To achieve success and remain successful, it may be worthwhile for construction professionals to study the elements of failure, argues Sameer Daoud of Drake & Scull International (DSI)
Managing risk in the construction industry is not only about being aware of possible adverse outcomes in operations, it is also about understanding the layout of the organisation and how you engage your personnel, to prevent the people and work environment from becoming a risk to the organisation itself.
It’s natural to attribute success to our own skill, while explaining away failure as due to unforeseen circumstances beyond our control. Being able to rationalise every outcome after the fact does not usually help us improve. Everything appears obvious in hindsight when connecting the dots to determine cause and effect. However, this is of no help when you’re trying to avoid making mistakes in the future.
To avoid potential threats, you need to be able to foresee them in the first place. This is the foundation of risk management – outlining possible scenarios and developing contingency plans. Risk management is about prioritising potential risks, not planning for every eventuality! That would be counterproductive.
The aim is to know how to react, and not become overwhelmed and paralysed in the face of adverse situations. The key is maintaining a balance between careful preparation and quick, decisive action, elements that depend on each other.
Money and resources are competitive advantages, but the side-effects can be temptation and greed. Both have been known to cause problems, yet it is rare that we are able or willing to recognise these traits in ourselves or in the organisations we serve. This is an area of risk management that, if you can master it, represents a direct and valuable competitive advantage.
Having success can make it easy to start believing you are infallible. The story of a meteoric rise and fall is one familiar to all, from ancient Greek mythology to the modern corporate world. Possibly the most important, yet difficult, part of risk management is knowing that each person and organisation carries within the seeds of their own demise. The trick is to not let these take root. This is an essential part of risk management.
Whether a major multinational or a small business, failure is usually the consequence of personal weaknesses and character flaws, more than any particular shortcoming in skill or lack of intelligence. Simply put, it is difficult to see the least flattering sides of ourselves clearly, let alone be critical of those we have chosen to place our faith in. Neither are we inclined to believe that the least desirable scenarios will play out.
Refusing to acknowledge the inherent risk of our own blind spots explains why organisations often find themselves in situations they can’t resolve. It is hard to consider situations properly that we don’t want to believe can come about at all or are even possible. Finding the motivation to develop a comprehensive plan B in response to hypothetical situations is difficult. Even if you can, that means having to highlight all the things that can go wrong with plan A, and risking the organisation losing faith in its overall pursuit of success. Nonetheless, it is vital to maintain a realistic outlook on a situation and to ask questions that you know will yield uncomfortable answers. One of these relates to transparency and accountability.
Effective management is the skill to align incentives for the actors in an organisation that create the optimal conditions to produce desired outcomes. This, of course, is also valid for leadership. Those responsible for setting incentives and goals are themselves driven first and foremost by incentives. More often than not, it is when this self-interest is misaligned that the seeds of systemic failure and downfall are sown.
A common scenario is that the incentives are structured in such a way that no one is willing to assume risk or responsibility for solving problems, due to the fear that they will be blamed if something goes wrong. Simply associating yourself with a problem by pointing it out and making suggestions for improvement can prove costly. That is why properly documenting what was said and done, to demonstrate one’s own importance and innocence or ignorance of internal problems, may come to overshadow the focus on effective collaboration. Building a career today is in no small part about having the skill to disassociate oneself from making traceable contributions and to skirt accountability when necessary.
So how does an organisation come to find itself in a situation where this is typical behaviour? My view is that succeeding, whether as a person, company or nation, often starts out with a situation where limited resources require ingenuity to solve a problem and compete by increasing efficiency. The next thing you know, you’ve found smarter ways to get things done and are winning in the marketplace.
The prerequisite then is a lack of resources for handling a clear problem, which defines everyone’s purpose. Without any clear obstacle to overcome, however, the primary drive and focus for the members of an organisation is to protect their position, and from there, atrophy is inevitable. There is a profound quote: “We have met the enemy, and they are us.”
Construction professionals need to be willing to accept that facing adverse outcomes is a natural part of the path to accomplish what they are attempting. The biggest threat to organisations is having no one willing to assume risk, because there is no incentive for them to do so. In the end, all innovation is about courage.