“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
– Warren Buffett
It is fascinating how many accident videos get posted to social media. Guess we all go to NASCAR races to see car wrecks. In some cases, videos are personal disasters for those involved. In some cases, they are downright funny and in the category of what were they thinking.
Equipment and facilities damage, lost production/project time, personal injury litigation are just some obvious costs. One hidden cost is reputational damage. Would you hire a firm that hires, does not train, and/or tolerates some of this behavior? Probably not, and in some case a strong safety record is part of the procurement decision process.
Risk Mitigation
Most of the social media video show failures in occupational safety. Typically, in the United States these would fall under the Occupational Safety and Health Administration (OSHA) and/or state and local safety regulations. This is laudable, but without a broader safety governance framework, a lackadaisical attitude can continue.
Under a Strong Bond Governance Framework, a robust Operations Management System (OMS) enables both public and private firms to realize the Safety Culture they seek that will keep them off the social media most watched list.
Strong Bond GovernanceAn organizational governance model with the following attributes first put forth by the author in our seminal 2014 book, following the Deepwater Horizon incident.
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Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014). Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance. New York: Xlibris.
Operational Excellence
Operational Excellence is the execution of the business strategy more consistently and reliably than the competition, with lower operational risk, lower operating costs, and increased revenues relative to its competitor. It is needed more than ever in today’s technology driven rapidly changing business models, which require organizations to undergo end-to-end business transformation. Operational Excellence can also be viewed as execution excellence.
However, the focus of Operational Excellence goes beyond the traditional continuous improvement methods to a long-term change in organizational culture. Companies in pursuit of Operational Excellence do two things significantly differently than other companies: they manage their business and operational processes systematically and invest in developing the right culture.
Operational Excellence manifests itself through integrated performance across revenue, cost, and risk. It focuses on meeting customer expectation through the continuous improvement of the operational processes and the culture of the organization. The goal is to develop one single, integrated enterprise level management system with ideal flow. The second component, a culture of Operational Discipline, is commonly described as doing the right thing, the right way, every time. This culture is built upon guiding principles of integrity, questioning attitude, always problem-solving, daily continuous improvement mind-set, level of knowledge, teamwork, and process driven.
Organizations attain and sustain Operational Excellence using tools such as Operations Management System OMS).
A Typical OMS Framework includes all the major areas involved in organizational processes such as shown in this graphic.
OMS is a collection of processes and procedures enabling a company to effectively manage business practices and achieve the highest level of Operational Excellence in daily operations.
One of the more notable examples is the Safety and Environmental Management System (SEMS). SEMS embodies the Safety Culture into the organization’s OMS. This systemic model is incorporated into a Strong Bond Governance Framework causing safety to become ‘the way we do business.’ In other words, the culture of the organization and by extension its Ecosystem.
Systemic Safety Culture
In a culture of safety, people are not merely encouraged to work toward change; they take action when it is needed. Inaction in the face of safety problems is taboo, and eventually the pressure comes from all directions — from peers as well as leaders. There is no room in a culture of safety for those who uselessly point fingers or say, “Safety is not my responsibility, so I’ll file a report and wash my hands of it.”
— Institute for Healthcare Improvement
Systemic Safety Culture is the Core Set of Values and Behavioral Economics of ALL participants of the extended organization and its Enterprise Risk Management strategy that reflect a Strong Bond Governance commitment to behaving as a High Reliability Enterprise Ecosystem in a safe and environmentally responsible manner.
Most Safety Cultures have a set of tenets similar to the nine shown in the following list. These are based on those developed by the Bureau of Safety and Environmental Enforcement’s (BSEE) for marine offshore oil and gas operations and are typical of those used in other Critical Infrastructure sectors.
Nine Tenets of a Culture of Safety
- Leadership
- Problem Identification and Resolution
- Personal Accountability
- Work Processes
- Continuous Learning
- An Environment for Raising Concerns
- Effective Communications
- Trust and Respect
- Inquiring Attitude
Finally, it is common practice for parties to refer to a singular industry ‘Safety Culture.’ In reality since each organization has its own culture, there are literally hundreds if not thousands of Safety Cultures in any critical infrastructure sector. As shown in the above figure, each individual can interact routinely with a myriad of other cultures, both internal to their organization as well as with external economic players.
After the Deepwater Horizon disaster in 2010, the authors quickly recognized that all economic players in the industry regardless of size would need to immediately adopt a Safety Culture if they were to survive.
The resulting 2014 book, Implementing a Culture of Safety: A Roadmap for Performance Based Compliance remains one the few that readers can use as a roadmap to incorporate a Safety Culture into their Operational Excellence business model regardless of industry.
Smart OpEx
Fifteen years ago, large organizational Operations Management Systems were struggling to incorporate structural safety as more than the so-called, ‘slips, trips and falls’ of OSHA regulations to one where safety is endemic to the culture. Smaller firms, often participants in the supplier ecosystem were largely forgiven. The logic being that the major contractors and operators would assure that the final work product met Safety Culture requirements. This is no longer the case. Firms of all sizes in every business sector with an operations component now require an OMS to manage not just internal operations but third-party contractors as well.
The Smart OpEx Operations Management System software solution is joint venture between The Rapid Response Institute LLC and Knowledge Ops, Inc.
As Mr. Buffet mentions, reputations can be lost in an instant. According to a 2007 Harvard Business Review article, “In an economy where 70% to 80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations.” While almost 20 years old, the premise of the HBR piece remains the case as Boeing, Bud Light, and others can attest.
Put systems with checks and balances in place that enable the organizational governance and protect the company from entering the Halls of the Disreputable.
An individual’s and organization’s reputation are everything. How are you assuring both are protected?
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The author’s credentials in this field are available on his LinkedIn page. Moreover, Dr. Shemwell is the coauthor of the 2023 book, “Smart Manufacturing: Integrating Transformational Technologies for Competitiveness and Sustainability.” His focus is on Operational Technologies.
We are also pleased to announce our forthcoming book to be released by CRC Press in April 2025, Navigating the Data Minefields: Management’s Guide to Better Decision-Making. This is a book for the non-IT executive who is faced with making major technology decisions as firms acquire advanced technologies such as Artificial Intelligence (AI).
“People fail to get along because they fear each other; they fear each other because they don’t know each other; they don’t know each other because they have not communicated with each other.” (Martin Luther King speech at Cornell College, 1962). For more information on Cross Cultural Engagement, check out our Cross-Cultural Serious Game. You can contact this author as well.
For more details regarding climate change models, check out Bjorn Lomborg and his book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.
Regarding the economics of Climate Change, check out our blog, Crippling Green.
For those start-up firms addressing energy (including renewables) challenges, the author can put you in touch with Global Energy Mentors which provide no-cost mentoring services from energy experts. If interested, check it out and give me a shout.