ADM 612 – Leadership

1. ADM 612 – Leadership Predictable Surprise: Hurricane Katrina and Government Accountability

2. Source • Max H. Bazerman and Michael D. Watkins. 2004. Predictable Surprises: The Disasters You Should Have Seen Coming and How to Prevent Them.

4. New Orleans, Louisiana

5. Gulfport, Mississippi

6. Biloxi, Mississippi

7. Predictable Surprises • A predictable surprise arises when leaders unquestionably had all the data and insight they needed to recognize the potential for, even the inevitability of, a crisis, but failed to respond with effective preventative action. • Example: 9/11. • Example: Enron scandal.

8. Characteristics of Predictable Surprises • Leaders know a problem exists and that the problem will not solve itself.

9. Characteristics of Predictable Surprises • Organizational members recognize that a problem is getting worse over time. • Fixing the problem will incur significant costs in the present, while the benefits of action will be delayed.

10. Characteristics of Predictable Surprises • Addressing predictable surprises typically requires incurring a certain cost, while the reward is avoiding a cost that is uncertain but likely to be much larger.

11. Characteristics of Predictable Surprises • Decision-makers, organizations, and nations often fail to prepare for predictable surprises because the natural human tendency to maintain the status quo. • A small vocal minority benefits from inaction and is motivated to subvert the actions of leaders for their own private benefit.

12. Cognitive Roots of Predictable Surprise • We tend to have positive illusions that lead us to conclude that a problem doesn’t exist or is not severe enough to merit action. • We tend to interpret events in ways that are self-serving.

13. Cognitive Roots of Predictable Surprise • We overly discount the future. • We tend to maintain the status quo, and refuse to accept any harm that would bring about a greater good. • Most of us don’t want to invest in preventing a problem that we have not personally experienced or witnessed through vivid data.

14. Organizational Roots • Four critical information processing tasks. • Scan the environment and collect sufficient information regarding all significant threats. • Integrate and analyze information from multiple sources within the organization to produce insights that can be acted upon. • Respond in a timely manner and observe the results. • In the aftermath, reflect on what happened and incorporate lessons-learned into the “institutional memory” of the organization to avoid repetition of past mistakes.

15. Organizational Roots • Scanning failures. • Selective attention. • Background noise. • Information overload. • Integration failures. • Silos. • Secrecy.

16. Organizational Roots • Incentive failures. • Collective action problems. • Conflicts of interest. • Illusory consensus.

17. Organizational Roots • Learning failures. • Organizational learning disabilities (explicit versus tacit knowledge; individual versus relational knowledge). • Memory loss.

18. Political Roots • Special interest groups. • Political action committees. • Campaign funding.

19. Hurricane Katrina • Knowing the problem existed. • U.S. GAO, 1976, 1982. • New Orleans Times Picayune June 23-27,2002. • Civil Engineering Magazine, 2003. • National Geographic October 2004. • FEMA, Allbaugh, three most likely disasters (New Orleans, California, New York), 2001. • FEMA, Hurricane Pam simulation, 2004.

20. Hurricane Katrina • Problem getting worse over time. • Numerous articles on the destruction of Louisiana wetlands.

21. Hurricane Katrina • High current costs, delayed benefits. • $2 billion to complete, $1 billion to upgrade to Category 4 or 5, 30 years.

22. Hurricane Katrina • Certain costs, uncertain larger rewards. • Emergency management traditionally suffers from discounting future events.

23. Hurricane Katrina • Maintain status quo. • Incremental changes in New Orleans levee system brought on by individual disasters.

24. Hurricane Katrina • Subversion by vocal minority. • Dominance of homeland security over emergency preparedness. • Corruption in Louisiana. • Mississippi casinos and anti-gambling lobbying.

25. Preventing Predictable Surprises • Recognition. • Measurement system redesign. • Intelligence network building. • Scenario planning. • Disciplined learning processes.

26. Preventing Predictable Surprises • Prioritization. • Structuring dialogue. • Decision analysis. • Incentive system redesign.

27. Preventing Predictable Surprises • Mobilization. • Persuasive communication. • Coalition building. • Structured problem-solving. • Crisis-response organization.

28. Preventing Predictable Surprises: Catastrophic Disasters • A representative set of natural and manmade disaster scenarios. • A flexible set of response modules to deal with expected scenarios or combinations of scenarios.

29. Preventing Predictable Surprises: Catastrophic Disasters • A plan that matches response modules to scenarios. • A designated chain of command. • Preset activation protocols.

30. Preventing Predictable Surprises: Catastrophic Disasters • A command post and backup. • Clear communication channels. • Backup resources. • Regular simulation exercises. • Disciplined post-crisis review.