The following is a speech I gave at this years World Economic Forum in Davos, Switzerland. The theme for this years Davos was “Resilient Dynamism” and I thought it worked well with the topic “Weak Signals” that I was about to discuss.

Actually, in a perfect world, the following was supposed to be the speech I was supposed to give, however, I wasn’t allowed to use notes or a teleprompter, so the actual presentation turned out to be what I remembered of the text below:

Reducing loss from natural disasters – Weak signals or willful failure to perceive them?

I’d like to challenge the proposition that the notion of “weak signals” assumes that the signal which predicts an event is “weak.” Because recent experience has shown me that the real weakness is our willful collective failure to perceive signals that become blindingly obvious in hindsight aka “The Neon Swan”.

Recently, I’ve spent a lot of time reflecting on the causes of Japan’s nuclear power plant accident. In fact, I was closely involved in the accident investigation commissioned by Japan’s national legislature. The Fukushima accident is profoundly disturbing… not simply because 250,000 residents will not be able to return for decades to an area the size of Luxembourg. It’s disturbing because it forces us to ask…

… If the Japanese, with their legendary engineering prowess and their diligent adherence to process, can’t be relied on to run a nuclear power plant… then who can?

The plant’s operator tried to maintain that the “signals were weak” – that the tsunami exceeded all their models. But there are written records of massive tsunami on that coast as far back as Europe’s Dark Ages. So how could some of the world’s brightest engineers imagine it was OK to put back-up generators in a floodable basement?

Why did no one speak up?

In certain respects, Japanese culture was the culprit. As mentioned in the final report: “our reflexive obedience; our reluctance to question authority; our devotion to ‘sticking with the program’; our groupism; and our insularity.”

I’m actually doing research into “groupthink” and I don’t think Japan can claim copyright on all those traits. Japanese may take them to the limit, but they are universal.

After almost every disaster, no matter where, newspaper readers with the benefit of hindsight shake their heads and ask, “Anyone could’ve spotted that; how could they have been so stupid?.”

I think the answer lies in the word anyone.

As individuals, we have highly evolved (and continue to learn) senses that allow us to perceive danger: for example, the pain your finger instantly reports to your brain when you stick it in a flame. Or the gag reflex that alerts you when you swallow sour milk.

Unfortunately, in groups and groupthink, we tend to lose this ability to perceive vital signals. And I think it’s fair to say, the larger the group becomes, the more perception we lose.

There are several key mechanisms to this.

One is the tendency of groups to seek homogeneity as they expand. It’s why companies usually want to hire like-minded people… people who will fit in… people who share the same perspective.

In effect, what you have is a willful effort to filter out divergent views and perspectives. So you end up with 20,000 people who can’t even spot obvious signals because they share a single set of eyes and ears.

Another mechanism has to do with hierarchy. In your body, even your little toe has the freedom to send your brain a signal it can’t ignore. And it doesn’t care if you are busy giving a speech to the World Economic Forum. If it itches, it’s going to let you know.

By contrast, rightly fearing immediate amputation… the little toe in a giant corporation would never dream of disturbing the CEO while he’s at a podium in Davos.

Similarly you get the lookout on an ocean liner who’s afraid to disturb the captain’s dinner by reporting an iceberg off the bow; or Challenger, Lehman or Sandy; and finally, you get employees at a nuclear power plant who assume it must be OK to have back-up generators in the basement.

That’s why… I feel that the… inability to perceive weak signals is about the willful failure of human groups to strive for the evolutionary sophistication of the human body.

In groups, we actively work to eliminate the diversity needed to broaden our perspective. And we deliberately inhibit the free flow of information from the extremities to the brain.

To better perceive signalsweak or otherwise – we need to embrace diversity: diverse perspectives and diverse identities, in terms of gender, ethnicity, age, and education. And we need to evolve better protocols to transmit information throughout our organizations; a resilient dynamism; especially in an increasingly complex and interconnected, multi stakeholder world.

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