Prepping for Threats: Lessons from Risk: A User’s Guide by Gen. Stanley McChrystal.

Gen. McChrystal was a U.S. commander in Afghanistan; you may remember he was fired by President Obama for making, and allowing subordinates to make, disparaging comments about then-Vice President Biden.  However, McChrystal was widely respected as a soldier and leader, and his recent book* on strengthening an organization’s “risk immune system” caught our attention.  This post summarizes its key points, focusing on items relevant to formal civilian organizations.

McChrystal describes a system that can detect, assess, respond to, and learn from risks.**  His mental model consists of two major components: (1) ten Risk Control Factors, interrelated dimensions for dealing with risks and (2) eleven Solutions, strategies that can be used to identify and address weaknesses in the different factors.  His overall objective is to create a resilient organization that can successfully respond to challenges and threats. 

Risk Control Factors

These are things under the control of an organization and its leadership, including physical assets, processes, practices, policies, and culture.

Communication – The organization must have the physical ability and willingness to exchange clear, complete, and intelligible information, and identify and deal with propaganda or misinformation.

Narrative – An articulated organizational purpose and mission.  It describes Who we are, What we do, and Why we do it.  The narrative drives (and we’d say is informed by) values, beliefs, and action.

Structure – Organizational design defines decision spaces and communication networks, implies power (both actual and perceived authority), suggests responsibilities, and influences culture.

Technology – This is both the hardware/software and how the organization applies it.  It include an awareness of how much authority is being transferred to machines, our level of dependence on them, our vulnerability to interruptions, and the unintended consequences of new technologies.

Diversity – Leaders must actively leverage different perspectives and abilities, inoculate the organization against groupthink, i.e., norms of consensus, and encourage productive conflict and a norm of skepticism.  (See our June 29, 2020 post on A Culture that Supports Dissent: Lessons from In Defense of Troublemakers by Charlan Nemeth.)

Bias – Biases are assumptions about the world that affect our outlook and decision making, and cause us to ignore or discount many risks.  In McChrystal’s view “[B]ias is an invisible hand driven by self-interest.” (See our July 1, 2021 and Dec.18, 2013 posts on Daniel Kahneman’s work on identifying and handling biases.) 

Action – Leaders have to proactively overcome organizational inertia, i.e., a bias against starting something new or changing course.  Inertia manifests in organizational norms that favor the status quo and tolerate internal resistance to change.

Timing – Getting the “when” of action right.  Leaders have to initiate action at the right time with the right speed to yield optimum impact.

Adaptability – Organizations have to respond to changing risks and environments.  Leaders need to develop their organization’s willingness and ability to change.

Leadership – Leaders have to direct and inspire the overall system, and stimulate and coordinate the other Risk Control Factors.  Leaders must communicate the vision and personify the narrative.  In practice, they need to focus on asking the right questions and sense the context of a given situation, embracing the new before necessity is evident. (See our Nov. 9, 2018 post for an example of effective leadership.)

Solutions

The Solutions are strategies or methods to identify weaknesses in and strengthen the risk control factors.  In McChrystal’s view, each Solution is particularly applicable to certain factors, as shown in Table 1.

Assumptions check – Assessment of the reasonableness and relative importance of assumptions that underlie decisions.  It’s the qualitative and quantitative analyses of strengths and weaknesses of supporting arguments, modified by the judgment of thoughtful people.

Risk review – Assessment of when hazards may arrive and the adequacy of the organization’s preparations.

Risk alignment check – Leaders should recognize that different perspectives on risks exist and should be considered in the overall response.

Gap analysis – Identify the space between current actions and desired goals.

Snap assessment – Short-term, limited scope analyses of immediate hazards.  What’s happening?  How well are we responding?

Communications check – Ensure processes and physical systems are in place and working.

Tabletop exercise – A limited duration simulation that tests specific aspects of the organization’s risk response.

War game (functional exercise) – A pressure test in real time to show how the organization comprehensively reacts to a competitor’s action or unforeseen event.

Red teaming – Exercises involving third parties to identify organizational vulnerabilities and blind spots.

Pre-mortem – A discussion focusing on the things mostly likely to go wrong during the execution of a plan. 

After-action review – A self-assessment that identifies things that went well and areas for improvement.

 

Table 1  Created by Safetymatters

 

Our Perspective

McChrystal did not invent any of his Risk Control Factors and we have discussed many of these topics over the years.***  His value-add is organizing them as a system and recognizing their interrelatedness.  The entire system has to perform to identify, prepare for, and respond to risks, i.e., threats that can jeopardize the organization’s mission success.

This review emphasizes McChrystal’s overall risk management model.  The book also includes many examples of risks confronted, ignored, or misunderstood in the military, government, and commercial arenas.  Some, like Blockbuster’s failure to acquire Netflix when it had the opportunity, had poor outcomes; others, like the Cuban missile crisis or Apollo 13, worked out better.

The book appears aimed at senior leaders but all managers from department heads on up can benefit from thinking more systematically about how their organizations respond to threats from, or changes in, the external environment. 

There are hundreds of endnotes to document the text but the references are more Psychology Today than the primary sources we favor.

Bottom line: This is an easy to read example of the “management cookbook” genre.  It has a lot of familiar information in one place.

 

*  S. McChrystal and A. Butrico, Risk: A User’s Guide (New York: Portfolio) 2021.  Butrico is McChrystal’s speechwriter.

**  Risk to McChrystal is a combination of a threat and one’s vulnerability to the threat.  Threats are usually external to the organization while vulnerabilities exist because of internal aspects.

***  For example, click on the Management or Decision Making labels to pull up posts in related areas.

Making Better Decisions: Lessons from Noise by Daniel Kahneman, Oliver Sibony, and Cass R. Sunstein

The authors of Noise: A Flaw in Human Judgment* examine the random variations that occur in judgmental decisions and recommend ways to make more consistent judgments.  Variability is observed when two or more qualified decision makers review the same data or face the same situation and come to different judgments or conclusions.  (Variability can also occur when the same decision maker revisits a previous decision situation and arrives at a different judgment.)  The decision makers may be doctors making diagnoses, engineers designing structures, judges sentencing convicted criminals, or any other situation involving professional judgment.**  Judgments can vary because of two factors: bias and noise.

Bias is systematic, a consistent source of error in judgments.  It creates an observable average difference between actual judgments and theoretical judgments that would reflect a system’s actual or espoused goals and values.  Bias may be exhibited by an individual or a group, e.g., when the criminal justice system treats members of a certain race or class differently from others.

Noise is random scatter, a separate, independent cause of variability in decisions involving judgment.  It is similar to the residual error in a statistical equation, i.e., noise may have a zero average (because higher judgments are balanced by lower ones) but noise can create large variability in individual judgments.  Such inconsistency damages the credibility of the system.  Noise has three components: level, pattern, and occasion. 

Level refers to the difference in the average judgment made by different individuals, e.g., a magistrate may be tough or lenient. 

Pattern refers to the idiosyncrasies of individual judges, e.g., one magistrate may be severe with drunk drivers but easy on minor traffic offenses.  These idiosyncrasies include the internal values, principles, memories, and rules a judge brings to every case, consciously or not. 

Occasion refers to a random instability, e.g., where a fingerprint examiner looking at the same prints finds a match one day and no match on another day.  Occasion noise can be influenced by many factors including a judge’s mood, fatigue, and recent experience with other cases. 

Based on a review of the available literature and their own research, the authors suggest that noise can be a larger contributor to judgment variability than bias, with stable pattern noise larger than level noise or occasion noise.

Ways to reduce noise

Noise can be reduced through interventions at the individual or group level. 

For the individual, interventions include training to help people who make judgments realize how different psychological biases can influence decision making.  The long list of psychological biases in Noise builds on Kahneman’s work in Thinking, Fast and Slow which we reviewed on Dec. 18, 2013.  Such biases include overconfidence; denial of ignorance, which means not acknowledging that important relevant data isn’t known; base rate neglect, where outcomes in other similar cases are ignored; availability, which means the first solutions that come to mind are favored, with no further analysis; and anchoring of subsequent values to an initial offer.  Noise reduction techniques include active open-mindedness, which is the search for information that contradicts one’s initial hypothesis, or positing alternative interpretations of the available evidence; and the use of rankings and anchored scales rather than individual ratings based on vague, open-ended criteria.  Shared professional norms can also contribute to more consistent judgments.

At the group level, noise can be reduced through techniques the authors call decision hygiene.  The underlying belief is that obtaining multiple, independent judgments can increase accuracy, i.e., lead to an answer that is closer to the true or best answer.  For example, a complicated decision can be broken down into multiple dimensions, and each dimension assessed individually and independently.  Group members share their judgments for each dimension, then discus them, and only then combine their findings (and their intuition) into a final decision.  Trained decision observers can be used to watch for signs that familiar biases are affecting someone’s decisions or group dynamics involving position, power, politics, ambition and the like are contaminating the decision process and negating actual independence.

Noise can also be reduced or eliminated by the use of rules, guidelines, or standards. 

Rules are inflexible, thus noiseless.  However, rules (or algorithms) may also have biases coded into them or only apply to their original data set.  They may also drive discretion underground, e.g., where decision makers game the process to obtain the results they prefer.

Guidelines, such as sentencing guidelines for convicted criminals or templates for diagnosing common health problems, are less rigid but still reduce noise.  Guidelines decompose complex decisions into easier sub-judgments on predefined dimensions.  However, judges and doctors push back against mandatory guidelines that reduce their ability to deal with the unique factors of individual cases before them.

Standards are the least rigid noise reduction technique; they delegate power to professionals and are inherently qualitative.  Standards generally require that professionals make decisions that are “reasonable” or “prudent” or “feasible.”  They are related to the shared professional norms previously mentioned.  Judgments based on standards can invite controversy, disagreement, confrontation, and lawsuits.

The authors recognize that in some areas, it is infeasible, too costly, or even undesirable to eliminate noise.  One particular fear is a noise-free system might freeze existing values.  Rules and guidelines need to be flexible to adapt to changing social values or new data.

Our Perspective

We have long promoted the view that decision making (the process) and decisions (the artifacts) are crucial components of a socio-technical system, and have a significant two-way influence relationship with the organization’s culture.  Decision making should be guided by an organization’s policies and priorities, and the process should be robust, i.e., different decision makers should arrive at acceptably similar decisions. 

Many organizations examine (and excoriate) bad decisions and the “bad apples” who made them.  Organizations also need to look at “good” decisions to appreciate how much their professionals disagree when making generally acceptable judgments.  Does the process for making judgments develop the answer best supported by the facts, and then adjust it for preferences (e.g., cost) and values (e.g., safety), or do the fingers of the judges go on the scale at earlier steps?

You may be surprised at the amount of noise in your organization’s professional judgments.  On the other hand, is your organization’s decision making too rigid in some areas?  Decisions made using rules can be quicker and cheaper than prolonged analysis, but may lead to costly errors. which approach has a higher cost for errors?  Operators (or nurses or whoever) may follow the rules punctiliously but sometimes the train may go off the tracks. 

Bottom line: This is an important book that provides a powerful mental model for considering the many factors that influence individual professional judgments.

*  D. Kahneman, O. Sibony, and C.R. Sunstein, Noise: A Flaw in Human Judgment (New York: Little, Brown Spark) 2021.

**  “Professional judgment” implies some uncertainty about the answer, and judges may disagree, but there is a limit on how much disagreement is tolerable.