Featured Product
This Week in Quality Digest Live
Management Features
Gleb Tsipursky
A vaccine is on the way, but so is a new strain of the virus
Annette Franz
Give ‘em the pickle!
James J. Kline
Quality, finance, accounting, and auditing professions will compete to carry out risk management
NordVPN Teams
Companies and cyber criminals race for unpatched software
Alena Komaromi
A successful combination of influence tactics can increase buyers’ interest and the likelihood of a contract

More Features

Management News
Too often process enhancements occur in silos where there is little positive impact on the big picture
Latest installment of North American Manufacturing Covid-19 Survey Series shows 38% of surveyed companies are hiring
How to develop an effective strategic plan and make the best major decisions in the context of uncertainty and ambiguity
What continual improvement, change, and innovation are, and how they apply to performance improvement
Good quality is adding an average of 11 percent to organizations’ revenue growth
Further enhances change management capabilities
Awards to be presented March 24, 2020, at the Quest for Excellence Conference, in National Harbor, MD
Workers more at ease about job security. Millennials more confident regarding wages.

More News

Gleb Tsipursky

Management

Normalcy Can Kill You

From Boeing’s 737 Max to PG&E wildfires, cognitive biases can lead to death and damage

Published: Tuesday, March 3, 2020 - 12:03

Perhaps the worst quality failure of modern times is Boeing’s 737 Max disaster.

Due to the grounding of its 737 Max airplane following two deadly crashes that killed 346 people, Boeing lost $5 billion in direct revenue by summer 2019. The overall losses—ranging from damage to the brand to losing customers—were valued by investors at more than $25 billion by March 2019. In late 2019, new revelations about problems with the 737 Max further increased Boeing’s losses. And in January 2020, new internal Boeing emails revealed the chaos and incompetence at Boeing’s 737 Max factory, along with how Boeing mocked regulators and dismissed safety concerns. Shortly before the revelation of the emails, Boeing fired its CEO, Dennis Muilenburg, due to the 737 Max fiasco.

What led to this quality disaster for Boeing? On the surface, it came from Boeings efforts to compete effectively with Airbus’ newer and more fuel-efficient airplane, Airbus 320. To do so, Boeing rushed the 737 Max into production and misled the Federal Aviation Administration (FAA) to get rapid approval for the 737 Max. In the process, Boeing failed to install safety systems that its engineers pushed for and did not address known software bugs in the 737 Max, glitches that resulted in the eventual crashes.

The new normal

However, these surface-level quality issues had a deeper cause. Ironically, the transformation of the airline industry in recent decades to make airplanes much safer and accidents incredibly rare is key to understanding Boeing’s quality disaster.

Boeing’s leadership suffered from what cognitive neuroscientists and behavioral economists call the normalcy bias. This judgment error causes our brains to assume things will keep going as they have been—i.e., normally. As a result, we drastically underestimate both the likelihood of a disaster occurring and the impact if it does. The normalcy bias is one of many potentially dangerous cognitive biases, mental blind spots resulting from how our brains are wired.

Boeing’s 737 Max disaster is a classic case of the normalcy bias. Boeing leadership felt utter confidence in the quality of the airplanes it produced in the last couple of decades due to the company’s safety record. That confidence was deserved, according to statistics on crashes.

From Boeing’s perspective, it would be impossible to imagine that the 737 Max would be less safe than these other recent-model airplanes. The company saw the typical FAA-certification process as simply another bureaucratic hassle that got in the way of doing business and competing with Airbus, as opposed to ensuring quality and safety.

Think this bias in quality affects only big companies? Think again.

Normalcy bias in an electric utility

Of course, the normalcy bias hits midsize and small companies hard as well.

At one of my trainings for small and midsize company executives, Marvin, a risk-management executive in a regional electric utility in the northeast United States, told me about his company being barely prepared when Hurricane Sandy hit in 2012.

The problems stemmed from the fact that key people within senior management felt that reinforcements and repairs done in the aftermath of Hurricane Irene were enough to withstand any damage that Hurricane Sandy would bring, ignoring the reality that the U.S. power grid is already fragile at best.

Although system checks were completed, Marvin felt that these were done in haste, and not enough weight was given to potential hazards. Additional precautions would have incurred significant costs, and the decision makers in Marvin’s company felt optimistic with the resources they already had in place. They felt that Irene was an aberration, and that things would go back to normal, since the 2011 Hurricane Irene was a “once-in-50-years” event. But Hurricane Sandy proved even worse.

As a result of this substandard plan and execution, Marvin’s company incurred more damage than other utility companies in the wake of Hurricane Sandy. With millions of dollars lost, the company faced not just the daunting task of repairing damaged power lines and restoring power, but also significant public backlash for not being able to do so at the same pace as the better-prepared electric utility companies.

Needless to say, Marvin was looking to build a solid plan to avoid a repeat of what happened in 2012.

Preventing normalcy bias disasters

Fortunately, recent research in these fields shows how you can use pragmatic strategies to address these judgment errors to ensure top-notch quality. With the normalcy bias in particular, it really helps to use the strategy of considering and addressing potential alternative futures that are much more negative than you intuitively feel are likely. That’s the strategy that Marvin and I explored during my coaching with him after the training session.

Marvin wanted to avoid the previous problems his company experienced. So, we discussed the best practice of creating emergency systems and processes that would enable key teams in his utility company to proactively identify potential hazards, as well as quickly and efficiently respond when disasters strike.

Likewise, we spoke of how the growing problem of climate change will pose an increasingly large threat to utility companies. What was considered the standard of quality during the 1980s will not be sufficient for the 2020s, whether for major hurricanes or other natural calamities such as forest fires, which PG&E learned to its, and its customers, sorrow.

So what are the broader principles here?

1. To get over the challenges caused by the normalcy bias, be much more pessimistic about the possibility and impact of disasters than you intuitively feel or can easily imagine.

2. Use effective strategic planning techniques to scan for potential disasters and try to address them in advance, as Marvin did with his plans for the new business.

3. Of course, you can’t predict everything, so retain some extra capacity in your system—of time, money, and other resources—that you can use to deal with unknown unknowns, also called black swans.

4. Finally, if you see a hint of a disaster, react much more quickly than you intuitively feel you should to overcome the gut reaction’s dismissal of the likelihood and impact of disasters.

Discuss

About The Author

Gleb Tsipursky’s picture

Gleb Tsipursky

Gleb Tsipursky is on a mission to protect quality leaders from dangerous judgment errors known as cognitive biases by developing the most effective decision-making strategies. A best-selling author, he wrote Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters (2019). His expertise comes from 20+ years of consulting, coaching, and speaking and training as the CEO of Disaster Avoidance Experts, and over 15 years in academia as a behavioral economist and cognitive neuroscientist. Contact him at Gleb[at]DisasterAvoidanceExperts[dot]com, Twitter@gleb_tsipursky, Instagram@dr_gleb_tsipursky, LinkedIn, and register for his Wise Decision Maker Course.

Comments

Just a thought

Can Nokia company be considered as a victim of "normalcy"? --- And your article is really good and a worthwhile read.