Sticking to a failed course of action can have fatal consequences for successful change, a case study of the air traffic organization Avinor shows.
KNOWLEDGE @BI: Crisis Management
Political pressures behind promises made during large-scale organizational change projects often lead to a general reluctance by top leaders to modify plans, even when critical assumptions change.
In the spring of 2003, the Norwegian Air Traffic Control Organization – Avinor – embarked upon a three-year organizational change project that ended in collapse.
Despite the recognition of the need for flexibility and emergence in planned strategies, the leaders of Avinor felt that the accepted plan, known as Take-off 05, constituted a formal “promise” to carry out the plan as originally presented - even in the face of conflicting information.
In particular, many of the original key assumptions upon which the plan was based proved inaccurate, or evolved over time. In addition, small incremental changes, that were both internally and externally generated, created a situation where the desired organizational outcomes could no longer be achieved.
Yet, at no point in time did the leadership recognize the seriousness of the situation, or evaluate changing the plan before the sudden collapse of the Take-off 05 project in December 2005.
This article presents the findings of a three-year longitudinal case study that followed the events of the Take-off 05 project from the original need for change, through the planning process, and finally, the unfolding events during project implementation that led to collapse.
A need for change
In the fall of 2002, it was already clear that the aviation environment was in crisis. Reduced air traffic volumes post-9/11 demanded significant restructuring within the entire aviation industry.
The Norwegian government decided to initiate a new management model by converting the government-administrated air traffic control organization - Luftfartsverket - into the government-owned, private company Avinor. With this change came the decision to restructure to accommodate the changes within the civil aviation industry. The restructuring project became known as Take-off 05.
The Take-off 05 project was advertised as a participative process where employee representatives were used actively in all stages. Based on the significant reduction in air traffic volume internationally, and rising administrative and maintenance costs uncovered during the planning process, it was determined that annual administrative and operating costs needed to be reduced by 490 million NOK annually. This translated into a reduction in 725 man-years of production.
This conclusion was completely unexpected by the employees who only learned of the size of the cuts when the final implementation plan was made public. The results did not meet the expectations of participating employees, and led to widespread dissatisfaction and loss of trust in the leadership, and eventually resistance to the plan. With the sudden unexpected resistance from the employees, the leadership reverted to a purely top-down implementation of the final Take-off 05 plan.
The Take-off 05 implementation plan was designed only to meet the minimum projected operational requirements identified in the planning process based on a new organizational structure, a new air traffic management system, and the bare minimum number of operational employees required to meet operational demands based on international air traffic volume projections.
However, designing a system with no extra capacity soon proved to be a problem. Internally, dissatisfied air traffic controllers (ATCs) began to leave the organization for other opportunities. In addition, external demands such as annual re-certification for ATCs, restrictions on the use of overtime from the Norwegian authorities due to safety concerns, and the European Union decision to limit the operational age for ATCs from 65 to 60 further reduced operational capacity. At the same time, actual air traffic volumes increased from the expected flat growth to over 14% already in the first year of the implementation process.
In the academic literature, escalation of commitment has been described as «the tendency for decision makers to persist with failing courses of action» (Brockner, 1992: 39). The tendency refers to decision makers’ preference for one behavioral option (i.e. continuing on the chosen course) when the decision is whether to cease a questionable line of behavior or to commit more effort and resources into making that course of action pay off (Staw, 1981).
In the Avinor case, clear signals were present that the foundation for the original plan had changed, and that adjustments were required if the plan was to be successfully implemented. But no changes were made, or even considered. The reason for not changing was attributed to the “promise” made to the Avinor board of directors to execute the plan as originally accepted.
Lessons to be learned
The Avinor study uncovered many important lessons-learned for leaders during organizational change. The first was that change is complex and dynamic, and requires continual monitoring and adjustment underway. Assumptions need to be continually evaluated and challenged, and the faint signals from internally and externally initiated incremental changes must be captured and evaluated against desired change outcomes.
And finally, sticking to a failed course of action can have fatal consequences for successful change.
This article is published in BI Leadership Magazine 2014/2015 BI Leadership Magazine is a Science Communication Magazine published by the Department of Leadership and Organizational Behaviour at the BI Norwegian Business School.
Photo courtesy of Avinor, CC BY 3.0 license.