies decentralized management structure worked well when dealing with routine procedures

• But its dealing with crises that crossed national boundaries was not good

• Shell UK focused basically within UK • While Greenpeace focused on global attacks

against Shell

Political Aspects

• Shell failed to anticipate and shape European political responses to its Brent Spar plan

• Negotiations were made only with the British Government and the European nations were notified

• Later after pressure was applied on the German government, Germany forced Shell UK to reverse its decision

Solutions