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How to evaluate near misses
photo by Luis Penados

In the airline industry, “when two planes almost collide they call it a ‘near miss.’ It’s a near hit! A collision is a near miss.’”

— George Carlin

In the wake of disaster, companies naturally become more cautious, implementing new safeguards and waxing conservative on decisions. But when disaster is narrowly averted, the opposite is true. Research by Georgetown University’s Robin L. Dillon-Merrill and Catherine Tinsley shows that organizations perversely consider such events — the product flaw caught just before shipping, the thwarted break-in by a hacker — to be successes. Nothing awful happened, the reasoning goes, so we must be doing something right.

In fact, near misses often presage disaster, hinting at systemic flaws that continue to threaten the organization. By studying them, companies can prepare for the inevitable event when luck or circumstances don’t cut their way.

How? In a 2011 article for the Harvard Business Review, Dillon-Merrill and Tinsley, in collaboration with Peter Madsen of Brigham Young University, present these seven strategies for recognizing and learning from near misses.

1. Heed high-pressure situations.
Teams struggling to meet tight schedules or cost targets are more likely to discount near misses than other teams. Ask: If we had more time and more money, would we make the same decision?

2. Learn from deviations.
As conditions or outcomes repeatedly deviate from the status quo, team members respond by recalibrating the norm. Ask: Have we always been comfortable with this level of risk? Has our policy toward this risk changed over time?

3. Uncover root causes.
Managers find it easier to correct a deviation than to dig deep and find its cause. Ask: Why did this effect happen? What was required to produce this effect? What do we need to do to address the root cause?

4. Demand accountability.
Managers will dismiss the seriousness of near-misses unless forced to justify those assessments. Ask: Does the corporate culture make us feel accountable for our decisions?

5. Consider worst-case scenarios.
Unless teams imagine severe negative consequences, they are unlikely to act. Ask: Could we have seen other outcomes? How bad could the outcome have been?

6. Evaluate projects at every stage.
Managers generally don’t conduct post-mortems after successes, yet they characterize near-misses as successes. Ask: Can we pause and learn something at this project milestone?

7. Reward owning up.
If employees are discouraged or punished for admitting failures, they will sweep undetected errors under the rug. Ask: How can we create an organizational culture that recognizes and rewards uncovering near misses?

#nearmisses

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Industries such as manufacturing, chemicals, and transportation are most likely to monitor near-misses. But given recent events, financial-services firms are being encouraged to get with the program. “The Near-Miss Management of Operational Risk,” published in the Journal of Risk and Finance (Fall 2002) by Alexander Muermann and Ulku Oktem, provides a worthy overview.

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