Learning From Chernobyl

Gut-wrenching drama with a side-order of the mechanics of nuclear fission, Chernobyl is now the all-time highest rated TV drama[1] on review aggregator, Metacritic. In telling the story of the largest nuclear accident in history, it highlights the failings that can occur when you blend complex technology and human nature.

Whilst managing a pension fund is an entirely different enterprise to overseeing a Soviet RBMK reactor (the pension fund might be more complex), the situations that arise in Chernobyl have some important lessons to teach trustees about decision-making.

Wilful Blindness

At multiple points in the Chernobyl crisis, we see wilful blindness. People, for various reasons, cannot or will not acknowledge the gravity of the problem facing them, which creates predictably bad outcomes. Whilst wilful blindness has a longstanding history in the legal context, here we are more interested in the wider phenomenon, where people seem unable to face difficult issues.

In Chernobyl, it is almost always about control – people needing to show they are on top of a situation. It’s not until they acknowledge the reality of their plight that they can start the process of managing it effectively.

We’d argue the same can be true in the trustee context, whether that relates to a poor funding position, an unproductive relationship with the sponsor, or where the board isn’t functioning effectively. Until a problem can be clearly articulated and understood by all parties there’s a good chance it won’t be optimally solved.

For a good synopsis of the overall drivers of wilful blindness, try Margaret Heffernan’s book of the same name, or view her TED talk here.

Death by HiPPO

Chernobyl has some clear villains. In particular, the bullying deputy chief engineer, Anatoly Dyatlov, who threatens workers with sacking if they will not implement the fateful actions that lead to the disaster. His team know they are doing something questionable, but they can’t resist the power of the HiPPO (the ‘Highest Paid Person’s Opinion’).

Whilst we very rarely see Dyatlovs in the trustee context, we do see similar issues at work. This is typically where there are powerful personalities with strong views who sit at the top of the trustee hierarchy (a chair or someone who holds a senior position at the sponsor). These individuals can have a disproportionately high impact on decision-making, sometimes for the good, but often not.   

HiPPO problems can be complex for trustees to solve. In general, the best place to start is by building clear processes that ensure multiple perspectives are gained. An easy way to do this, that will also assist in learning from failure, is by building a CheckLog.

Not Learning From Failure

The Russian authorities were aware that a similar problem had occurred with an RBMK reactor nearly ten years earlier. Some information had been shared widely, e.g. a certain number of control rods had to be kept in place, but apparently there was no clear explanation of why. This lack of context was a key contributing factor in the disaster. Engineers tried a strategy that made sense, given what they knew, but ultimately not having the full picture led to disaster.

Learning from failure is incredibly valuable, but most groups, whether they be governments or trustee boards, find acknowledging failure hard. This is a natural, very human, phenomenon. If you want a simple way to highlight the value of learning from failure, we recommend sharing Matthew Syed’s book, ‘Black Box Culture,’ with your colleagues. It’s a highly readable explanation of what the aviation industry and medical practice have (and haven’t) learnt about both the mechanics of learning from failure and how it can be positively embraced. We have shared this book with a number of our clients over the last few years and many have commented on its ability to help reframe failure.

Joint Responsibility – the need for clear advice and the need to listen to that advice

One of the most tragic story arcs relates to Lyudmilla Ignatenko and her firefighter husband Vasily, who was one of the first firefighters to tend the blaze at Reactor 4. He is massively irradiated and when Lyudmilla visits him in hospital, she is given vague instructions that he could be dangerous to her and that she should not spend too much time around him. Crucially, there is no clear explanation of the hidden dangers to her and her unborn child. Lyudmilla ignores the doctor’s suggestion and later, she is reprimanded for ignoring advice and given a far clearer warning. This is also ignored, which the story suggests ultimately kills her unborn child.

Trustees cannot hope to make good decisions without effective advice. A key element of this, which we feel is sometimes missed, relates to the setting of a clear context for a decision. Without this context, decisions are made harder than they need to be: if people can’t understand the why, there’s the potential for the retention of the status quo, or a sub-optimal choice.

On the other side of the equation, clear advice is sometimes not taken. This can be for a number of reasons; it may be ambiguous, or run against the gut feelings or beliefs of the trustees. It can be valuable for trustees to ask themselves why they didn’t make certain decisions – was the advice not clear enough, did we not believe the advice-giver? Getting clear on these issues can play an important role in improving the outcomes of future decisions.

What Can We Learn From This?

We believe that there are two fundamental lessons that trustees can take away from this – the power of making the complex simple and the need for Psychological Safety.

The Power of Making the Complex Simple

Valery Legasov, the nuclear physicist who help saved Chernobyl from being a significantly larger disaster, was no doubt incredibly smart and brave. A less obvious, but equally important trait, was his ability to provide clear context and make the complex simple. This ability has the power to move sceptics and provides clear paths of action to unlock difficult problems. 

Managing a modern pension fund is challenging – it often requires the use of complicated investment and risk management strategies. Unless this complexity is simplified and clear context given for decisions, it increases the chance of a poor choice being made. If your advisers (including us) are not doing a good enough job in this regard, they should be held account – demand better.

Psychological Safety

Psychological Safety is a facet of group dynamics that describes how individuals feel about taking risks in front of others – typically expressing their views or beliefs. High levels of Psychological Safety allow us to flag problems, learn from them and work effectively with our colleagues. Its absence creates the backdrop for the kind of poor decisions seen in Chernobyl.

It’s understandable why Psychological Safety was low in Soviet Russia and to a certain extent the corporate environment that most trustees are drawn from. However, in the pension fund context, there is no reason why it should not be high. The good news is that there are simple things that trustees can do to make sure their boards reap the benefits of Psychological Safety (download the paper here).

A Final Thought

The scenarios that play out in Chernobyl reflect some of the human challenges that all decision-making groups, including trustees, face. There are clear solutions that can make things better – but to take advantage of them requires a final piece of the puzzle that is writ large through Chernobyl’s narrative: courage.

Fortunately, no trustee will be called upon to swim through irradiated water, or risk their life questioning the authority of the state. Let’s be clear, however, asking whether things are working well enough, or calling out advisers or the sponsor can feel risky. We think that’s a risk worth taking, as the failure to act on issues such as these has no doubted contributed to some of the pension fund industry’s own Chernobyl moments.

[1] Chernobyl is a fact-based drama and there are polarized debates on elements of its historical accuracy and some of the underlying science. This piece is based on the narrative as described in the series.

Author: Paul Richards

Paul is Head of Governance and Decision Research at Redington. Understanding and improving decision-making has been the thread which has linked Paul's career in consulting, asset management and research. His work has helped a diverse range of pension schemes, with a particular focus on helping in-house teams. Prior to joining Redington, Paul held senior positions at Goldman Sachs, Aon and Friends Ivory & Sime (now BMO). He holds a Masters Degree in Research from the University of Bath's School of Management.

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