- Conflicting KPIs can encourage contradictory behaviours when different parts of the organisation are rewarded for achieving competing outcomes.
- Budget silos encourage local optimisation when managers are accountable for their own financial performance rather than enterprise value.
- CAPEX and OPEX structures can distort lifecycle decisions when accounting boundaries influence choices more strongly than asset outcomes.
- Short-term performance pressure can undermine long-term value when immediate targets are achieved by transferring cost or risk into the future.
- Functional optimisation can work against enterprise value when individual departments succeed while the organisation collectively performs worse.
- Incentives can create unintended consequences when people rationally respond to measures that do not reflect the organisation’s broader objectives.
- Cost, risk and performance trade-offs need to be explicit so decision-makers understand what is being gained, lost or transferred.
- Changing behaviour sometimes requires changing the organisational system because people will continue responding rationally to their environment.
Real World
The maintenance contract recovery assignment taught me not to assume poor outcomes mean poor people. I walked into an organisation where operators, maintainers, management and contractors could all point to evidence showing why somebody else was responsible for the problem. In many cases they weren’t lying. Their individual behaviours made sense within the environment they had been given. Different commercial models drove different metrics, historical disputes had damaged trust, and functions had learned to optimise their own survival. Individually rational decisions were collectively producing a poor organisational outcome.
That distinction matters enormously in asset management. If I tell a maintenance manager to minimise maintenance cost, a production manager to maximise output and procurement to minimise purchase price, I shouldn’t be surprised when each makes a “good” decision that damages lifecycle value. Good people can make bad asset management decisions because organisations frequently give them the wrong context in which to make them. Before blaming competence or attitude, I now look at objectives, incentives, information, accountability and line of sight. Very often, changing the environment in which the decision is made is more powerful than telling people to make better decisions.
Change Management Perspective
When capable people repeatedly make decisions that don’t support the organisation’s objectives, I don’t immediately assume that the people are the problem. I look at the environment in which they are making those decisions. What are they measured against? What behaviour is rewarded? What happens when budgets are exceeded? Are functional KPIs encouraging optimisation within one department at the expense of enterprise value?
From an organisational change perspective, asking people to behave differently while leaving these conditions unchanged is unlikely to succeed. Sometimes the most powerful behavioural intervention isn’t communication or training; it is changing the governance, measures, incentives and decision structures that make the unwanted behaviour perfectly rational.
Key Takeaway
If good people repeatedly make poor organisational decisions, look at the system rewarding the behaviour.