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.

When presented with the choice between admitting our mistakes or protecting our self-image, the decision is easy. We want to believe we are not at fault, so we find every reason to justify what we did as correct. That makes it hard to learn! A psychological bias known as the fundamental attribution error exacerbates the problem. Stanford psychologist Lee Ross identified this fascinating asymmetry: when we see others fail, we spontaneously view their character or ability as the cause. It’s almost amusing to realize that we do exactly the opposite in explaining our own failures—spontaneously seeing external factors as the cause. For example, if we show up late for a meeting, we blame traffic. If a colleague is late for a meeting, we may conclude he is uncommitted or lazy.

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.

Reducing complex failures starts with paying attention to what I call ambiguous threats. Whereas clear threats (a Category 5 hurricane will hit your neighborhood tomorrow) readily trigger corrective action (evacuate your house), we tend to downplay ambiguous threats—missing chances to prevent harm. Downplaying ambiguous threats is the opposite of what occurs in high reliability organizations. I’ve observed this downplaying in settings ranging from the NASA Space Shuttle program to Wall Street to pharmaceutical drug development. What do to these disparate settings have in common in addition to complexity? High stakes and a drive to succeed—a drive so powerful it blinds people to subtle warning signals.

And because they’re ready, their confidence doesn’t crack. The venture capitalist Josh Wolfe likes to say, “Failure comes from a failure to imagine failure.”

The bottom line: people who think about what is likely to go wrong and determine the actions they can take are more likely to succeed when things don’t go according to plan.

A smart way to assess your options is by using the following principle.

The Second-Level Thinking Principle: Ask yourself, “And then what?