Tuesday, 7 April 2020

Preparing For The Next Step: Why Things Go Wrong?

I thought that the following quote from my book ‘Beyond Airline Disruptions – Thinking and Managing Anew’ can inspire existing and aspiring leaders, in the midst of immense difficulties, to start thinking anew and get better prepared for the fresh start in a less complex but more uncertain world. Before we find out more about the next steps, let’s first see why things go wrong and what needs to improve?
"When we make plans, we expect that most things will respond in a linear way, that more input will get us more output. If we want more passengers, we add more flights, fly to more airports (even if overcongested), squeeze more seats into the plane, pack more people in. We also want to be bigger and stronger than our competitors. The bigger we become, the more we are inclined to ignore the critical resource limitations and issues of quality.
In real life, however, most things don’t respond in a linear way (quality and cost in particular). This is why we fail to notice the critical point beyond which the quality of outcome turns downwards. From that point on, adding more flights or having more passengers only make things worse. This happens whenever the traditional way of thinking and doing makes us ignorant to what is happening now, when we are unable to understand early signals of this decline and are deluded by the occasional rise in profit. In this way, we unknowingly increase complexity and are later surprised by unexplainable losses, unforeseen disruptions and loss of reputation.
The chart below shows dependences between growth, quality of outcome, money and time. These relationships are essential for understanding the current state of business and its future prospects.
Why is it so easy to pass the turning point without noticing it? On the surface, it is about quality and connectedness of data and information which come from multiple sources with different measuring and reporting criteria. By the time they reach decision makers, these data are aggregated, then apportioned, freely interpreted and compared so that in the end, their value is reduced to the level that decision become risky but with unknown consequences.
At a deeper level, however, the problem with quality of data is related to fragmented organisation, top-down management where decisions don’t follow the natural flow of work, and measures of system performance that are detached from operational reality. It is also about legacy mindset, which sees the system as stable, boxed structure, that only trusts the official information that comes from the same sources year after year, packed in standardised reporting formats, no matter the quality. Analysing these data with unknown origins further distorts information, allowing for free interpretations.

By making decisions based on too many assumptions, we unknowingly create more problems elsewhere and are unable to measure their impact on the system due their complexity. When we compare the planned and actual results published in company reports, we cannot say what is beyond these figures, what really happened and why, and what we need to improve. Regardless of amount of data we collect and analyse, sometimes the impact of our decisions is minor, and sometimes it can have longer-term implications on the system performance that we wouldn’t be aware of. 
This is because the system we are in is not designed to manage things we are facing in real life. Complexity arises from interactions between people and processes that are the very nature of airline business, but existing information systems and management do not recognise it. Hence the detachment between strategy and operations, plans and reality."

This time the chances are that we may start below the turning point which may be painful in the beginning, but then it will be up to us to decide whether we want to know or not when things start to go downwards.