In this article we will look at a different kind of hazard. Not a physical hazard such as a toxic chemical or flammable gas which are sources for physical harm. Instead, we will look at organizational hazards that are sources of harm to an organization's ability to achieve overall mission success. These are areas of uncertainty that if not addressed create the possibility for "institutional" or "operational" risk.
For purposeful and goal-oriented organizations, sources of uncertainty can often be found with respect to its goals, how an organization works, and strategies used to effect change:
1. Uncertainty of the goals and objectives
Companies use roadmaps to take them from where they are now to where they would like to be in the future. Uncertainty of any of the elements of the roadmap will impact mission success which include:
Uncertainty of where an organization has been in the past
Uncertainty with how an organization perceives where they are now
Uncertainty with their prediction of the future
Not addressing these uncertainties may result in scenarios such as having the right goal but starting at the wrong spot on the roadmap; a place where you have not yet arrived.
2. Uncertainty with the model of the organization
Each organization will have some idea or model for how their organization works. The sophistication of the model is not always what is important. What is important is that it is able to predict outcomes. That is, if we do A then we expect B to happen. Causation will lie somewhere between deterministic and probabilistic behaviors. Deterministic processes are characterized by having the same outputs for the same inputs and initial conditions. Whereas, probabilistic processes will have a variety of outputs based on the same inputs and initial conditions. Knowing what kind of processes an organization has will help to determine what strategies to use achieve mission success.
3. Uncertainty with the strategies used to effect change
The more complex a system is the harder it is to know what changes will produce a desired change in outcomes. There will always be uncertainty in the outcomes along with a possibility for unintended consequences. However, even when systems are more ordered and deterministic there will be uncertainty in the effectiveness of replacing old behaviors for new ones to achieve different results. Habits are hard to change particularly when they were once good habits.
Strategies to Improve the Probability of Success
To help determine which strategies to use to improve the certainty of achieving mission success, we can classify organizational systems across the dimensions of order and chaos, and certainty and uncertainty as shown in the following diagram:
Static Zone
This a system that is ordered, mostly deterministic, and with predictable causation. This defines normal operations and practices for an organization. Standard practices and procedures are the focus and productivity is the ultimate goal which is constantly measured, assessed, and improved.
Conformance to standard is embedded in the culture which by its nature resists variation. The side effect is that is also resists change making improvements slow to implement and uncertain. This requires change management strategies to improve the probability that changes are completed and effective.
Lack of improvement is the hazard for organizational systems in the static zone.
Variable Zone
This is a system that is mostly deterministic but has drifted into disorder. This defines abnormal operations and requires a return to normal practices. Behaviors and practices often focus on what is common but not what is best.
Processes are needed to address deviance and variability often achieved through audits, analysis, and remediation. Quality management is used to standardize behaviors and practices and improve consistency.
Lack of conformance is the hazard and normalization of deviance must be avoided to prevent a drift to failure.
Probabilistic Zone
This is a system that is mostly ordered but not as deterministic as had been thought resulting in a variety of outcomes. This describes the result of uncertain operations where companies don't know what the results will be exactly.
Variability is a result of a lack of knowledge or associated with chance (random variability).
Processes may be defined but tend not to be effective (ordered uncertainty). Focus is usually on "best efforts" not "best outcomes".
Improved models are needed to effectively buy-down reducible risk by reducing likelihoods and the consequence of undesirable outcomes. In addition, measures are needed to contend with natural variability. This is the domain of Risk Management and Lean Six-Sigma.
Lack of knowledge is the hazard due to a failure to learn.
Unpredictable Zone
This is a system that is disordered and uncertain and defines unpredictable operations. This is often the case when organizations fail to anticipate and protect. Organizations cannot predict to any level of confidence what the outcomes of their efforts will be. This may be the result of unsafe work practices or conditions increasing the chance for breaches that negatively affect quality, safety, security, reputation or any other objectives.
The hazard in this case is a lack of protection.
Emergency response and incident management is needed to react, stabilize, and improve levels of protection. If you cannot predict then you need to protect as if it will happen.
Summary
In practice, organizational maturity and type of business determine the zone where most of an organization's systems and processes exist. Companies in highly-regulated, high-risk sectors will require greater levels of organizational maturity to combat uncertainty and disorder as more is at risk.
However, even when organizations are performing well under normal operations they are at risk of drifting to other zones due to a lack of attention, rigor, and pro-activity which are themselves hazards to avoid.