194. Lessons from the Post Office scandal

business strategy digital transformation Mar 13, 2024

The Post Office scandal led to 900 wrongful convictions and four suicides.

It is now known as the worst miscarriage of justice in British history.

It happened because Post Office leadership did not know how to deal with glitchy software.

In this episode, you’ll learn how not to repeat their mistakes.

Listen to learn:

  • What happened during the UK Post Office scandal
  • The biggest wrong assumption Post Office management made
  • The role of the board and company advisors: what should they have done?
  • What to expect when buying software services: either as a government or a founder



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Episode Transcript

Hello smart people!

How are you today?

Last week, I was doing jury duty in London, on a criminal case that honestly left me emotionally drained, but I think it is a good thing.

When sad things happen, I want to feel sad. I think there is a lot of toxic positivity around these days, which negates the human experience.

When there is a miscarriage of justice, as a society, we do not want to brush it under the carpet. We want to do what we can to correct it, and to learn from it.

This is why in today’s episode, I want to share what we can learn from the Post Office scandal, which has been called the biggest miscarriage of justice in UK history, and started because of a software glitch.

Here is a quick recap of what actually happened:

The British Post Office scandal arose from faulty software called Horizon, which was provided by Fujitsu, this software wrongly recorded shortfalls in the accounts of thousands of subpostmasters. This means that subpostmasers, also known as postmasters, who are people who are in charge of the post office, had to use this software as part of their work, and the software wrongly calculated how much money they made in their post office.

For example, let’s say a post master made £1,000 in a week, they would report that and send the money to the central head office. But, if the software recorded that they made £2,000, but they only made £1,000 and they only physically had £1,000, they had the legal obligation to give the central head office £2,000.

And if they couldn’t, or didn’t, then they were legally a thief and whatever the software reported was used as evidence.

And this is really dangerous, right? Because essentially the software was a false witness, which could not be relied on in court.

But, the justice system did not know that.

Between 1999 and 2015, over 900 subpostmasters were convicted of theft, fraud and false accounting based on faulty Horizon data.

Other subpostmasters were prosecuted but not convicted, forced to cover Horizon shortfalls with their own money. and sometimes this was in the tens of thousands, which these people simply did not have. So their employer was literally extorting them: saying either sell your house and hand over all your money or go to jail.

This is why, learning how software is made is not just for people leading digital transformation or working in tech companies. We as a society now depend on software, and if we don’t know anything about it, we end up with these results.

The court cases, criminal convictions, imprisonments, loss of livelihoods and also the huge debts and bankruptcies, ruined lives and people’s health, and led to at least four suicides.

I think it really has made many people in the UK upset about this, because we all go to the post office, and we interact with postmasters when we post packages or buy stamps. And the thought that people who serve our neighbourhoods were silently suffering like this for years, is making many people angry.

Although many subpostmasters had reported problems with the new software, the Post Office, then led by CEO Paula Vennells, insisted that Horizon was robust and failed to disclose that they had doubts about how faulty it was. So they continued securing convictions, whilst knowing that it was possible that the software was a false witness.

In 2009, Computer Weekly broke the story about problems with Horizon, and subpostmaster Alan Bates launched the Justice for Subpostmasters Alliance, which has been fighting to overturn convictions. But, even by January 2024, only 100 of the 900 convictions have been overturned and not all the victims have received compensation, and nobody from the Post Office management has faced any real punishment in the justice system, but they are now the most hated people in the country.

A doc-drama series came out about it this year, called Mr Bates vs the Post Office and it is absolutely brilliant, and you can watch it with people who don’t know anything about technology or even business.

And now, what can we learn from this disaster?

The first and most important lesson is that if you are in any position of power, then you have to educate yourself about how software is made. You don’t have to go very deep, you don’t need to learn to code, but you do need to learn the basic concepts, and know how to ask the right questions.

Paula Vennells was the CEO of the Post Office, and she headed an organisation that extorted fortunes out of working class people. From what we can tell, she believed that the software was “like Fort Knox” - perfect and infallible.

This is a basic lack of education. In the digital age, this is the equivalent of being illiterate. Do not be an illiterate leader.

If a large proportion of your organisation depends on software tools, you have to know something about it.

This does not apply to every type of business.

If you run a restaurant, for example, and you’re using booking software to enable diners to book tables, then you don’t really need to know how it works.

BUT - if you are in a responsible position in a company where revenue, supply chain or any kind of important process depends on software, you have to learn something about it. It is your fiduciary responsibility, especially if there is also a legal aspect, like there was in the Post Office case.

Paula Vennells should have educated herself, but what about the people who appointed her? What about the board or the executive leadership?

It seems that the people at the highest echelons of one of the UK’s largest organisations lived firmly in the twentieth century.

If you are an investor, a board member or a strategic advisor like a lawyer or a banker, you have a responsibility to nudge the executive team to educate themselves. Otherwise you run the risk of being close to another Post Office scandal.

All of the people who advised the Post Office executive team back then are now implicated, and some of them are villains in a popular TV series. They should have learned how to speak tech, and learned some software innovation basics.

The second lesson, is that technology often has bugs, and that means that it is relatively normal for software to have issues. These issues usually get fixed pretty quickly, but problematic software does get released to customers.

Look at the OpenAI issues back in February, when OpenAI came out with pictures black founding fathers. The software wasn’t ready, it wasn’t properly trained and yet it was released. And OpenAi is backed by Microsoft!

It’s not a great look for Satya Nadella, but I want you to see that even Microsoft - a hugely successful and established company, that employs the best engineers and has more money than God sometimes releases buggy software.

If something looks wrong, it probably is. Don’t let software, or software companies gaslight you into thinking that you don’t know what’s going on.

The third lesson is about how large organisations buy software. This is also important for the tech founders listening to this, because you’ll often hire outsourced developers to make your products, and your software will be custom made for you,

In the Post Office case, Fujitsu made custom software for the Post Office. Apparently, the Post Office had no access to design documentation and the software was a black box.

I know that sounds a bit jargon-y, so I’ll explain what that means. When software is made, like the apps on your phone, there will be a team of designers who create what the app looks like and how it works, like what happens when you swipe right, for example.

All software companies will have these designs documented. You literally have drawings of screens and a map showing how they are all inter-connected.

If you are paying someone to make it for you, you need this map.

It’s the same with the actual code: code is written down, and there’s also something called a Read Me file, which is a description of all the technology tools used to build a product.

You must expect access to this. If you are paying for something to be made for you, it is normal to expect to see how it is made.

And finally, from what I hear, when the Post Office ran the tender process for this software contract, several companies made the bid for the work, and Fujitsu’s was bid the cheapest.

Well, you get what you pay for.

This is the case for government contracts and if you just want to make a new app. You could go on Upwork and find the cheapest person and hope for the best.

But if the software is for something that actually matters to you, something that’s mission critical, don’t go for the cheapest. Go for the best. These two are usually mutually exclusive.

Honestly, if this podcast had been around back then and Paula Vennells had listened to it, she wouldn’t be one of the most hated people in Great Britain today.

Today, every large organisation is a tech company in some way, so what you are learning here will pay off no matter what you’re doing.

So well done for educating yourselves by listening to this podcast, and for updating your skillset for the digital age.

And, the best way to make this knowledge really sink in is by taking one of the Tech for Non-Techies courses.

We have a great track record of creating super engaging corporate trainings that people love, so if you like what you’re learning here, let’s talk about how we can tailor it for wherever you work.

And, I have some good news: learning and development budgets are on the rise this, so it’s very likely that your employer will pay you to learn from me. Won’t that be fabulous!

So book a consultation call in the show notes, and we will tell you about our trainings and how the corporate reimbursement process usually works.

And now, have a wonderful week and I’ll be back in your delightful smart ears next week.


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