Card 22

🏢 🔄 🤦

Why do organizations keep making the same mistakes?

💭 How to Think About This

Post-mortem after failure → Good intentions → Nothing changes → Same failure! Organizations have SYSTEM-level pathologies: perverse metrics, institutional memory loss, firefighting mode. Even smart individuals get trapped in dumb systems.

Is organizational dysfunction primarily a people problem or a systems problem?

🔒 Start writing to unlock hints

When a measure becomes a target, it ceases to be a good measure:

• Call centers: Measure call time → Hang up on customers

• Hospitals: Measure ER wait → Wait in ambulance instead

• Schools: Measure test scores → Teach to test only

Same people, different metrics = different behavior. System wins!

Imagine replacing everyone with "better" people but keeping same:

• Same metrics → Same gaming

• Same incentives → Same short-termism

• Same silos → Same coordination failures

• Same memory practices → Same repeated mistakes

If nothing changes, it's the SYSTEM, not the people!

Blameless post-mortems: Fix systems, not people

Outcome metrics: Customer satisfaction > calls handled

Protect slack: 20% time prevents firefighting

Institutional memory: Knowledge in systems, not just people

Incentive alignment: Make long-term thinking pay

Important caveat: Systems don't fall from the sky!

• Leaders CHOSE those metrics • Managers CREATED those incentives • Culture EMERGED from decisions

People created the system. People can change it. But once running, the system shapes behavior more than intentions.

Change the system, not just the people IN the system!

Organizational dysfunction IS a systems problem - but people create and can change systems!

Goodhart's Law: What gets measured gets gamed. Same people, different metrics = different behavior. The system shapes choices.

The replace test: If you replaced everyone with "better" people but kept the same metrics/incentives/silos, nothing would change. QED: It's the system.

Solutions: Blameless post-mortems, outcome-based metrics, protected slack, institutional memory, aligned incentives. Fix systems, not people.

The catch: People created the system. Leaders chose those metrics. So accountability matters - but for designing better systems, not blaming individuals within broken ones!

Both matter, in different ways:

• Systems: Create constraints, incentives, default paths

• People: Choose within constraints, sometimes break them

Same system + different leader = different outcomes. Same leader + different system = different outcomes. BOTH matter!

People and systems co-evolve:

1. People create systems

2. Systems shape people's behavior

3. Shaped people create more systems

4. Systems entrench culture

Intervention point: Break the loop at either level!

Focus on systems when:

• Many people making same mistake • Incentives clearly misaligned • Replacing people didn't help

Focus on people when:

• One person with unusual behavior • Skill/knowledge gap • Leader needed to change the system

Good organizations do both:

• Hire for values AND design for outcomes

• Train skills AND fix incentives

• Coach individuals AND run blameless post-mortems

• Hold leaders accountable AND give them power to change systems

Either/or thinking misses the interplay!

Both systems and people matter - they interact and co-evolve!

Systems shape: Constraints, incentives, default paths. Same people in different system = different outcomes.

People choose: Within constraints, sometimes breaking them. Same system with different leader = different outcomes.

The loop: People create systems → Systems shape people → Shaped people create more systems. Intervene at either level!

Practical wisdom: Focus on systems when many people make the same mistake. Focus on people when one person behaves unusually or when a leader is needed to change the system. Good organizations work both levers!

Same system, different leader = different outcomes!

• Apple with vs without Steve Jobs • Microsoft before vs after Satya Nadella • Turnarounds happen when leaders change

People with vision, courage, and skill can transform organizations even within bad systems!

Systems can't guarantee good behavior:

• Enron: Had metrics, incentives, processes - and massive fraud

• Wells Fargo: System designed, people gamed it criminally

When integrity fails, no system saves you. Character matters!

"The system made me do it" can become excuse-making:

• Bad metrics didn't FORCE fraud • Poor incentives didn't REQUIRE corner-cutting • Silos didn't DEMAND ignoring problems

People have agency. Blaming systems entirely removes moral responsibility!

Honest caveat: Systems matter enormously!

• Goodhart's Law is real • Incentives shape 90% of behavior • Memory loss and firefighting ARE structural

The question isn't WHETHER systems matter but: Does individual character provide the ONLY solution? Or should we ALSO fix systems?

People and their character matter - but don't ignore systems!

Leadership: Same system, different leader = different outcomes. Turnarounds prove people matter.

Character: Enron and Wells Fargo had systems - fraud happened anyway. Integrity can't be systematized entirely.

Agency: "The system made me do it" can become excuse-making. People have moral responsibility.

But: Systems DO shape 90% of behavior. Goodhart's Law is real. The answer isn't people OR systems - it's people DESIGNING better systems, then being accountable within them!

🤔 Which thinking lens(es) did you use?

Select all the lenses you used:

Learn more about the 7 Thinking Lenses →

👨‍👩‍👧 For Parents & Teachers

🌱 A Small Everyday Story

A crisis. A hero saves the day.
A post-mortem. Good intentions.
Then deadlines. Firefighting returns.
The lessons are forgotten.
Two years later, same crisis.
New hero. Same story.

See more guidance →

🧠 Thinking habits this builds:

Recognizing organizational pathologies as system problems, not people problems
Understanding Goodhart's Law and metric gaming
Seeing the firefighting loop and why prevention is undervalued
Appreciating institutional memory and knowledge management

🌿 Behaviors you may notice (and reinforce):

"Is this a people problem or a system problem?" questions
Noticing when metrics are being gamed
Understanding why good people make bad organizational decisions
Appreciating blameless post-mortems and psychological safety

How to reinforce: When they see organizational dysfunction, ask: What loop is this organization stuck in? What would need to change at the system level?

🔄 When ideas are still forming:

Some learners may blame individuals for organizational failures. Others may not see how incentives shape behavior.

Helpful response: "If you replaced everyone with 'better' people but kept the same metrics and incentives, what would change?" Help them see system-level causes.

🔬 If you want to go deeper:

Research blameless post-mortems in tech companies
Analyze an organization they know: What loops is it stuck in?
Discuss why some organizations learn and others don't

Key concepts (for adults): Goodhart's Law, organizational learning, institutional memory, firefighting mode, blameless post-mortems, psychological safety, incentive alignment.

Why do organizations keep making the same mistakes?

🔄 Other Perspectives

⚙️ Systems Problem

⚖️ Both Interacting

👥 People Problem

🤔 Which thinking lens(es) did you use?