Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New Zealand
This research addresses the strategic issue of why key decision-makers fail to foresee potential extreme ‘black swan’ events. Following a review of the literature, a conceptual framework is developed that identifies two types of organisational blindness that are reflected in Tetlock’s hedgehog cogni...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2024-01-01
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| Series: | Systems |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2079-8954/12/1/34 |
| _version_ | 1797342498817835008 |
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| author | Richard John Logan Robert Y. Cavana Bronwyn E. Howell Ian Yeoman |
| author_facet | Richard John Logan Robert Y. Cavana Bronwyn E. Howell Ian Yeoman |
| author_sort | Richard John Logan |
| collection | DOAJ |
| description | This research addresses the strategic issue of why key decision-makers fail to foresee potential extreme ‘black swan’ events. Following a review of the literature, a conceptual framework is developed that identifies two types of organisational blindness that are reflected in Tetlock’s hedgehog cognitive thinking style, being the oversimplification of uncertainty (e.g., inductive biases) and an unquestioned, top-down, reference narrative. This framework is tested using a case study approach and qualitative analysis of secondary data sources available from the Royal Commission of Inquiry and other published reports following the 2010 methane explosion at the Pike River Coal Ltd.’s mine (Pike) in New Zealand, that killed 29 miners and caused the loss of all funds invested. The results indicate that the combined effect of both blindnesses meant that Pike’s collective intelligence was limited, and for the three key decision-makers at the Pike River mine, some type of extreme ‘black swan’ event was apparently inevitable. This research provides theoretical and practical contributions to the analysis of business and public policy decision-making under uncertainty. |
| first_indexed | 2024-03-08T10:34:18Z |
| format | Article |
| id | doaj.art-4d8411adf7ee49fbaa26f4c161c4e098 |
| institution | Directory Open Access Journal |
| issn | 2079-8954 |
| language | English |
| last_indexed | 2024-03-08T10:34:18Z |
| publishDate | 2024-01-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Systems |
| spelling | doaj.art-4d8411adf7ee49fbaa26f4c161c4e0982024-01-26T18:40:00ZengMDPI AGSystems2079-89542024-01-011213410.3390/systems12010034Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New ZealandRichard John Logan0Robert Y. Cavana1Bronwyn E. Howell2Ian Yeoman3School of Management, Victoria University of Wellington, Wellington P.O. Box 600, New ZealandSchool of Management, Victoria University of Wellington, Wellington P.O. Box 600, New ZealandSchool of Management, Victoria University of Wellington, Wellington P.O. Box 600, New ZealandHospitality and Tourism, NHL Stenden University of Applied Sciences, 8900 CB Leeuwarden, The NetherlandsThis research addresses the strategic issue of why key decision-makers fail to foresee potential extreme ‘black swan’ events. Following a review of the literature, a conceptual framework is developed that identifies two types of organisational blindness that are reflected in Tetlock’s hedgehog cognitive thinking style, being the oversimplification of uncertainty (e.g., inductive biases) and an unquestioned, top-down, reference narrative. This framework is tested using a case study approach and qualitative analysis of secondary data sources available from the Royal Commission of Inquiry and other published reports following the 2010 methane explosion at the Pike River Coal Ltd.’s mine (Pike) in New Zealand, that killed 29 miners and caused the loss of all funds invested. The results indicate that the combined effect of both blindnesses meant that Pike’s collective intelligence was limited, and for the three key decision-makers at the Pike River mine, some type of extreme ‘black swan’ event was apparently inevitable. This research provides theoretical and practical contributions to the analysis of business and public policy decision-making under uncertainty.https://www.mdpi.com/2079-8954/12/1/34Knightian uncertaintyuncertainty aversionfox/hedgehog cognitive thinking stylesnarrative economicscomplex systemsdecision-making under uncertainty |
| spellingShingle | Richard John Logan Robert Y. Cavana Bronwyn E. Howell Ian Yeoman Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New Zealand Systems Knightian uncertainty uncertainty aversion fox/hedgehog cognitive thinking styles narrative economics complex systems decision-making under uncertainty |
| title | Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New Zealand |
| title_full | Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New Zealand |
| title_fullStr | Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New Zealand |
| title_full_unstemmed | Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New Zealand |
| title_short | Why Do Key Decision-Makers Fail to Foresee Extreme ‘Black Swan’ Events? A Case Study of the Pike River Mine Disaster, New Zealand |
| title_sort | why do key decision makers fail to foresee extreme black swan events a case study of the pike river mine disaster new zealand |
| topic | Knightian uncertainty uncertainty aversion fox/hedgehog cognitive thinking styles narrative economics complex systems decision-making under uncertainty |
| url | https://www.mdpi.com/2079-8954/12/1/34 |
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