In the name of efficiency and optimisation, we eliminate excess capacity. It is seen as a virtue to use every last resource, person and moment to the full. This works well when times are good but saps our resilience in the face of the unexpected.
By doing this, we take out the circuit breakers so that a failure in one area rapidly cascades across the entire system.
As a commuter, I’ve always noticed this on trains. It wouldn’t matter so much that the train doors were broken if we had spare rolling stock to bring into service. We wouldn’t need to wait for the driver to get off their last train if we had more staff on the rota. But you get greater return on investment if you reduce capital and greater profit with a lower wage bill. For a while.
We can now see this principle at work in our health service as well as businesses going to the wall because of insufficient margin. As Chris Cook says in an article for Tortoise:
[P]art of any disaster response planning needs to include some generic idea of resilience – a generalised ability to absorb the unforeseeable. A uniquely British problem is that the way the country has been run for three decades pushes in the opposite direction.
We started this crisis in a weak position.
We have built a fragile state.The NHS at capacity, Chris Cook, Tortoise. 30/03/2020
The forces working against spare capacity during normal times are severe. Shareholders and voters alike don’t tolerate unused resources. The capital must be redeployed to increase earnings, the taxes must be spent on today’s priority. And, to be fair, it would be hard to defend unused hospital beds when we need more money to prescribe all the medicines demanded. I get the pressure. And it is hard to blame leaders for following the incentives we give them.
It is right to eliminate waste – tasks and routines in use that don’t add value. This is not the same as eliminating gaps, downtime and spare capacity. It is not waste to run at slightly less than full tilt.
Chris further quotes Nassim Taleb in this vein:
The service needs to think more broadly about resilience. The human body works with one simple form of resilience: redundancy. Nassim Nicholas Taleb puts it in his book Anti-Fragile: “Layers of redundancy are the central risk management property of natural systems. We humans have two kidneys… extra spare parts, and extra capacity in many, many things (say, lungs, neural system, arterial apparatus)…”
We forget far too quickly that disasters always strike. How can we help people act as if disaster is just round the corner?
Maybe, as Chris says, framing it as resilience rather than redundancy would help. Maybe, as Taleb argues, being ready for black swans would help too. If we were able to use our reserves for other purposes and switch them across rapidly when needed, that might also make it easier to maintain them. Just being good at substituting and repurposing rapidly is a kind of reserve. You can trade off between agility and redundancy.
Ultimately, and this is certainly not a fresh insight, we have to evaluate leadership performance over a longer timescale. Anyone can look good for a year or two. You can buy temporary success by borrowing from the future. The real test of success comes over the course of a decade. If people knew that, they would build reserves, redundancy and resilience because they would know that some form of crisis is inevitable in the long term.
Too many of the most glittering leadership careers are the moral equivalent of Ponzi schemes, revealed as hollow when the good times end.
The full crisis collection.