I’ve been reading “The Strategy Paradox” by Michael Raynor, a book that Toby Elwin put me on to. The thesis of the book is that “Extreme positions in strategic space create the highest levels of profitability, but also create the highest levels of strategic risk and hence failure.” Although targeted at the commercial world there are also lessons that apply to the regulatory world. A few years ago at a safety workshop at Redondo Beach I had a beer with a safety inspector who shortly thereafter was promoted to be the principal operations inspector of a major airline. He observed that, while selection to become a PI was an important step in an ASI’s career, forever thereafter he would live in hope that his airline would avoid a major accident, because if they did have an accident his life would become one of answering questions as to why he hadn’t done this or that to forestall the event, and perhaps asking himself the same questions.

The FAA comes in for frequent lashings from NTSB , congress, and the press, and while some criticism may be justified, a good deal of it is both unfair and unhelpful to the agency’s safety mission. Although these critics presumably understand that you can’t predict the future, they continue to fall back on ineffective models of accidents being caused by an easily understood chain of events. Leaving aside the questions of what type of accident model you use, one thing is certain, it’s easier to identify the precursors of accidents after they have occurred than before – the question is how well one can reduce future risk given current knowledge. This is precisely Raynor’s point when he makes a distinction between forecasting the future with the future, and with forecasting the future with the “future present” that eventually obtains. In other words, at any given moment of time there exists a range of futures that might occur, and that is how one should evaluate the goodness of forecasting, not with what actually occurs. Given enough forecasts, someone will always turn out to have been accurate, but we don’t know at the time who that will be.

The counterpart of strategic uncertainty in a regulatory agency is the need to organize for robustness against a range of risks and hazards. This robustness comes at a price – less than optimal efficiency. The organization is working to mitigate future risks that are entirely possible but actually never transpire. That does not mean that the effort could have been better directed elsewhere — we are not working in an efficient system. One might conclude therefore that there is nothing one can do to address this issue, but Raynor goes one step further and recognizes that the issue of strategic uncertainty is tied to the time horizon. At the operational level one has a time horizon of days and weeks, while at the strategic level one has a time horizon of several years. The FAA has been labeled the “tombstone agency” but this characterization fails to distinguish its operational and strategic roles. At the operational level, there is nothing wrong, and indeed it is quite appropriate that the agency react to short term priorities and, especially, it must know how to react promptly to accidents, incidents, and other events. At the intermediate level, a process of selecting important problems and fixing them, as espoused by Malcolm Sparrow, is the appropriate course of action. But risks, by definition, are in the future, and it is at the strategic level that the agency can perform hazard identification and risk mitigation. Aviation safety already structures the organization by SMS pillars (policy, assurance, risk management, culture) and aviation system levels (national, organizational, individual), and should also structure itself according to different time horizons.