Advertisement

Executive Perspectives on Strategic Error Management

  • Vincent Giolito
  • Paul J. Verdin
Chapter

Abstract

The authors focus on CEOs supervising organizations in which grave errors occurred. Those errors challenged the organizations in their strategies and endangered their survival. As a result, executives and academics have begun to recognize that strategic error management is a critical feature of exercising the highest responsibility in an organization. The authors emphasize that, regardless of whether an organizational error occurs at the top or the bottom of the hierarchy, strategic error management refers to all actions that top executives of an organization undertake (or fail to) in order to disconnect latent errors from actual and potentially adverse consequences and to learn from them.

References

  1. Argyris, C. 1988. Crafting a theory of practice: The case of organizational paradoxes. In Paradox and transformation: Toward a theory of change in organization and management, ed. R.E. Quinn and K.S. Cameron, 255–278. Cambridge, MA: Ballinger Publishing.Google Scholar
  2. Bandura, A. 1977. Social learning theory. Englewood Cliffs: Prentice Hall.Google Scholar
  3. ———. 1991. Social cognitive theory of self-regulation. Organizational Behavior and Human Decision Processes 50 (2): 248–287.CrossRefGoogle Scholar
  4. Barney, J. 1991. Firm resources and sustained competitive advantage. Journal of Management 17 (1): 99–120.CrossRefGoogle Scholar
  5. Baron, R.S. 2005. So right it’s wrong: Groupthink and the ubiquitous nature of polarized group decision making. Advances in Experimental Social Psychology 37: 219–253.CrossRefGoogle Scholar
  6. Bryant, C., and A. Sharman. 2015. Martin Winterkorn resigns as VW boss over emissions scandal. Financial Times, September 23. https://www.ft.com/content/d2288862-61d1-11e5-97e9-7f0bf5e7177b
  7. Carpenter, M., M. Geletkanycz, and G. Sanders. 2004. Upper echelons research revisited: Antecedents, elements, and consequences of top management team composition. Journal of Management 30 (6): 749–778. https://doi.org/10.1016/j.jm.2004.06.001.CrossRefGoogle Scholar
  8. Cohen, J.R. 2000. Apology and organizations: exploring an example from medical practice. Fordham Urban Law Journal 27: 1447–1482.Google Scholar
  9. Corbin, J.M., and A. Strauss. 1990. Grounded theory research: Procedures, canons, and evaluative criteria. Qualitative Sociology 13 (1): 3–21.CrossRefGoogle Scholar
  10. D’Aprix, R. 2012. Kodak’s demise: Denial and truth in a difficult world. Strategic Communication Management 16 (3): 10.Google Scholar
  11. Dane, E., and M.G. Pratt. 2007. Exploring intuition and its role in managerial decision making. Academy of Management Review 32 (1): 33–54.CrossRefGoogle Scholar
  12. Edmondson, A. 1999. Psychological safety and learning behavior in work teams. Administrative Science Quarterly 44 (2): 350–383.CrossRefGoogle Scholar
  13. Edmondson, A.C., and S.E. McManus. 2007. Methodological fit in management field research. Academy of Management Review 32 (4): 1246–1264.CrossRefGoogle Scholar
  14. Eisenhardt, K.M. 1989a. Making fast strategic decisions in high-velocity environments. Academy of Management Journal 32 (3): 543–576.Google Scholar
  15. ———. 1989b. Building theories from case study research. Academy of Management Review 14 (4): 532–550.CrossRefGoogle Scholar
  16. Eisenhardt, K.M., and M.E. Graebner. 2007. Theory building from cases: Opportunities and challenges. Academy of Management Journal 50 (1): 25–32.CrossRefGoogle Scholar
  17. Eubanks, D.L., and M.D. Mumford. 2010. Leader errors and the influence on performance: An investigation of differing levels of impact. The Leadership Quarterly 21 (5): 809–825. https://doi.org/10.1016/j.leaqua.2010.07.009.CrossRefGoogle Scholar
  18. Felin, T. 2005. Strategic organization: A field in search of micro-foundations. Strategic Organization 3 (4): 441–455. https://doi.org/10.1177/1476127005055796.CrossRefGoogle Scholar
  19. Frese, M., and N. Keith. 2015. Action errors, error management, and learning in organizations. Annual Review of Psychology 66 (1): 661–687. https://doi.org/10.1146/annurev-psych-010814-015205.CrossRefGoogle Scholar
  20. Gioia, D.A., and K. Chittipeddi. 1991. Sensemaking and sensegiving in strategic change initiation. Strategic Management Journal 12 (6): 433–448.CrossRefGoogle Scholar
  21. Giolito, V.J. 2015. Managing organizational errors: Three theoretical lenses on a bank collapse. Brussels: Solvay Brussels School of Economics & Management Working Paper. https://dipot.ulb.ac.be/dspace/bitstream/2013/208371/3/wp15033.pdf
  22. Giolito, V.J., and P. Verdin. 2016a. From wrong to right – Error management conference and summit report. Brussels: Solvay Brussels School of Economics & Management. https://www.dropbox.com/s/usbfwk7tx948pwb/160926%20l%20Error%20Mgt%20Summit%20Report.pdf?dl=0
  23. ———. 2016b. From wrong to right: A multi-source investigation of organizational error management by top executives. Presented at the AOM annual meeting, Anaheim.Google Scholar
  24. ———. 2016c. From wrong to right: The critical role of error acknowledgment in managing strategic errors. Presented at the strategic management society annual meeting, Berlin.Google Scholar
  25. Glaser, B., and A. Strauss. 1967. The discovery of grounded theory. Strategies for qualitative research. Mill Valley: The Sociology Press.Google Scholar
  26. Goodman, P.S., R. Ramanujam, J.S. Carroll, A.C. Edmondson, D.A. Hofmann, and K.M. Sutcliffe. 2011. Organizational errors: Directions for future research. Research in Organizational Behavior 31: 151–176. https://doi.org/10.1016/j.riob.2011.09.003.CrossRefGoogle Scholar
  27. Gray, A. 2016. Wells Fargo loses status as world’s most valuable bank. Financial Times, September 14. https://www.ft.com/content/cfda2e06-79ba-11e6-97ae-647294649b28
  28. Gumbel, P. 2008. Saving Société Générale. Fortune 157 (8): 106–114.Google Scholar
  29. Hagen, J. 2013. Confronting mistakes: Lessons from the aviation industry when dealing with error. Houndmills/Basingstoke/Hampshire: Palgrave Macmillan.CrossRefGoogle Scholar
  30. ———. 2014. Applying airline error management principles on the ground: An interview with Jan U. Hagen, author of confronting mistakes: Lessons from the aviation industry when dealing with error. Strategic Direction 30 (2): 34–35. https://doi.org/10.1108/SD-02-2014-0009.CrossRefGoogle Scholar
  31. Hambrick, D.C., and P.A. Mason. 1984. Upper echelons: The organization as a reflection of its top managers. The Academy of Management Review 9 (2): 193. https://doi.org/10.2307/258434.CrossRefGoogle Scholar
  32. Haunschild, P.R., and B.N. Sullivan. 2002. Learning from complexity: Effects of prior accidents and incidents on airlines’ learning. Administrative Science Quarterly 47 (4): 609–643.CrossRefGoogle Scholar
  33. Hayward, M.L., and D.C. Hambrick. 1997. Explaining the premiums paid for large acquisitions: Evidence of CEO hubris. Administrative Science Quarterly 42: 103–127.CrossRefGoogle Scholar
  34. Ho, B., and E. Liu. 2011. Does sorry work? The impact of apology laws on medical malpractice. Journal of Risk and Uncertainty 43 (2): 141–167.CrossRefGoogle Scholar
  35. Hodgkinson, G.P., E. Sadler-Smith, L.A. Burke, G. Claxton, and P.R. Sparrow. 2009. Intuition in organizations: Implications for strategic management. Long Range Planning 42 (3): 277–297. https://doi.org/10.1016/j.lrp.2009.05.003.CrossRefGoogle Scholar
  36. Hoffman, A.J., and P. Devereaux Jennings. 2011. The BP oil spill as a cultural anomaly? Institutional context, conflict, and change. Journal of Management Inquiry 20 (2): 100–112. https://doi.org/10.1177/1056492610394940.CrossRefGoogle Scholar
  37. Hofmann, D.A., and M. Frese. 2011a. Errors, error taxonomies, error prevention and error management: Laying the groundwork for discussing errors in organizations. In Errors in organizations, ed. D.A. Hofmann and M. Frese, 1–44. New York: Psychology Press.Google Scholar
  38. ———, eds. 2011b. Errors in organizations. New York: Psychology Press.Google Scholar
  39. Hunter, S.T., B.W. Tate, J.L. Dzieweczynski, and K.E. Bedell-Avers. 2011. Leaders make mistakes: A multilevel consideration of why. The Leadership Quarterly 22 (2): 239–258. https://doi.org/10.1016/j.leaqua.2011.02.001.CrossRefGoogle Scholar
  40. Huy, Q.N. 2012. Emotions in strategic organization: Opportunities for impactful research. Strategic Organization 10 (3): 240.CrossRefGoogle Scholar
  41. Janis, I.L. 1997. Groupthink. Notre Dame: University of Notre Dame Press.Google Scholar
  42. Kahneman, D. 2012. Thinking, fast and slow. London: Penguin.Google Scholar
  43. Lei, Z., E. Naveh, and Z. Novikov. 2016. Errors in organizations: An integrative review via level of analysis, temporal dynamism, and priority lenses. Journal of Management 2 (5): 1315–1343.CrossRefGoogle Scholar
  44. Lovallo, D., and D. Kahneman. 2003. Delusions of success. Harvard Business Review 81 (7): 56–63.Google Scholar
  45. Makary, M.A., and M. Daniel. 2016. Medical error – The third leading cause of death in the US. British Medical Journal: i2139. https://doi.org/10.1136/bmj.i2139.
  46. March, J.G., L.S. Sproull, and M. Tamuz. 1991. Learning from samples of one or fewer. Organization Science 2 (1): 1–13.CrossRefGoogle Scholar
  47. Nembhard, I.M., and A.C. Edmondson. 2006. Making it safe: The effects of leader inclusiveness and professional status on psychological safety and improvement efforts in health care teams. Journal of Organizational Behavior 27 (7): 941–966. https://doi.org/10.1002/job.413.CrossRefGoogle Scholar
  48. Panko, R.R. 1998. What we know about spreadsheet errors. Journal of Organizational and End User Computing (JOEUC) 10 (2): 15–21.CrossRefGoogle Scholar
  49. ———. 2008. Spreadsheet errors: What we know. What we think we can do. arXiv Preprint arXiv:0802.3457. http://arxiv.org/abs/0802.3457
  50. Perrow, C. 1999. Normal accidents – Living with high-risk technologies. Edition: Updated. Princeton: Princeton University Press.Google Scholar
  51. Ramanujam, R. 2003. The effects of discontinuous change on latent errors in organizations: The moderating role of risk. Academy of Management Journal 46 (5): 608–617. https://doi.org/10.2307/30040652.CrossRefGoogle Scholar
  52. Ramanujam, R., and P.S. Goodman. 2003. Latent errors and adverse organizational consequences: A conceptualization. Journal of Organizational Behavior 24 (7): 815–836. https://doi.org/10.1002/job.218.CrossRefGoogle Scholar
  53. Reason, J. 1990. Human error. First ed. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  54. ———. 2000. Human error: Models and management. British Medical Journal 320 (7237): 768–770.CrossRefGoogle Scholar
  55. Roberts, K.H. 1990a. Managing high-reliability organizations. California Management Review 32 (4): 101.CrossRefGoogle Scholar
  56. ———. 1990b. Some characteristics of one type of high-reliability organization. Organization Science 1 (2): 160–176.CrossRefGoogle Scholar
  57. Salas, E., M.A. Rosen, and D. DiazGranados. 2010. Expertise-based intuition and decision making in organizations. Journal of Management 36 (4): 941–973. https://doi.org/10.1177/0149206309350084.CrossRefGoogle Scholar
  58. Schein, E.H. 2004. Organizational culture and leadership. Third ed. San Francisco: Jossey-Bass.Google Scholar
  59. Schweitzer, M.E., A.W. Brooks, and A.D. Galinsky. 2015. The organizational apology. Harvard Business Review 93 (9): 44–52.Google Scholar
  60. Shimizu, K., and M.A. Hitt. 2004. Strategic flexibility: Organizational preparedness to reverse ineffective strategic decisions. The Academy of Management Executive 18 (4): 44–59.Google Scholar
  61. ———. 2005. What constrains or facilitates divestitures of formerly acquired firms? The effects of organizational inertia. Journal of Management 31 (1): 50–72. https://doi.org/10.1177/0149206304271381.CrossRefGoogle Scholar
  62. ———. 2011. Errors at the top of the hierarchy. In Errors in organizations, ed. D.A. Hofmann and M. Frese, 199ff. New York: Psychology Press.Google Scholar
  63. Shrivastava, P. 1987. Bhopal: Anatomy of crisis. Illustrated ed. Cambridge, MA: Ballinger Publishing.Google Scholar
  64. Starbuck, W.H., and F.J. Milliken. 1988. Challenger: Fine-tuning the odds until something breaks. Journal of Management Studies 25 (4): 319–342.CrossRefGoogle Scholar
  65. Staw, B.M. 1976. Knee-deep in the big muddy: A study of escalating commitment to a chosen course of action. Organizational Behavior and Human Performance 16 (1): 27–44.CrossRefGoogle Scholar
  66. ———. 1981. The escalation of commitment to a course of action. The Academy of Management Review 6 (4): 577. https://doi.org/10.2307/257636.CrossRefGoogle Scholar
  67. Staw, B.M., S.G. Barsade, and K.W. Koput. 1997. Escalation at the credit window: A longitudinal study of bank executives’ recognition and write-off of problem loans. Journal of Applied Psychology 82 (1): 130.CrossRefGoogle Scholar
  68. Suddaby, R. 2006. From the editors: What grounded theory is not. Academy of Management Journal 49 (4): 633–642.CrossRefGoogle Scholar
  69. Teece, D.J. 2007. Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal 28 (13): 1319–1350. https://doi.org/10.1002/smj.640.CrossRefGoogle Scholar
  70. Tversky, A., and D. Kahneman. 1973. Availability: A heuristic for judging frequency and probability. Cognitive Psychology 5 (2): 207–232.CrossRefGoogle Scholar
  71. Vuori, T.O., and Q.N. Huy. 2015. Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative Science Quarterly. https://doi.org/10.1177/0001839215606951.
  72. Weick, K.E. 1988. Enacted sensemaking in crisis situations. Journal of Management Studies 25 (4): 305–317.CrossRefGoogle Scholar
  73. ———. 1990. The vulnerable system: An analysis of the Tenerife air disaster. Journal of Management 16 (3): 571–593.CrossRefGoogle Scholar
  74. Weick, K.E., and K.M. Sutcliffe. 2007. Managing the unexpected: Resilient performance in an age of uncertainty. Second ed. San Francisco: Jossey-Bass.Google Scholar
  75. Weick, K.E., K.M. Sutcliffe, and D. Obstfeld. 2005. Organizing and the process of sensemaking. Organization Science 16 (4): 409–421. https://doi.org/10.1287/orsc.1050.0133.CrossRefGoogle Scholar
  76. Wells, P., and A. Gray. 2016. Deutsche Bank agrees to pay $7.2bn to settle DoJ probe. Financial Times, December 23. https://www.ft.com/content/785232ab-79b1-32de-843d-04c9f680e539
  77. Whittington, R. 1996. Strategy as practice. Long Range Planning 29 (5): 731–735.CrossRefGoogle Scholar
  78. Whittington, R., and L. Cailluet. 2008. The crafts of strategy. Long Range Planning 41 (3): 241–247. https://doi.org/10.1016/j.lrp.2008.03.003.CrossRefGoogle Scholar
  79. Whittington, R., E. Molloy, M. Mayer, and A. Smith. 2006. Practices of strategising/organising. Long Range Planning 39 (6): 615–629. https://doi.org/10.1016/j.lrp.2006.10.004.CrossRefGoogle Scholar
  80. Wright, T.A., and R. Cropanzano. 2004. The role of psychological well-being in job performance. Organizational Dynamics 33 (4): 338–351. https://doi.org/10.1016/j.orgdyn.2004.09.002.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Vincent Giolito
    • 1
  • Paul J. Verdin
    • 1
  1. 1.BrusselsBelgium

Personalised recommendations