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When Complex Systems Fail: New Roles for Leaders

by Margaret Wheatley

Institute, No.11, Winter 1999

The Year 2000 (Y2K) problem -- the inability of many computer systems to process dates after 1999, and the operational breakdowns that will likely result -- is presenting us with some new and startling realizations. It is making visible the ways in which we have woven the world together through technology. It is showing how both local and global systems are dependent and interdependent on the smooth functioning of computers. While we cannot predict which of these systems will fail, we do know that few nations or systems will remain unaffected. The unprecedented global scope of Y2K represents a new breed of systemic problems.

When complex systems fail, prevailing models of leadership offer little help. What we learn now with Y2K can prepare us for a future where more and more failures of complex systems will confront us. It can also help us look beyond the confines of in-house systems and structures, and to see new, more effective ways to lead our business and social institutions.

The study of complex systems -- and past experience with more isolated network breakdowns -- suggests that complex system failures share several distinguishing features:
  • The longer they unravel, the more extensive their effects
  • Costs always far exceed what has been budgeted for amelioration
  • As effects materialize, unknown interdependencies become apparent
  • The more these systems come into focus, the fuzzier they appear
  • Cause and effect are impossible to track
  • Consequently, there is no one to blame

A New Kind of Problem

These features describe perhaps the most frightening realization about complex systemic problems: They are inherently uncontrollable. They cannot be understood sufficiently either ahead of time or even while they are occurring. Prediction and control -- the traditional tools of management -- are impossible to apply.

Each of these characteristics has become increasingly evident with the Year 2000 problem. Initially, Y2K was thought to affect only software -- all those lines of code that had been hastily written ten to thirty years ago, when programmers were intent on saving space and getting systems up and running. The problem was thought to be relatively simple, affecting only those sectors in business and government that dealt with date computations. (Even if this had been the extent of the problem, there have never been enough programmers to correct the billions of lines of code that needed correcting.)

But then we learned that embedded microprocessors were vulnerable to the date change as well. These chips are so prevalent in modern life -- in cars, satellites, home appliances, utilities, oil rigs, transportation systems, telecommunications, manufacturing, and medical equipment -- that the average American encounters 70 microprocessors before noon each day. There may be fifty billion of these chips in operation. If only 1 percent of them cannot deal with the calendar change at year 2000, we would still face large numbers of failures. And these failures would occur throughout our social and economic infrastructures, threatening to disrupt all major systems: health care, utilities, governments, transportation, food supplies, public safety, finance, and defense.

What began as a simple "technology problem" has assumed massive proportions. And what was first seen as a problem for each organization to solve individually (those that solved it would take a lead over their competitors) has become a problem that can't be solved alone. What does it matter how compliant and ready you are if your suppliers lag behind, or if your employees can't get to work, or if power generation plants fail?

Year 2000 has eaten into more and more resources as it has mushroomed into a fuzzier and fuzzier problem. In the Fall of 1996, the governor of one state reported that his state's Y2K compliance efforts were well under way. He expressed confidence that they had gotten to this issue early, were technologically sophisticated, and were expecting to achieve compliance. Eighteen months later, in March of 1998, deep into system remediation efforts, this same leader was despairing, exclaiming how difficult it was to grasp the implications of this issue.

With Y2K we are confronted not only with a new type of systems failure. We are also forced to deal with the consequences of how we chose to construct modern systems. We gave primacy to efficiency, for lean, non-redundant designs. We created complex systems containing millions of components that are serially dependent on the correct functioning of each of those components. If one fails, the whole system can crash. In 1990, AT&T experienced frequent failures in its long-distance service. At the time, this system relied on two million lines of code to be operational. Yet the system stopped functioning because of only three lines of bad code. Similar examples occur often. U.S. pagers, and much electronic commerce, crashed for a day in May 1998 when one satellite wobbled in space. In the era of deregulated public utilities, huge power grids have failed because of problems with a single small provider. General Motors was brought to a halt last summer by strikes in two small plants that supplied critical components. Most modern systems, built to be lean and just-in-time, look "efficient" but in fact are frighteningly fragile because of such efficiencies.

The Need for New Solutions

Given the nature of these systems and how they fail, what kind of leadership is required? Very little in our past practice as leaders is relevant here; in fact, old patterns and interpretations make it impossible to understand these failures. This became evident as economies in Asia unraveled. Early on, government officials and economists thought they recognized a pattern of economic failure that was similar to what had occurred in Mexico a few years earlier. That proved incorrect; what worked for Mexico had no substantial impact in Asia. Gradually, it became clear that Asia was a new variety of systemic economic and political failure. One investment economist noted that "The Asian situation is laced with every type of financial crisis and instability that has ever shown up in the real world or any textbook. And while there are some brilliant minds working on it, no one can deal with it." And a senior CIA officer recently told the International Herald Tribune that his agency "hasn't a clue how to deal with this kind of crisis." In fact, the only thing that experts could agree on by summer of 1998 was that the US government was understating the depth of Asia's economic problems so as not to scare people (see also "Four Hundred Days in Asia," this issue).

The more we cling to past practices,
the more we deepen the crisis and prevent solutions.
With Y2K, as with Asian economic woes, we are in new territory. To function well, or to restore effective functioning, complex systems require collaboration, participation, and openness to information and relationships. These new systems problems force us to dissolve our past practices of hierarchies, boundaries, secrecy, and competition. In a systems crisis, the more we cling to these past practices, the more we deepen the crisis and prevent solutions.

As the Year 2000 problem develops greater complexity, it has become increasingly evident that the more we try to protect our competitive advantage through secrecy and defensive postures, the more we threaten our capacity for simple survival. The U.S. Defense Department understands that if defense computer screens in Russia or China go blank on January 1, 2000, or present false information, U.S. security will be at risk. China might think they were under attack and feel compelled to launch a counter-attack. The best safeguard is to reveal information about U.S. defenses, to share information that formerly had been deemed top secret, in order to prevent a potentially devastating response. Deputy Defense Secretary John J. Hamre testified to a Senate Committee that the U.S. armed forces were developing this information sharing plan, "so that we do not enter into the nightmare condition where everybody is all of a sudden uncertain and their screens go blank. That would be a very worrisome environment for all of us." However, at the time of this writing, Russia was resisting sharing their defense information. Based on US-Soviet history, why would they trust us with such information?

The problem is no different for companies. Y2K has forced us to think about competitive advantage not at the level of individual companies, but at the level of entire industries and beyond. (The Big Three auto manufacturers are working together on production and supply chain issues to try and ensure that U.S. vehicle production is sustained.) What kinds of cooperation are required among all members of manufacturing, or banking, or education to ensure access to information, supplies, and employees, in the face of potential computer and equipment failures? And how can employers partner with their communities to sustain social cohesion? How can they together ensure continuation of utilities and all public services so that employees are available -- both physically and emotionally -- for work? (The essential networks are very broad. In the aftermath of Hurricane Andrew in 1992, for example, many employees could not return to work because no day-care facilities were operating.)

Planning for Y2K also has been severely hampered by our present legal environment. Corporate counsels have warned clients against helping those in their supply chain; any attempt to help others achieve compliance exposes the helper to potential lawsuits from the supplier's customers. But if you don't assist your suppliers and then they fail, what is the consequence to your business? What's the greater value -- sustaining one's capacity to do business or protecting one's legal position? Systemic failures are never solved by isolatory, self-protective behaviors -- these only compound the problem.

Why Structure Matters

Similarly, the failure of any complex system can't be adequately addressed through hierarchical structures or by a few experts importing their knowledge into the system. The deep workings of any system are known only to those who work within it. (And often these people don't know what they know until some event makes their knowledge visible.) Therefore, discovering solutions to systemwide issues requires processes that engage the intelligence and experience that is located throughout the entire system. In the face of a complex system failure -- where fuzziness keeps growing, where there is no discernible cause and effect, and where invisible interconnections pop up in unexpected places -- there is no choice but to engage those who know the system most intimately. Unparalleled levels of participation are required just to understand what is happening. Leaders need to engage people everywhere in their system -- including those outside the traditional boundaries of their organization -- in developing responses and creating solutions.

Nobody knows a plant better than
the people who work there every day.
Cargill Corporation has developed its Y2K assessment and remediation work from this perspective. With 922 small- and medium-sized plants worldwide (in agriculture, steel, and other products), the company developed a coordinated response but asked each plant to use its own people, not teams of outside consultants, to implement the plans. As described by Philip Hannay, Y2K plant systems coordinator, Cargill understood that nobody knows the plant better than the people who work there every day. Even if they take their systems for granted, they know what and where critical resources are and what they do. And they know how to work around those systems when they fail.

Given that people everywhere in the system are necessary to develop effective responses, a critical leadership role is to focus attention on developing the processes and relationships that support people coming together to develop solutions. What needs to be done to create more information more easily, and to move it more quickly through the system? (Cargill used very simple ad hoc reporting processes, believing that even traditional spreadsheets slowed down information flows.) What can be done to facilitate easier access to each other? What procedures, boundaries, fiefdoms need to be demolished quickly so that people can talk honestly to one another, exchanging information, responding quickly and intelligently?

Leading for New Times

The middle of a crisis is the
worst time to establish partnerships.
The many stories of extraordinary human responses in the face of natural disasters reveal the importance of trusting relationships. Just a few weeks prior to the Oklahoma City bombing in 1995, community agencies had worked together in a civil defense preparedness drill. No one was practicing for a bombing, but as they prepared for other contingencies they developed good relationships that helped them work well together when confronted with the bombing horror. However, one key player had not participated in the drill, and that was the FBI. Many people in Oklahoma City still speak with resentment about how they felt pushed around by "the Feds" who excluded them from participating in the rescue operations. As disaster relief officials have often said, the middle of crisis is the worst time to establish partnerships; a smooth response requires relationships developed ahead of time.

People who learn they've been kept in
the dark lose confidence in leaders quickly.
It is important to note that traditional strategic and information practices, which rely on secrecy or evasion, create more risk rather than less. Secrecy always fails, even if we're trying to protect people, or take care of them, or avoid panic. Lockheed Martin CEO Norm Augustine, in describing his experiences with crisis, has given one rule for information: "Tell the truth and tell it fast." Secrecy feeds the problem, not the solution. And secrecy sets in motion some powerful dynamics that end up destroying capacity. People who learn they've been kept in the dark or fed misleading information lose confidence in leaders quickly. In the absence of real information, they fill the vacuum with rumors and fear. And whenever people feel excluded from involvement, they withdraw and focus on self-protection. They no longer believe anything or anybody -- they become unavailable, distrusting and focused only on self-preservation. As the veil of secrecy thickens, the capacity for solution-finding disappears.

Y2K demands a different kind of leadership. For this crisis, and all the similar ones waiting to greet us in the new millennium, leaders are required to:
  • Engage the whole system. Only participation can save you.
  • Keep expanding the system. Ask "Who else should be involved?"
  • Create more openness and ease of access in everything
  • Create abundant information, circulate it through dedicated channels (such as Web sites or intranets)
  • Develop simple reporting systems that generate information quickly and broadcast it easily.
  • Make relationship development a top priority. Trust is your greatest asset.
  • Resist competitive behaviors; support only collaboration.
  • Demolish boundaries and territories. Push for openness.
  • Focus on creating new, streamlined systems. There is no going back.

Leaders who have learned these 21st century lessons about the power of participation and involvement are everywhere. From a DuPont chemical plant in West Virginia to the largest retailer in South Africa to a division of Barclay's Bank in Britain, these leaders report that they have been overwhelmed by the energy, commitment, and creativity that have blossomed within their organizations. Solutions materialize from unexpected places, people's creativity soars and even in the midst of difficult and threatening circumstances, people actually enjoy the work and working together. These leaders discover that human energy and creativity are limitless. They have learned that their leadership task is to convene people to solve the unsolvables, to depend on them to find solutions, to create the organizational conditions of access, openness, and trust that help people find each other and the solutions.

And they report one paradoxical truth: We don't have to know the future in order to be prepared for it. Organizations and communities that learn to work together, that know how to learn together, that trust one another, and that become more expansive and inclusive, develop the capacity to deal with the unknown. They create a capacity for working and thinking together that enables them to respond quickly and intelligently to whatever the future presents.

The Year 2000 problem has been denied and downplayed because no one can predict the extent or nature of the disruptions it will cause. Yet the list of potential consequences keeps growing. Those organizations and communities that have learned how to work collaboratively and inclusively will be those best able to deal with those consequences. While technology may fail, there is no reason why our relationships must also fail.

Y2K demands that leaders step forward now with a new form of leadership. We must insist that we approach this systemic crisis with the behaviors and sensitivities that systems require: collaboration, inclusiveness, openness, and trust. We don't know what the future will be, but we know for certain which path can lead us there in the most humane and productive manner.


Resources for Y2K

For this fast-moving, time-dependent issue, the Internet is the best source of information. Numerous Web sites offer reliable and helpful information. Each site intends to share relevant information, link people together, and provide factual assessments of the dimensions of Y2K. (There are also many to avoid -- those that only promote fear and apocalyptic mania.)

The following sources include guides and pamphlets for assessment, remediation, and contingency planning for all types of organizations and communities. Some include downloadable educational video clips. Many link to other good sites as well. Also, there are many industry-specific or association Web sites that provide Y2K information.
  • www.Y2Ktoday.com -- information on Y2K for all domains (business, community, etc,) international Y2K news bureau, articles, planning pamphlets, video clips
  • www.year2000.com -- Articles, user groups, product and vendor listings
  • www.yardeni.com -- Ed Yardeni, chief economist of Deutsche Bank and Securities, analyzes the possible economic impact of Y2K.
Community related:
  • www.CY2KR.com -- Citizens for Y2K Recovery, an educational membership organization, offers publications, conferences, and other resources to help local community prepare
  • www.cassandraproject.org/ -- The Cassandra Project, a nonprofit, provides information and advocacy for community planning
Government related
  • www.Y2K.gov -- Federal government information on Y2K operations, support, and coordination of efforts
  • www.pti.org -- Public Technology Inc., a nonprofit research and development agency for cities and counties, provides technology support on many issues, including Y2K

Copyright © 1999 by Leader to Leader Institute. Reprinted with permission from Leader to Leader, a publication of the Leader to Leader Institute and Jossey-Bass.

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Hesselbein, Frances "When They Look at Us, Can They Find Themselves?" Leader to Leader. 11 (Winter 1999): 4-6.

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Issue No. 11
Winter 1999

 

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