The Unseen Flaws in Organisations

The Unseen Flaws in Organisations: Lessons from Abraham Wald on Operating Models and Leadership.

In the organisations, especially those with revenues around 200 million euros, unseen issues often lurk beneath the surface, threatening growth and stability. These hidden challenges can reside in the operating model and leadership dynamics—two pillars critical to organisational success.

To uncover these invisible pitfalls, we can draw a powerful analogy from a remarkable story in history: the insight of Abraham Wald during World War II.

The Story of Abraham Wald and the Hidden Data

During WWII, the military sought to reinforce aircraft to reduce losses from enemy fire. They analyzed bullet holes on planes returning from missions, intending to strengthen the most damaged areas. Conventional wisdom suggested reinforcing the wings and tail, where bullet holes were most visible. However, Abraham Wald, a mathematician and statistician, challenged this approach with a counterintuitive insight.

Wald realised the military was only looking at planes that survived and returned. The bullet holes on these planes indicated areas that could sustain damage without causing a crash. The planes that never returned were hit in critical areas—likely the engines or other vital parts—that were not marked by bullet holes on surviving aircraft. Therefore, the military should reinforce the areas with few or no bullet holes, as damage there was fatal.

This story is a profound lesson in avoiding survivorship bias—focusing only on visible success and overlooking unseen failures. It teaches us to look beyond the obvious data to understand what truly threatens organisational health.

Unseen Challenges in Operating Models

What Is an Operating Model?

An operating model defines how an organisation delivers value through its people, processes, and technology. It shapes workflows, decision rights, and resource allocation. Despite its importance, many organizations struggle with invisible flaws in their operating models that impede agility, innovation, and resilience.
Common Unseen Flaws in Operating Models

Focusing on Symptoms, Not Root Causes: Like the military focusing on bullet holes on surviving planes, organizations often optimize based on visible issues (e.g., bottlenecks in current processes) without understanding deeper systemic weaknesses that cause failures.
Lack of Adaptability to Disruption: A significant percentage of C-suite executives believe their operating models jeopardize growth and performance, with many feeling the need for a fundamental rethink to cope with disruptive forces such as digital transformation and market volatility.
Misaligned Labor and Business Strategy: Operating models sometimes fail to align workforce capabilities with strategic goals, leading to inefficiencies and wasted resources.

Overlooking Culture and Behavior: Operating models often neglect the cultural and behavioral dimensions that influence how work actually gets done, especially during mergers or transformations.

How to Address These Flaws

Holistic Data Analysis: Just as Wald looked beyond visible bullet holes, leaders must analyze both successful and failed initiatives to identify true vulnerabilities.
Agility and Resilience: Redesign operating models to be adaptive, integrating technology and human intelligence to respond swiftly to change.
Alignment of Strategy and Execution: Clearly define roles, responsibilities, and performance targets to avoid confusion and inefficiency.
Cultural Integration: Recognize and address unseen cultural forces that impact execution, especially in periods of change.

The Hidden Leadership Challenges

Leadership is the compass guiding the operating model and organizational culture. Yet, many leadership challenges remain unseen, eroding effectiveness from within.
The Invisible Burdens of Leadership

Loneliness and Isolation: CEOs and senior leaders often experience profound isolation, which can impair decision-making and strategic clarity. Studies show that 50% of CEOs feel isolated, and this loneliness negatively impacts their choices.
The Paradox of Infallibility: Leaders are expected to appear confident and decisive, which discourages vulnerability. However, embracing vulnerability fosters trust and collaboration, essential for a resilient culture.
Decision Fatigue and Pressure: Constant high-stakes decisions lead to fatigue, reducing judgment quality. Without support systems, leaders risk making superficial or delayed decisions that stall organizational progress.
Impostor Syndrome and Overwhelm: Many leaders feel stretched beyond their capacity, battling self-doubt and insecurity, which can undermine their performance.

Leadership Lessons from Wald’s Insight

Wald’s approach teaches leaders to question assumptions and seek unseen data. Similarly, leaders should:
Encourage Open Communication: Create safe spaces where team members can share failures and challenges without fear, revealing hidden issues.
Balance Confidence with Vulnerability: Demonstrate openness to learning and adaptability, which strengthens team trust and innovation.
Build Support Networks: Combat isolation by fostering peer connections and mentorship, ensuring leaders have trusted advisors.
Prioritize Reflective Decision-Making: Recognize decision fatigue and implement delegation, prioritization, and rest periods to maintain clarity.

Integrating Operating Model and Leadership for Organizational Success

The unseen flaws in operating models and leadership are intertwined. A rigid operating model can constrain leaders, while ineffective leadership can perpetuate flawed models. Addressing these requires a dual approach:

Data-Driven, Holistic Analysis: Use comprehensive data, including failures and successes, to redesign the operating model with agility and resilience in mind.
Leadership Development Focused on Emotional Intelligence: Equip leaders to manage pressures, embrace vulnerability, and foster a culture of transparency and continuous improvement.
Cultural Alignment: Align leadership behaviors with the desired organizational culture to ensure that the operating model is supported by the right mindset and values.

Conclusion: Seeing the Unseen to Thrive

The story of Abraham Wald is a timeless metaphor for organizational insight. Just as the military saved countless lives by reinforcing the unseen vulnerabilities in aircraft, organizations must look beyond visible successes and obvious problems to identify hidden flaws in their operating models and leadership.

For senior management overseeing large organizations, this means embracing a mindset that values unseen data—failures, cultural undercurrents, leadership pressures—and using it to drive thoughtful, strategic change.

By doing so, organizations can build resilient, adaptive operating models and cultivate leadership that not only navigates complexity but thrives within it.

“The planes that come back tell only part of the story. To truly protect our organization, we must understand where the unseen vulnerabilities lie—and address them before they bring us down.”

This insight is not just a wartime lesson; it is a blueprint for modern organizational excellence.