Transformation projects, especially when they're "side of desk," can seem like an unwelcome responsibility and a distraction from the core work of managing a function, yet for operational executives these are frequently an opportunity for senior leadership to evaluate suitability for more strategic roles. More often than not these projects involve a requirement to re-frame well-known challenges, to communicate a vision that sticks, and to demonstrate a capability to see across the business rather than purely within one's own vertical.
Modeling as a means of facilitating shared understanding among different stakeholders is a key tool for insurance leaders to master.
When we think of models, we might bring to mind financial forecasts or visualizations, but a model can also take the form of an analogy, a prototype, a system map, or even a road map or a project plan. We define a model as a representation of the structure and underlying rules of a concept (or set of concepts). Modeling involves mapping an idea's structure onto a form that makes its defining conditions - the underlying rules that make it possible - easier to see, explore, or test. Moreover, insofar as a model is an abstraction, it can also help to bridge communicative divides between stakeholders with different contexts or different perspectives, thus making it easier to arrive at a shared understanding - which is essential for senior leader effectiveness. Models are tools that bridge mindsets.
Project management is people management
Over the past few years, I've worked on complex transformation programs in which securing alignment on objectives and purpose was as critical as agreement on how to execute. A recent example highlights what may be a familiar challenge for many executives. Our client, Alison, was caught in the middle of a project management nightmare. She had a reputation for successful IT delivery, but the majority of these projects had been focused within her function. Now she was involved in overseeing a multi-departmental program, coordinating the replacement of a legacy underwriting platform. On the face of it, this would appear to have been a simple re-platforming exercise, except for the fact that over time it had become a fundamental source of data for a range of different systems across the enterprise, from policy and CMS systems through to the master ledger. Replacing this system involved changes across the enterprise, and as such, required understanding and buy-in from stakeholders who had limited awareness or meaningful incentive to engage.
The program had executive-level support, which helped open doors and secure time with platform owners and the business, but as the initiative moved from concept to an execution plan, misalignment emerged between finance, operations, and IT leaders. Each stakeholder had different expectations:
- Finance pressed for outcomes that would require custom development beyond out-of-the-box capabilities of the recommended platform replacement;
- Forecast efficiencies were contested by operations leadership, affecting the program rationale and budget;
- IT's preferred vendor shortlist differed from operations' panel - and the latter had engaged their own leadership team to add pressure - raising concerns about impacts to scope, cost, and schedule.
We'll return to Alison's case, but when faced with this level of disconnect, our instinct can be to go on the offensive and tackle differences in perspective as skirmishes to negotiate. Another way of considering this situation, however, is to frame it as perceptual misalignment. In short, each party was interpreting the problem from their own point of view, informed by their own context, assumptions, and expectations. Bringing that to the surface - both for yourself and for your counterparty - can be helpful to isolate legitimate points of difference and exploring how to overcome these. Models are an effective tool to help us achieve this.
Why we see the same thing differently
Each of us perceives the same external environment, but we interpret it through our own lens - personal, for instance, but also institutional, such as different teams or functions that set our context - and these unique lenses lead to differences in understanding. Those differences are valuable because they help us see alternatives outside of our own way of interpreting the world (hence the value of diversity) - but what's more compelling than difference in and of itself is why we interpret our environments differently. Bringing those assumptions and framing conditions to the surface is where the value lies.
Recent research in cognitive psychology supports this focus. Pioneering work by scientists such as Karl Friston, Anil Seth, and Andy Clark asserts that our moment-to-moment experience is informed not only by the data that our physical senses collect but through a complex process of predictive modeling that shares an affinity with Bayesian statistical analysis. They argue that our experience of reality is an interpretation and as such is informed, to an extent, by underlying expectations and assumptions and beliefs. Moreover, while we may see the same world "out there" - outside of the skull-bound brain that manifests our experience but doesn't literally "see" it - we each have our own model of that reality. When we engage with each other we're often challenged by the problem of aligning these interpretive models to arrive at a shared understanding. Starting out with this recognition - that there is an inherent difference in the way each of us "reads" the world - helps us to understand the nature of the divide and leads us to explore why we're interpreting the same situation differently and how we can get onto the same page.
To see this in practice, consider an underwriter and a claims manager separately reviewing the wording of a revised commercial property policy. The underwriter sees a risk selection and pricing instrument, with a mix of conditions, sub-limits, and exclusions. He may consider how the language allows for exposure in line with the firm's risk appetite and how definitions protect against adverse selection. The claims manager reads the same document through a different lens. Drawing on years of experience at point of loss, she sees where clients are likely to contest coverage language, where exclusion wording is ambiguous enough to invite dispute, and where the gap between policyholder expectation and actual coverage may drive complaints. What looks like careful risk architecture to the underwriter is, to the claims manager, a map of potential friction. Our perception is shaped by our background, training, and the mental models we've built over time. Shared models can help bridge that perceptual divide. Analogy, deployed carefully, is one effective tool for achieving this.
Analogy can be a powerful communication and alignment tool when it's deployed with some constraints. We define an analogy as a relational structure between two models (which may be concepts, ideas, stories and so on). Analogies can be effective to help us isolate a concept from a familiar context to analyze it carefully (we can think of this like a discrete "lab environment"), or to explore abstract ideas in terms of more familiar constructs, or even to visualize problems that otherwise couldn't be observed. Think of Einstein's thought experiments when developing general relativity, for instance, imagining two lightning bolts striking the end of a train and thereby exploring the idea that simultaneity is relative and not absolute. Similarly, in one well-known example, mapping a radiology problem onto a military campaign helped to generate options for treating a cancerous tumor without killing the patient. This is the art of constructing an analogy as a model for exploration and communication - isolating the fundamental conditions and rules and consciously mapping them across to a different environment to retain focus and facilitate transfer of insights back to your original problem. When we consider the objective of achieving alignment between stakeholders, mapping a core topic into an unfamiliar setting can help to create a level perceptual playing field.
So far we've considered how modeling can help us to acknowledge and address differences in interpretation of a shared topic. Yet not all stakeholder alignment challenges are the same - there's no "one size fits all" approach. Paul Carlile's insight that misalignment may take different forms serves as a useful guide.
Addressing misalignment with models
If we aim to align stakeholders with distinctly different perspectives, and we intend to use models to do so, it helps to think of these differing viewpoints as being separated by boundaries. Carlile defines three levels of boundaries in this context (syntactic, semantic, and pragmatic). For accessibility, we may re-interpret these boundary categories as defined by:
- A common language
- An agreed meaning (but different languages exist)
- Contextual differences
The first level – "a common language" (Carlile's syntactic) – applies when all parties share a similar understanding, both language and familiarity with the concepts involved, such that communication may involve direct knowledge-sharing without significant modification. A straightforward project status update may be one example of this, shared with leads of different functions who are already familiar with a program.
The second level – "an agreed meaning (but different languages exist)" (Carlile's semantic) – applies to situations in which various parties to a communication may be more or less "on the same page" but arrive at this from different perspectives or different ways of framing it. In this instance, there is a need to translate concepts from one form to another that is more readily understood. Analogy can be an effective tool in this case.
The third level - "contextual differences" (Carlile's pragmatic) - describes circumstances in which some form of transformation is required to communicate and engage. This transformation may require a change or compromise from one or more parties and may involve some cost. Models may help to bring differences to the surface that can be addressed and required changes (such as modifications to the concept design or to the budget or timeframes) may be negotiated to achieve alignment.
Returning to Alison's case, the problem that she faced was that her stakeholders were located across the organization and held very different interpretations of the IT program's impact and outcome for their own functions. As an IT leader who worked regularly with the operations team, she shared a common language that had been developed over time. The disconnect in this case was more an issue of control and resource-management. Framing her challenge in this way allowed her to carve it out from the whole and address it separately, drawing on workflow and process-mapping to illustrate anticipated efficiency benefits and systems maps along with specifications to justify vendor selection. In other words, these models along with a common language created a space where all parties could compare their understanding and negotiate points of difference. Her challenge with finance, however, was more complex.
The challenges that the finance leadership team presented stemmed from their position that they saw the re-platform as an opportunity to build new capability (specifically, to support incentive planning for distribution partners and forecasting) though they had limited awareness of the cost, time, and complexity involved in introducing non-standard features. Rather than litigating this issue with the whole team, Alison mapped a quick analogy that drew on the fundamental conditions of the proposed platform onto an example of upgrading a car's engine from a V6 to a V8 (a process thoroughly distant from both of their fields). This example helped her to illustrate the complexity of the existing transformation even before considering upgrades and additional enhancements. The example was sufficiently detailed and connected to the core problem that the finance team felt they were working through a meaningful problem and it helped to provide a clear example of the trade-offs involved before returning to the re-platforming issue at hand and finalizing the scope.
Transformation projects as proving grounds
Transformation projects, even if they're an added responsibility to an already busy schedule, are an opportunity to demonstrate your capacity to engage a wide range of stakeholders and align their efforts around a shared task. Leaders who understand why people interpret the same situation differently, and who have the tools to bridge that divide, are better positioned to turn that live audition into an appointment. The ability to model - to represent a complex idea in a form that others can see, explore, and act on - is one of the most underrated capabilities an insurance operations leader can develop.
