Adapt: Why Success Always Starts with Failure by Tim Harford

Preventing Financial Meltdowns or: Decoupling

  • Tim uses examples of disasters like those involving oil rigs at sea, nuclear power plants, and the 2008 banking meltdown to caution against building systems that are both complex and tightly coupled. By tightly coupled he means any system where a failure somewhere will propagate to cause other failures much like one falling domino can cause an unlimited number of others to fall. He finds that adding safety measures to complex systems often introduces a new way for something to go wrong. Adding more safety measures can also cause people to take more risks.
  • There are three types of error. Slips are unintentional mistakes like dropping something. Violations occur when someone deliberately does something wrong. Mistakes happen when you do something on purpose with unintended consequences. Complex systems allow for more mistakes or latent errors that show up later. People on the front lines of an organization can often spot latent errors, but they often fail to report them for fear of reprisal. When possible, we need to give people incentives to be whistle blowers so latent errors can be spotted sooner. We also need systems that are less likely to allow failures to spread.
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