Learning from Failure Patterns: The Recurring Disconnect Between Information and Decision-Making

When you read third-party committee reports on crisis response, one pattern appears again and again. Even when useful information exists on the front lines during a crisis, that information does not connect to decision-making.

In the series of system failures at Mizuho Bank in 2021, the third-party committee treated not only the system failures themselves but the crisis management structure as a central subject of review. The report notes that although failure information was grasped within individual departments, it was not sufficiently consolidated, and that standing up a structure to share the situation at the management level took time. As a result, incident response, customer response, and public communication each proceeded separately, and the response never came together as a unified whole.

What is interesting is that the report does not frame the problem as “a lack of information.” On the front lines, information was continuously escalated from branches and the systems division. What did not function well enough was the decision-making body that would integrate this information and position it as “a company-wide crisis.” The problem in crisis response lay not in whether information existed, but in the process of converting information into decisions.

This structure can be understood as what organizational theory calls the separation of information flow and authority. In ordinary organizational management, information gathers on the front lines while decision-making authority concentrates in the upper layers. In a crisis, however, this very division of labor can become a factor that produces delay in the initial response. The front lines understand the situation but cannot make external judgments, while executives hold the authority to decide but cannot obtain sufficient information. As a result, the organization as a whole slows down.

This phenomenon is not unique to Mizuho Bank. It is commonly observed across many crisis cases, including aviation accidents, quality problems, and large-scale outages. What crisis response tests may not be the volume of information, but how information is delivered to the people who decide.

Learning from Success Patterns: Designing Explanations That Restore Trust Even When Delayed

In crisis response, “speed of initial action” is emphasized. Yet when you compare publicly available cases, it becomes clear that a delayed initial response alone does not determine the outcome. Rather, when a crisis becomes prolonged, the way an organization explains itself, even after some time has passed, often shapes public evaluation.

The large-scale communication outage at KDDI in July 2022 is a representative example. The outage had a wide-ranging impact on voice calls and data communication, and full recovery took several days. The Ministry of Internal Affairs and Communications treated the incident as a serious accident and asked KDDI to investigate the cause and report on measures to prevent recurrence. The verification report published afterward examined not only the technical factors behind the network failure but also the provision of information to users and the crisis management structure.

At the same time, public evaluation of the response was not consistently negative. At its press conferences, the company explained the course of the outage, the recovery status, and the technical causes in stages, and it later disclosed its compensation policy and recurrence prevention measures in sequence. The content of the explanation was updated over time, with information revised and added as the investigation progressed.

What deserves attention here is that the company was not able to give “a complete explanation from the very start.” Immediately after the outage, neither the scope of impact nor the cause was fully understood. For that reason, the press conferences distinguished between “facts confirmed at this point” and “matters still under investigation.” What seemed to matter in the response was the posture of not speaking about uncertain information as if it were settled, and of continuously updating the facts that could be confirmed.

Crisis communication is often said to require not only speed but also consistency and transparency. An explanation being updated partway through is not necessarily a failure. Rather, by continuing to disclose changes in situational awareness without hiding them, an organization can show society that it is facing the crisis directly.

Explanation in crisis response is not something that concludes in a single press conference. It may be better designed as a continuous process that includes organizing the facts, investigating the cause, and presenting measures to prevent recurrence. The KDDI case illustrates a feature of crisis recovery that speed of initial action alone cannot explain. Trust is not formed in the first few hours alone. It is also shaped, to a large degree, by the quality of the explanations that accumulate afterward.

When Government and Regulators Become Stakeholders

In crisis response, attention tends to focus on customers, business partners, and shareholders. In social infrastructure and regulated industries, however, there is another stakeholder of comparable importance: government bodies and regulators. Because these administrative bodies not only supervise corporate activity but also carry the role of ensuring the safety and public interest of society as a whole, their criteria for evaluating crisis response can differ from those of ordinary users.

In the 2022 KDDI communication outage, the Ministry of Internal Affairs and Communications judged that the incident fell under a “serious accident” as defined by the Telecommunications Business Act, and it requested a detailed report on the cause and recurrence prevention measures. The subsequent administrative review examined not only the equipment configuration and the cause of the failure but also the method of notifying users, the crisis management structure, and the recovery process. What the administration took interest in was not merely the technical failure itself, but whether the response expected of an operator responsible for public infrastructure had been appropriate.

What becomes important here is that “violation of law” and “social expectation” do not necessarily align. A company may comply with the law and still find the administration seeking improvements from the standpoint of public interest and social responsibility. Even when a company believes it “has fulfilled its legal obligations,” the administration may evaluate it as “not reaching the level expected of a social infrastructure operator.”

This kind of gap in perception can be understood as a gap in value criteria. Companies tend to act on the basis of economic rationality and management judgment, while the administration evaluates on the basis of public interest and user protection. For that reason, even for the same event, the meaning assigned to the crisis often differs between a company and a regulator.

When you read third-party committee reports and administrative verification materials, what is treated as a problem is, in many cases, not the accident alone. Information sharing after the crisis, coordination with related institutions, and the way accountability is fulfilled, the whole crisis management process, become the object of evaluation. This may be because the administration places weight less on individual technical failures and more on whether the organization is equipped with the capacity to prevent recurrence.

In managing crisis recovery, it may not be enough to view government and regulators only as “after-the-fact supervisors.” When a crisis occurs, the administration too becomes an important stakeholder, and communication that meets its expectations is called for. Because crisis response is a process of rebuilding a relationship of trust with society, the relationship with the administrative bodies that represent that “society” is also an important component of crisis recovery. As a result, companies are asked to respond to complexity, that is, to meet several criteria at once.

References

Mizuho Financial Group (2021). Notice of Receipt of the System Failure Special Investigation Committee Report. June 15, 2021. (Japanese)
https://www.mizuho-fg.co.jp/release/20210615release_jp.html
Mizuho Financial Group and Mizuho Bank (2021). On the Cause Investigation and Recurrence Prevention of the System Failures at Mizuho Bank. June 15, 2021. (Japanese)
https://www.mizuho-fg.co.jp/release/20210615_2release_jp.html
Mizuho Financial Group and Mizuho Bank (2021). On the Status of Response to the System Failures at Mizuho Bank. April 5, 2021. (Japanese)
https://www.mizuho-fg.co.jp/release/20210405_2release_jp.html
Mizuho Financial Group (2021). On the Establishment of a Third-Party Committee Regarding the System Failures. March 17, 2021. (Japanese)
https://www.mizuho-fg.co.jp/release/20210317release_jp.html
KDDI Corporation (2022). Submission of the Report Responding to Administrative Guidance on the Communication Outage of July 2, 2022. November 2, 2022. (Japanese)
https://news.kddi.com/kddi/corporate/newsrelease/2022/11/02/6361.html
Ministry of Internal Affairs and Communications (2022). Guidance to KDDI Corporation on the Appropriate Response to the Telecommunications Accident. 2022. (Japanese)
https://www.soumu.go.jp/menu_news/s-news/
Ministry of Internal Affairs and Communications (2022). On the Report Submitted by KDDI Corporation. 2022. (Japanese)
https://www.soumu.go.jp/