Broadly stated, the fundamental principles of quality affect everything an organization engages in as well as how it goes about achieving it. It is broader than the idea of producing "good" products or services to satisfy customers. For an organization to excel, it must ensure that everyone working there has a clear understanding of what this quality means and how it applies to everything.
The organization must also ensure that it has policies, procedures, and practices aligned with this thinking. This entails having a culture of quality that establishes the performance baseline.
The traditional approach to organizational management is generally production- or cost-focused. The business realities of today have shifted this focus to customer orientation. This means that the aim of management is to garner customer satisfaction in all aspects of the business relationship. So, to enable employees to achieve organizational expectations, they have to have mechanisms and/or systems in place that enable employees to be able to plan error-free outcomes.
Organizational Disasters and Analysis
With the understanding that things do go wrong in some cases, the organization should have mechanisms for employees to anticipate errors, discrepancies, and/or inefficiencies and have contingency recovery mechanisms or tools in place to aid them in taking corrective action. These possible deviations may have negative outcomes, ranging from minor inconveniences to possible catastrophic results. Below are only a few examples of failures in the quality of management and performance, resulting in catastrophic outcomes for various organizations.
Bhopal Disaster
The Bhopal disaster involved a gas leak incident on the night of December 2, 1984, at the Union Carbide India Limited (UCIL) pesticide plant in Bhopal, Madhya Pradesh, India. It is considered to be the world's worst industrial disaster. Over half a million people were exposed to methyl isocyanate (MIC) gas. This highly toxic substance made its way into and around the small towns located near the plant.
Estimates vary on the death toll. The immediate postincident death toll was about 2,300. The government of Madhya Pradesh confirmed a total of 3,800 deaths related to the gas release. Another estimate was that 8,000 died within 2 weeks, and another 8,000 or more have since died from gas-related diseases. At least 40,000 people suffered permanent disabilities. A government affidavit in 2006 stated that the leak caused approximately 560,000 injuries.
The cause of the disaster is uncertain. The Indian government and local activists contended that lax general management, sloppy operational practices, poor plant management, and a focus on cost control, as well as deferred maintenance, created a situation where routine pipe maintenance caused a backflow of water into an MIC tank, triggering the disaster. However, UCIL alleged sabotage by rogue workers as the cause of the disaster. The Indian government agreed to an out-of-court settlement in 1989, amounting to 470 million dollars. This and other poor management practices in other countries led to the eventual demise of the company.
NASA Challenger and Columbia Disasters
The Space Shuttle Challenger was destroyed shortly after lifting off from Cape Canaveral, Florida, on January 28, 1986, resulting in the death of seven astronauts, the loss of the $3 billion-dollar orbital vehicle, the suspension of the operation of the National Aeronautics and Space Administration (NASA) space shuttle program for a period of 32 months, and a severe blow to the reputation of that agency and the US space program.
The official cause of the disaster was the failure of an O-ring that was supposed to prevent hot gases from escaping through the joint in the solid rocket motor during launch. The commission investigating the disaster found that the O-ring design had been a concern for several years prior to the disaster, but it was either not effectively addressed due to miscommunication of its disastrous potential outcome or it was ignored in favor of maintaining scheduled launch dates and experimental accomplishments, ensuring continual budgetary appropriations.
The commission found that the booster rockets recovered after each flight indicated that some of the O-rings did, in fact, allow hot gases to escape. This had caused the engineers to articulate their concern about the O-ring failures, followed by suggestions that the booster joints needed to be redesigned. Management spent some time discussing this concern, but after a number of flights with no adverse effects from all these blowbys, management was lulled into the belief that this was not significant enough to require a major redesign of these joints, considering its resulting cost as well as delay in the shuttle operations.
In addition to the faulty O-rings design, the commission determined that the unusually cold temperatures at the time of the launch caused the O-rings to become more rigid and, as a result, allowed a great amount of hot gas to escape, causing an explosion that destroyed the shuttle. Upon analysis, NASA's management culture, organizational structure, and communication attributes were biased against the methods of risk assessment that would have highlighted the potential likelihood as well as the severity of the inherent risk that lead to the resulting disaster.
During many of the previous launches, pieces of foam were observed coming loose and hitting the space shuttle. Since it was only foam, and there was no adverse effect, this failure was deemed inconsequential. The impact of a piece of dislodged foam on the leading edge of the left wing of the Space Shuttle Columbia during launch created a breach in the thermal protection system of the wing. This allowed superheated air to enter the wing during reentry, causing a structural failure, which resulted in the loss of seven crew, the destruction of the Space Shuttle Columbia, and the dismantling of the entire space shuttle program.
The investigation and report of the Columbia disaster, which occurred on February 1, 2003, a little over 17 years after the Challenger loss, cited several of the same quality management system failures in both cases. The report indicated decision-making based on a simplistic presentation of complex information leading to poor risk assessment and a general lack of management focus on safety and quality, as well as the normalization of deviance (see "Normalization of Performance Deviations," August 2014), were significant contributing factors in the Columbia disaster. The report also highlighted the fact that, in spite of the disastrous outcome, deeply embedded organizational system failures may not trigger the recognition and desideratum of a robust quality management system.
Deepwater Horizon Disaster
On April 20, 2010, an explosion and fire occurred that lasted over 36 hours on a BP exploratory drilling rig in the Gulf of Mexico, about 50 miles off the Louisiana coast, killing 11 workers and injuring 17 others. The drilling rig Deepwater Horizon, which was leased from Transocean for extracting oil from the Macondo well, sank 2 days later in about 5,000 feet of water. The Macondo well continually vented oil for 87 days before it was successfully capped. The result was the discharge of almost 5 million barrels of crude oil into the fragile ecosystem of the Gulf of Mexico. This was the largest offshore oil spill suffered by the petroleum industry, causing an unprecedented environmental disaster ranging from the Texas coast to the Florida Panhandle.
A massive response was launched to protect beaches, wetlands, and estuaries from damage by the floating oil. The effort involved skimmer ships, floating booms, and controlled burns. At peak effort, almost 50 thousand people were involved in the coastal cleanup and protective effort on a daily basis. In spite of these efforts over a number of years, marine life, wildlife habitats, and the shoreline suffered extensive damage. The fishing and tourism industries were adversely affected as well, according to a number of studies. BP claimed that cleanup was substantially complete on April 15, 2014, approximately 4 years after the explosion.
BP paid the federal government over 4.5 billion dollars after pleading guilty to a number of charges and agreed to engage in a massive cleanup activity under the government's supervision. BP's cleanup activities cost the company over $65 billion, according to their records. In late 2014, a US district court judge ruled that BP was primarily responsible for the oil spill because of its gross negligence and reckless conduct. BP agreed to pay $18.7 billion in fines, which was the largest corporate settlement in US history to date. The cost of "good quality operations" compared to the cost of mitigating that of the disaster is stunning! Testing the concrete plug and correcting its deficiencies may have taken a couple of days. This would need the Deepwater Horizon to remain on-site for the work at a guesstimate of about $2 million.
A number of agencies and organizations investigated the disaster. The general consensus was that a series of events including equipment failure, shortcomings in quality planning, poor decision-making by the well team, the neglect to follow best practices, ineffective quality assurance, and inadequate risk assessment, as well as a disproportionate focus on scheduling and cost control, led to the disaster.
What is interesting to note is that on March 23, 2005, about 5 years prior to the oil spill, BP's Texas City refinery was involved in an explosion that killed 15 workers, injured over 500, and severely damaged the refinery. After the explosion, a fire team was assigned to determine its cause, suggest necessary changes, and report back to senior management. The team found that BP acquired Amoco in 1999, whose assets included the refinery. Due to Amoco's poor financial state, the refinery was poorly maintained. Upon taking over the plant, BP assigned its own management team to run the facility.
Even though repairs and maintenance were sorely needed, BP ordered a 25 percent cut in fixed costs. Plant management deferred much of the maintenance, which led to further deterioration of the plant equipment. This eventually led to the explosion and resulting fire. The investigating team found that a key reason for maintenance deferment was the fact that BP's employees' performance was evaluated every quarter based on each unit's profitability as well as each individual's contribution to the bottom line. The newly appointed refinery manager decided to defer maintenance because that would mean a number of quarters of deficient performance impacting not only his remuneration and possibly future advancement but every other employee's as well.
The investigating team found numerous management failures such as deficient risk assessment, an unsatisfactory safety culture, and ineffective oversight, as well as accepted deviations from proper operational practices. It was suggested that this plant's state of disrepair should have been determined. A reasonable amount of time and money for bringing the plant up to standard should have been established. The plant employee's performance during this period should have been tied to another set of metrics involving this effort rather than the company-wide quarterly financial metrics. They also suggested that the single universal performance evaluation system without the flexibility for special or unique situations not only contributed to this disaster but could potentially create other disasters in the future.
Conclusion
A search of the literature provides a long list of disasters, such as the Merck Vioxx recall, the Texas City port disaster, the Takata airbag recall, Volkswagen "Dieselgate," the Exxon Valdez oil disaster, the Samsung battery recall, the Puerto Rico disaster response and management, the Ford Pinto misjudgment, the Fen-Phen recall, or the Ford Motor Co./Firestone gaffe, to name a few.
In many of these and other cases, management allowed such things as cost or schedule to take precedence over doing the right thing or doing things right for any number of reasons. In some cases, the quality of the work environment or climate may be such that the person who has to make the decision is not comfortable or even fearful of letting higher-level management know that what they want or expect is not doable, and as a result, they do or allow things to be done in spite of the risk of failure.
Another possibility is the fact that the organizational systems, policies, processes, procedures, or practices are such that performance must be made without any question or doubt. This may result in allowing deviations from an organization's stated means and methods. In most cases, such a deviation has no adverse outcome; the effect is minor or inconsequential. After a few such results, the deviations from accepted means or methods become the norm. But the work environment continues to exert pressure to meet a short-term goal such as meeting a schedule or cost requirement while ignoring the long-term potential error or loss. As more deviations are allowed, eventually, the cumulative effect is some form of failure leading to disastrous outcomes.
Such events provide examples of the way in which quality must become a core value and an integral part of an organization's culture, along with an employee mindset that pervades every level of management and every position within the organization. Management must understand that systems drive risks. Long-term analysis and operational planning cannot and should not be left to site or floor workers to deal with; it is a fundamental responsibility of management. The quality of the organizational systems applies to both a big picture as well as an on-the-ground way of life and must be an integral part of every aspect of performance.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.
Broadly stated, the fundamental principles of quality affect everything an organization engages in as well as how it goes about achieving it. It is broader than the idea of producing "good" products or services to satisfy customers. For an organization to excel, it must ensure that everyone working there has a clear understanding of what this quality means and how it applies to everything.
The organization must also ensure that it has policies, procedures, and practices aligned with this thinking. This entails having a culture of quality that establishes the performance baseline.
The traditional approach to organizational management is generally production- or cost-focused. The business realities of today have shifted this focus to customer orientation. This means that the aim of management is to garner customer satisfaction in all aspects of the business relationship. So, to enable employees to achieve organizational expectations, they have to have mechanisms and/or systems in place that enable employees to be able to plan error-free outcomes.
Organizational Disasters and Analysis
With the understanding that things do go wrong in some cases, the organization should have mechanisms for employees to anticipate errors, discrepancies, and/or inefficiencies and have contingency recovery mechanisms or tools in place to aid them in taking corrective action. These possible deviations may have negative outcomes, ranging from minor inconveniences to possible catastrophic results. Below are only a few examples of failures in the quality of management and performance, resulting in catastrophic outcomes for various organizations.
Bhopal Disaster
The Bhopal disaster involved a gas leak incident on the night of December 2, 1984, at the Union Carbide India Limited (UCIL) pesticide plant in Bhopal, Madhya Pradesh, India. It is considered to be the world's worst industrial disaster. Over half a million people were exposed to methyl isocyanate (MIC) gas. This highly toxic substance made its way into and around the small towns located near the plant.
Estimates vary on the death toll. The immediate postincident death toll was about 2,300. The government of Madhya Pradesh confirmed a total of 3,800 deaths related to the gas release. Another estimate was that 8,000 died within 2 weeks, and another 8,000 or more have since died from gas-related diseases. At least 40,000 people suffered permanent disabilities. A government affidavit in 2006 stated that the leak caused approximately 560,000 injuries.
The cause of the disaster is uncertain. The Indian government and local activists contended that lax general management, sloppy operational practices, poor plant management, and a focus on cost control, as well as deferred maintenance, created a situation where routine pipe maintenance caused a backflow of water into an MIC tank, triggering the disaster. However, UCIL alleged sabotage by rogue workers as the cause of the disaster. The Indian government agreed to an out-of-court settlement in 1989, amounting to 470 million dollars. This and other poor management practices in other countries led to the eventual demise of the company.
NASA Challenger and Columbia Disasters
The Space Shuttle Challenger was destroyed shortly after lifting off from Cape Canaveral, Florida, on January 28, 1986, resulting in the death of seven astronauts, the loss of the $3 billion-dollar orbital vehicle, the suspension of the operation of the National Aeronautics and Space Administration (NASA) space shuttle program for a period of 32 months, and a severe blow to the reputation of that agency and the US space program.
The official cause of the disaster was the failure of an O-ring that was supposed to prevent hot gases from escaping through the joint in the solid rocket motor during launch. The commission investigating the disaster found that the O-ring design had been a concern for several years prior to the disaster, but it was either not effectively addressed due to miscommunication of its disastrous potential outcome or it was ignored in favor of maintaining scheduled launch dates and experimental accomplishments, ensuring continual budgetary appropriations.
The commission found that the booster rockets recovered after each flight indicated that some of the O-rings did, in fact, allow hot gases to escape. This had caused the engineers to articulate their concern about the O-ring failures, followed by suggestions that the booster joints needed to be redesigned. Management spent some time discussing this concern, but after a number of flights with no adverse effects from all these blowbys, management was lulled into the belief that this was not significant enough to require a major redesign of these joints, considering its resulting cost as well as delay in the shuttle operations.
In addition to the faulty O-rings design, the commission determined that the unusually cold temperatures at the time of the launch caused the O-rings to become more rigid and, as a result, allowed a great amount of hot gas to escape, causing an explosion that destroyed the shuttle. Upon analysis, NASA's management culture, organizational structure, and communication attributes were biased against the methods of risk assessment that would have highlighted the potential likelihood as well as the severity of the inherent risk that lead to the resulting disaster.
During many of the previous launches, pieces of foam were observed coming loose and hitting the space shuttle. Since it was only foam, and there was no adverse effect, this failure was deemed inconsequential. The impact of a piece of dislodged foam on the leading edge of the left wing of the Space Shuttle Columbia during launch created a breach in the thermal protection system of the wing. This allowed superheated air to enter the wing during reentry, causing a structural failure, which resulted in the loss of seven crew, the destruction of the Space Shuttle Columbia, and the dismantling of the entire space shuttle program.
The investigation and report of the Columbia disaster, which occurred on February 1, 2003, a little over 17 years after the Challenger loss, cited several of the same quality management system failures in both cases. The report indicated decision-making based on a simplistic presentation of complex information leading to poor risk assessment and a general lack of management focus on safety and quality, as well as the normalization of deviance (see "Normalization of Performance Deviations," August 2014), were significant contributing factors in the Columbia disaster. The report also highlighted the fact that, in spite of the disastrous outcome, deeply embedded organizational system failures may not trigger the recognition and desideratum of a robust quality management system.
Deepwater Horizon Disaster
On April 20, 2010, an explosion and fire occurred that lasted over 36 hours on a BP exploratory drilling rig in the Gulf of Mexico, about 50 miles off the Louisiana coast, killing 11 workers and injuring 17 others. The drilling rig Deepwater Horizon, which was leased from Transocean for extracting oil from the Macondo well, sank 2 days later in about 5,000 feet of water. The Macondo well continually vented oil for 87 days before it was successfully capped. The result was the discharge of almost 5 million barrels of crude oil into the fragile ecosystem of the Gulf of Mexico. This was the largest offshore oil spill suffered by the petroleum industry, causing an unprecedented environmental disaster ranging from the Texas coast to the Florida Panhandle.
A massive response was launched to protect beaches, wetlands, and estuaries from damage by the floating oil. The effort involved skimmer ships, floating booms, and controlled burns. At peak effort, almost 50 thousand people were involved in the coastal cleanup and protective effort on a daily basis. In spite of these efforts over a number of years, marine life, wildlife habitats, and the shoreline suffered extensive damage. The fishing and tourism industries were adversely affected as well, according to a number of studies. BP claimed that cleanup was substantially complete on April 15, 2014, approximately 4 years after the explosion.
BP paid the federal government over 4.5 billion dollars after pleading guilty to a number of charges and agreed to engage in a massive cleanup activity under the government's supervision. BP's cleanup activities cost the company over $65 billion, according to their records. In late 2014, a US district court judge ruled that BP was primarily responsible for the oil spill because of its gross negligence and reckless conduct. BP agreed to pay $18.7 billion in fines, which was the largest corporate settlement in US history to date. The cost of "good quality operations" compared to the cost of mitigating that of the disaster is stunning! Testing the concrete plug and correcting its deficiencies may have taken a couple of days. This would need the Deepwater Horizon to remain on-site for the work at a guesstimate of about $2 million.
A number of agencies and organizations investigated the disaster. The general consensus was that a series of events including equipment failure, shortcomings in quality planning, poor decision-making by the well team, the neglect to follow best practices, ineffective quality assurance, and inadequate risk assessment, as well as a disproportionate focus on scheduling and cost control, led to the disaster.
What is interesting to note is that on March 23, 2005, about 5 years prior to the oil spill, BP's Texas City refinery was involved in an explosion that killed 15 workers, injured over 500, and severely damaged the refinery. After the explosion, a fire team was assigned to determine its cause, suggest necessary changes, and report back to senior management. The team found that BP acquired Amoco in 1999, whose assets included the refinery. Due to Amoco's poor financial state, the refinery was poorly maintained. Upon taking over the plant, BP assigned its own management team to run the facility.
Even though repairs and maintenance were sorely needed, BP ordered a 25 percent cut in fixed costs. Plant management deferred much of the maintenance, which led to further deterioration of the plant equipment. This eventually led to the explosion and resulting fire. The investigating team found that a key reason for maintenance deferment was the fact that BP's employees' performance was evaluated every quarter based on each unit's profitability as well as each individual's contribution to the bottom line. The newly appointed refinery manager decided to defer maintenance because that would mean a number of quarters of deficient performance impacting not only his remuneration and possibly future advancement but every other employee's as well.
The investigating team found numerous management failures such as deficient risk assessment, an unsatisfactory safety culture, and ineffective oversight, as well as accepted deviations from proper operational practices. It was suggested that this plant's state of disrepair should have been determined. A reasonable amount of time and money for bringing the plant up to standard should have been established. The plant employee's performance during this period should have been tied to another set of metrics involving this effort rather than the company-wide quarterly financial metrics. They also suggested that the single universal performance evaluation system without the flexibility for special or unique situations not only contributed to this disaster but could potentially create other disasters in the future.
Conclusion
A search of the literature provides a long list of disasters, such as the Merck Vioxx recall, the Texas City port disaster, the Takata airbag recall, Volkswagen "Dieselgate," the Exxon Valdez oil disaster, the Samsung battery recall, the Puerto Rico disaster response and management, the Ford Pinto misjudgment, the Fen-Phen recall, or the Ford Motor Co./Firestone gaffe, to name a few.
In many of these and other cases, management allowed such things as cost or schedule to take precedence over doing the right thing or doing things right for any number of reasons. In some cases, the quality of the work environment or climate may be such that the person who has to make the decision is not comfortable or even fearful of letting higher-level management know that what they want or expect is not doable, and as a result, they do or allow things to be done in spite of the risk of failure.
Another possibility is the fact that the organizational systems, policies, processes, procedures, or practices are such that performance must be made without any question or doubt. This may result in allowing deviations from an organization's stated means and methods. In most cases, such a deviation has no adverse outcome; the effect is minor or inconsequential. After a few such results, the deviations from accepted means or methods become the norm. But the work environment continues to exert pressure to meet a short-term goal such as meeting a schedule or cost requirement while ignoring the long-term potential error or loss. As more deviations are allowed, eventually, the cumulative effect is some form of failure leading to disastrous outcomes.
Such events provide examples of the way in which quality must become a core value and an integral part of an organization's culture, along with an employee mindset that pervades every level of management and every position within the organization. Management must understand that systems drive risks. Long-term analysis and operational planning cannot and should not be left to site or floor workers to deal with; it is a fundamental responsibility of management. The quality of the organizational systems applies to both a big picture as well as an on-the-ground way of life and must be an integral part of every aspect of performance.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.