People Challenges Don’t Break Organisations. Fragile Responses Do.

This summer, as New Zealand Police found itself managing a crisis involving allegations of serious misconduct at the highest levels, I found myself returning to the philosophy of Nassim Nicholas Taleb.

A few years ago, when I first read The Black Swan: The Impact of the Highly Improbable it left me scratching my head (in a good way). I now spend a lot of my time supporting leaders and boards through complex risks.

So, I recently picked up Antifragile: Things That Gain From Disorder. It’s prompted a lot of reflection about how Taleb’s ideas might help organisations think differently about risk. Not in terms of eliminating it but in terms of how to respond when it inevitably shows up.

Out of the blue?

When concerns surface about the behaviour of someone within an organisation - especially when it involves a leader or a trusted member of the team - people often describe the situation as shocking, unexpected or surprising. This kind of reaction is completely understandable. But it’s not always helpful. And it can carry some hidden dangers. It can lead organisations to treat complex people challenges as gigantic unforeseeable crises rather than a predictable feature of the operating environment.

And that framing matters. The way an organisation understands risk determines whether pressure weakens it or makes it stronger.

An inconvenient truth

The challenge, whenever you’re working with people, is that you cannot eliminate risk. We know this. Because we have reporting mechanisms, policies and procedures, and frameworks for responding to these types of issues. These processes exist because we know that people make dumb decisions, breach trust, and sometimes are just downright malicious. We also know that people can perceive things in a variety of ways. And we know there are often power and identity dynamics at play. That people rationalise and justify their behaviour after the fact – I can tell you that even the most serious crimes are rationalised and justified. People are complicated and imperfect creatures.

The issue is not whether one of these challenges is going to occur, but what happens to your organisation when it does.

Fragile, Robust or Anti-fragile?

Stress quickly exposes the way in which your organisation is designed. Taleb creates three helpful categories to help us think through this.

Fragile

A fragile system breaks or collapses when exposed to shocks and errors. It appears orderly until pressure is applied and then it breaks.

Robust

A system is robust or resilient if it withstands shocks without changing. It can absorb stress and continue functioning. It’s able to bounce back and is less sensitive than a fragile system.

Anti-fragile

A system is anti-fragile if it benefits from volatility, stress, errors and shocks. This is the opposite of fragility.

Here’s the important point.

Catastrophic damage, the large downside, is rarely cause by the event itself. It is caused by the design of the organisational response.

How to identify organisational fragility

A fragile organisation is likely to include some of these features.

Centralised control

Only a small number of people are authorised or trusted to respond to people challenges. This creates a single point of failure, slows down response and turns everything into a high-stakes issue.

Ignorance of warning signs

Reporting lines are ineffective. People don’t trust the system. They fear retaliation. The triage and initial assessment process is weak.

Overconfidence in policy

Everyone assumes that because there’s a policy, they have control. They don’t consider the irrationality of human behaviour.

Prioritisation of efficiency

People challenges are dealt with as quickly and cheaply as possible. Investigations, reviews and training are seen as inefficiencies and costs to be avoided. Short-term costs are reduced but long-term risk increases massively.

Lack of optionality

The organisation depends on a small number of specialists to deal with people challenges. Or it’s limited in its range of potential responses. Typically, this might look like calling a lawyer over every complaint or sending every single issue into resolution or mediation. When organisations only know how to respond in one or two ways, mistakes become expensive very quickly.

A new way of thinking

There is a different way to frame people challenges. Instead of shrinking away during these moments of pressure-testing, these events can be seen as opportunities to gather intelligence and feedback which can be used to improve the system. Contrast this approach with that of the leader or board that sees everything as a threat or a failure.

Changing the questions we ask

Imagine for a moment that you are the New Zealand Police Commissioner. And let’s say you’re determined to learn from the current crisis. What would be the primary question you would ask at a time like this?

I bet for many of us it would be, “How can we stop this from happening again?”

But this is where things get a little uncomfortable. Because that question highlights a flaw in our approach to risk.

That question is about prevention. But risk cannot be eliminated. We know that systems involving humans will always include misconduct, errors in judgement, and abuse of power. If you try to build an organisation that only functions when it is error-free, you are unintentionally building a fragile organisation.

Instead, we have to shift ourselves into a very uncomfortable position. We have to accept that this sort of thing is going to happen again.

So, what questions should we be asking?

• Here are some alternatives:
• Where did we miss the early signals?
• Do people genuinely believe that speaking up will make things better or worse for them?
• What conditions allowed this to escalate?
• What assumptions did we make that were wrong?
• How can we change so that the next failure isn’t as damaging?
• Do our processes still work even when scrutiny is high?
• What really happens inside our organisation when something threatens our reputation?
• What have we been relying on to stay true for our system to function well?

From fragility to anti-fragility

People challenges don’t destroy organisations. It’s fragility that causes damage. Anti-fragile organisations don’t aim for no incidents. They expect stress and strive to grow more capable from it.