An Excerpt from Episode 15 of The Idealcast with Guest Admiral John Richardson
Gene Kim: I think we’ve all witnessed situations where an organization that once exhibited dynamic learning characteristics, well, they start to calcify.
When I attended Dr. Steve Spear’s workshop at MIT in 2014, I loved the way he cast the US space program in the 1960s as one of fundamental dynamic learning. I recently read Gene Kranz’ book, Failure Is Not an Option. And I love the way he described his role in it, a part of it was saving Apollo 13.
And even in the events leading up to it, he described the NASA philosophy as high risk, high gain. And as he described that engineering discipline, it reminded me so much of the Naval reactor program that was described as of what Admiral Rickover built.
I love this narrative that says something was lost in the US-based program, as it went from this culture of learning to a cultural of compliance.
And it was most notable after they embarked on US space shuttle program, which was pitched to Congress as a low cost, frequent access to space. The focus became around turnaround times and safe access to space. We started sending school teachers in space, even though the failure rates were probably still around 5%.
Under those conditions, due to the structure and dynamic, signals were starting to get suppressed. Deviances would get normalized. So if a tile falls off the shuttle, we might say it happened before so it should be okay.
Can you talk a little bit about whether you’ve seen these contrasts between a learning culture and a compliance culture, and what advice would you give to leaders to ensure that what was once a learning organization doesn’t devolve into this compliance culture?
How do you keep organizations from getting into a rut? And as I’ve heard you say, prevent the barnacles from growing.
Admiral Richardson: Yeah. Nice nautical analogy there. So, there is always, in high risk, high gain or I would say high consequence organizations, there’s a very appropriate focus on risk management, right? Because the consequences of failure can be existential? You could go out of business or something like that. Or the very, very high consequences. And so, as we like to think about it, it was about risk management, right?
And there’s a number of ways to do that. I mean, I know you’ve read The Checklist Manifesto, that terrific book. It talks about the role of checklists in terms of reducing risk. And I’m a huge fan of the appropriate application of checklists to do that.
A visual image is you set up this compliance structure. And inside of that, it defines an operational envelope, if you will. There’s some boundaries to that envelope that are defined by the risk that entailed in those boundaries.
And so, your compliance structure is just set up to make sure that you don’t cross one of those boundaries. In fact, you want to not only know where those boundaries are, but you probably most definitely want to even give yourself some margin inside those boundaries, because things go wrong. They don’t go as planned. You don’t want to go right up to the boundary. You want to give yourself plenty of margin.
And so now, you’ve got this envelope to sign or this landscape, this field on which you can operate. Inside of that, creativity can go. You can be as creative as possible. In fact, you want to encourage each other to be as creative as possible to take full advantage of all of the acreage that exists inside of that risk, that operational envelope.
That entails teaching all of your leaders in particular, but just about everybody, certainly what are the boundaries. Make those very clear, including the margin. But it is most effective when you also explain, why are those the boundaries, right? What is the specific risk involved? Is the risk to whom and for how long, et cetera. And then you empower them and you unleash them to operate inside those boundaries.
Now, I think that this calcification, this barnacle buildup, can happen as you become more risk intolerant over time. Certainly, these things can happen over time.
And then it can also happen kind of in an echelon organization where at the top level, I define my operational envelope and my risk boundaries. The next level down, well, they’re going to say, hey, I don’t even want to get close to there, so I’m going to apply another set of margins. And then as it goes on down, by the time you get three or four levels down in the organization, the operational envelope has become so small it gets really hard to be creative inside of that.
And so this again goes to, I think, to leader development. So say, hey, look, let’s open this back up. This is the real risk. The barnacles growing don’t really reduce risk. In fact, they might even increase risk, because what’ll happen is you strike this balance between compliance and creativity. It’ll set the cultural tone for your organization. This is where the decisions that your leaders are making on a day-to-day basis, they are going to be consistent with that organizational culture.
If it’s dominated by layers of barnacles that have existed either over time or through layers of the organization or both, they’re going to be mostly a compliance mindset, right? A checklist type of approach to things. Even a checklist approach where it’s not appropriate. You don’t want to be doing checklist things in the creative space.
So you’ve got to kind of open it back up and make sure you strike the right balance. You don’t want to be foolhardy. Don’t want to be a cowboy, so you get too close to those margins, but you’ve got to leave enough space for creativity.
So going back to your question, that’s something that the leader who has delegated so much, that’s something that they need to monitor very closely because they’re going to own that culture.
Gene Kim: And so what would they monitor for? “Hey, I’m coming to you Admiral, and I hear the logic of what you’re saying, but I’m not even sure what to look for.” How would you advise me in terms of—
Admiral Richardson: Yeah, I think that some could be, just taking a look at the policies. So you’ve got your policies that define the risk tolerance, and then you need to take a look at the policies that exist out in the other parts of the organization.
But that I think this is actually a pretty sterile way to do it. A much more rich way to do it is to really just have conversations among leaders and to communicate what we call commander’s intent.
The Team of Teams concept centers on this, because, hey, at some point, all of the laptops are going to go shut. All the tough books are going to go shut and you’re going to go off and execute. And you’ve got to have just the most fulsome understanding of the operational envelope, all the what ifs that you might encounter out there so that they can go and execute with as much creativity as possible.
Gene Kim: Can you maybe paint the contrast? I would imagine if you were to put two leaders in front of you, one of them has a very rigid set of… everyone’s managing to the checklist and one is achieving the same sort of compliance objectives, but enabling a higher degree of creativity. I suspect you’ll be able to spot them and very quickly. Can you describe what that contrast would look like?
Admiral Richardson: It’s one of those things that you know when you see it. Well, one, what are they rewarding in their organization and how are they running their teams? Who are they promoting, rewarding, etc.? And for what?
Are they striking this balance that is sort of more consistent with the compliance creativity balance that you want the organization to espouse? It’s not good to get either one out of balance, right? And so, there’s a real reason for this compliance structure that’s in place, to make sure that you control risk, but you don’t want to be dominated by it.
There’s a saying in the Navy, and it’s very true, that a ship will take on the personality of its commanding officer. It is tangibly noticeable.
So, it’s just in the conversations that you have with different people in that organization, you know right where their set point is, but it comes to person-to-person engagement. And you got to get down there, get that fingertip sense of things.