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Opinion: FTX crypto crisis is like a plane crash and a Ponzi scheme – there is a lot we can learn from it

Sam Bankman-Fried speaks at the Crypto Bahamas conference in Nassau on April 27.ERIKA P. RODRIGUEZ /The New York Times News Service

Chris Clearfield is the co-founder and chief executive officer of Clearfield Group. Andras Tilcsik is a professor with the University of Toronto’s Rotman School of Management. They are the authors of Meltdown: What Plane Crashes, Oil Spills, and Dumb Business Decisions Can Teach Us About How to Succeed at Work and at Home.

The bankruptcy of Sam Bankman-Fried’s FTX exchange displays the classic elements of the failure of what is known as a “complex” system. It’s like the remake of a famous movie franchise: a story with the same plot and basic characters, only played by different actors.

The same factors that underlie the collapse of FTX are at the root of the financial crisis, the Enron bankruptcy, and frauds such as Bernie Madoff’s Ponzi scheme and Elizabeth Holmes’s Theranos. These factors are also at the root of plane crashes, industrial accidents including the Deepwater Horizon oil spill, and failed responses to public-health crises.

As business leaders, we need to recognize that the increasing prevalence of such catastrophic meltdowns calls for a new approach to managing organizations – one that eschews control and focuses on building the capacity for change and resilience.

A complex system is not simply one that contains a lot of parts. It is one whose many parts are interconnected, more like a web than…

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