Organizational change in risky environments:

Space activities
Abstract

The purpose of this paper is to underline the relevance of organizational inertia when
organizations face risky environments. A conceptual framework was built that combines the
adaptation and selection perspectives from the evolutionary approach and the high-reliability
organizations literature and apply it to space activities. This paper focuses on space
organizations and not more general types of organizations. However, the findings could be
generalized to organizations manufacturing complex products and systems. The originality of
the paper is based on the new empirical and theoretical frameworks provided to analyze
organizational inertia. Organizational inertia may be a satisfying response to environments
favoring organizations with high levels of reliability. This new way of viewing inertia would be of
value to scholars studying organizations in which errors can have catastrophic consequences.
First, it was found that to prevent catastrophic failures, space organizations reproduce routines
validated in previous successful programs, which leads to situations of organizational inertia;
and second, the opposing perspectives of selection and adaptation become complementary
when the author focus on the level of risk faced by organizations.

Introduction
The evolutionary approach is one of the most widely used methods of analyzing change
in organizations. However, it encompasses two perspectives, which produce opposing
arguments about the impact of organizational change. The adaptation perspective, based on
the work of Nelson and Winter (1982), assumes that organizations are able to act on their
strengths and weaknesses in a satisfying way, that is, they are able to implement adaptive
strategies that reduce their mortality. The selection perspective, based on Hannan and
Freeman’s (1984) analysis, challenges this claim, arguing that organizations are not able to act
on their strengths and weaknesses in a satisfying way argue that adaptation to the risk involved
in space activities constrains organizational change. More precisely, we claim that
organizational inertia enables space HROs to deal with risky environments.

Framing elements
The relationship between organizational change and organization survival is the
adaptation and selection perspectives in the evolutionary approach have provoked lively
debate about the relationship between change and survival. These two main perspectives
within the evolutionary approach provide two different interpretations of the consequences of
organizational change. As both perspectives are rooted in the evolutionary approach, they
assume that changes in the environment matter to our understanding of organizational change.
However, each perspective displays different standpoints in terms of how organizations face
changes in the threats and opportunities presented by the environment. This conclusion is
based on the vision of the change retained by the adaptation perspective where change is
always a change in routines and is called “innovation.”
Organizational innovations emerge first from a new way of using the existing routines.
The selection perspective challenges this, arguing that organizations are not able to act on their
strengths and weaknesses in a satisfying way. In arguing also that environmental selection
favors organizations with high levels of reliability and accountability, a major claim of adherents
to the selection perspective is that organizational change increases organizational mortality,
and then organizational inertia decreases it. The selection perspective displays this conclusion
because is based on an ecological theory focused at the level of the population. Change occurs
through the replacement of extant organizations by new ones. This replacement is a process of
selection conducted by the environment and implies that organizations are not able to act on
their strengths and weaknesses in a satisfying way.
The case of HROs
Among the many types of organizations analyzed in organizational studies, there is a
specific social group called HROs. HROs include naval aircraft carriers (Weick and Roberts,
1993), air traffic control systems (Weick, 1990), nuclear power generation plants (Bourrier,
1996), and large space organizations such as space agencies and space manufacturers. One of
the main features of an HRO is that it cannot afford trial and error strategies (Roberts, 1990;
LaPorte and Consolini, 1991; Demchak, 1996). Analysis of the studies on HROs is useful for an
examination of the debate within evolutionary approach. These studies combine the context of
the adaptation perspective with the main results of the selection perspective. According to the
adaptation perspective, HROs conduct adaptive strategies to cope with the threats and
opportunities in the environment; however it seems that, as in the selection perspective,
organizational changes increase organizational mortality, and thus HROs tend to favor
organizational inertia.

A framework for organizational change in risky environments

In order to understand the specificity of HROs and to explain why organizational inertia
may help organizations to face risky environments, I propose a new framework based on the
two evolutionary perspectives and on the other hand in the literature on HROs. I exploit these
arguments to declare that organizational change increases organizational mortality when
organizations face a high level of risk, whereas organizational change decreases organizational
mortality when organizations face a low level of risk. My argument is based on six steps framed
by the two evolutionary perspectives and the studies on HROs:

(1) If trial and error is unaffordable.

(2) Organizations face risky environments.
(3) These types of environments demand high levels of reliability. As a consequence, the
adaptive behaviors of organizations lead to the implementation of reliability strategies.
(4) Reliable performance requires that an organization continually reproduces its structure.
(5) High levels of reproducibility of structure generate strong inertial pressures
(Hannan and Freeman, 1984, p. 154).
(6) Organizational inertia is a way of coping with risky environments.

Unaffordable trial and error in space activities

Exploration of Mars has been surrounded by an unusual and impressive failure rate. The
impossibility of identifying what caused the failure of the Mars Polar Lander underlines a major
specificity of the activities conducted by space HROs, which is that they cannot interact directly
with damaged space probes and satellites because of their remoteness from the earth.
The inaccessibility of space probes, satellites, and space rockets in operation further
emphasizes that trial and error in space activities is unaffordable. Space HROs cannot send
astronauts to fix breakdowns; this would cost more than the entire space program. With the
exception of the Hubble telescope, which was designed to be regularly serviced by astronauts
(Brunier, 2006, p. 127), space HROs are only able to implement minor actions, such as updating
software or trying uncertain undertakings to extend the service life of damaged technical
systems.

Space HROs face risky environments

Risk is defined, on the one hand by an amount of loss, and on the other hand by an
assessment of uncertainty (Kahneman and Tversky, 1979). Both these parameters reach high
levels in space activities. In HROs, the amount of loss is often high and has been described as
the “cost of error” (Roberts, 1990, p. 174). In space HROs, this high cost is a significant part of
the costs of the entire space program.
First, space programs are expensive projects: costs range from several million dollars for
micro satellites to several billion dollars for constellations of satellites. Second, due to the
unreachability of space technical systems while in operation, it is difficult to fix failures and a
single failure may jeopardize an entire space mission, and thus represents an important amount
of money. Another reason for the high cost of failure is the small batches produced by space
HROs. To summarize the risky environments faced by space HROs, we would refer to a general
rule in insurance theory, which argues that the extent of disasters is a negative function of their
occurrence. That is, the higher the failure rate, the lower will be the cost of failure and vice
versa.

High levels of reliability required in space activities

The risky environments faced by space HROs stress that space agencies and large space
manufactures are not failure tolerant like organizations involved in mass production. Owing to
the inaccessibility of space technical systems in operation, the reliability strategies of space
HROs are mainly applied during manufacture rather than operations which would be case in
other industries.
Reliability is achieved by previous stake risk mitigation. This culture of reliability can also
be identified in the strong sense of mission exhibited by HROs, which induces strong
commitment to reliability and a readiness to invest in reliability enhancing technology. A final
significant feature of the reliability culture in HROs is organizational redundancy. The assembly
of space technical systems often involves one person doing the actual assembly and another
making detailed note of each work step. This ensures that all work is well done and underlines
the need for redundancy; the two exchange duties after each task.

Conclusion
My study provides three main results. First, that space organizations exhibit
organizational inertia within their manufacturing processes although they often conduct
activities that may be regarded as innovative. Second, that organizational inertia helps
organizations to cope with risky environments.
When failures can have catastrophic consequences, a strategy of organizational
reproduction is adopted to maintain the routines validated in previous programs. Third, the
selection and adaptation perspectives may be complementary if we focus on the level of risk
faced by organizations. When this level is high, it is relevant to argue that organizational change
increases organizational mortality, and conversely when the level of risk is low, it is relevant to
argue that organizational change decreases organizational mortality.