High-Reliability Organizations: Managing Risk In Complex Operating Environments

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HighReliabilityOrganiza1onsManagingRiskinComplexOpera4ngEnvironments

Presenta4onattheAFPMAnnualMee4ngMarch17,2016

Complexity is stretching the capabilities of most organizations

TECHNOLOGYPRODUCTS&SERVICES

PROCESSES

ORGANIZATIONS

REGULATIONS

MARKETS

X

X X

X

X COMMUNICATIONS

Complexity grows exponentially

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#Items #links

1 0

2 1

3 3

4 6

5 10

…

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Complexity

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Characteristics of complex systems

1. Non-linear reactions

3. Unknown interactions

2. Feedback loops

4. Emerging properties

Many companies are passing a complexity threshold

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VALUE(diminishingreturns)

COST&RISK(exponen4algrowth)

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Complexity

Fewcompaniesares.llhere

Manycompaniesarehere

Anincreasingnumberofcompaniesarehere

Increased complexity

Poor execution

Loss of process control

Poor performance

Added processes Vicious

Complexity Cycle

The typical response to complexity is to add even more complexity

Catastrophic incidents are becoming more frequent and more severe

1979–Three-MileIslandcoremeltdown1988–PiperAlphaexplosion2005–TexasCityRefineryexplosion2010–SanBrunoPipelineexplosion2010–BPDeepwaterHorizonoilspill2011–FukushimaDaiichidisaster2013–WestFer1lizerplantexplosion

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Traditional risk management doesn’t address these “normal accidents” well

Too complex to anticipate

Too fast to address

Too infrequent to understand

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The Pessimist’s View

“Regardlessoftheeffec4venessofmanagementandopera4ons,accidentsinsystemsthatare

characterizedby4ghtcouplingandinterac4vecomplexitywillbe

normalorinevitableastheyoTencannotbeforeseenorprevented.”

WilsonPerumal&Company,Inc. 10

Yet a few High Reliability Organizations seem to defy the Pessimistic View!

The Nuclear Navy has never had a reactor accident over its

50+yearhistory

150mobilenuclearreactors

6,000+yearsofreactorplantopera4on

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Three Lessons from the Nuclear Navy

#1 Safety should not be a GOAL!

#2 Simplify your management system

#3 Culture is critical

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2

3

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Lesson #1

Achieving zero incidents should not

be a

It should be an

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This has important implications for what we reward

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Lesson #2: Simplify your management system

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The Nuclear Navy simplifies with one management system for all outcomes

PeopleProcess

EquipmentChange

KeyControls

Safety

PeopleProcess

EquipmentChange

KeyControls

Environ-mental

PeopleProcess

EquipmentChange

KeyControls

Quality

PeopleProcess

EquipmentChange

KeyControls

Reliability

PeopleProcess

EquipmentChange

KeyControls

Cost

CommonManagementSystemApproach

NuclearNavyManagementSystem

PeopleProcess

EquipmentChange

IncreasedperformanceAcceleratedlearning

Reducedcostandoverhead

SafetyQuality

Environmental

Reliability

Compliance

Cost

KeyControls

WilsonPerumal&Company,Inc. 17

Havingoverlycomplexmanagementsystemscanbeveryexpensive

“If[theQEMS]hashadanimpact,it’sprobablyanega1veimpact.”–EngineeringMgr.

Thecostofmee1ngQEMSrequirements… doesnottranslatetohighperformance

taskexecu4onishighlyvariableamongdivisions(~50%variabilityinrework/revisions)

highlevelofrework(17%)andrevision(4%)whileexternalfindings/auditareincreasing

majorityofreports(44-72%)past6daytargetwhencompe4torsdeliverin1-3days

repe44veauditfindingsindicatelackofprocessimprovement

adequatetomaintaincompliancewithISO&OHSASü

û

û

û

û Improvement

Efficiency

Accuracy

Consistency

ComplianceCostEs1matesforQEMS Range

FulfillingQEMSRequirements

Operators $26–67M

Engineers $17–31M

Con1nuousImprovement

CARProcessing1 $200K–2M

InternalAuditProgram1 $100K–700K

QEMSMaintenance1 $200K–800K

Governance QEMSGroup2 $3M

TOTAL ~$50M–100M

Lesson #3: Culture is critical

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Culture is the Nuclear Navy’s last layer of defense

Rob

ust E

quip

men

t

Rig

orou

s P

roce

dure

s

Cul

ture

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The culture required was a vast departure from traditional military culture

Tradi1onalMilitaryCulture

Followorders

Dowhatyouaretold

Don’taskques4ons

Neverques4onyoursuperiors

Rickover’sCulturalPillars

Haveahigherlevelofunderstanding

Followprocedures

Ques4onprocedureswhenthingsdon’tseemright

Backeachotherup

Doitallwithintegrity

LevelofKnowledge

Formality

Ques1oningAktude

ForcefulWatchTeamBackup

Integrity

LEVE

LOFKN

OWLEDG

E

FORM

ALITY

QUESTIONINGATTITUDE

FORC

EFULBA

CKUP

INTEGRITY

CONTINUITYOFPOWERREACTORSAFETY

Safety and reliability depend on specific operator behaviors

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The“PillarsoftheProgram”

WP&C has worked with the Nuclear Navy to benchmark its culture

1.00 2.00 3.00 4.00 5.00 6.00 7.00

Seekthecompany'ssuccessBeresultsorientedWalkthetalkFollowproceduresCon4nuallyseekgreaterknowledgeAlwayscollaborate

Confi

den4

al

Payalen4ontohierarchyandstatusDowhatyouraretoldCompetewithpeersWorklonghoursCoverthemistakesofothersPunishfailure/mistakesShortcutsaretolerated

ChangeCurrentvs.Target=32%

40Characteris1cs

TargetCultureCurrentCulture

AveragerankingforCurrentvs.TargetCultures

MostLikeUsNotLikeUs

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Ques4oningAotude Formality Integrity ForcefulWatchTeamBackup

LevelofKnowledge

Current

The Navy describes itself consistently with the Five Pillars

MostLikeUs

NotLikeUs

RangeClient

RangeNavy NavyAverage

ClientAverage

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Three Lessons from the Nuclear Navy

#1 Safety should not be a GOAL!

#2 Simplify your management system

#3 Culture is critical

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2

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25cseifert@wilsonperumal.com

ThankYou

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ChrisSeifertPartner,Opera1onalExcellencePrac1cecseifert@wilsonperumal.com(972)800-3618www.wilsonperumal.com

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