Individual businesses differ in their level of accountability or, to use a term from the safety management profession, maturity. In an immature industry, we rely on the behaviour, maturity and professionalism of the individual manager. Yet, as the industry grows, it becomes more complex and ever more difficult (impossible) for managers to maintain situational awareness and know what the hell is going on.
This is the moment when the industry is ripe for a step change in management control. It cries out for great systems in order to cope, move forward and thrive at the next level.
Sadly, the trajectory for change often involves undesirable events that, with hindsight, might have been avoided (such as financial failures, safety failures or accidents). The pattern is familiar:
An industry draws attention to itself because of one or several high profile negative events.
The public and other stakeholders express a desire for change.
New regulations are added top down from a political level.
The more far-sighted organisations with the best strategic management pre-empt this change by driving change themselves, more in pursuit of operational performance and financial benefits than from fear of sanctions.
After a process that can take decades, the industry matures and becomes known for good management, good behaviour, accountability and high performing organisations.
Pathfinders are motivated by the carrot rather than the stick and the benefits can be huge. 'Collapse', the best-selling book by the anthropologist and environmentalist, Jared Diamond, contains a chapter that is full of praise for the oil company, Chevron, detailing their culture of accountability and how they manage environmental impact in fragile countries. What a coup for Chevron, getting into the position where a Pulitzer prize winning ecologist puts them in his book! And, if you’re interested, the New York Times.
Diamond is clear on the business benefits of environmental accountability: "The embrace of environmental concerns by chief executives has accelerated recently for several reasons. Lower consumption of environmental resources saves money in the short run. Maintaining sustainable resource levels and not polluting saves money in the long run. And a clean image — one attained by, say, avoiding oil spills and other environmental disasters — reduces criticism from employees, consumers and government."
The most mature industries on the planet are characterised by high performance business cultures and risk based regulations. Managers need to know the status of the business in detail in order to “stay out of jail,” protect the organisation and reputation, and deliver the best possible results. Transport, complex manufacturing, energy and chemicals are good places to look for great management as these industries have been on the maturity journey for decades.
Here is the main point of this article: when an industry is about to enter a phase of regulation and a step change in maturity, there is an opportunity for management to be proactive about changing strategy. A live example is Chevron, who moved beyond the safety case and implemented a risk-based high accountability culture that was ahead of their peers in the oil exploration business.
So, in which sectors should managers be looking out for opportunities to move beyond a culture of lagging indicators and inspections and towards an operating model that takes risk seriously and puts systems in place to manage it? To start looking for answers to such a question, I would follow my ears to the 'Today Programme'. Where is the noise happening today? Where is the public irked by perceptions of poor performance? Where is there a sense that change is coming, but uncertainty about exactly what to change?
Perhaps in some areas of the delivery of public services, certainly in the UK at least, there are several big drivers for change that we can recognise as precursors of a step change in maturity:
Financial pressure to deliver efficiencies and cashable savings;
Problems with IT systems failing due to complexity, fragmentation and lack of a joined up approach;
Low productivity and a sense of intense pressure in under-equipped front line staff;
Low quality management information resulting in low awareness of what is going on operationally;
Front line staff grumbling about bureaucracy;
Episodic high profile incidents that involve suffering and attract political scrutiny and public criticism;
Soul searching, blaming, and a sense of “What the hell can we do about this?”
Some parts of the National Health Service and also the delivery of children’s social care by local authorities fit this description in the UK in 2015. Just as in the chemicals, transport or energy sectors in the 80’s and 90’s, performance management tends to be based on a regime of inspection and lagging indicators. Although the use of near-time leading indicators and a risk-based model for operational high performance are undoubtedly still some way off, there can be no doubt that this is part of the answer.
Consider this. Each year Offsted reports the ‘serious case reviews’ into the death or serious harm to children in receipt of social care in England and Wales. The number of such cases each year varies but is usually more than one hundred. In some years it has been closer to two hundred. Occasionally one of these cases will come to the public attention because the media latches on to a particular detail or aspect of the situation, but many go unreported in the press. In almost every case there was some moment of opportunity to intervene but it was missed because of – to use the aviation term – poor safety intelligence.
If that casualty rate were compressed into a single industrial accident, then the shock would be huge and the response immediate. The opportunity exists today for the best managers in the delivery of such public services to investigate risk based performance management. They can be pathfinders who – like Chevron in the oil industry – introduce new practices, behaviour and cultures. As well as saving lives and reducing suffering, they will also find new ways to deliver efficiencies and productivity benefits for their organisations and the public purse.
If you are interested to read more about the maturity journey to ERM: