In many organizations, like those discussed in this chapter, countless small problems routinely occur, presenting early warning signs that the company's strategy may be falling short and needs to be revisited. Yet these signals are often squandered. Preventing avoidable failure thus starts with encouraging people throughout a company to push back, share data, and actively report on what is really happening in the lab or in the market so as to create a continuous loop of learning and agile execution.

In select instances like these, where error prevention is clearly more important than innovation, we have loads of checks, processes, and procedures to ensure we don’t screw anything up. In these moments, we want Netflix to be like a hospital where there are five people verifying the surgeon is operating on the correct knee. When a mistake would lead to a disaster, rules and process isn’t just nice to have, it’s a necessity.

With this in mind, you can consider your objective carefully before deciding when to opt for freedom and responsibility and when rules with process would be a better choice. Here are a set of questions you can ask in order to select the right approach:

• Are you working in an industry where your employees’ or customers’ health or safety depends on everything going just right? If so, choose rules and process.

• If you make a mistake, will it end in disaster? Choose rules and process.

• Are you running a manufacturing environment where you need to produce a consistently identical product? Choose rules and process.

For example, meeting with senior executives in a large financial services firm in April

2020, I listened as they explained that the current business environment made failure temporarily “off-limits.” Understandably concerned about an economic climate increasingly challenged by a global pandemic, these business leaders wanted everything to go as well as possible. Generally speaking, they were sincere in their desire to learn from failure. But enthusiasm about failing was acceptable when times were good, they told me; now that the future looked uncertain, pursuing unerring success was more imperative than ever. These smart, well-intentioned people needed to rethink failure. First, they needed to appreciate the context. The need for fast learning from failure is most critical in times of uncertainty and upheaval, in part because failures are more likely! Second, while encouraging people to minimize basic and complex failures may help them focus, welcoming intelligent failures remains essential to progress in any industry. Third, they needed to recognize that the most likely outcome of their prohibition on failure wasn’t perfection but rather not hearing about the failures that do occur. When people don’t speak up about small failures—say, an accounting error—these can spiral into larger failures, such as massive banking losses.

The problem with Perrow’s idea that organizations could not safely function with interactive complexity and tight coupling was that so many such organizations did in fact function without mishap for years, even decades. Nuclear power plants operated without incident nearly all the time. So did air traffic control systems, nuclear aircraft carriers, and a host of other inherently risky operations. A small group of researchers led by Karlene Roberts at the University of California, Berkeley, set out to study how they did it. What they discovered was more behavioral than technical. The term high reliability organization, or HRO, captures the essence of the theory. HROs are reliably safe because of how they make everyone in them feel accountable to one another for practices that consistently catch and correct

deviations to prevent major harm. Vigilance is one word for it. But it’s more than that. To me the most interesting part of HRO research is the observation that rather than downplaying failure, people in HROs are obsessed with failure. My colleagues Karl Weick, Kathie Sutcliffe, and David Obstfeld wrote a seminal paper highlighting the culture of HROs as preoccupied with failure, reluctant to simplify, acutely sensitive to ongoing operations (quick to detect subtle unexpected changes), committed to resilience (catching and correcting error,

rather than expecting error-free operations), and valuing expertise over rank. In other words, HROs are weird places. Rather than holding back to see what the boss is thinking, people there don’t hesitate to speak up immediately. A frontline associate, to avert a crisis, can tell the CEO what to do. Failure is clearly seen as an ever-present risk that can nonetheless be consistently averted.

Boston University professor Anita Tucker and I studied nurses carrying out the dozens of tasks that occupied them throughout long hospital shifts. Taking detailed notes, complete with time stamps, to document the work of these dedicated caregivers at nine hospitals, Anita observed that nurses confronted “process failures” surprisingly often—almost one an hour. A process failure was anything that disrupted a nurse’s ability to complete a task, such as an unexpected supply shortage in bed linens or medications. The nurses were acutely aware of these frustrating daily hurdles. Their jobs were hard enough! On average nurses were working an extra (unpaid) forty-five minutes simply to tie up loose ends before leaving the hospital.