Article 3 of 7-part thought leadership series: Enabling ‘Good’ Innovative Problem Solving for Organisational Sustainability and Success

Lehman Brothers: A Missed Opportunity in Risk Management

The 2008 fall of Lehman Brothers highlights a stark failure in managing risks effectively.

1. Identifying the Problem: Lehman Brothers did not properly acknowledge the financial dangers of their high leverage and complex financial deals, neglecting the ethical and long-term sustainability of their business practices.

2. Generating Solutions: Their approach to managing risks was disconnected from real-world demands, leading to unrestrained risk-taking without adequate controls.

3. Implementation Solutions: Their risk management framework was inadequate, unable to support their aggressive expansion, which compromised their financial health.

4. Working as a Team: A uniform decision-making style and lack of diverse viewpoints likely exacerbated the crisis by not challenging the prevailing risk-friendly culture.

Monarch Airlines: Struggling to Adapt in a Changing Industry

The 2017 failure of Monarch Airlines illustrates the challenges of adapting in a fast-changing industry when problem-solving does not align with Hartman’s dimensions.

1. Identifying the Problem: Monarch Airlines didn’t correctly identify or tackle industry challenges, such as rising competition and evolving customer preferences, resulting in strategic missteps.

2. Generating Solutions: Their adaptation strategies, including cost reductions and focusing on specific markets, didn’t meet external demands and were unsuccessful.

3. Implementing Solutions: The airline’s slow response to technological advancements and innovation reflected a disconnect with necessary systemic industry changes.

4. Working as a Team: Limited diversity in decision-making restricted the airline’s ability to adjust to industry shifts and anticipate future obstacles.

NHS Cyber Attack (2017): A Lesson in Digital Vulnerability

The 2017 cyber-attack on the NHS is a stark reminder of systemic risk management failures.

1. Identifying the Problem: The NHS failed to adequately recognize or address the escalating cybersecurity risks, overlooking the ethical obligation to safeguard patient information.

2. Generating Solutions: The NHS’s cybersecurity strategy did not align with practical needs, lacking effective measures to fortify its digital defenses against cyber threats.

3. Implementing Solutions: The outdated IT systems of the NHS highlighted systemic deficiencies, showing a failure to employ up-to-date cybersecurity practices.

4. Working as a Team: A potential shortfall in collective action to tackle cybersecurity risks may have exacerbated the attack’s consequences.

Key Lessons

These case studies teach us:

Intrinsic Oversight: Neglecting the intrinsic dimension can lead to ethical failures and a disregard for human-centric aspects, as seen in Lehman Brothers and NHS cases.

Extrinsic Neglect: Underestimating the importance of practical, sustainable outcomes can have severe repercussions, as shown in all three examples.

Systemic Failure: Disregarding systemic values leads to non-compliance with essential standards and practices, vividly illustrated by the NHS cyber-attack.

Underestimating Problem-Solving Stages:

The examples of Lehman Brothers, Monarch Airlines, and the NHS demonstrate that overlooking any problem-solving phase, particularly in identifying problems and generating solutions, can lead to disastrous results.

These insights are vital for leaders aiming to avoid similar mistakes, highlighting the importance of fostering a culture that embraces comprehensive problem-solving. This ensures decisions are innovative, sustainable, and true to the organisation’s core values.

Stay tuned for our next article, where we’ll discuss the limitations of traditional analysis methods in identifying the root causes of organisational failures and how a more holistic approach can offer deeper insights.

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