When managing risk, decision makers must work with limited information, cognitive limitations, and contextual biases. Simplifying strategies, social norms, and coalition dynamics influence how these decisions unfold. Organizational risk-taking is a function of context, competitive pressures, and organizational success, as political scientist and sociologist James G. March (1928–2018) wrote in A Primer on Decision-Making (1994). A re-read.

 

The illusion of optimal decisions

Decision making may seem like a rational process of evaluating all possible alternatives, but limitations in attention, memory, and comprehension make the ideal of rationally evaluating all possible alternatives unachievable. Instead, decision makers settle for good-enough solutions. They simplify, use rules of thumb, and frame alternatives in specific ways. They focus on certain aspects of a problem and ignore others. Decision making often reinforces certain perspectives. This in turn influences norms and perceived legitimacy within the organization.

 

How do decision makers assess risk?

Decision makers strive to make risk assessments that are both technically accurate and socially acceptable. Biases can obscure critical, uncertain risks. Familiar patterns are often overemphasized, which leads to an exaggerated sense of control. This overconfidence can lead to underpreparation for low-probability, high-impact events, because decision makers may overlook risks that do not fit their existing frameworks, the black swans.

 

Risk taking (and promotion!) as a consequence of success

Risk preferences are shaped by both individual predispositions and situational context. Although risk taking can be a conscious trait, competitive environments often force individuals to take bold risks to stand out, even when more cautious strategies may be beneficial for long-term stability.

Success breeds trust, which can sometimes lead organizations to underestimate risk. Sustainable success can support a can-do attitude, especially in high-growth organizations, where leaders can begin to view risks as more manageable than they are. While this confidence encourages bold initiatives, it can also create critical blind spots that leave organizations unprepared for unexpected challenges.

Risk taking influences the chance of getting promoted. Those who achieve visible success tend to be promoted, which can lead to more risk-seeking leaders in positions of influence. This tendency does not necessarily reward risk taking directly, but rather is a byproduct of reputations built over time. As competition increases, risk takers stand out through their visibility and performance, often leading to advancement.

 

How is rule-based action reinforced in organizations?

In organizations, decisions are often determined by identity-driven rules rather than purely calculated outcomes. Individuals often act according to what is considered appropriate for their role, in accordance with social norms and expectations. Organizations reinforce this identity-based logic by structuring behaviors through defined roles, combining experiential feedback with environmental pressures, meaning that certain successful practices persist and evolve, shaped by social influences and occasional irrational adherence to past behaviors. In multi-actor environments, group decisions must pursue multiple goals, with participants forming strategic alliances and selectively sharing information to achieve desired outcomes.

Real-world decision-making requires flexibility, adaptation, and the willingness to adjust rules based on real-world circumstances. Rule-based action must therefore allow for situational adjustments, and it is important to support employees’ daily adjustments for safe and effective operations.

 

Failure AND Success - Safety-I AND Safety-II

Success and failure affect decision-making in different ways. Failure often leads to a cautious, efficient search for solutions. Success, on the other hand, can lead to experimental, riskier choices driven by the availability of slack resources. In stable environments, this slack can lead to inefficiencies, but in dynamic environments it can support innovation. Success can also breed overconfidence, creating blind spots that make organizations vulnerable to high-impact unforeseen events.

This idea parallels Hollnagel’s Safety-II, which treats successful outcomes as “normal,” which can blur the understanding of what makes systems function reliably (Hollnagel, 2014).

Balancing exploration and exploitation is important for effective decision-making, March writes. Overreliance on exploitation risks becoming highly proficient in outdated methods. Excessive exploration, on the other hand, can lead to unproductive experimentation. Effective decision-making therefore requires a balance between these approaches. This allows organizations to exploit new opportunities while preserving established competencies. This balanced approach reflects Hollnagel's view that Safety-I and Safety-II are complementary (ibid.).

 

Ambiguity and the Garbage Can Model

In highly ambiguous environments, decisions often emerge from the convergence of problems, solutions, and participants (called the garbage can by March) rather than from a clear, rational process. In organized anarchies such as large bureaucracies, timing and context often play a greater role than logical considerations. Therefore, decision-making not only focuses on practical issues, but also reinforces cultural myths and social identities, giving decisions meaning beyond their immediate outcomes. In socio-technical systems, traditional Safety-I models that assume clear causality and predictability are often inadequate. Ambiguity and flexibility in managing outcomes are necessary because simple root cause analysis may not be sufficient.

 

Commitment, knowledge, and the human spirit

Decision-making often requires real commitment. March describes three foundations for such commitment: (1) a belief in the impact of one’s actions, (2) a sense of duty tied to identity, or (3) an intrinsic motivation driven by arbitrary willpower. These sources of commitment help decision makers overcome analysis paralysis; this enables action in the face of uncertainty and affirming the resilience of human intent.

Failure often leads to efficiency-driven, risk-averse choices, while success can encourage riskier, experimental actions due to the presence of slack resources. As safety professionals, understanding why work is successful and identifying the daily conditions that lead to resilience and effective performance are important to advance proactive safety management.

 

Sources:

• Hollnagel, E. (2014), Safety-I and Safety-II – The Past and Future of Safety Management, Farnham/Burlington: Ashgate.
• March, J.G. (1994), A Primer on Decision-Making – How Decisions Happen, New York: Simon & Schuster.

 

Illustration:

• People Are Awesome – Balancing on the edge of 1,000ft cliff in Norway (Facebook)