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.

The dilemma is that when the challenges facing an organization are not about repeatable execution, but about innovation or responding to complexity, the idea of breaking things down into well-understood parts is not only unhelpful, it can also be a dangerous trap.

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.

In retrospect, the erosion seen in the engineer’s Champlain Towers South inspection seems a clear signal of imminent collapse—but at the time it was undeniably ambiguous. Ambiguous threats are problematic because of the natural human tendency to downplay them. It’s natural, and more pleasant, to assume nothing’s wrong and to adopt a wait-and-see attitude. Perhaps you’ve heard of confirmation bias-our tendency to see what we expect, thereby reinforcing an existing belief or prediction by paying attention to confirming data and failing to notice disconfirming data. Becoming more self-aware, as you will see in the next chapter, is one element of learning to notice early warnings—and to actively seeking disconfirming data, just in case. But it’s natural to adopt a wait-and-see attitude instead of getting curious and taking a closer look at some subtle signal of irregularity. The financial industry turned a collective blind eye to the risk of mortgage-backed securities, composed of shaky loans granted to people with neither assets nor income to ensure repayment.

A lack of situation awareness can spawn a variety of preventable failures—usually due to a cognitive bias called naïve realism. As described by Stanford psychologist Lee Ross, naïve realism gives you an erroneous sense that you see reality itself—not a version of reality filtered through lenses created by your background or expertise. It’s a source of overconfidence that can lead to preventable failures. Naïve realism makes us interpret a variable or novel situation as predictable. We’ve already seen examples of this with the child left in the taxi, or my classroom experiences, but perhaps you’ve lost a sale you thought was in the bag or believed a date was going well only to never hear from the person again. Overestimating a situation’s familiarity and underestimating its uncertainty sets us up for failures that are preventable rather than intelligent.