The Unknown Known

There are two things I know to be true:

• you can’t grow as an organisation without taking risk; and
• you can’t innovate as an organisation without taking risk.

A degree of risk is not only healthy for organisations, it is essential.

What this means is that we need a robust risk management framework that allows decision makers at all levels to have sufficient information to make risk-informed decisions.

But there is a significant problem.  Decision makers are not always getting all the information necessary for them to make appropriate risk informed decisions. Often, information is ‘filtered’ by ‘gatekeepers’ as it escalates through the bureaucracy.

In his now infamous speech, Donald Rumsfeld stated:

There are known knowns; there are known unknowns – that is to say, there are things that we now know we don’t know. But there are also unknown unknowns – there are things we do not know we don’t know.

Whilst it has been the subject of parody on many comedy shows, the reality is, the combination of knowns and unknowns is precisely what an organisation faces, particularly in complex organisations or projects.  But one thing that Rumsfeld did not mention was a trend I have observed in recent times, particularly in bureaucratic organisations: the unknown known.

How many times in your organisation has something happened and when it was investigated, people at the lower levels of the organisation were aware of the issue, but the information didn’t filter its way to the Executive?  There are many reasons why this occurs:

• a fear or blame culture existed that punished people who raised issues;
• there may not have been clear communication channels available for staff to report any of these issues;
• previous inaction (why would I raise an issue when it, or others, have been previously ignored?);
• lack of understanding of the issue in relation to organisational objectives/ consequences;
• concern that if a risk is raised it may mean more work for the person raising it; and/or
• the “Chameleon Risk” i.e. the risks that change colour as they progress up the chain through the many ‘filters’ and ‘gatekeepers’ without anything being done to justify the change in risk level.

But herein lies the irony.

Executive/management need as much information as is available to make risk-informed decisions in relation to the risks they face as they develop their strategies. However, in many cases they are responsible for influencing/setting the culture that gives rise to the unknown known and prevents information from flowing up.

In many organisations, therefore, the very people who need the information from below to make risk-informed decisions are the same people who have made it difficult, if not impossible, to get that information.  That is, not only hindering the organisation, but in some cases, it can lead to catastrophic consequences.

We need to change the culture within our organisation, but that culture change needs to start at the top.  It involves ensuring that everyone understands the importance of escalating information, without it being diluted or filtered.  It also involves accepting that when something does go wrong, it is because of failures across the entire organisation and, as such, to prevent it happening again, we need to avoid seeking blame and look at opportunities to improve.

The days of ‘management don’t want or need to know this’ are well and truly in the past.  Management must know, and to that end, they need to put in place the mechanisms and develop the culture that allows that to happen.