High Reliability Organizations (HROs) and High Performance Karlene H. Roberts Haas School of Business University of California, Berkeley karlene@haas.berkeley.edu 510.642.4700 (fax) You’ve just seen an example of an organization that really can’t afford to have a big mistake. Big mistakes in your industry and in other industries have many many ramifications that are economic, social, political and public relations . We need look no further than BP , Enron, or Lehman’s for evidence of that. 1

December 29, 2001 - As the sun rises on the deck of USS John C December 29, 2001 - As the sun rises on the deck of USS John C. Stennis (CVN 74), the ship is readied for flight operations. Stennis and her embarked Carrier Air Wing Nine (CVW-9) are supporting Operation Enduring Freedom. U.S. Navy photo by Photographer's Mate 3rd Class Jayme Pastoric.

Aircraft carriers to things other than fly airplanes, load weapons and maintain aircraft that are also potentially dangerous. Here’s an example. This is a carrier underway replenishment or unrep. Here the replenishment ship is transfering to the carrier everything the carrier uses in day to day operations, from the mail to food to aircraft fuel. The two ships are traveling in parallel at 12 knots. Should one go faster then the other they are in trouble. Should they get too close to one another they will crash into each other with obvious outcomes. Should they get too far apart the transfer lines will snap, destroying cargo and killing everyone in the way. At the end of the cargo transfer they do something called an emergency break-away, practicing for a time when an enemy may be close by and these tethered ships would be sitting ducks.

The Arrow Incident General environmental conditions Government / Regulators Company Management Operational Staff Work Here’s an example of the components of an accident. It’s not just the operstor who causes the accident…. Actions Incident

What is a High Reliability Organization (HRO) ? An organization Conducting relatively error free operations Over a long period of time Making consistently good decisions resulting in High quality and reliability operations What is a high reliability organization (or HRO)? You might argue that some organizations need not be HROs and that’s quite possibly true. Considerable resources are needed to make organizations into HROS and I don’t think the local family owned grocery store is the place to start.. But complex, complicate organizations, particularly those with interdependencies among departments or with other organizations are the place to start.

HRO and Fast Execution It is our contention that reliability enhancement is fast execution enhancement I know that you at Siemens are targeting faster execution of your operation and of the implementation of your strategies. There is good empirical evidence that pushing fast execution without a reliable organization and without an open leadership culture can lead to major incident, for example the BP Gulf of Mexico oil spill. We know that there was a lot of production pressure aboard the platform. Do you have examples at Siemens where fast execution without having a reliable organisation led to incidents? (for example the Siemens Street Car “Combino” quality problem some years ago) Reliability is fostering fast execution because of reducing the amount of time spent for trouble shooting and other issues. Errors incubate over time! In a reliable organization you detect errors early. It cost a lot of money and time if you detect the errors late. 6

What HRO theory does for you Provides a common language Recognizes principles and practices shared by high reliability firms Permits you to communicate lessons learned with other High Reliability Organizations Enables executives to share HRO concepts with managers and workers who will develop detailed plans Changes attitudes about reporting important information Establishes and supports a safety culture Explain 7

Naval Aviation Class A Flight Mishap Rate 24 aircraft destroyed in FY03- all in flight mishaps 776 aircraft destroyed in 1954 FY50-03 Angled Decks Aviation Safety Center Naval Aviation Maintenance Program RAG (FRS) Concept Initiated NATOPS Program Squadron Safety Program System Safety Aircraft Design CRM Aircrew reviews ORM Safety culture Performance and reliability. This is the graph of the Navy’s reduction in Class A accidents per 100,000 flight hours over the years. A class A accident costs over USD1 million or kills someone or both. As you can see the rate has been going down since 1959. This happened for three technological reasons all in place by the end of the 1950s: the angled flight deck, the Fresnel lens (paddles), and the jet airplane. All the rest of the Navy’s “fixes” were management fixes which included many HRO processes. 96-2003 Fiscal Year

The very same picture exists for commercial aviation The very same picture exists for commercial aviation. The accident rate is the low grey line on the slide which has been going down since the 1960s and for the same reasons.

Nuclear Energy Institute Data 1985-2008 Rx Trips/ Scrams Capacity Factor (% up) Cost (¢/kwh) Significant Events/Unit Reactor trips/SCRAMS – unplanned reactor shutdowns either automatic or manual   Significant events per unit – defined by NRC regulation as to what is significant Significant events are those events that have serious safety implications and include degraded safety equipment, a reactor shutdown with complications, an unexpected response to a change in a plant parameter, or a degraded fuel rod or coolant piping. Capacity factor – ratio of amount of power actually produced versus the amount technically possible.  A plant running 24/7 for the entire year is operating at 100% capacity. Cost per kwh – cost per kilowatt hour 10

An HRO must sustain a “mindful infrastructure” which Observes and tracks small failures and anomalies Resists oversimplification Remains sensitive to operations Maintains capabilities for resilience Looks to expertise not rank to inform decisions 11

An HRO must sustain a “mindful infrastructure” which Observes and tracks small failures and anomalies Resists oversimplification Remains sensitive to operations Maintains capabilities for resilience Looks to expertise not rank to inform decisions Principles of anticipation Principles of containment 12

1) Observe and track small failures and anomalies Worry chronically about errors. Assume each day is a bad day. Difficult to do. “Collective bonds among suspicious people.” Commercial aviation worries chronically about errors and has a error reporting systems that helps them out. Do you have any example from your experience? 13

2) Resist oversimplification All organizations must ignore many things. Doing so may force them to ignore key sources of problems. Restrain temptations to simplify. Through checks and balances, adversarial reviews, and multiple perspectives. BP oversimplified. Dartmouth university medical center hospital: The leader is very good in resisting oversimplification by insisting that his team pays attention to details. Nuclear power plants resist oversimplification by using training simulations and walk-throughs instead relying on plans. Do you have any example from your experience? 14

3) Remain sensitive to operations Pay close attention to operations. Everyone values organizing to maintain situational awareness. Use resources so people can see and comprehend what is happening. Aircraft carriers and submarines Do you have any example from your experience? 15

4) Maintain capabilities for resilience Anticipate trouble spots. Capability to improvise. Improve capacity to Do quick studies Develop swift trust Engage in just‐in‐time learning 9/11: Within minutes the Federal Aviation Administration took every plane out of the air (compare with the airmap on the wall at your Lufthansa visit day before yesterday at the Munich Hub Control Center – every dot = plane can disappear within minutes). Air crews and airports had to improvise. Do you have any example from your experience? 16

5) Look to expertise not rank to inform decisions Let decisions “migrate” to those with expertise to make them. Avoid rigid hierarchies. Training for wild-land fire fighting team to let the people with the most expertise not with the highest rank make the decisions. Things change in the event of a fire. The captain of the aircraft carrier said: This is the job, I don’t care how it is done, do it. In the case of an unexpected event they don’t have to check with the top guys before doing something. Do you have any example from your experience? 17

Businesses Targeting High Reliability Commercial Aviation (e.g. United Airlines) Commercial Banking (e.q. S.W.I.F.T.) Healthcare (e.g. Loma Linda Hospital, Totally Kids, Kaiser Permanente, AHRQ hospital consortium) Nuclear Power (e.g. Diablo Canyon Power Plant, INPO) Commercial Maritime Petroleum and chemical Industries (e.g. Chevron, Shell, Gard Services) 18

Government Agencies Targeting High Reliability US Naval Carrier Aviation US Navy Submarine Service (e.g., Admiral Rickover) US Department of Energy Laboratories Community Emergency Services (U.S. Forest Service, Orange County California Fire Authority, San Bernardino County and City Fire) Manned Space Flight (Columbia Accident Investigation Board) Deep Underground Science and Engineering Laboratory - DUSEL (under design) 19

/now, let’s think for a moment about how non HRO organizations behave.

Non-HROs Focus on success Underdeveloped cognitive infrastructure Focus on efficiency Inefficient learning (episodic) Lack of diversity (focused conformity) Information & communications filtering Reject or excuse early warning signs of quality degradation Source: Weick and Sutcliffe 21

Characteristics of a Non-HRO Attend meetings and solve nothing Catch airplanes and miss ‘connections’ Conduct briefings and persuade no one Evaluate proposals and miss the winners Meet deadlines for projects on which the plugs have been (or should be) pulled Organizations in which people shuffle papers and lose a few Source: Weick and Sutcliffe 22

Is your organization an HRO? 23

Is your organization an HRO? How do you get there? How do you stay there? HRO is not a one time change like adopting a currency or language, it is a way of conducting business and a continual effort. 24

HRO – High Reliability Organizations Statoil Experience Siemens 20 May 2010

Why the HRO initiative ? Statfjord field – Statfjord B ,A and C

Statoil’s experience The HRO journey startet with inviting the PSA and OLF together with Statoil Managers HRO Workshop at University of California, Berkeley The Norwegian Oil Industry Association

Statoil’s HRO experience What happened when back in business and introducing HRO? Great enthusiasm in the group Realized that the process needed maturation and time Not the great buy-in, but not rejection either! Gjøa Development - topside facility on the move

Statoil What we do – and how we do it A values based performance culture Firm commitment to health, safety and environment (HSE) Stringent ethical requirements and a code of conduct which promotes personal integrity

Is Statoil a high or low reliability organization? HRO’s Leadership training Good structures Value based organisation Emergency preparedness LRO’s Consensus culture Focus on success Expertise focus Elementary versus advanced Denial HRO – High Reliability Organizations Crisis Management Preparedness LRO- Low Reliability Organizations Number of Denials

Culture/HRO step-change Cultural / HRO step-change is not triggered by magic bullet or directive Rather Culture / HRO is changed by series of small steps taken by the leading members of the organization at all levels Leadership is standing up and leading the way Changing the way business is conducted requires people at all levels to lead by personal example

“Troll A Platform shaft Recommendations Start at the Top Management Use time to implement Training, training, training and discussions External inspiration Establish network / forum meetings “Troll A Platform shaft

Thank you HRO – Statoil Experience Ståle Tungesvik Senior Vice President, Reserve and Business Development Exploration and Production Norway sttu@statoil.com www.statoil.com

An HRO must sustain a “mindful infrastructure” which Observes and tracks small failures and anomalies Resists oversimplification Remains sensitive to operations Maintains capabilities for resilience Looks to expertise not rank to inform decisions 34

Exercise on 5 HRO leadership principles